Press release

Fortum calls for EU-level sustainability criteria and phase out of subsidies for biomass

19 April 2016, 12:50 EEST


Fortum today released in Helsinki its latest publication in its Energy Review
series; the focus of this issue is bioenergy. In the Energy Review Fortum
suggests clear EU-level sustainability criteria for biomass and a transition to
a market-driven system in place of complex subsidy systems.

Biomass is a renewable, domestic, mainly local and carbon-neutral energy
source, which is a central part of our energy system. It is the only renewable
energy source that can replace all types of fossil fuels in heating, cooling,
electricity production and traffic.
However, the uncertainty regarding biomass-related regulatory policy has
increased in the EU, which adds instability to the biomass markets and reduces
the investment willingness. The biggest policy risks impacting bioenergy are
related to sustainability principles and financial subsidies.

Fortum is of the opinion that EU-level sustainability criteria are needed for
solid biomass, criteria that are applicable to all bioenergy, regardless of its
end use. The use of biomass for energy should be on equal footing with other
usage forms. The resource efficiency of biomass could be one of the
sustainability criteria.

“We think that biomass use must be advanced in a market-driven way and the
current subsidy systems should be phased out. The EU’s emissions trading scheme
should steer investments in biomass-fuelled plants and fuel choice in existing
plants. Support for bioenergy innovations and for research and development,
particularly in the commercialisation of new bioenergy technologies, will
continue to be needed in the future,” notes Kari Kankaanpää, Senior Manager,
Climate Affairs, Fortum.

Fortum is a significant user of biomass: last year 5.1 TWh (2.6 million m3) was
used and its use will grow by 50% during the next couple of years. Biomass
accounts for one fourth of Fortum’s heating fuels in the EU area. The new
biofuel-fired combined heat and power (CHP) plant being built by Fortum and the
city of Stockholm, in Värtan, will be commissioned in May. The plant uses 2.4
TWh of fuel per year. It is one of the world’s biggest biomass-fired CHP
plants, producing heat and electricity for about 190,000 households.

Fortum Corporation
Corporate Communications

Further information:
Kari Kankaanpää, Senior Manager, Climate Affairs, Fortum, tel. + 358 50 453 2330

Biomass - Fortum’s key messages:

• Biomass is a crucial part of a sustainable energy system: renewable,
carbon-neutral, mainly local and domestic energy – the only renewable energy
form replacing fossil fuels in the production of electricity, heat, cooling and
traffic fuels.

• EU-wide harmonised and binding sustainability criteria for all bioenergy and
targeting the origin of bioenergy, regardless of its end use, is required. In
proving the sustainability of forest biomass, a practical and transparent
approach based on sustainable forest management is a necessity.

• Due to its versatility, biomass is a desired raw material for many purposes.
A well-functioning biomass market and a level playing field for competition
between the various uses of biomass have to be enabled.

• Resource efficiency has to be a key criterion steering the use of biomass
between the different end uses. In energy production, biomass is most
efficiently utilised in advanced CHP plants in connection with district heat
production or in other CHP-integrated processes.

• Subsidies for mature renewable energy technologies, including biomass, have
to be gradually phased out and the EU ETS alone has to steer further
investments in biomass and fuel choice in existing plants. Should subsidy
policies continue, they have to be technology-neutral and preferably regionally
harmonised. The Fortum Energy Review series highlights the challenges and
opportunities we see in the energy sector and outlines our solutions to them.

Read more:
Fortum Energy review: More sustainable, less subsidised biomass
Energy reviews on Fortum’s website 

Fortum’s vision is to be the forerunner in clean energy. We provide our
customers with electricity, heat and cooling as well as other energy solutions
that improve present and future life. Already 64% of our electricity generation
is CO2 free. Our main markets are the Nordic and the Baltic countries, Russia,
Poland and India. In 2015, we employed some 8,000 energy sector professionals,
and our sales were EUR 3.5 billion. Fortum’s share is listed on Nasdaq