UPM Annual Report 2016

Stakeholders

In brief

Strategy

Businesses

Governance

Accounts

SOLAR SUCCESS FOR UPM SHOTTON The construction of the UK’s largest solar park at Shotwick, Cheshire, adjacent to the UPM Shotton paper mill, has brought yet another opportunity for UPM to deliver on its 2030 renewable energy target to reduce fossil CO 2 emissions by 30%. Solar power is a highly efficient method of energy production with zero moving parts, meaning maintenance is kept to a minimum. Using the latest in both photo-voltaic panels and cutting edge conversion technology, the plant can produce on average 65 MWh/year. A direct link to UPM Shotton’s own infrastructure means that the paper mill can operate on 100% renewable energy during daylight hours. The start-up of its second steam turbine, utilising excess steam from its biomass combined heat power plant (CHP), in December 2016, means the mill will be on track to meet its own energy efficiency targets and significantly contribute to UPM Group’s 2030 responsibility targets. UPM Shotton’s transition to 100% renewable energy started in 2006 with the start-up of its CHP. With a focus on energy efficiency, the mill has continued to reduce its use of fossil fuels from the national grid. The solar park development means it will reduce its purchase of power to almost half.

Read more: www.upm.com/responsibility

Climate actions and energy efficiency

CAPACITY TO GENERATE POWER THROUGH OWN POWER PLANTS AND SHAREHOLDINGS

69%

TARGETS 2030

Renewable fuels share

Nominal MW

The goal of international climate policy is to keep the global average temperature rise at a level that does not threaten nature and society. Achieving the goal requires significant reductions in emissions across the globe. Developing means for adapting and preparing for climate change is also necessary. UPM’s Biofore strategy meets the challenge set by climate change on many levels: Sustainable forestry • We ensure that our most important rawmaterial, wood, grows in forests that are sustainably managed and act as carbon sinks • We promote biodiverse ecosystems that are less vulnerable to the impacts of climate change Responsible production • We promote resource efficiency by making more with less • We utilise the best available techniques (BAT) in our production • We continuously increase the share of renewable and low-emission energy in our operations Renewable and recyclable products • We replace non-renewable materials with renewable materials, and our products store carbon • We innovate new business and products for future needs UPM’s energy production is based on versatile energy sources UPM is a significant energy producer. The company favours the use of renewable and other carbon-neutral energy sources and the use of natural gas. Biomass-based fuels account for 69% (67%) of the fuels used. UPM is the second-largest generator of biomass-based electricity in Europe. Paper and pulp mills, which use power and heat in their production processes, represent the majority of UPM’s total energy consumption.

Most of the energy is consumed in the manufacture of mechanical pulp, pumping and paper drying. At all pulp and almost all paper mills, steam and electricity are generated simultaneously by combined heat and power (CHP) plants. At some mills, all or some of the energy is produced by external and co-owned power plant companies. As the use of weather-dependent energy sources increases, the need for balancing power in energy systems will also grow. UPM is investing in hydropower, the most effective and sustainable method of producing balancing power. The new unit of the Harjavalta hydropower plant was completed in September. The project provides new possibilities for managing the water flow rate in the Kokemäenjoki and, as a result, decreases the risk of flooding. As part of the renovation project, facilities for a fish hatchery have been built at the power plant. Hatcheries play an important role in maintaining the populations of migratory fish species in rivers with man-made structures. UPM strives to continuously improve energy efficiency across all its operations. For this purpose, UPMhas set a new continuous target to improve energy efficiency by 1% annually. During the last 20 years, energy efficiency in production has significantly improved due to energy audits, innovations and internal campaigns. Electricity consumption per tonne of paper has decreased by 14% over the past 10 years. As a result of the energy-saving actions carried out in 2016, UPM reduced its energy costs by EUR 1.9 (1.2) million, avoided 18,000 (8,100) tonnes of CO 2 emissions and achieved a 49,000 (32,000) MWh reduction in energy consumption. The annual savings were EUR 2.0 (1.7) million, 17,300 (13,000) t CO 2 and 92,000 (51,000) MWh. In October 2016, UPMwas included in the CDP Climate A List. UPMhas featured in the CDP Climate Index for eight consecutive years as a result of its climate actions and transparent climate reporting.

Hydropower Nuclear power

722 581 191

Condensing power UPM Energy in total

1,494 1,415

UPM’s fossil carbon dioxide emissions

Mill site combined heat and power (CHP)

mio t CO 2

/a

mio t

Mill site hydropower

49

8

16

Mill site power generation in total

1,464 2,958

6

12

Total UPM

In 2016, on-site CO 2 emissions (Scope 1) decreased mainly because of change in energy supply at UPM Hürth mill. CO 2 of purchased electricity (Scope 2) increased mainly due to higher CO 2 factors in Germany and Finland.

4

8

ELECTRICITY GENERATION THROUGH OWN POWER PLANTS AND SHAREHOLDINGS TWh

2

4

2016 2015

0

0

07

10 09 08

11 12 13 14 15 16

Mill CHP

6.1 3.6 4.7 0.5

5.9 3.9 4.7 0.4

■ CO ■ CO

2 from purchased electricity 2 from on-site energy generation

Hydropower Nuclear power

Paper production Chemical pulp production

Condensing power

Total

14.9 14.9

UPM’s acidifying flue gases

FUELS USED FOR HEAT GENERATION TWh

1,000 t

mio t

20

20

2016 2015 19.7 17.6

16

16

Black liquor

Bark and other biomass

9.1 1.3

8.5 1.4

12

12

In 2015, reduction was achieved mainly due to investment in flue gas purification at UPM Changshu paper mill. In 2016, increase of NOx was mainly due to the production increase of chemical pulp.

Heat recovered from TMP production

8

8

Renewable fuels total

30.1 27.5

4

4

Peat

1.0 1.0 8.1 0.6 3.4

1.1 0.7 8.3 0.6 3.0

0

0

Purchased heat

07

10 09 08

11 12 13 14 15 16

Natural gas

■ Total SO 2 ■ Total NO X Paper production Chemical pulp production

Oil

24%

Coal Total

TARGETS 2030

Reduction in acidifying flue gases since 2008

44.2 41.2

CONTENTS

66

67

UPM Annual Report 2016

UPM Annual Report 2016