Last week, the CEO of Volkswagen stated in an interview that the automotive company would continue to use coal to power its manufacturing plant, given the ongoing tension between Europe and Russia. Herbert Diess, the auto-manufacturing company’s CEO, added that the firm planned to convert its coal-fired power plants into gas.
Volkswagen’s manufacturing facility in Wolfsburg covers an area of 6.5 million m2 and uses cogeneration plants that provide it with power and heat. Volkswagen’s plans involved replacing its boilers, which use coal with steam and gas turbine units, in an effort to reduce carbon dioxide emissions.
However, global events have made the automotive company a bit hesitant to move forward with its plans. Diess has noted that the company was holding off on proceeding with its plans and was observing how the situation was developing. He added that once the supply for gas was secured, the company would make the switch.
Volkswagen also reported its 2022 first-quarter results last week, which show that its sales revenue was a little under 15 billion euros. This is a decrease from the 17.6 billion euros the company recorded during 2021’s first quarter. VW’s operating profit was 513 million euros, which is an improvement over the 490 million euros recorded the previous year.
The remarks from the Volkswagen CEO were released the same day that the European Commission imposed new sanctions against Russia. These sanctions include a six-month phase out of crude oil imports from Russia. In a speech, European Commission president Ursula von der Leyen stated that the commission plans to phase out the supply of crude oil from Russia in six months and refined products from the country by the year’s end.
Von der Leyen explained that it was important to minimize the damage Europe and its partners across the globe would face while putting more pressure on Russia, noting that the economy needed to remain strong in order to help Ukraine.
Data shows that in 2021, Russia was the largest supplier of natural gas and petroleum oils to the European Union. Last month, Gazprom, a Russian state-owned corporation, halted supplies to Bulgaria and Poland after the countries declined to pay for gas in rubles. This move caused others to fear that their supplies could be stopped too.
The coronavirus pandemic, the volatility of the energy markets and geopolitical instability have increased concerns that the transition to a global economy focused on renewables could be prevented or delayed. However, given the increasing oil prices and phasing out of coal use, the green transition may, in fact, be accelerated.
As things stand, coal extraction companies such as Arch Resources Inc. (NYSE: ARCH) still have a huge market to serve, and there is no telling when exactly coal will no longer be needed in the global economy given the fluctuating nature of many of the renewable sources of energy like solar and wind energy.
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