Coal procurement at Fortum and Uniper

The use of coal in energy production needs to be discontinued and we are working towards that. Fortum and Uniper together are already the third largest producer of carbon-free electricity in Europe. And in places where we still use coal, we do so efficiently and responsibly.

Coal use is decreasing quickly

We have a big responsibility in the everyday functioning of society. The transition to a low-carbon society must be done in such a way that enough energy at an affordable price can be produced at any given moment. Coal accounts for about 13% of Fortum and Uniper’s combined production, and it will decrease rapidly in the upcoming years. Coal use in Europe is gradually being phased out within the framework of national schedules.

Fortum’s energy production (excluding Uniper) is primarily based on carbon dioxide-free hydro and nuclear power and on energy-efficient combined heat and power (CHP). Fortum is also investing in solar and wind power. Uniper’s power production is based on hydro and nuclear power and on gas- and coal-fired power generation. Uniper also operates a commodities trading business and has natural gas reserves.

Examples of the coal phase out

  • In Espoo, Fortum is discontinuing the use of coal in district heating in 2025.
  • In Inkoo, Fortum has dismantled the biggest coal-fired power plant in the Nordic countries.
  • Stockholm Exergi, co-owned by the City of Stockholm and Fortum, discontinued the use of coal in spring 2020.
  • Uniper’s coal power capacity will be reduced by half by the end of 2025, and the company’s target is to be carbon-neutral in its European electricity production in 2035.
  • In discontinuing coal use, it makes sense to decommission the most polluting power plants first. Uniper will decommission 3,000 MW of old coal capacity, which is three times more than the output of the new Datteln 4 coal-fired power plant.

Responsible coal procurement


Fortum and Uniper require that suppliers commit to a responsible way of operating. We use the Bettercoal initiative’s Code and tools in assessing the responsibility of the coal supply chain. Bettercoal is an independent organisation with the goal of continuous improvement of the coal supply chain.

  • Fortum’s long-term goal (excl. Uniper) is that all coal suppliers commit to the Bettercoal initiative. In 2019, 66% of all Fortum’s coal procurements were made from suppliers whose mines had undergone a Bettercoal site assessment. For example, all the Russian coal suppliers already participate in the Bettercoal assessment programme.
  • Bettercoal suppliers accounted for 55% of Uniper’s coal procurements in 2019. Uniper aims to increase the share of coal procured from Bettercoal suppliers. Information about Uniper’s coal procurement and use is available in the Uniper’s 2019 Sustainability Report (pages 44 and 52).

Fortum (excl. Uniper)

Coal’s share in Fortum’s electricity and heat production in 2019 was 3 and 18 per cent, respectively. We purchase virtually all coal directly from mining companies, so we know the origin of the coal. In 2019, we imported coal to Finland from Kuzbass, Russia. In Poland, we used mainly Polish coal. Russian power plants used coal from Kazakhstan.

Finland
In Finland, coal is used at the Suomenoja and Meri-Pori power plants and at Fortum’s co-owned Naantali power plant.

Fortum will discontinue the use of coal at the Suomenoja combined heat and power (CHP) plant in Espoo in 2025. Fortum and the City of Espoo have together committed to developing Espoo’s district heating to be carbon-neutral in the 2020s in the Espoo Clean Heat project.

The Kivenlahti bioheat plant, completed in 2020, replaced one of the two coal-fired units at the Suomenoja plant. In addition to using biofuels in energy production, we are pursuing new solutions – from utilising excess heat from data centres, wastewater and industry with heat pumps to geothermal energy and smart demand-response solutions – to replace the remaining coal production. In 2021, the Otaniemi geothermal plant is expected to start production and the new heat pump unit utilising excess heat from wastewater is estimated to be commissioned at the Suomenoja plant.

