E.ON Foe Sees `End of World' in Coal as Germany Shuns Reactors

By Nicholas Comfort and Lars Paulsson

Oct. 10 (Bloomberg) -- Winfried Schwab-Posselt feels he's driving toward Armageddon when commuting to work.

Every day, the 56-year-old night-school teacher drives down the main street in the southwest German town of Hainburg under the shadow of five gray-and-white towers spewing clouds of vapor from E.ON AG's Staudinger coal-fired power plant. Now, Germany's biggest utility is planning to build a larger facility.

``It's like moving toward a big wall and facing the end of the world,'' Schwab-Posselt says. ``Now there's the fear that an even bigger wall is coming.''

Hainburg is at the center of the battle over Germany's energy future as the nation tries to shut its 17 nuclear reactors over the next 15 years. While utilities say coal is the cheapest way to replace the lost capacity and keep Germany's economy humming, neighbors contend such plants will harm their health, their home values and the planet.

The outcry may force Germany, Europe's biggest power consumer, to backtrack on its plans for a nuclear-free future.

``Germans may think they have to choose between death and pestilence, but they still have to choose,'' says Karin Brinkmann, an analyst at UniCredit Markets & Investment Banking in Munich. ``If E.ON isn't allowed to continue nuclear generation, those capacities will have to be replaced, and that means using coal-fired power plants.''

Dusseldorf-based E.ON plans to knock down three Staudinger generators built from 1965 to 1970 to make room for a bigger, more efficient power plant. With a planned capacity of 1,100 megawatts, it will light as many as 2.3 million homes.

15 Plants Needed

Energy consultant Deutsche Energie Agentur GmbH says plants such as Staudinger-6 and Vattenfall AB's 1,640-megawatt unit in Moorburg, near Hamburg, must be built to avoid shortages.

As many as 15 new facilities are needed to compensate for the atomic decommissioning program signed in 2000 by the governing coalition of Social Democrats and Greens, and as old stations are retired, the firm says. Coal-fired plants generated 46 percent of Germany's power last year and nuclear 22 percent.

``People want to have a secure energy supply, but when you want to build it somewhere, they are up in arms that it's going to be in their backyards,'' says Julia Katzenbach, a spokeswoman for the Staudinger plant.

Anti-E.ON sentiment isn't limited to Germany. In early August, hundreds of people camped in a field near E.ON's Kingsnorth power station, 30 miles east of London, to protest plans for the U.K.'s first coal-fired plant for 30 years.

Coal produces twice as much carbon-dioxide as natural gas, sparking opposition from environmental groups who say increased use of the fuel accelerates global warming.

$1.6 Billion Cost

In Hainburg, where the Romans once used the soil to make clay bricks, the existing E.ON plant dominates the skyline.

The generators E.ON plans to scrap each boast a cooling tower and chimney, with the tallest reaching 198 meters (650 feet). While the new plant will house both functions in one 180 meter-high tower, it will still be a ``change for the worse,'' says three-term Mayor Bernhard Bessel, 57.

E.ON estimates Staudinger-6 will take at least four years to build at a cost of 1.2 billion euros ($1.6 billion). The company is awaiting the results of an evaluation ordered by the state government before starting work.

Hainburg citizens are concerned about the effect the plant will have on their health. ``Burning more coal will mean more pollutants,'' Schwab-Posselt says.

Current emissions from Staudinger are within legal limits and hence ``not alarming,'' Katzenbach says.

Political Opposition

Residents also fear Hainburg home prices, stable for five years, will drop if E.ON constructs the new unit.

``If the new build is allowed to go ahead, then prices will fall,'' says Gunther Reibert, who evaluates real estate for Sparkasse Hanau, a savings bank that serves the community.

Residents have banded together, forming the ``Stopp Staudinger'' group, to oppose the new unit at Staudinger, which employs 450 people and contributes 40 million euros a year to the local economy. In addition, all five of Hainburg's political parties oppose the project.

``We're not distanced from reality,'' says Rudolf Kaller, representing the Social Democratic Party on a Hainburg committee responsible for construction and environmental issues. ``We know we need electricity.''

Rather than build a coal-fired plant, E.ON should invest in local renewable energy projects, Kaller says.

Vattenfall, the Nordic region's biggest utility, on Sept. 30 received approval to build the Moorburg project on the condition that it runs at reduced capacity 250 days a year. The decision followed a five-month legal battle with Hamburg's Department of City Development and Environment.

Minister Backs Coal

Staudinger-6 and Moorburg have an unlikely supporter in German Environment Minister Sigmar Gabriel. Coal-fired stations are needed because nuclear reactors aren't safe enough, according to Gabriel.

``We can't do more than what we do now: go there and talk to people, tell them we need these coal-fired plants,'' Gabriel said on Sept. 9 at the Third German Energy Congress in Munich.

Germany's choice of power for its 40 million households will be decided when the country elects a new government in 11 months, said Vattenfall Chief Executive Officer Lars Josefsson. He predicted a stand off between the pro-nuclear Christian Democrat Chancellor Angela Merkel and Gabriel's Social Democrats.

``Germany will have to make up its mind, and it will be either more coal, or coal and nuclear,'' Josefsson said. ``Everybody wants to have electricity when they put the plug in the socket.''

To contact the reporters on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net; Lars Paulsson in London at lpaulsson@bloomberg.net