Steelmaking and rolling processes are energy intensive. Achieving the highest possible level of energy efficiency is very important for Outokumpu. Our aim is to minimize total energy usage from a life-cycle point of view and reduce the direct environmental impact. We recognize the need for energy to be used efficiently. In addition to world class energy efficiency, we also aim to minimize the Group's effect on climate change.
Energy and climate change
Outokumpu's production sites use a range of energy sources, such as natural gas, propane, heavy fuel oil and electricity. Outokumpu's approach to energy efficiency is long term, and the target is a continuous improvement of a 1% reduction yearly. Energy efficiency is part of the management systems at all production sites. 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. In 2017, we further improved our energy efficiency by 2% from the previous year, corresponding to a saving of about 1.1 million MWh.
Outokumpu participates in low-carbon energy programs in nuclear power, wind power, hydropower, combined heat and power and LNG mainly in Finland but also in Norway and in Germany. In 2017, 60% 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 14% by 2023 compared to the baseline of 2014–2016.
In 2017, we maintained our CO2 intensity at the level of the baseline. See all climate change related figures. More information on the climate change and our results is also available in our latest annual report.
Before following the Science Based Target, Outokumpu set an ambitious low carbon program in 2010 to reduce our carbon profile (including electricity and transport) by 20% by 2020. In 2017, we reached this target three years ahead of schedule. Outokumpu contributes to climate protection with a specific target to reduce its carbon footprint by a further 20% from the 2007-2009 baseline by 2020.
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.