Fortum: The ETS requires an allowance supply adjustment mechanism

PRESS RELEASE 25 June 2013

Both immediate actions and longer-term adjustments are required to allow better functioning of the European carbon market and the emissions trading scheme, ETS. Early July, the European Parliament should approve the backloading proposal in order to postpone 900 million allowances from entering the market. This should be followed by a structural reform of the ETS, where an allowance supply adjustment mechanism should be introduced.

In the current EU ETS set-up the supply of allowances is inflexible and does not react to demand or any other developments. An allowance supply adjustment mechanism, ASAM, would automatically, based on pre-determined rules, adjust the supply of allowances in cases of significant deviations in the economic development. According to a recent study by the consulting company Pöyry on Fortum's assignment, ASAM's benefit is, in particular, that it does not require separate political interventions. In addition to adopting ASAM, the European carbon market must be strengthened by setting a demanding CO2 target for 2030 as soon as possible.

"The ETS must deliver a clear carbon price signal for the huge investments needed for decarbonisation of the society. We welcomed the favourable voting result in the ENVI Committee on backloading last week and encourage the Members of the Parliament to vote in favour of the legislation in the upcoming plenary," urged Markus Rauramo, Fortum's CFO at the European Business Leaders' debate in the European Parliament on 25 June 2013.

Fortum is highly committed to climate change mitigation and supports emissions trading as the main climate policy instrument in Europe. Emissions trading promotes the competitiveness of low-carbon energy production and technologies, while enabling climate goals to be reached at the lowest cost. The Commission has proposed the backloading of 900 million allowances to be auctioned in 2013-2015 until 2019-2020.

Fortum Corporation
Corporate Communication

Further information:
Esa Hyvärinen, Vice President, Corporate Relations, Fortum, tel. +358 40 82 62646
Johan Linnarsson, Advisor, Long-Term Market Analysis, Fortum, tel. +46 70 99 55884

Fortum
Fortum's purpose is to create energy that improves life for present and future generations. We provide sustainable solutions that fulfil the needs for low emissions, resource efficiency and energy security, and deliver excellent value to our shareholders. Our activities cover the generation, distribution and sales of electricity and heat as well as related expert services.

Fortum's operations focus on the Nordic countries, Russia, Poland and the Baltics. In the future, the integrating European and fast-growing Asian energy markets provide additional growth opportunities. In 2012, Fortum’s sales totalled EUR 6.2 billion and comparable operating profit was EUR 1.7 billion. We employ approximately 10,400 people. Fortum’s shares are quoted on NASDAQ OMX Helsinki.