Why Uniper?

Uniper is a Fortum subsidiary. Together we form a strong entity that has the resources and expertise to drive Europe’s energy transition and serve our customers even better than before.

We both want to significantly reduce emissions from energy production without jeopardising the security of supply of electricity and heat or raising energy prices unreasonably. Uniper is a successful, international energy provider and trader, and a great match with Fortum. Uniper’s hydro, nuclear and gas power is needed to realise Europe’s energy transition. Together we create for Europe a leading energy company.

The work to align the companies’ strategies and develop a shared vision is beginning. The strategy Uniper published in March 2020 is a good starting point; at its core is phasing out coal in Europe, converting fossil production, growing the gas business, and developing hydrogen and other new solutions. This is very much in alignment with Fortum’s strategy that is strongly weighted to carbon-free energy production. Additionally, we are building significant new business related to the circular economy.

Our goal with the strategy work is that we will set concrete and ambitious emissions reduction targets for both companies by the end of the year 2020.

Good momentum in the transition

Fortum has committed to shared efforts to mitigate climate change. We have a common goal with others who share the climate concern: reducing carbon dioxide emissions and replacing the use of coal. We are working every day towards this in many ways. We invested about 400 million euros in carbon dioxide-free production in 2019 – one hundred million more than in 2018.

With the Uniper investment, Fortum’s emissions-free electricity production capacity grew by about 60%. Fortum and Uniper are together Europe’s third largest producer of carbon-free electricity.

Uniper – a profitable investment in Europe’s energy future

Production that secures the functionality of society at all times is needed alongside intermittent renewable energy. In the Nordic countries, this need is met with hydro and nuclear power – and Uniper and Fortum both have a lot of it. Uniper owns about 200 hydropower plants with total capacity of 3.6 gigawatts in Sweden and Germany. This capacity exceeds that of all the hydropower plants in Finland combined.

In Central Europe, gas plays a key role, and it too is being made greener all the time.  Uniper is a pacesetter in this development work. Fortum shares Uniper’s view that natural gas is needed as a replacement for coal so that delivery reliability can be maintained and emissions can be reduced. Gas also enables added investments in wind and solar energy. Uniper is also developing renewable energy storage solutions, especially hydrogen-based, in which it can utilise its gas expertise and its gas infrastructure.

With Uniper, Fortum’s share of carbon-free production grows by approximately 60%. Coal accounts for about 12% of the combined production of the companies.

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.

Frequently asked questions

Why did Fortum, an advocate of green energy, acquire Uniper?

Fortum wants to drive the change towards a cleaner world. Our goal is to enable a carbon-neutral energy system, but change doesn’t happen overnight, it requires persistence. Uniper has set as its goal to reach carbon neutrality of its European electricity production by 2035.

Fortum and Uniper have competencies that are very complementary. Together Fortum and Uniper are in the vanguard in Europe’s energy transition. Alongside intermittent renewable energy, we need the security of supply at all times to ensure the functionality of society. In the Nordic countries, this need is met with hydro and nuclear power – and Uniper and Fortum have a lot of it. In Central Europe, gas plays a key role, and it too must be made green in the longer term. Uniper is a pacesetter in this development work.

Of Fortum and Uniper’s combined production, 37% is carbon-free hydro and nuclear power and 49% is gas power. Uniper’s emissions were reduced by 20% in 2019 compared to 2018, and by 35% in the company’s production in Europe.

The share of coal accounted for about 1 % of Fortum and Uniper’s combined sales in 2019.

Together, Fortum and Uniper have sufficient size and financial capacity to drive Europe towards carbon neutrality. The strong financial position makes it possible to decommission the old and to build new to mitigate climate change. We have an aggregate EBITDA of approximately EUR 3 billion. This puts us in a strong position to advance the transition and also to capture the growth opportunities it presents.

Doesn’t Fortum take climate change and people’s climate concerns seriously?

We take climate change very seriously and we are working every day to mitigate it. We invested 401 million euros in carbon dioxide-free production in 2019 – one hundred million more than in 2018. Climate change is a shared challenge. We have a common goal with others who share the climate concern: reducing carbon dioxide emissions and replacing the use of coal.

Why hasn't Fortum blocked the commissioning of the Datteln 4 plant?

Uniper has recently announced that it is decommissioning three times the amount of old coal-power capacity compared to Datteln 4. Uniper will close all its old coal plants in Germany and Britain by the end of 2025. Uniper's coal plant in the Netherlands will be closed by 2030 at the latest.

Urgent actions are needed, but, in terms of society, shutting down all fossil production at once is simply not possible – no matter how much we would like that. Since coal is still needed, for now, it is best to use the newest and more efficient power plants, like Datteln 4.

