UPM annual report 2015

IN BRIEF

STRATEGY

BUSINESSES

STAKEHOLDERS

GOVERNANCE

ACCOUNTS

Reusing waste is part of circular economy

Increasing renewable energy production at Shotton “Prior to the closure of a paper machine, all of the excess low pressure steam generated as a by-product of electrical power generation was used as heat in UPM’s paper mill. We can no longer use all of this steam, which consequently is cooled and vented to the atmosphere. The new condensing turbine power plant will use this excess steam and generate electrical power,” says mill manager David Ingham from Shotton in the UK. The new plant will generate approximately 4.8 MW of renewable energy from waste steam. Thanks to the condensing turbine, the share of biomass energy production will increase to 70% from 56%. The condensing turbine will reduce the mill’s carbon footprint by approximately 27% and at the same time improve the mill’s cost efficiency. The new plant will be producing power by early 2017 at the latest. “In addition to the new condensing turbine, we are executing a plan for further energy efficiency improvements within our existing paper mill operations. We have kept the most energy efficient assets in operation but have also developed the availability of our power plant boiler and improved the quality of the waste biomass that feeds the boiler,” says Ingham.

Reducing the amount of solid waste and increasing reuse are important targets at all UPMmills. To us, yesterday’s waste is the valuable rawmaterial of tomorrow. Nearly all organic production residues, includ- ing bark and wood residues, as well as fibre-con- taining solids from deinking and effluent treat- ment, are used in energy generation at mill sites. Today, over 90% of UPM’s production waste is recovered and recycled. Ash resulting from bioenergy production forms the most significant proportion of UPM’s solid waste. Ash is used on a large scale in applications ranging from landscaping to road building. UPMhas developed innovative ways to reduce its own waste and residues and reuse waste in new products. Good examples of the company’s efforts in pro- moting circular economy: • UPM is the world’s largest user of recovered paper for the production of graphic papers, consuming 3.1 million tonnes of recovered paper in 2015. • The share of recycled fibre represents one third of all fibre rawmaterials used in UPM’s paper production. • UPM’s renewable diesel, UPMBioVerno, is produced from crude tall oil, a residue of pulp production. • Most Central European paper mills no longer send any solid waste to landfill. During 2015, UPM focused on utilising and reusing production side streams in amore efficient way. UPMupdated its waste target in 2015. The previous target of a 40% decrease in the amount of solid waste sent to landfill by 2020 proceeded as planned. According to the new target, no process solid waste will be sent to landfill by 2030.

Climate actions and energy efficiency

Sustainable forestry • We ensure that our most important raw material, 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 function as carbon sinks • 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 67% of the fuels used by UPM. UPM is the second largest generator of biomass-based electricity in Europe. In 2015, UPM continued to develop the utilisation of forest energy in collaboration with its partners. Paper and pulp mills, which use power and heat in their production processes, represent the majority of UPM’s total energy consump- tion. 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 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 hydro- power, the most effective and sustain- able method of producing balancing power. UPM strives to continuously improve its energy efficiency across all its operations. During the last 20 years, the energy efficiency of production has significantly improved due to energy audits, innovations and internal cam- paigns. The electricity consumption per tonne of paper has decreased by 17% over the past 10 years. From its energy- saving investments carried out in 2015, UPM gained savings of EUR 1.2 million, achieved 8,100 t avoidance in CO 2 emis- sions and a 32,000MWh reduction in energy consumption. The annual sav- ings are EUR 1.7 million, 13,000 t and 51,000MWh. In 2015, UPMwas listed on the CDP Nordic Disclosure Leadership Index (CDLI) for the seventh time in a row with the score A-99. UPMupdated its climate targets in 2015. Regarding the previous target of a 15% reduction in fossil carbon dioxide emissions by 2020, the development was not in line with target in 2015. The new target is to achieve a 30% reduction in CO 2 emissions at UPMproduction plants and in the production of pur- chased electricity and a 20% reduction in acidifying combustion gases at UPM production plants by 2030.

capacity to generate power through own power plants and shareholdings

Nominal MW

708 581 191

Hydropower Nuclear power

The goal of international climate policy is to keep the global average temperature rise at a level that does not threaten mankind. Achieving the goal requires significant reduc- tions in emissions across the globe. Develop- ing means for adapting and preparing for climate change is also necessary. UPMpartici- pated in preparing industry views for the Paris climate change conference in 2015. UPM’s Biofore strategy meets the chal- lenge set by climate change on many levels:

Condensing power UPM Energy in total Mill site combined heat and power (CHP) Mill site hydropower

1,480

1,473

Read more: www.upm.com/responsibility, www.upmbiofore.com

49

Mill site power generation in total

1,522 3,002

Total UPM

ELECTRICITY generation THROUGH OWN POWER PLANTS AND SHAREHOLDINGS

TWh

2015

2014

Mill CHP

5.9 3.9 4.7 0.4

5.6 3.2 4.8 0.8

UPM's acidifying flue gases 1,000 t

5 UPM’s fossil carbon dioxide emissions mio t CO 2 /a mio t 15

Hydropower Nuclear power

mio t

UPM’s total waste to landfills 1,000 t

Condensing power

20

20

Total

14.9

14.4

16

16

12

4

250

12

12

9

3

200

fuels used for heat generation TWh 2015

8

8

6

2

150

2014

Black liquor

17.6 18.5

4

4

3

1

100

Bark and other biomass Heat recovered from TMP production Renewable fuels total

8.5

8.5

0

0

0

0

50

15 14 13 12 11 10 09 08 07 06

15 14 13 12 11 10 09 08 07 06

1.4

1.3

■ Total emission

■ Total NOx ■ Total SO 2 Paper production Chemical pulp production

0

27.5

28.3

15 14 13 12 11 10 09 08 07 06

Paper production Chemical pulp production

Peat

1.1 0.7 8.3 0.6 3.0

1.2 0.5 8.0 0.7 3.6

Purchased heat

The total amount of solid waste sent to landfill has decreased over the last ten years by 50%. However, from 2012 to 2013 the total amount of waste sent to landfill increased significantly. This is due to the fact that former reuse possibilities for ash ceased at one of UPM’s paper mills. Starting from 2014, new methods of recycling were established, with further options for recycling still being investigated.

Natural gas

In 2015, reduction was achieved mainly due to investment in flue gas purification at UPM Changshu paper mill. Increases in total volumes are due to acquisitions (in 2010 and 2011).

Biomass-based fuels account for 67% of the fuels used by UPM.

Oil

Coal Total

41.2

42.2

contents

59

60

UPM Annual Report 2015

UPM Annual Report 2015