The Government will not make any new decisions-in-principles on nuclear power. Fortum can not take Loviisa 3 forward during the next four years.
The Government proposes windfall and uranium taxes. In Fortum's view, the taxes are discriminatory and in clear contradiction with climate goals.
The Government will review support schemes for renewable energy. Fortum endorses cost-efficient, market-based and cross-border support schemes to increase renewable energy.
Fortum welcomes the Government's commitment to advance common European electricity market and smart grids development.
The new Finnish "Rainbow Government" consisting of the National Coalition Party, Social Democrats, Left Alliance, The Greens of Finland, Swedish People's Party and Christian Democrats announced its programme for the four-year term late on Friday 17 June 2011. The programme took a stand on several energy policy issues, but naturally, details regarding the implementation schedule and actual outcome are still open.
Fortum's viewpoints to some of the issues included in the new Government's programme:
No new decisions-in-principles on nuclear power will be made
The Government announced it will not make new decisions-in-principle on nuclear power during its four-year term. Therefore, Fortum cannot initiate preparations to apply for a decision to replace the existing capacity in Loviisa. Even if the following Government (2015-2019) took a positive stand on nuclear power during its term and Fortum got a permit to replace the existing two units, the operating license of Loviisa 1, at least, would expire before the new capacity would be in production. The licenses of Loviisa 1 and 2 expire in 2027 and 2030, respectively.
The Government announced that it will speedily give building permits to the two nuclear power units that received a positive decision-in-principle from the previous Government in 2010. Fortum is a shareholder with an approximately 25% interest in Teollisuuden Voima Oyj (TVO), whose application for a new nuclear power plant unit, Olkiluoto 4, was approved. The programme also states that the Government will make the necessary decisions on the final disposal of nuclear waste once ongoing studies have been completed with the intention of finding a "national solution" for disposal. The purpose and possible execution of this national solution is unclear as the Finnish Nuclear Power Act clearly states that each producer is responsible for the disposal of its own waste to ensure, for example, that only nuclear waste generated in Finland will be deposited in the country. Fortum's spent fuel will be placed in a final repository at Olkiluoto. Posiva Oy, which is jointly owned by Fortum and TVO, will handle the practical implementation of the final disposal. The repository at Olkiluoto allows for the final disposal of the spent fuel of Fortum and TVO's existing operational plants and their planned new units.
Windfall and uranium taxes proposed
The previous Finnish Government withdrew the windfall tax from its agenda in August 2010, because it proved to be impossible to implement nationally while fulfilling the EU regulations. The tax would have been discriminatory, in contradiction with the aim of fulfilling climate goals and would have encouraged electricity imports. Now the new Government has entered the tax to its programme once again with the intention to collect EUR 170 million annually. According to the programme, the Government aims to implement the tax in a way that is "suitable for Finnish conditions" leaving the schedule and details open.
Furthermore, the Government announces that it will investigate the possibility and expediency of introducing a uranium tax in 2012. According to the programme, the tax could be implemented in mid-term, but details are left open.
Emissions trading is the EU's primary means for combating climate change: it is designed to increase the cost of fossil-fuel powered generation and to benefit CO2-free generation. After 2012, power generation will not receive any free emissions allowances and all allowances will be auctioned. From this, the Finnish State is estimated collect EUR 225–600 million annually depending on the price of the allowances. This fact is ignored in the Government´s programme. In Fortum's opinion, it is important that energy taxation supports commonly agreed energy and climate policy that also the new Finnish Government strongly endorses. The proposed windfall and uranium taxes are direct support to fossil-fuel powered generation and therefore in obvious contradiction with climate goals.
Support schemes for renewable energy to be reviewed
The Government will review public support schemes for renewable energy by end of 2012. In Fortum's view, public support should be channelled through cost-efficient, market-based mechanisms that are preferably harmonised at EU-level. The ideal solution would be to introduce an EU-wide green certificate system. As investments in power and heat generation are highly capital intensive, Fortum stresses the importance of a predictable and consistent energy policy and operating environment.
Commitment to common European electricity market and development of smart grids
The Government announces that it prepares for the introduction of a common European power market and wants to endorse its formation by promoting the development of transmission capacity, smart grids and common market rules. As an example, the Government states it will support smart grids by renewing national legislation on electricity distribution. It also aims to investigate R&D tax incentives. Fortum welcomes the Government's initiatives.
Anne Brunila, Executive Vice President, Corporate Relations and Sustainability
Tel. +358 10 452 0970