FORTUM FOR FUTURE? - urgewald - Finland and the Finnish state-owned energy company at the crossroads
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urgewald FORTUM FOR FUTURE? Finland and the Finnish state-owned energy company at the crossroads
Contents
I. Fortum’s Fossils 2
II. What has Fortum Bargained for? 2
III. Datteln 4 – Responding to the Climate Crisis
with a New Coal Plant? 3
IV. Undermining Climate Action Across Europe –
Uniper’s Threat to Sue the Netherlands 5
V. Creating Dangerous Lock-in Effects:
The Gas Infrastructure Expansion Plans 6
VI. “For a Cleaner World?” 9
VII. Time to Take Charge – Uniper is Fortum’s Responsibility 9
VIII. What Fortum Should do now 10
IX. The Role of Finland: Will the Marin
Government Walk the Talk? 10
X. The Role of Fortum’s Investors 11
1
In December 2019, the newly elected It is true that the company has under- to take the Netherlands to court for
Finnish Prime Minister Sanna Marin taken significant steps to reduce its its timely decision to phase out coal
declared that “climate change is the CO2 emissions in the last few years. and the plans for Germany’s first
greatest challenge of our future” and Nevertheless, Fortum still produced Liquid Natural Gas Terminal in Wil-
confirmed Finland’s commitment to 41 % of its electricity and 80 % of its helmshaven. Uniper’s actions show
become carbon-neutral by 2035.1 heat with fossil fuels in 2018.3 The that the company is still on collision
While the country has traditionally most significant problem however, course with climate science and the
been a timid actor in EU climate is the takeover of the German energy goals of the Paris Agreement. And the
politics, it has now set an ambitious company Uniper. Uniper’s enormous responsibility for these actions are
goal to become the first “fossil-free coal and gas assets put an immense now on Fortum’s plate.
welfare society in the world”.2 At the question mark on the Finnish utility’s
same time, Finland’s state-owned vision of becoming a frontrunner in This briefing sheds light on the incon-
energy company Fortum presents climate friendly energy production. sistencies between Fortum’s self-as-
itself as a forward-thinking and And the upcoming plans of the Ger- cribed green image and its actual
sustainable company with a vision man utility will unquestionably lead portfolio and formulates demands by
“for a cleaner world” and plans to to the exact opposite of a “cleaner civil society organizations towards
“decarbonize society”. Unfortunately, world”. Among those plans are the the Finnish government, Fortum and
the reality behind these promising commissioning of the highly contro- its investors.
announcements looks quite different. versial coal plant Datteln 4, the threat
I. Fortum’s Fossils
Fortum is the third largest power claims, Fortum is still heavily invest- 1.5°C goal, coal, however, must be
producer in the Nordic region with ed in fossil fuels and produces 41% phased out by 2030 in OECD coun-
additional significant operations (38% fossil gas, 3% coal) of its power tries, Eastern Europe and the former
in the Baltics, Poland and Russia. and 80% (64% fossil gas, 16% coal)5 Soviet countries.7 Despite its promise
Despite investing in solar, wind and of its heat by burning non-renewable to decarbonise society, Fortum has
other renewables, the utility com- energy sources. still not articulated a Paris-aligned
pany is also the sole owner of eight roadmap for its coal fleet. And with
coal power plants in Finland, Poland Whereas its Finnish coal plants will the takeover of Uniper, Fortum is
and Russia with a combined electrical retire in 2029 due to the country’s drifting even further away from a
and thermal capacity of 4.735 MW4. ban on burning coal for energy6, necessary 1.5C° trajectory. Uniper’s
Two additional, jointly-owned power Fortum has not announced a com- portfolio is a veritable carbon bomb
plants in Sweden and Finland com- prehensive decommissioning plan and its actions and investment plans
plete the company’s polluting coal for its remaining coal plants. To be in pose a major threat to the European
portfolio. Despite its sustainability line with the Paris Agreement and the Union’s climate goals.
