Study by Roland Berger Strategy Consultants on the effects of a nuclear tax and CO2 emissions trading: German energy groups facing billions of euros in costs Study bon the effects of a nuclear tax and CO2 emissions trading: German energy groups facing billions of euros in cost

• Calculating the impact of a nuclear tax and CO2 emissions trading for the most important European energy groups in 2013
• RWE and Vattenfall will be particularly hard hit (additional costs up to more than 40% of their 2009 operating profit)
• Threats include dwindling financial power, declining investment and less room to maneuver

German energy groups are facing billions of euros in profit losses in the coming years. The energy experts at Roland Berger Strategy Consultants have calculated the financial fallout from a tax on nuclear fuel and from CO2 emissions trading for the biggest European energy groups in 2013. Starting that year, companies have to purchase all pollution rights at auction; up to now, they were allocated largely for free. The consequences for companies could be disastrous: their financial power would shrink, investments would have to be scaled back, and they would have less room to maneuver. RWE and Vattenfall would be particularly hard hit, as they stand to lose 40% or more of their 2009 operating result.

"The European competitive landscape will undergo a massive change," says Veit Schwinkendorf, Head of the Energy & Chemicals Competence Center at Roland Berger Strategy Consultants. "And it would be to the detriment of German companies." German energy groups may be facing billions of euros in losses over the coming years.

The experts at Roland Berger conducted a study to quantify the financial ramifications of a tax on nuclear fuel and a carbon trading scheme for Europe's most important energy groups in 2013. Starting then, companies will have to buy all of their pollution rights at auction; up until now, they had received a large portion of these for free.

German utilities less competitive

The study indicates that the consequences for companies could be quite serious: their financial power would shrink, investments would have to be scaled back, and they would have less room to maneuver. The study goes on to show that current and announced performance programs will not be enough to close the profit gap.

Roland Berger Partner Jörg Stäglich says, "If the nuclear tax goes into effect, companies won't be able to offset the consequences just by cutting costs." European competitors would benefit from this and can make significant inroads into the German market.

According to the study, providers RWE and Vattenfall (each with a large share of coal-fired power plants) would be hit especially hard. They may be forced to absorb additional losses amounting to more than 40% of their 2009 operating profit. This figure would be about 36% at EnBW, which would feel a nuclear tax the most, and roughly 25% at Eon.