Germany’s coal companies are following large multinational miners in cleaning up their image, with critics concerned that restructuring plans may set the stage for emissions to rise further.

The owner of the country’s second largest coal miner said last week that it will split off its dirty operations from renewables, becoming the latest among several companies to do so. That’s similar to moves by fossil-heavy corporations including Teck Resources and Anglo American, both of which have made efforts to restructure their businesses to get coal assets off their books, rather than shutting them down altogether.

A key risk is that owners of dirty spun-off assets will continue to run them with less pressure from shareholders to go green. While coal plants were considered critical for ensuring Germany’s energy security during last year’s crisis, companies seeking more favorable financing options are trying to get such assets off their books.

“The pressure from the financial sector — banks, investors, insurance companies — on operators of coal-fired power plants to divest from their ‘dirty’ business is increasing worldwide,” said Hanns Koenig, Managing Director Central Europe for Aurora Energy Research. “Emissions can of course also rise after such a transaction if the new owners continue to operate power plants.”

While the idea of spinning off dirty businesses has been underway for a while among large multinationals — with Anglo American completing the demerger of its South African coal business in 2021 — it has only recently gained momentum among German coal operators.

Czech energy company EPH - which is led by billionaire Daniel Kretinsky — announced last week that it will transfer its German lignite operations into a new sister company, EP Energy Transition. “As a result, EPH will be almost free from all of its current coal assets by 2025 and will completely abandon coal as a power generation source by 2030,” it stated. While the new firm should also invest €10-billion into renewables, the coal plants under the new company are expected to run until 2035-2038, according to the group’s sustainability report.

Last year, the country’s largest coal operator RWE came under pressure from an activist investor to separate the German utility’s lignite unit from its clean-energy operations, but the proposal was voted down by other shareholders. In October RWE committed to end coal in 2030 — eight years earlier than previously planned — and has since floated plans to spin off its lignite operations into a state-run foundation.

In contrast to the situation for larger global players, the push in Germany is also coming from small shareholders and municipalities rather than big investment or pension funds. STEAG — a hard-coal burning company largely owned by communal utilities — has worked on the separation of its green operations since last year, and announced the creation of its new renewables subsidiary Iqony this January, while coal assets will continue as STEAG Power GmbH.

The advantage for the green business is that it gets “more visibility, bank financing and makes it much easier to place our services with customers,” according to Iqony Head of Communications Christoph Dollhausen.

The possible consequences for emissions might be exemplified by a similar event in 2016, when Swedish energy company Vattenfall AB sold its lignite operations in eastern Germany. The utility said the transaction wiped out 57 million tons of annual CO2 emissions from its portfolio. But the emissions did not vanish: EPH bought up the assets, and restarted the already mothballed coal plants during last year’s energy crisis.

EPH insists on burning coal until 2038 — whereas Vattenfall had announced plans to cut 55% of its emissions by 2030.

“If Vattenfall were still the operator in Germany now, it would never have been able to justify such a long coal operation, and would probably have shut down the plants sooner,” said Sebastian Rötters, energy campaigner of Urgewald, a non-profit environmental organization.