II. What has Fortum Bargained for?
In September 2017, Fortum’s CEO fossil-based and rather than looking February 2019.9 At the time of writ-
Pekka Lundmark announced that to decarbonize its portfolio, it relies ing, it is set to become the majority
the state-owned energy company on keeping most of its coal assets stakeholder in Uniper by acquiring
would acquire 46.7% of shares in the and expanding its gas activities.8 To additional shares from the investors
German utility company Uniper. This the general bewilderment of the Finn- Knight Vinke and Elliott – thus total-
offer was met with criticism as both ish media and public, Fortum never- ling at a 70.5 – 73 % stake.10 Uniper
companies’ strategies differ marked- theless decided to increase its stake will become a subsidiary of Fortum
ly. Uniper’s energy generation is 80% in Uniper even further to 49.99% in once this transaction is finalized. As
2
Hundreds of students protesting Uniper’s new coal-fired power plant at the German parliament. „Datteln 4 nicht mit mir – Datteln 4 not with me”.
Photo: snapshot-photography / F.Boillot
the majority shareholder with a stake Russia. Uniper’s CO2 emissions alone can become leading actors in the en-
of more than 70%, Fortum must now amounted to 59.5 million tons in ergy transition13, it seems to overlook
be held responsible for its subsidi- 201811, more than the entire country the fact that the acquisition has just
ary’s climate impacts. of Finland was responsible for in the turned Fortum into one of the most
same time period. Together with For- polluting utility companies in Europe.
Uniper is the fifth largest coal plant tum’s own carbon dioxide emissions Rather than setting the benchmark
operator in Europe, with power of 20.1 million tons in 201812, this for clean energy production, state-
plants in Germany, Russia, the United adds up to a staggering 79.6 million owned Fortum is now following in
Kingdom and the Netherlands. The tons. While Fortum’s leadership the footsteps of Europe’s biggest CO2
company owns more than 9 GW claims that both companies, with emitter RWE.
of coal-fired assets in Europe and their complementary competences,
III. Datteln 4 – Responding to the Climate Crisis
with a New Coal Plant?
While more and more countries and The scientific community is very clear strategy to phase out the country’s
companies are making plans to phase about the future of coal. If we want to coal fired-power generation. In its
out coal as quickly as possible, Uniper stand a chance of meeting the Paris final report, the commission explicitly
still adheres to the plan of opening Agreement’s goal of limiting warming recommends that no new coal power
the highly controversial coal plant to 1.5°C, existing coal power plants plants should go online.16 Neverthe-
Datteln 4 in the summer of 2020. will need to be retired as soon as less, Uniper decided to ignore the
This stands in sharp contrast to the possible and no new coal-fired power proposal of the Coal Commission and
recommendations of the German Coal plants can go online.15 In Germany, is set to connect the 1.1 GW Datteln 4
Commission14 and would send a dis- the federal government established plant to the grid in 2020.
astrous signal to the rest of the world. the Coal Commission to develop a
3
Bringing Datteln 4 online also sends state constitution to enable further opposition throughout Germany as no
a disastrous signal to other coun- construction of Datteln 4. It became one can understand why the promised
tries. In 2019, the UN secretary known as “Lex E.on” in Germany19. As coal phase-out should begin with the
General Antonio Guterres travelled a shameful consequence, the power initiation of a new coal plant.
around the world asking countries plant received a new permit in 2017.
to stop building new coal plants by But Datteln 4 is not only a climate
2020. If Uniper and Fortum ignore Construction was further delayed and a reputational risk, it is also likely
this message by bringing a new coal when the welding seams of the boiler to become a financial liability. Both
plant online in one of the richest of the plant showed numerous flaws Deutsche Bahn and RWE secured power
countries in the world, how can during testing. Newly developed T-24 purchase agreements with Uniper in the
anyone expect that countries like steel had been used as building ma- early development stages of the plant.