Coal will be phased out in Uniper’s production as quickly as its use can be replaced with other energy forms. The plant’s commissioning is part of German government legislative proposal currently under review by Germany’s parliament. Even though a clear decision to exit coal was made in Germany, for now, the country has to use coal to secure the supply of electricity.

Societies are completely dependent on electricity. Even a short power outage has an impact on water intake and wastewater removal. It disrupts the operations of, e.g., hospitals, public transportation, stores, banks and gas stations. In extended power outages, everyday life – water, cooking, and heating of residential, business, and office buildings – would be problematic.

Will Fortum’s Uniper investment tarnish Finland’s climate reputation?

Fortum wants to be leading the way in the energy sector in enabling the transition towards a carbon-neutral Europe; that also requires systematic work to discontinue coal power. Fortum also supports Europe’s and Finland’s targets to exit coal power. A cleaner world is created by a combination of carbon-free energy production and the smart use of resources.

We are working every day towards this in many ways. We invested 401 million euros in carbon dioxide-free production in 2019 – one hundred million more than in 2018.

Why does Fortum want to have Holland pay for the Uniper coal power investment?

Uniper doesn’t object to shutting down coal power, but it wants the Netherlands to comply with the international investment protection agreement. The International Energy Charter Treaty (ECT) protects the rights of companies in the event of unilateral regulatory changes. The Treaty was signed by 53 countries in 1998, including the Netherlands, and it applies to all energy technologies. Uniper’s power plant in Holland was commissioned in 2016, and its design life is several decades.

To our knowledge, the Dutch government has expressed its willingness to negotiate the matter with Uniper. The decisions in the matter will be made by Uniper.

What impact will Uniper have on Fortum’s total emissions?

Fortum produces low-carbon electricity mainly with hydro, nuclear and gas power. With the Uniper investment, Fortum’s carbon-free electricity production capacity will increase by about 60%, and together Fortum and Uniper will become Europe’s third-largest producer of carbon-free electricity. Coal accounts for 12% of Fortum and Uniper’s combined production – and that would quickly decrease in the upcoming years.

If EU emissions trading were functioning, would Datteln 4 be comissioned?

Emissions trading is the primary mechanism for reducing emissions. Europe’s emissions trading not only covers emissions from electricity and district heat production but also emissions from the European industrial sector and air traffic. The emissions market is constantly looking for more cost-efficient ways to reduce emissions in the sectors it covers. It includes more than 12,000 industrial and electricity production plants and 1,400 airlines. Emissions trading has proven its effectiveness. In 2019, the emissions from Europe’s electricity production decreased by about 100 million tonnes – largely as a result of the tripling in the price of emissions allowances. The use of coal power decreased in Europe by close to one quarter in 2019.

Coal power cannot be shut down all at once without widespread power outages. It makes sense to first shut down the most polluting plants. Coal is still needed for now, so it is best to use the newest and more efficient plants.

We call for comprehensive solutions instead of pinpointed ones. Energy production emissions are reduced most effectively through EU-level emissions trading, the tightening of which Fortum has strongly advocated. That would eliminate the plant- and country-specific decisions, and emissions would be reduced at the lowest possible cost. Limiting the rising global temperature requires measures to reduce emissions in all areas of society. A good way to do this would be to expand the scope of emissions trading, e.g., to transportation and stand-alone heating and cooling of buildings.

Why aren’t renewable energy solutions being taken into use on a wider scale?

The transition to a low-carbon and ultimately a carbon-neutral future will take time and significant investments in energy production and transmission infrastructure – power lines and gas pipelines. The transition must be done in such a way that we can secure the supply of energy in all conditions. And costs must be kept affordable for everyone, for industry and services, for cities, transportation and households. At the same time, the transition’s impacts on regional development and employment must be taken into consideration.

What will replace coal use in energy production?

The only way coal use can be discontinued in electricity and heat production is if the production can be replaced with other energy sources. Otherwise, there won’t be enough electricity and heat and the prices will go up. This will require investments not only in renewables, but also in gas, energy storage, and other flexibility solutions to improve the security of supply.

Urgent actions are needed, but, in terms of society, shutting down all fossil production at once is simply not possible – no matter how much we would like that. Companies like Fortum must shoulder their responsibility with affordable energy costs to keep the lights on, households warm, and the wheels of industry turning. A lot of development is also needed for new technologies and investments in tried and true low-carbon production forms as well as in transmission systems – power grids and gas pipelines. To shoulder this responsibility and to do the work, we need financially strong and successful companies, because the task is impossible with public funds.

A controlled transition to low-carbon and carbon-neutral energy gives us time to develop renewable energy and new technologies, like hydrogen technology and the development of gas to minimise emissions. Fortum’s and Uniper’s competencies are complementary in this respect.