annual-and-sustainability-report-2014

Customer solutionsthat enable sustainableuse of energyEnsuresustainability inthe supply chainSafeguardthe company’sTransform theproduction portfoliotowards lowerCO 2 emissionsand morerenewablesIncreasefocus on otheremissionsProtect natureand speciesand safeguardbiodiversityImprove resourceefficiencyin Vattenfall’soperationsintegrityTakeresponsibilityEnsure afor Vattenfall‘shealthy andimpacts on localsafe workplaceOur employees communitiesSustainable consumptionSustainable financial performanceSustainable productionDevelopments during the year | Sustainable productionTransform the production portfolio towards lower CO 2-emittingsources and more renewablesVattenfall emitted 82.3 million tonnes of carbon dioxidein 2014. Reducing Vattenfall’s emissions will requirethat the production portfolio be transformed away fromfossil-based energy and towards more renewables-basedproduction. This transformation of the production portfoliois in line with the owner’s expectations for the companyand is an integrated part of Vattenfall’s strategy.How is Vattenfall working with this?The largest emissions come from production of electricity and heatfrom fossil fuels – mainly lignite, hard coal and natural gas, which todayaccount for just under half of Vattenfall’s production portfolio. Thework on transforming the production portfolio is being done in partby divesting fossil-based production and in part through growth andinvestments in renewable production.What will be decisive for achieving the target of a 65 milliontonne CO 2exposure by 2020 is to divest all or parts of Vattenfall’sfossil-based plants. This would lead to a reduction in Vattenfall’s CO 2exposure, but not necessarily in total emissions as long as the plantsremain in operation. Vattenfall’s CO 2target is based on emissions correspondingto the company’s ownership share in the power plants (i.e.,on a pro rata basis). This means that the sale of a share in a powerplant would result in a reduction in the company’s CO 2exposure by acorresponding degree.Vattenfall continues to focus on long-term profitable growth inrenewable energy, mainly wind power. Carrying out growth projectsin partnership with other companies or inviting external financiers aspart-owners in plants will enable a faster expansion of wind power forVattenfall. Read more about Vattenfall’s investment plan on page 20.The use of biomass as fuel as a replacement for coal requiressupport systems in order to be profitable – such systems are currentlylacking in Germany and the Netherlands. Vattenfall is investing tomodernise its plants and to replace coal with biomass where commerciallyfeasible.Activities during the yearVattenfall sold the following operations in 2014: the Amagerværketand Fynværket CHP power stations in Denmark, a minority shareholdingin Enea S.A. in Poland, and the CHP assets in Utrecht, the Netherlands.Vattenfall also announced that the company has decided to lookinto the opportunities of divesting its lignite operations in Germany.In May Vattenfall’s largest onshore wind farm in southern Sweden,Hjuleberg (36 MW), was inaugurated. In Germany the DanTysk offshorewind farm began generating electricity at the end of the year. Vattenfallalso decided to proceed with construction of the Sandbank (288 MW)StrategyTo be among the leaders in developing environmentally sustainableenergy production by reducing the company’s CO 2exposure and transforming the production portfolio towardsmore renewable production.TargetsReduce annual CO 2exposure to 65 million tonnes, read moreon pages 23Grow faster than the market in renewable production capacity,read more on page 23Achievements 2014Divestment which together reduced the Group’s CO 2exposureby approximately 3 MtonnesThe DanTysk (288 MW) offshore wind farm in Germany begangenerating electricity in December. The plant will be formallycommissioned in 2015Co-investment in four wind power projects with the insuranceand banking company SkandiaChallengesLow prices for CO 2emission allowances and falling coalprices encourage the use of solid fossil fuels over gas andbiomassFinding financing solutions which, despite a scaled-backinvestment framework, enable a high pace of growth ininvestments in wind poweroffshore wind farm, just west of DanTysk. Vattenfall and the insuranceand banking company Skandia decided to co-invest in four new windfarms in Sweden with combined capacity of 141 MW. This marksthe first time that a Swedish financial investor is directly financingconstruction of new wind power. The wind farms will be operated bya jointly owned company. The four wind farms are: Hjuleberg (36 MW),Höge Väg (38 MW), Juktan (29 MW) and Högabjär–Kärsås (38 MW).Planned activitiesIn order to reach the target of reducing the company’s CO 2exposureto 65 million tonnes and transform to more renewable production,Vattenfall has decided to look into the opportunities of divestingthe lignite operations in Germany. Vattenfall is also inviting in otherinvestors in an effort to maintain a high pace of growth in renewableelectricity generation, particularly in wind power.Vattenfall Annual and sustainability report 2014 35