India will heed the Secretary Gener- terial in order to ensure an improved Since the signing of these agreements,
al’s call? If Datteln 4 is connected to efficiency of the plant. As with other market prices have plummeted and due
the grid in 2020, it undermines the power plants using this new kind of to the massive delay and complications
efforts of the international commu- steel, the material turned out to be in the construction of the power plant,
nity to convince coal-heavy countries less durable than expected and had to neither of the companies feel bound
to adhere to the Paris Agreement be replaced with conventional, less ef- to the former contracts anymore. In
and stop the further buildout of coal ficient steel – thereby reducing the in- its annual report, Uniper has already
power plants. tended efficiency gains. Replacement acknowledged that it will have to sell
work on the 35,000 welding seams20 its electricity at a much lower price than
“Germany’s Largest Illegal further delayed the finalization of the initially anticipated, leading to massive
Construction” plant, making Datteln 4 the only coal write-offs in the company’s books. Add-
Uniper’s predecessor E.on started power plant under construction in ing aforementioned legal and technical
the initial construction of Datteln Western Europe in 2019.21 risks, Uniper’s own calculations value
4 in 2007 with the commissioning Datteln 4 in the lower triple-digit million
planned for 2011. These dates were It Doesn’t Add Up! sum which stands in stark contrast to
pushed back as environmental or- The initial line of argument for Datteln the 1.5 billion € it initially invested.24
ganizations and local residents filed 4 in 2007 was that it would replace It is therefore highly unlikely that the
numerous lawsuits against the power four older coal-fired power plants company will be able to even amortize
plant’s construction and emission and that its electricity would be the plant. Fortum however, is set on the
control plans. In 2009 and 2011, necessary for the operation of the premise that it will receive a good return
German courts came to the conclu- German railway operator Deutsche on its investment into Uniper.25 But
sion that the permit for Datteln 4 was Bahn.22 However, all of the four older considering the financial risks associat-
unlawful and construction came to a power plants were already retired in ed with Datteln 4, Fortum’s calculations
halt.17 As of now, a pending lawsuit 2013 and 2014 and neither did any might not add up.
against the plant filed by Friends of lights go out nor did any trains stop
the Earth Germany renders Uniper’s running in Germany as a result. The At the same time, the new coal plant
construction and operational plans new plant is also not likely to reduce is set to become ‘ground zero’ for the
illegal. Consequentially, the plant CO2 emissions by replacing older German climate movement. Fridays
received the nickname of “Germany’s and less efficient coal power plants for Future and other globally net-
largest illegal construction”.18 as Uniper argues. Instead, Datteln 4 worked climate justice movements
will likely compete with costlier, but have already staged protests. They
Disregarding the suspension of more climate-friendly gas-fired power have announced26 that the site will
permits, a strong opposition by civil plants. According to projections, remain the focal point of public op-
society and E.on’s unlawful conduct, Datteln 4 would lead to additional CO2 position until it is certain that Datteln
the coal friendly state government of emissions of 2 to 4 million tons an- 4 will not be connected to the grid.
North-Rhine Westphalia continued nually.23 In the end, even the German Whether Fortum likes it or not, the
to drive the project forward. It did government had to admit that Datteln company will have to bear the brunt
so not by requesting E.on to amend 4 would lead to higher CO2 emissions, of an ever-growing climate movement
their faulty plans, but by amending and not reductions. While the govern- that is not willing to accept the inau-
the local state zoning laws and the ment is still intent on enabling Datteln guration of a new coal power plant in
climate protection paragraph of the 4, the plant faces broad-spread public Western Europe.
4
Uniper’s Maasvlakte 3 coal plant will have to retire early by 2030. Subsequently, the company threatens to sue the Netherlands for its timely
coal phase-out law. Photo: Rudmer Zwerver
IV. U
ndermining Climate Action Across Europe –
Uniper’s Threat to Sue the Netherlands
Unfortunately, the story of Fortum’s the plant is identical to the Datteln An Outdated Agreement
investment does not stop here. 4 power station. A year before the The Energy Charter Treaty (ECT) is
Uniper’s plans do not only undermine construction of Maasvlakte began, an obscure multilateral investment
climate ambition in Germany, but en- the Intergovernmental Panel on agreement signed in 1994 . It was
danger progressive climate decisions Climate Change (IPCC) published originally intended to overcome the
of governments all across Europe. its 4th Assessment Report. This political and economic divisions
The company has publicly threatened report left no doubt that urgent and between Eastern and Western Europe
to sue the Dutch government, after meaningful measures to lower CO2 by protecting Western investments in
it had announced a law to phase out emissions would be required. Fur- fossil fuels in the former Soviet Union
the burning of coal for electricity thermore, three years earlier, the EU after years of state control.28 Howev-
generation by 2030.27 The Dutch law had already established the Emis- er, today more than 80% of invest-
is actually quite similar to the Finnish sions Trading Scheme with the aim of ments protected by the ECT are made
law, which will end coal-fired elec- reducing CO2 emissions. In complete within the EU and the ECT is increas-
tricity generation by 2029. Uniper is ignorance of the ever worsening ingly being used to protect fossil fuel
now seeking up to €1 billion Euros climate crisis, Uniper claims that its investments and infrastructure. The
in compensation from the Dutch plant should be able to run for 40 agreement provides fossil compa-
government for the early retirement years and that the new law will cost nies, such as Uniper, with a powerful
of its coal-fired power plant in the the company hundreds of millions tool to sue governments if new and
Netherlands. of Euros. Consequentially, Uniper progressive climate or environmental
is now threatening to file an Inves- laws threaten the profits of big oil,
Construction for Uniper’s coal plant tor-State Dispute Settlement (ISDS) coal or gas.
