If anything, I believe the pandemic has brought us closer together and strengthened people’s determination to live more sustainably. National governments and the EU are targeting tighter emission reductions, recovery efforts are geared to support clean growth and advances in technology give further reason for optimism.
When I look back at everything we at Fortum have achieved during this extraordinary year, I can only be proud of our team. We have welcomed Uniper to the Fortum Group, as a strategic subsidiary and our fifth business segment. Together, we are now the third largest CO2-free power producer in Europe and a major gas company that will play a significant role in shaping the energy transition. And today, we have laid out our joint strategic roadmap for the coming years.
Fit for the future
I am very excited to announce this new strategy. We have been working intensively with Uniper to align our strategies and detail cooperation opportunities, and I believe we are in an excellent position to push development further. I am especially pleased that as a major international energy group, we have now formalized our commitment to the Paris Agreement, by setting ambitious targets towards transforming our own operations to carbon neutral latest in 2050.
Our strategy builds on our re-defined and sharpened purpose: We want to drive the change for a cleaner world. We are securing a fast and reliable transition to a carbon-neutral economy by providing customers and societies with clean energy and sustainable solutions. I see this as a critical role for Fortum to play. It comes with a lot of responsibility, helping to deliver a sustainable, reliable and affordable transition to carbon neutrality. At the same time, we want to remain an excellent employer for all colleagues and a good investment for our owners.
Priorities for success
Our core business areas will continue to be CO2-free power – hydro, nuclear, wind and solar - and gas. We will continue to strengthen our CO2-free power generation, and focus our growth on wind and solar power. By 2025, we plan to build up to 2 GW of new onshore wind and solar power generation capacity primarily in Europe. This is exciting news and in my view a very important step in expanding our renewables portfolio.
As Europe transitions away from coal, our leading gas business provides much-needed flexibility and stability to the power system, enabling fast growth in solar and wind power. Our role is also to provide reliable supplies of natural gas for heating, power and industrial processes across Europe, from individual households to large modern factories, who depend on these supplies every day of the year.
We also know that gas has to become clean overtime with significantly less, or no carbon emissions compared to today. That’s why we are placing so much emphasis in our strategy on contributing to the development of a hydrogen economy. Currently, in terms of energy, Europe uses roughly 70% more gas than electricity. For the society to become carbon neutral, most of the gas we use today will have to be replaced with hydrogen or other clean gases. This will not be an easy task for Europe. We are ready to contribute and will build on Uniper’s first-mover position in hydrogen.
I had the opportunity recently to virtually tour and meet with the team at Uniper’s Falkenhagen hydrogen plant in Germany. It offered a glimpse of our future with hydrogen that is really inspiring. Currently, we have over 500 MW of project prospects across Europe and want to be among the leaders in commercial clean gas applications, serving especially industrial and infrastructure customers with whom we have long-term relationships. We have plenty of expertise to offer them, not only in hydrogen but also with other sustainable solutions. By partnering with these customers, we can help them to reduce their environmental and carbon footprints.
Working towards carbon neutrality in 2050
In line with the Paris Agreement, we are committed to becoming carbon neutral by 2050 at the latest – not an easy task, but something we all need to work hard towards. To measure our progress, we have decided to halve the carbon emissions in our European generation by 2030 and to transform these activities to carbon neutral latest by 2035. I am personally totally committed to these goals.
As we have said for years, coal-fired generation does not have a place in our portfolio in the long-term, and we are set to reduce the Group’s coal-fired generation capacity by more than 50% over the next five years. In Russia, we will also gradually transform our asset portfolio towards renewables, while over time reducing our fossil exposure.
Determined steps forward
With our strategy laid out, it is now time roll up our sleeves and get to work. We will have a phased approach to the execution; securing our financial strength and performance while gradually increasing our growth investments, primarily in renewables and clean gas. Using the expertise of both companies, we aim to have a “one team approach” in strategic areas such as Nordic hydro and physical trading optimisation, solar and wind project development, and hydrogen.
Alongside the investments, we will also see some divestments. Active business portfolio management has been an integral part of both Fortum and Uniper in the past. It helps us to finance new investments in line with our strategy and to become more focused and stronger as a result of these changes.
With the great range of expertise, experience and the work ethic we have among our colleagues at Fortum and at Uniper, we have a good starting point for the execution of our strategy. But being a driver of and a true leader in the energy transition in an increasingly uncertain world won’t be a walk in the park. There will be some tough choices and stiff competition at some point. We will all need to work hard to achieve our goals, and all need to be committed to the journey that lies ahead of us.
Nonetheless, I am very optimistic about our future. We are in an excellent position to capture the opportunities presented by the energy transition. The next five to ten years will be crucial – for the energy transition, for a cleaner world – and for Fortum. I look forward to working together with our customers, partners and the societies around us. But most of all, I am excited to work with all our employees across Fortum Group, in all our countries, to make this a success story.