Fortum’s Meri-Pori coal-fired power plant has been has been selected for 440 MW of production capacity for the national peak-load reserve capacity system, based on the competitive bidding organised by the Energy Authority. Fingrid will give the plant the possible start-up order in situations when there is a shortage of electricity or the threat of a power shortage is evident.  

Russia
Over 90% of our energy production in Russia is based on natural gas, and the development focus is on boosting energy efficiency. The Chelyabinsk combined heat and power plant CHP-2 and the Argayash combined heat and power plant in Russia use natural gas and coal in energy production.

The new plant units in Russia use gas turbine technology that represents the best available technology in natural gas combustion. The modernisation of the plants has reduced the emissions per produced energy unit by about 20 per cent.

Fortum’s investments in Russia in recent years have targeted the development of renewable energy. We aim to increase the wind and solar portfolio to a multi-gigawatt scale. Together with our local partner Rusnano, we currently have a total of 430 MW solar and wind power in Russia – in addition to the over 1,470 MW under development.

Poland
In Poland, coal is used at the Czestochowa combined heat and power plant and the adjacent 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 refuse-derived fuel (RDF) and coal. The old Zabrze and Bytom combined heat and power plants were closed in 2019 and will be completely decommissioned after 2022.

Coal suppliers
Fortum’s most significant coal suppliers in 2019 were SUEK, Maikuben-Komir, Polska Grupa Górnicza, Kaproben and Kuzbassrazrezugol (KRU). There were no procurements made from KRU in 2020 because Stockholm Exergi, co-owned by the City of Stockholm and Fortum, discontinued the use of coal in spring. In Poland, we also procured a small amount of coal in 2019 from intermediaries. It accounted for 0.1% of all our coal procurements. Fortum doesn’t procure coal from Colombia.

Reducing environmental impacts
We take the environmental impacts of coal seriously. In addition to carbon emissions, the use of fuels also produces, e.g., sulphur dioxide, nitrogen oxide and particle emissions that impair air quality and cause acidification of soil and water systems. Flue-gas emissions can be reduced effectively with 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.

Read more in Fortum’s Sustainability Report

Uniper

Uniper is independently responsible for its coal procurement. Uniper used 11.8 million tonnes of coal and brown coal in 2019, 16.7 million tonnes in 2018, and 18.3 million tonnes in 2017. Information about Uniper’s coal procurement and use is available in the company’s 2019 Sustainability Report (pages 44 and 52).

Bettercoal

Bettercoal’s requirements are based on the Bettercoal Code, which covers good governance, human rights, social responsibility, and environmental issues, among other things. Bettercoal’s assessment programme includes the coal supplier’s Letter of Commitment, self assessment, and an independent assessment of mining operations.

Based on the assessment, a Continuous Improvement Plan (CIP) is made for suppliers; the realisation of the plan is monitored by Bettercoal several times a year. A new assessment is done every five years. Additionally, the realisation of the improvement plan is monitored by country-specific working groups.

Bettercoal has Russia and Colombia working groups, and Fortum participates in both of them. Uniper chairs the Colombia working group. The working groups’ reports are published on the Bettercoal website. Important focus areas in the development work for Russia include, e.g., environmental impacts, securing biodiversity, occupational health and safety, and engaging with local communities. The particular focus in Colombia is on strengthening the trust between the various stakeholders in coal-mining regions to support the peace process of the civil war that ended in the early 2000s, and to support the diversification of local livelihoods in a situation where the demand for coal is decreasing. The agenda of the working group also includes issues related to access to clean water for local communities.

If a coal supplier committed to Bettercoal violates its commitments and fails to implement corrective measures within a reasonable time, Bettercoal can initiate measures to dismiss the supplier. In such case, the supplier forfeits its Bettercoal supplier status.

Bettercoal member companies, like Fortum and Uniper, are required to annually report on the use of coal and on how the Bettercoal supplier assessment process has been integrated in their coal procurements. Every member company must also annually define commitments to advance the Bettercoal principles and processes.

Read more about Bettercoal