in the Netherlands, Maasvlakte 3, claim within the framework of the
began in 2008 and the plant was only Energy Charter Treaty (ECT) against One shocking example is the 2009
brought online in 2016. Technically, the Netherlands. legal claim against Germany by Vat-
5tenfall over environmental standards claims by foreign energy compa- Powering Past Coal Alliance (PPCA),
for its coal-fired power plant in Ham- nies. Accordingly, a network of 278 a network of progressive govern-
burg.29 The Swedish utility company environmental, climate, consumer ments, businesses and organizations
demanded €1.4 billion in compen- and development civil society groups that explicitly endorse the Paris
sation for, what it believed, were have urged the members of the Euro- Agreement and aim to accelerate the
disproportionately high environmen- pean parliament to withdraw from the transition from coal to clean power
tal restrictions which would have Energy Charter Treaty if no steps are generation.33 Surely, members of the
rendered its project unprofitable. taken to amend its current undemo- Finnish government have to realize
Intimidated by the high compensa- cratic and fossil fuel friendly provi- that the threat of one member’s
tion demands, the local government sions.31 Even the German government state-owned company suing another
yielded, settled the case with Vatten- has signed a political declaration member state will erode the very
fall, and weakened its environmental wherein it is committed to inform the credibility of the alliance.
regulation. In a second case, which is investor community not to introduce
not public, opaque and still ongoing, new intra-EU arbitration proceedings, Finland is on track to damage its
the Swedish company expects including under the ECT.32 reputation as a climate leader in
€6.1 billion in compensation from the Europe if it does not stop the absurd
German government for the country’s The Double Standard of the legal claims against the Netherlands.
accelerated nuclear phase-out plans Finnish Government The Finnish government holds a 51%
following the Fukushima disaster.30 Fortum, and by extension the stake in Fortum and has the respon-
Finnish government, are now in an sibility to intervene in the actions
At a time when numerous European indisputably awkward position. The of its flagship company, which will
countries are announcing carbon state-owned energy company plans soon own over 70% of Uniper. Up to
neutrality goals and coal exit plans, to drive “the change for a cleaner now, the government has not reacted
Uniper’s threat to sue the Nether- world” and the Finnish government and consequentially finds itself in
lands sets a dangerous precedent. has set a coal phase-out date for a situation where it operates on a
If the company follows through with 2029. Fortum’s future subsidiary double standard: striving for carbon
its claim, the case could precipitate a Uniper however, now plans to sue a neutrality by 2035 at home and look-
“regulatory chill” throughout Europe, government, whose coal-phase-out ing the other way while a subsidiary
discouraging governments from date is one year later than Finland’s. of its flagship company undermines
taking necessary climate action in At the same time, both Finland and Europe’s climate goals.
