Volkswagen is prolonging its use of coal attributable to Russian power 'risk'

The CEO of Volkswagen advised CNBC Wednesday that the German automotive large was holding its choices open when it comes to the way it powers its enormous manufacturing plant in Wolfsburg, admitting coal would nonetheless be wanted attributable to ongoing tensions between Russia and Europe.

Speaking to CNBC’s Annette Weisbach, VW chief Herbert Diess was requested how involved he was about gasoline provides from Russia stopping and what that will imply for his agency’s operations.

“That’s actually really a threat … because it’s very hard to predict what’s going to happen,” Diess mentioned. “Here in Wolfsburg we still have coal-fired power plants which we wanted to — and we are — converting into gas.”

Covering an space of 6.5 million sq. meters, VW’s manufacturing facility within the metropolis of Wolfsburg makes use of two cogeneration crops that present it with warmth and energy.

The agency had been planning to interchange its coal-fired boilers with gasoline and steam turbine items in a bid to decrease carbon dioxide emissions, however world occasions would seem to have prompted a rethink in the interim.

“It’s all prepared but now we are a little bit hesitating, and we will look and see how the situation is going to develop,” Diess mentioned. “We can [adapt] … to the situation. We can, [for] a little bit, prolong our coal-fired plants — hopefully it’s not for too long. Then we would like to change to gas once the supply is secured.”

On Wednesday, Reuters additionally quoted Diess as telling reporters that VW had “just decided to upgrade our coal-fired power plants to still be able to use coal or gas,” including that this associated to the corporate’s important operations in Wolfsburg.

VW reported outcomes for the primary quarter of 2022 on Wednesday. Operating revenue earlier than particular objects hit 513 million euros (round $541 million), up from 490 million euros within the first quarter of 2021. The agency reported gross sales income of slightly below 15 billion euros in comparison with 17.6 billion euros within the first quarter of 2021.

Diess’ remarks got here on the identical day the European Commission, the EU’s govt department, put ahead new sanctions towards the Kremlin that can embrace a six-month part out of Russian crude imports.

“We will phase out Russian supply of crude oil within six months and refined products by the end of the year,” Ursula von der Leyen, the European Commission’s president, mentioned in a speech outlining the plans.

“Thus, we maximize the pressure on Russia, while at the same time – and this is important – we minimize the collateral damage to us and our partners around the globe,” she mentioned. “Because to help Ukraine, we have to make sure that our economy remains strong.”

Russia was the largest provider of each petroleum oils and pure gasoline to the EU final 12 months, based on Eurostat. Toward the top of April, Russia’s state-owned power agency Gazprom stopped provides to 2 EU nations, Poland and Bulgaria, as a result of they’d refused to pay for gasoline in rubles. The transfer led many to worry that different international locations within the EU might see their provides halted too.

Geopolitical instability, the volatility of power markets and the Covid-19 pandemic have all sparked considerations in some quarters that any transition to a worldwide economic system centered round renewables may very well be delayed or prevented.

During an interview with “Squawk Box Europe” on Wednesday morning, the CEO of transport large Maersk provided a cautiously optimistic outlook.

Søren Skou mentioned “a higher oil price, all things equal, will help the green transition because it will make the cost premiums, if you will, for greener fuels smaller.”

“So we see that more as a way of accelerating the green transition than pushing it back.”

— CNBC’s Silvia Amaro contributed to this report