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Fortum calls for phase out of subsidies for biomass

Finnish utility Fortum has called for a clear EU-level sustainability criteria for biomass and a transition to a market-driven system in place of complex subsidy systems.

The state-run firm unveiled its views in its latest Energy Review series.

Fortum said the uncertainty regarding biomass-related regulatory policy has increased in the EU, which adds instability to the biomass markets and reduces the investment willingness.

The biggest policy risks impacting bioenergy are related to sustainability principles and financial subsidies, according to the utility firm.

Fortum is of the opinion that EU-level sustainability criteria are needed for solid biomass, criteria that are applicable to all bioenergy, regardless of its end use.

The use of biomass for energy should be on equal footing with other usage forms. The resource efficiency of biomass could be one of the sustainability criteria.

“We think that biomass use must be advanced in a market-driven way and the current subsidy systems should be phased out,” said Kari Kankaanpää, senior manager, Climate Affairs, Fortum.

He added: “The EU’s emissions trading scheme should steer investments in biomass-fuelled plants and fuel choice in existing plants.

“Support for bioenergy innovations and for research and development, particularly in the commercialisation of new bioenergy technologies, will continue to be needed in the future.”

Fortum is a significant user of biomass: last year 5.1 TWh (2.6 million m3) was used and its use will grow by 50% during the next couple of years.

Biomass accounts for one fourth of Fortum’s heating fuels in the EU area.

The new biofuel-fired combined heat and power (CHP) plant being built by Fortum and the city of Stockholm, in Värtan, will be commissioned in May.

The plant uses 2.4 TWh of fuel per year. It is one of the world’s biggest biomass-fired CHP plants, producing heat and electricity for about 190,000 households.