order to avoid massive compensation the Netherlands are members of the
V. Creating Dangerous Lock-in Effects:
The Gas Infrastructure Expansion Plans
While the previous examples relate The company argues that a landing toxic, pollutes the air and often leads
to wrong investment decisions in the terminal will significantly improve the to earthquakes. The German Federal
past, it is worth mentioning Uniper’s security of supply and contribute to Ministry for Environment considers im-
questionable future strategy: The the reduction of greenhouse gas emis- ported fracking gas to be as damaging
company is intent on expanding sions. In reality, these claims could to the climate as coal.34 The planned
its activities in the gas sector. One not be further from the truth. capacity of 10 billion cubic meters per
important project in this context is the year would translate into at least 17
construction of Germany’s first Lique- The terminal would be used for the million tons of CO2 emissions35 –and to
fied Natural Gas (LNG) Terminal in Wil- import of fossil gas, which would most massive methane emissions connected
helmshaven. The floating storage and likely be comprised of fracking gas to fracking. According to Uniper the
regasification unit would be connect- from the USA and also Canada. Frack- project could even be expanded in the
ed to land by a 30 km pipeline and is ing is an extremely dirty gas extraction future to transport up to 40 billions
planned to be operational by 2023. technique, which turns local water cubic meters a year.36
6Massive LNG Vessels would transport fracked gas across the Atlantic to supply Uniper’s planned gas infrastructure. Photo: The Mariner 2392
Uniper’s new LNG terminal would ineligible for approval due to environ- Beyond the LNG business, Uniper
have disastrous consequences for mental and safety concerns. is involved in the contested gas
the climate, and it would be com- pipeline North Stream 2, set to bring
pletely expendable as Germany What is certain is that a new LNG Russian gas to Germany. Uniper is
already has sufficient import capac- Terminal has no place in Germany’s one of the financial investors in the
ities for fossil gas. The terminal is in decarbonisation strategy. However, pipeline, together with Wintershall,
direct conflict with Germany’s 2050 Wilhelmshaven is only on the receiv- Shell, Engie and OMV.
decarbonisation target and will most ing end for LNG. On the other side
likely become a stranded asset due of the Atlantic, Uniper is involved in Uniper is also involved in the
to its long amortization time of at the creation of more new LNG infra- Southern Gas Corridor, a pipeline
least 30 years. Uniper’s planned gas structure: The Canadian company from Azerbaijan to Italy, which will
infrastructure therefore poses a risk Pieridae Energy wants to build the bring Azeri gas to Europe. Here the
of becoming its compensation claims LNG export terminal Goldboro in involvement is via purchase contracts
of tomorrow. Nova Scotia. Crucial for its construc- for gas from the Shah Deniz gas field
tion is a long term (20 years) supply in the Caspian Sea, which will feed
Furthermore, the coastal region agreement between Pieridae and the pipeline.
around Wilhelmshaven is already Uniper, which might be supported
projected to be highly susceptible to through German state guarantees. While gas is often promoted as a
climate change induced sea level rise The agreement with Uniper is for half bridging fuel to a carbon neutral
and extreme storm floods. A number the liquefied natural gas produced at future, the projects Uniper is pursu-
of protected nature reserves and a Goldboro or 5 mmtpa (million tonnes ing will lead to a prolonged fossil fuel
Special Area of Conservation, the per annum). The project is supposed lock-in with dire consequences for
Lower Saxon Wadden Sea, would be to start shipping LNG by 2024/25, our climate, the environment and the
endangered due to close proximity to meaning that Uniper would buy transition towards a genuinely clean
the planned terminal. Consequential- fossil gas until 2044/45 despite all energy system. Uniper and Fortum
ly, a legal report by the NGO Envi- its talk about new gas infrastructure have to put an immediate stop to this
ronmental Action Germany (DUH)37 being used for “renewable” gas in expansion of new fossil fuel infra-
considers the planned terminal to be the future. structure.
7Dirty coal for Fortum’s and Uniper’s coal plants
Fortum sources its hard coal for the Finnish and Russian power plants from mining companies in Russia
and Kazakhstan, while Uniper imports mainly from Russia, Colombia and the USA. Especially Russian and
Colombian coal has a devastating human rights and environmental track record.
RUSSIA: The big coal mining companies SUEK, are frequently covered with black
Cheap coal for Europe, black Kuzbassrazrezugol (KRU) and Sibe- dust. “Black snow” has become a
snow for the Kuzbass rian Business Union (SDS) are the common phenomenon.II
most important exporters to Europe,
The coal imported from Russia comes In February 2019, the Swedish tele-
but there are also more than a dozen
almost entirely from the Kuzbass Re- vision SVT published a documentary,
smaller companies mining coal in the
gion, located between the cities of Ke- in which it showed, that Carbo One,
region. There is a high probability,
merovo and Novokuznetsk. Kuzbass the coal trading company of KRU, was
that the big companies trade coal of
is the largest coal basin in Russia. At involved in a huge money launder-
the smaller companies as well.
present, there are 120 underground ing and tax evasion scandal.III Even
and opencast mines in operation here. Coal mining has wreaked havoc on though Fortum and Uniper are well
The coal is transported 4,000 km the environment in Kuzbass. Rivers, aware of the accusations against their
by train to the Baltic ports and then ground water and air are heavily coal supplier, they haven’t questioned
distributed all over Europe. polluted, with devastating impacts the business relationship to this day.
