Stainless steel production is energy intensive. The keys to reducing our carbon emissions are to increase our energy efficiency and the use of low carbon energy sources.
Outokumpu's approach to energy efficiency is long term, and the target is a continuous improvement of a 0.5% reduction yearly. The largest energy-saving potential lies in the use of process gas or CO gas from ferrochrome production, the recovery of waste heat, improved process integration and improved efficiency in using raw materials.
In all new investments or replacement investments, energy efficiency is improved and energy saving is a target. We also systematically monitor and analyse energy consumption. Over a ten-year period 2010-2020, our improvement of energy efficiency calculated as a sum of different process steps was 7% compared to the baseline 2007–2009.
Outokumpu's production sites use a range of energy sources, such as natural gas, propane, heavy fuel oil and electricity. Outokumpu participates in low-carbon energy programs in nuclear power, wind power, combined heat and power and LNG. In 2020, approximately 76% of electricity came from renewable and low-carbon sources.
Outokumpu is following Science Based Target Initiative in the further reduction of carbon dioxide emissions. Outokumpu targets to reduce the direct, indirect, upstream and downstream transport emission intensity by 20% by 2023 compared to the baseline of 2014–2016.
Our total company carbon profile, including upstream emissions, is the lowest in the industry according to internal estimates. We continuously strive to make our operations more energy efficient and to maximize the use of low carbon electricity in our operations. Increasing the recycled content in our steel and improving resource efficiency are also factors in reaching even lower CO2 emissions and reducing upstream emissions. In 2020, we reduced our CO2 intensity by 17.0% compared to the baseline 2014–2016. More information on the climate change and our results is also available in our latest annual report.
Outokumpu is participating in carbon dioxide (CO2) emission trading according to the EU ETS legislation. Outokumpu has been participating in trading according to ETS since beginning of 2005. Currently 5 production sites are included: Tornio Works, Avesta Works, Sheffield primary products SMACC, Nyby Thin Strip and Degerfors.
The emissions trading (or cap and trade) system is an administrative approach used to control pollution by providing economic incentives for achieving efficient reductions in the emissions of pollutants. The European Union Emission Trading Scheme (or EU ETS) is the largest legally binding multi-national, greenhouse gas emissions trading scheme in the world and was created in conjunction with the Kyoto Protocol.
Our regulatory environment
Outokumpu’s main production operations in terms of energy consumption and carbon emissions are located in Europe. More than 90% of Outokumpu’s direct emissions fall under the CO2 Cap & Trade system. The European Emissions Trading Scheme places a direct financial cost on production emissions and the indirect costs of emission trading are reflected through higher electricity prices. These two elements raise Outokumpu’s marginal production costs in relation to our global competitors. The emissions trading scheme has also created an administrative burden for European companies. Outokumpu emphasizes the need for global regulation in efforts to transfer to the low-carbon society.