Fortum: Decisions by the European Council the right step towards a climate-neutral society

PRESS RELEASE 24 October 2014

Heads of the EU states decided in their meeting of 23-24 October 2014 on the
energy and climate policy targets for 2030. These targets direct the
legislation as well as both the investments and development of the energy
industry far into the future.

The decision made by the European Council builds confidence in the political
commitment to climate change mitigation. It also improves the prerequisites for
investments in low-carbon energy production. The contents of the consensus
reached can be considered a good compromise. The European Council committed to
reduce greenhouse gas emissions by at least 40% from 1990, to increase the
share of renewable energy to 27% of final energy consumption and to increase
energy efficiency by 27%. The EU's decisions are an important first step
towards the upcoming global climate negotiations in Paris in late 2015.

It is vital to maintain the central role of greenhouse gas reduction and
emissions trading in the implementation of the EU climate policy. In the
implementation of the targets for renewable energy and energy efficiency
alongside the emission reduction target, measures should primarily focus on
non-ETS sectors.

Urgent reform of ETS required

The European Council's clear position on the importance of a well-functioning
and reformed emissions trading system in the implementation of the EU energy
and climate policy is welcomed. Tightening of the emission reduction target
alone is not enough to strengthen the emission trading system, but additional
measures are needed already before 2021.

It is utmost important to introduce the market stability reserve mechanism that
has been mentioned in the Council conclusions and is currently under
negotiations already in 2017. The mechanism would increase stability and
predictability in the allowance market, but would keep the emission cap
unchanged. A well-functioning emissions trading system improves the
competitiveness of low-carbon technologies and enables the climate targets to
be met with the least cost.

Market-driven practices and cost efficiency the main principles for the
legislation

The aim should be to use as uniform, market-based and cost-efficient tools as
possible in the implementation of the agreed climate and energy targets up to
2030. This is the best way to support Europe's competitiveness and to secure
low-carbon electricity at a competitive price to customers. Securing the
competitiveness of the European industry is a true concern: the cost of the
EU's climate targets to the industry should be compensated until other
countries commit to comparable targets.

Efficient internal energy market a way to improved energy security

The Council conclusions highlight quite correctly the importance of a fully
functioning and connected internal energy market in improving the EU's internal
security of supply. Also a strong climate policy together with the emissions
reduction target naturally contribute to a better security of supply by
incentivizing both energy efficiency and development and deployment of
renewable and other low-carbon energy sources.

Fortum Corporation
Corporate Communications

Further information:
Merja Paavola, Vice President, Corporate Relations, +358 50 396 1161
Kari Kankaanpää, Senior Manager, Climate Affairs, +358 50 453 2330

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