on the health and the livelihoods of Both companies frequently refer to the
people living in the region. The land Bettercoal Initiative and its assess-
rights of local communities are fre- ments of the coal mining companies.
quently violated; regulations on the In fact, assessments are far from
minimum distance between opencast being transparent and comprehen-
mines and inhabited areas are ig- sive. To this day, even predominantly
nored and pollution levels exceed the negative assessment results have nev-
allowed limits.I In the winter months, er led to any serious consequences for
large parts of the coal mining regions the assessed supplier.
Photo: Ecodefense
COLOMBIA: nanced the paramilitary “Juan Andrés against six Drummond managers. It
Blood coal for Europe Alvarez” front (JAA), which spread also reported twelve new testimonies
Urgewald and other NGOs have terror across Cesar and especially of Drummond workers against the
informed Uniper and its predecessor in the coal mining region between company.V
E.on since 2009 about the terrible sit- 1996 and 2006. During this time, the
Russian and Colombian coal will fuel
uation in the Colombian coal mining front grew from 60 to 600 men under
Uniper’s new Datteln 4 coal plant. It
regions. In 2014, the Dutch peace arms, before it was demobilized. The
is the people in the mining regions,
organization PAX issued the report JAA was responsible for more than
who are paying the price for cheap
“The Dark Side of Coal – Paramili- 3,100 killings and displaced more
and dirty energy.
tary Violence in the Mining Region than 55,000 people. The victims wait
of Cesar, Colombia”.IV The report for justice and remedy to this day.
investigates the involvement of the During all these years, Uniper
mining companies Drummond (USA) sourced coal from Drummond and
and Prodeco (Glencore, Switzerland) Prodeco. The company has never
in the paramilitary violence in the seriously considered interrupting
Cesar region. The report cites several its business relation with these
testimonies that were made under companies. In January 2020, the
oath by former paramilitary leaders. Colombian Newspaper El Espectador
According to these testimonies both reported, that Colombian prosecutors
Drummond and Prodeco allegedly fi- have started a criminal investigation
A mother holding her son’s ID card who was
murdered by the JAA. Photo: Daniel Maissan
I https://ecdru.files.wordpress.com/2015/12/russian-coal.pdf
II https://www.theguardian.com/environment/2019/feb/15/toxic-black-snow-covers-siberian-coalmining-region
III https://www.occrp.org/en/daily/9396-swedbank-scandal-doubles-implicates-organized-crime
IV https://www.paxforpeace.nl/media/files/pax-dark-side-of-coal-final-version-web.pdf
V https://www.paxforpeace.nl/stay-informed/news/new-testimonies-against-mining-multinational-drummond
8VI. “For a Cleaner World?”
Fortum presents itself as a compa- climate ambition.40 On numerous still bets on bringing the highly con-
ny with an ambitious vision: The accounts the company has stated the troversial Datteln 4 coal power plant
utility wants to “reshape the energy following: “Decarbonisation is deeply online in 2020.
system” and become the “leading embedded in our DNA“.41
clean-energy company that drives the Interestingly, this does not seem to
change for a cleaner world”. Naturally, the question arises of how concern Fortum. Pekka Lundmark has
the acquisition of a fossil fuel laden even gone on record saying that Dat-
The company website is laden with company like Uniper fits into For- teln 4 should be allowed to operate
news and reports outlining the ener- tum’s vision of decarbonization and until 2038, the current coal phase-
gy producer’s sustainability targets, overall sustainability? According to out date in Germany. This date and
plans for reducing greenhouse gas the company’s head Pekka Lund- the associated phase-out pathway is
emissions and its self-ascribed posi- mark, Uniper’s fossil-based assets completely out of step with climate
tion as a circular economy champion. will provide the important security of science – and the Finnish govern-
An emotional company advertise- supply while the share of renewables ment’s own coal ban by 2029.
