Energy giant RWE has denied reports it is putting up the "for sale" sign on its Lynemouth plant in Northumberland, despite its renewable energy division exiting the biomass market.

Paul Coffey, RWE Innogy chief operating officer, told reporters yesterday that the unit was ditching its biomass arm, and would be seeking to sell off its four plants in Germany, Italy, the UK and Georgia, US over the next two years.

"Biomass has become a bit of a casualty of the economic situation," he said. "It's clear when you look at the group's ability to invest capital for growth that it's less than it used to be. When we looked at how we can use our capital resources going forward, and given that those resources are constrained, we decided that within the RWE Group biomass is not really a core activity for us, which is a bit of a shame, but it's an economic reality for us and something that we need to do."

His comments prompted reports the entire RWE Group was exiting the biomass business, prompting concerns it is seeking to sell Lynemouth Power Station in Northumberland, which is due to be converted from coal to biomass.

Lynemouth was last month chosen over Eggborough power station as one of 10 projects eligible for early support under a government scheme designed to help drive green energy investments. As a result of the decision, Eggborough's bosses have warned that the plant could now be forced to close. Engineering Construction trades unions GMB and Unitethis week announced they were seeking a meeting with the government over concerns that the closure of Eggborough would lead to the loss of 850 jobs.

However, RWE was today forced to clarify its position, confirming the Lynemouth conversion is still on track. Lynemouth is not part of the Innogy business, but a standalone part of the RWE Group, meaning that it is not affected by the planned sale of biomass facilities by the company's dedicated renewable energy division.

"There has been some confusion on this," an Innogy spokesman toldBusinessGreen. "Paul was talking about Innogy RWE, which is scaling back on biomass, but not the RWE Group." He added that those employees working on biomass in Innogy had now been transferred to another part of the group in Germany.

A spokeswoman for RWE UK confirmed it was aiming to reach a final investment decision on the conversion of the Lynemouth plant in the first quarter of this year.

However, RWE Group is expecting to reduce its renewable energy investments this year, as it struggles to cope with reduced demand for conventional thermal plants across Europe.

Coffey said the Innogy division is now seeking corporate partners to finance wind farm and hydro projects, instead of owning them outright.

Julie Elliott MP, shadow minister for energy and climate change, said the company's decision underlined the need for a 2030 decarbonisation target in the Energy Bill.

"This announcement is the latest worrying setback for clean energy in the UK," she said. "Investment in clean energy has halved under prime minister David Cameron's watch, costing jobs and threatening our energy security. The UK should be a world leader in low carbon technology. For that to happen, investors need certainty from government, and they need a 2030 power sector decarbonisation target."

However, RWE has been a vocal opponent of the decarbonisation target campaign, arguing that another target would create further confusion and risk for investors.

"Our view is that the [Emissions Trading System] works," said Julia Lynch Williams, managing director of RWE npower renewables. "If you have a macro target that is working and you start to say underneath that that you also have targets to do with renewables or energy efficiency, it creates a complexity that can add cost."

Earlier this week, Cameron confirmed that he remained opposed to the adoption of a decarbonisation target for 2030 at this point, arguing that it could undermine investment in carbon capture and storage technologies that he hopes could provide a cost-effective means of cutting emissions.