Fuels and procurement
Fortum is a significant purchaser of goods and services, the annual purchasing volume being approximately EUR 2–3 billion depending on the investment volume. Beyond investments, a significant part of the purchasing volume is related to purchasing of fuels, while the rest comes from purchasing of various goods and services. Sustainability is an integral part of Fortum’s supply chain management. Our goods and service providers as well as contractors play an important role in our efforts towards sustainability.
Responsible supply chain management
Fortum wants to conduct business with viable companies that act responsibly and comply with Fortum Code of Conduct and Supplier Code of Conduct. While Fortum Code of Conduct provides the basis for ethical business conduct, Fortum Supplier Code of Conduct sets the basic sustainability requirements on what is expected from suppliers of services and goods. It is based on the ten principles of the United Nations Global Compact and is divided into four sections: business practices, human rights, labour standards and the environment. Monitoring of suppliers that was started with revised methodology in 2011 will help Fortum to identify potential risk suppliers and thus recognise and focus the need for further actions.
Responsible fuel purchasing
Fortum purchases fuels from international and local suppliers. In 2011, fuel purchases represented 35% of the total purchasing volume out of which roughly half originated from risk countries.
Sustainability of fuel procurement and especially sourcing of fossil fuels and biomass has become a topic of concern. Industry wide dialogue is required to address issues systematically.
The fuel assemblies of the existing power plant units in Loviisa are both Russian and British. The uranium used in the assemblies of both manufacturers originates from Russia. The zirconium material manufacturing plant and the plant responsible for manufacturing uranium oxide pellets and fuel assemblies, are certified in accordance with the ISO 14001 environmental management standard.
Fortum carries out regular reviews of the quality, environmental and health and safety management systems of its nuclear fuel suppliers. Fortum also controls regularly the manufacture of nuclear fuel assemblies. In 2011, Fortum’s nuclear and sustainability experts visited both the nuclear fuel assembly and the conversion unit in Russia. In summer 2012, a similar visit is scheduled to take place in one of the uranium mines operated by Fortum’s Russian supplier.
Natural gas used in Fortum’s operations in 2011 in Russia, the Baltic countries, Poland and Finland originated from Russia. In Russia gas is purchased from several suppliers. In the UK, Fortum purchases natural gas from the national supplier and it originates mostly from the UK and Norwegian gas fields in the North Sea.
All the natural gas consumed in Finland is imported from the Western-Siberian natural gas fields of Yamburg and Urengoy in Russia, some 3,300 km from the Finnish-Russian border.
In 2011, the majority (88%) of the coal used by Fortum in Finland and Sweden originated from Russia, but there were also small purchases from Columbia. Coal used in Polish power plants originated from Poland and Russia, and Fortum’s Russian power plants used coal from Russia and Kazakhstan.
In Russia coal is transported in open cars by railway from a coal strip mine to a power plant. Coal to other Fortum’s operating countries is transported by sea. In early 2012, Fortum decided to join Bettercoal initiative to promote the principles of sustainable development in coal mining.
In 2011, the majority (70%) of the biofuels used consisted of wood pellets, wood chips and industrial wood residues, and they originated mainly from Sweden, Finland and Germany. Other types of biofuels were also acquired for example from the United States, Spain and Malaysia. Fortum recognises the challenges related to the origin of biofuels and thus cannot be absolutely confident about the country of origin. Fortum’s position and actions for the sustainable utilisation of bioenergy approved in late 2011 will contribute to improved traceability.
In Finland, biomasses consumed were forest chips, by-products from forest industry, black liquor, recycled wood from industry and construction and a minor amount of wood pellets, reed canary grass and biogas. Additionally, solid refined recovered waste fuel was used in one power plant. The biofuels used originate mainly from Finland, only minor volumes of Russian wood were consumed. Aim is to increase the use of solid biofuels originating from certified sources in the coming years and also to report the share of this biofuel.
|ORIGIN OF FUELS USED IN 2011 ¹)|
|Fuel||Country of origin|
|Biofuel||Sweden, Finland, Germany and other countries|
|Coal||Russia, Poland, Columbia, Kazakstan|
|Natural gas||Russia, UK, Norway|
|¹) The biggest countries of origin based on the purchasing volumes in 2011|
|MATERIALS AND SERVICES PURCHASED 2009–2011, EUR MILLION ¹)|
|¹) Based on the income statement|
|FUEL USE BY COUNTRY IN 2011, GWh|
|Biofuels||Waste fuel||Natural gas||Coal||Peat||Uranium fuel||Other fuels|
Sustainable bioenergy procurement
The sustainable production and use of bioenergy is an increasingly topical issue worldwide. The European Union has defined the sustainability criteria for biofuels and bioliquids in transport and is considering enlarging the scope of criteria into solid biomass in energy production.
Bioenergy is an important energy source for Fortum. In 2011, Fortum compiled position and actions for the sustainable utilisation of bioenergy in electricity and heat production. The position and actions contribute to improved traceability of biomass fuels and responsible management of fuel purchases. Actions include, for example, the pre-selection and audit of suppliers, certification of the wood biomass chain, risk analyses and participation in international initiatives on sustainable bioenergy. Position and actions were approved in December 2011 and their implementation will start in 2012.