ment video named “Mother”38 calls increases in the energy system.42
on the viewer to join the movement However, this reasoning stands on Endorsing an utterly inadequate
and to look after Earth as she has shaky ground. Fossil gas, and espe- 2038 coal phase-out timeline and
looked after us. In a post on Fortum’s cially its expansion, is in direct con- supporting the commissioning of a
own ForTheDoers blog39, the compa- flict with a low-carbon energy system new coal-fired power plant are not
ny’s CEO Pekka Lundmark explicitly as it creates long-term dependencies the steps that take us towards “a
calls for an immediate and strict and resource allocation conflicts with cleaner world”. In reality, Fortum still
reduction of greenhouse gas emis- renewable energy sources. Any new has a long way to go if it wants to
sions in order to limit global warming fossil fuel infrastructure is incom- transform itself into a leading clean
to 1.5°C. Indeed, he also acts as a patible with reaching the 1.5C° goal energy company. And the Uniper
board member of the Finnish Climate outlined in the Paris Agreement.43 takeover has just made that journey
Leadership Coalition, which actively Nonetheless, Uniper is expanding its significantly longer.
engages itself in pushing forward gas activities on a major scale and
VII. Time to Take Charge – Uniper is Fortum’s Responsibility
Fortum has undoubtedly made a chase of over 46% of Uniper shares, more, Fortum is on track to become
questionable deal with its investment an open letter44 by 15 European the majority shareholder with a stake
in Uniper. This investment puts the Environmental NGOs urged Fortum to of at least 70.5% in Uniper after
Finnish government in a credibil- develop a credible closure plan for Un- closing transactions by the end of the
ity quandary and severely erodes iper’s coal power fleet in line with the first quarter 2020.46 The Finnish utili-
the sustainability claims made by Paris Agreement. At the time, Fortum ty company has announced that it in-
Fortum. But so far, the Finnish utility replied that due to their minority own- tends to be represented on Uniper’s
does not seem to have realized the ership they weren’t in a position to supervisory board in accordance
implications of its takeover of Uniper. make decisions over Uniper’s assets.45 with its ownership stake.47 Uniper´s
carbon footprint is now indisputably
On several occasions in the past, The situation now is a different one. Fortum’s responsibility and Fortum
Fortum and its CEO Pekka Lundmark Since the original acquisition, all of can and must make decisions regard-
have shied away from taking respon- Uniper’s board members have been ing its subsidiary’s fossil business.
sibility for Uniper’s actions by arguing replaced and it seems unlikely that Those decisions – or indecisions - will
that they don’t hold a majority stake in the new CEO and his colleagues were show us whether Fortum is willing to
the company. In February of 2018 for elected against the will of the com- take responsibility for the impact its
instance, following the initial pur- pany´s biggest shareholder. Further- actions are having on our future.
9VIII. What Fortum Should do now
• Fortum should commit to closing • In the meantime, Fortum and Un- • Fortum needs to ensure that
(and not selling) its coal assets, iper need to clean up their coal Uniper respects the Netherlands’
including Uniper’s. It should supply chains. Suppliers that are coal exit decision and withdraws
develop and publish a decom- accused of human rights and en- its absurd compensation claim.
missioning plan to retire its coal vironmental violations or corrupt Putting forward a legal threat
power plants – Uniper’s included practices should be investigated under the ECT is undemocratic
– by 2030 in accordance with the and excluded until cleared. and endangers European climate
Paris Agreement. ambition.
• Fortum should stop the commis-
sioning of Datteln 4. It would be
a disastrous signal to the world
if Fortum allows a new coal plant
to go online in 2020.
IX. The Role of Finland: Will the Marin
Government Walk the Talk?
The Finnish government can play a import of millions of tons of dirty coal The Finnish government should also
very progressive and pro-active role from coal mining regions in Russia, position itself against Fortum’s and
in the fight against climate change Colombia or elsewhere. Uniper’s plans to build new gas in-
– not only in Finland, but also in frastructure like the planned LNG ter-
Germany and the Netherlands with Furthermore, the Finnish Government minal in Wilhelmshaven. This would
positive effects on a European or should ensure that the subsidiary of only create lock-in effects for fossil
even a global level. its flagship company refrains from gas, which are grossly incompatible
legal threats against an EU partner with the Paris Agreement.
