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Concentration of CO2 in the Atmosphere

When Activism Meets Business

World’s Largest Investor-owned Utility Goes 100% Renewable

By George Harvey

Desmond Tutu, an Anglican bishop in South Africa, achieved a fair amount of fame as an anti-apartheid activist. Now he is calling on businesses to cut their ties with the fossil fuels industry.

Bill McKibben, a Schumann Distinguished Scholar at MiddleburyCollege, has gained a lot of press recently as the leader of 350.org, which is calling on investors, especially colleges and universities, to divest of their holdings in the fossil fuels industry.

E.ON coal-burning plant in Rostok District, Mecklenburg-Vorpommern, Germany. Photo by Jan Rehschuh.

E.ON coal-burning plant in Rostok District, Mecklenburg-Vorpommern,
Germany. Photo by Jan Rehschuh.

Many others have been pushing the cause for renewable energy, as well. Though it has been slow, the activist-propelled movement away from ties to the fossil fuels industry has been gaining ground. At least, it has been slow until now.

On November 30, 2014, E.ON, the largest investor-owned utility in the world, announced that it is spinning off a company to take all its nuclear and fossil-fuel-burning power plants. The parent company will focus entirely on renewable power, primarily from wind, solar, and biomass. In effect, E.ON is answering the call of Bill McKibben and Desmond Tutu. The largest publicly traded utility on Earth is distancing itself from fossil fuels.

This is about as radical as a change can be. E.ON will be giving up nearly all the traditional power generating facilities on which its business was built. Instead, it will work on a forward-looking set of sustainable systems that are as yet not entirely developed.

The German government has already committed the country to closing down its nuclear plants, and is starting to talk seriously about closing all its coal-burning plants. Given the facts that the German government is not willing to permit fracking, that it is uncomfortable with its dependence on Russia for natural gas, and that it is strongly against fossil fuels in general, it is hard to imagine large-scale development of any sort of fossil fuel plants in the country.

The newly spun off company will have a problem because much of its assets will be nuclear and fossil plants that will have to be closed down, without much hope of being replaced. It may be that the new company will have to adopt a business plan that foresees reduction of business with passing time rather than growth. Whatever plan it uses, it will have to attract investors, and that will not be easy.

When the largest investor-owned utility in the world stops investing in (supporting) fossil fuels (distances itself from fossil fuels) and focuses entirely on renewable energy, it is time to pay attention!

At the same time that E.ON announced spinning off its baseload power plants, it also said it would be writing down $4.5 billion in assets for this year. Investor response to these announcements is news in itself. There was a sudden surge of interest in E.ON stock, which went up about 6%.

What the effect these events will have remains to be seen. We might expect, however, that they will make the leaders of utilities and related industries all over the world sit up and take note. Even if German energy policies are confined to Germany, the cost reductions for renewable power are worldwide.

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