Fortum and coal

Our energy production is mainly based on carbon dioxide-free hydro and nuclear power, and on energy-efficient combined heat and power. In recent years we have also constructed wind and solar power in the Nordic countries, Russia and India. Our carbon footprint (gCO2/kWh) is one of the smallest among European energy companies.

Zabrze

Our energy production is mainly based on carbon dioxide-free hydro and nuclear power, and on energy-efficient combined heat and power. In recent years we have also increased wind and solar power production in, e.g., the Nordic countries and Russia. Our carbon footprint (gCO2/kWh) is one of the smallest among European energy companies.

Coal’s share in electricity production in 2019 was 3% and in heat production 18%.

Of our total electricity production in 2019, 59% was carbon dioxide-free and 29% was produced with renewable energy sources. Of our heat production, 10% was produced with renewable, carbon dioxide-neutral energy sources. In Europe, 96% of our electricity production was carbon dioxide-free.

Further information about fuel use by country is available on pages 19-20 and 64 of our Sustainability 2019 Report.

Responsible fuel procurement

Where we use coal, we do so efficiently and responsibly. The coal used in Finland originates from Russia. In Poland, we use mainly Polish coal. Russian power plants use coal originating from Russia and Kazakhstan. We purchase virtually all coal directly from mining companies. Fortum’s most significant coal suppliers in 2019 were SUEK, Maikuben-Komir, Polska Grupa Górnicza, Kaproben and Kuzbassrazrezugol (KRU). The share of coal coming from unknown origins via intermediaries was 0.1 % of the coal we purchased in 2019.

Fortum is a member of the Bettercoal initiative and uses the Bettercoal Code and tools in monitoring the responsibility of the coal supply chain. Fortum’s most significant Russian suppliers have already been assessed against Bettercoal Code, and a Bettercoal assessment was performed at our supplier’s mines in Kazakhstan in 2019. All coal suppliers participating in the Bettercoal initiative and their status in the assessment process are listed on Bettercoal’s website. In 2019 66 % of our coal purchases were made from suppliers whose mines have been subjected to a Bettercoal site assessment. We are committed to increasing this share to 70 per cent by the end of 2020.

Advanced combustion technology

In addition to carbon dioxide emissions, fuel use also generates sulphur dioxide, nitrogen oxide and particle emissions, which weaken air quality and cause acidification of soil and water systems. Flue gases can be reduced efficiently by using various flue-gas cleaning technologies and combustion technology solutions. All our power plants operate in compliance with environmental permit conditions. We also supply other energy companies with combustion technology solutions designed to reduce nitrogen oxides.

Fortum’s coal use in Finland

The Suomenoja combined heat and power (CHP) plant in Espoo currently uses coal and natural gas for fuel. However, Fortum will discontinue the coal use in Espoo in 2025. Fortum and the City of Espoo have committed to developing Espoo district heating system to be carbon-neutral during the 2020s in Espoo Clean Heat project.

As the new bioheat plant in Kivenlahti is commissioned, it will replace the old coal-fuelled unit in the Suomenoja plant. To replace the remaining coal use, we are pursuing new solutions – from utilising the excess heat from data centres, wastewater and industry to heat pumps, geothermal energy and smart demand-response solutions, in addition to use of biofuels in energy production. The Otaniemi geothermal plant is expected to be commissioned in late 2020, and the new heat pump unit utilising excess heat from wastewater is estimated to start its operations at the Suomenoja plant in 2021.

The Meri-Pori condensing power plant produces electricity mainly during peak consumption periods. A 308-MW share of the Meri-Pori power plant has been part of the Energy Authority’s peak-load reserve capacity since July 2017, and the agreement ends in June 2020. The Meri-Pori power plant has been selected for 440 MW of production capacity for the national peak-load reserve capacity system for the period July 2020 – June 2022.

Fortum’s coal use in Russia

In Russia the Chelyabinsk combined heat and power plant CHP-2 uses natural gas and coal, and the Argayash combined heat and power plant uses mainly coal.

Fortum’s coal use in Poland

In Poland coal is used at the Czestochowa combined heat and power plant and in the connecting heat plants, as well as at the new Zabrze combined heat and power

plant and the adjacent heat plants. The Czestochowa plant also uses biofuels, and the new Zabrze plant uses coal and refuse-derived fuel, RDF. The old Zabrze and Bytom combined heat and power plants are decommissioned in 2019, and they will be removed completely from operating capacity after 2022.

Fortum’s Uniper investment and discontinuing coal use

Uniper is a Fortum subsidiary and a valuable part of Fortum. Our nearly four-billion-euro investment in Uniper was one of the most significant energy sectors Mergers & Acquisitions in Europe in 2018. In 2019 Fortum announced its intention to acquire the majority shareholding in Uniper, and in the spring of 2020 we closed the transaction, which increased Fortum’s holding to 73.4% of the shares and voting rights in Uniper and Fortum’s acquisition cost to approximately EUR 6.5 billion. Following the confirmation of our increased ownership, five shareholder representatives resigned from the Uniper Supervisory Board, and new board members were appointed in April, in line with Fortum’s ambition.

The biggest concerns the various stakeholders have raised about the transaction have been the strategic fit of Uniper’s fossil-based production with Fortum’s low-carbon assets and its impact on Fortum’s carbon footprint.

Fortum and Uniper have a strategic mix of assets – both clean and secure – as well as the expertise required to successfully drive the transition towards a low-carbon energy system.

Fortum supports the EU’s climate target of a carbon-neutral EU by 2050, and we, along with other Nordic energy companies, have encouraged the European Commission to have a more ambitious policy to achieve the goal. We invested in Uniper in spite of coal power, not because of it. We believe that a well-functioning, market-based emissions trading system is the best way, in terms of security of supply, to implement the transition to a low-carbon energy system at the lowest cost to society.

As a responsible and committed parent company, Fortum intends to work with Uniper’s management team and employees on the creation and implementation of a joint vision. In the rapidly changing and decarbonising European energy sector, the vision must be centred around the three cornerstones of sustainability, affordability and security of supply. In March 2020, Uniper published its updated strategy, including a coal-exit plan and a target for carbon-neutrality by 2035 for its European power generation. We welcome the updated strategy as a clear step in the right direction, underlining the strategic rationale for our investment in Uniper.

Uniper will gradually phase out coal

The share of coal in Fortum’s and Uniper’s production will decrease quickly in the upcoming years.  In discontinuing the use of coal, it makes sense to decommission the most polluting power plants first. If the law phasing out German coal power is enacted, Uniper has announced that it will decommission 3,000 MW of old coal capacity, which is three times more than the capacity of the new Datteln 4 power plant. Overall, Uniper’s coal power capacity will be cut in half by the end of 2025, and the company is aiming for its electricity and heat production in Europe to be carbon-neutral in 2035.

The new EU Commission is pursuing carbon neutrality for the European Union by 2050.