If the Marin government stops For- country for passing a progressive coal
tum’s plans of opening the last new phase-out law. ISDS arbitration pro- With the mentioned steps the Finn-
coal plant in Western Europe, it would cedures within the EU are uncalled for ish Government could multiply its
send a strong signal to the European and a disparagement of the function- leverage and become a real leader
Union and the world. A signal that ce- ing EU legislative framework. And this for coherent and ambitious climate
ments the fact that the time for coal particular claim is especially harmful action in Europe.
in Europe is definitely over. In doing as it could deter governments from
so, it would prevent the additional considering new climate legislation.
10Activists holding a peaceful demonstration outside the Fortum headquarters in Espoo, Finland. Photo: Martin Snellman / Greenpeace
X. The Role of Fortum’s Investors
There is a growing global consensus merous environmental organizations Furthermore, the Dutch case high-
among leading financial institutions and climate movements, such as lights the exposure to policy risks of
that as the world is moving irreversibly Fridays For Future, have been and will Fortum and Uniper.
towards a low carbon economy, coal continue protesting the plant’s com-
power assets and new fossil infrastruc- missioning. The approval of Datteln As it was only connected to the grid
ture are going to become stranded 4’s commissioning by the German in 2016, Uniper’s Maasvlakte plant
investments, which constitute growing Federal Ministry for Economic Affairs will operate less than half of its
financial risks. The profitability of hard and Energy has been met with fierce lifetime due to the Dutch coal exit in
coal plants has been collapsing and criticism by media and the public 2030.
it can be expected that, due to an in- alike. Datteln 4 constitutes a major
creased carbon price, fossil fuel-heavy liability and is likely to seriously Investors of Fortum and Uniper have
companies such as Uniper will be damage Fortum’s reputation. to take additional action in order
facing further significant losses. to fully align Fortum and Uniper’s
Both companies will be subject to business model with the climate sci-
The inauguration of Datteln 4, the further reputational damage if Uniper ence based 1.5°C target of the Paris
only new coal-fired power plant in decides to follow through on its Agreement. They should require both
Western Europe, is already becoming threats to file a claim against a timely companies to adhere to the require-
the focal point of the German and coal phase-out in the Netherlands. ments as outlined in Section VIII.
European climate movement. Nu-
11Sources
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2 https://www.socialeurope.eu/finland-climate-leadership
3 https://www.fortum.com/sites/g/files/rkxjap146/files/investor-documents/fortum_sustainability_2018.pdf
4 https://www.fortum.com/about-us/our-company/our-energy-production/our-power-plants/combined-heat-and-power-chp-and-condensing-power-
plants
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6 https://www.reuters.com/article/finland-energy-coal/finland-approves-ban-on-coal-for-energy-use-from-2029-idUKL5N20N6QV
7 https://climateanalytics.org/media/report_coal_phase_out_2019.pdf
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10 https://www.fortum.com/media/2019/10/fortum-agrees-acquire-majority-uniper-improve-stability-and-accelerate-realisation-strategy
11 https://cr.uniper.energy/en/climate-action-and-security-of-supply/
12 https://www.fortum.com/about-us/sustainability/climate-resources/towards-low-emission-energy-system
13 https://www.fortum.com/media/2019/10/fortum-agrees-acquire-majority-uniper-improve-stability-and-accelerate-realisation-strategy
14 Official Title: Commission on Growth, Structural Change and Employment
15 https://climateanalytics.org/media/report_coal_phase_out_2019.pdf
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19 https://www.manager-magazin.de/unternehmen/artikel/a-667556.html
20 https://www.gruene-datteln.de/uniper-verbrennt-in-datteln-geld
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22 https://www.bund-nrw.de/publikationen/detail/publication/bund-hintergrund-steinkohlenkraftwerk-datteln-4/
23 https://www.bund-nrw.de/publikationen/detail/publication/bund-hintergrund-steinkohlenkraftwerk-datteln-4/
24 https://www.bund-nrw.de/fileadmin/nrw/dokumente/Energie_und_Klima/2019_11_14_BUND_Hintergrund_Datteln_4_web.pdf
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nal-fluessigerdgas-anlage-bei-wil/
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nal-fluessigerdgas-anlage-bei-wil/
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39 https://www.fortum.com/about-us/blog-podcast/forthedoers-blog/now-its-time-take-action-climate-change-wont-wait
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12urgewald
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Authors: Marc Bühnemann, Regine Richter, Sebastian Rötters (Published: February 2020)
Editing: Jacey Bingler
Cover-Photo: Jochen Tack; Fotonen / istock
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