HELSINKI (Reuters) - Finland’s top utility Fortum on Thursday said the European Union’s emissions trading system was having an impact in reducing the use of coal for power as the company reported fourth-quarter profit that beat forecasts on higher hydro volumes.
Fortum’s chief executive Pekka Lundmark said the European Union’s emissions trading system ETS was now “clearly delivering” and welcomed its role as a key element in the new EU commission’s Green Deal.
“The use of coal for power declined in Europe by slightly over 20% last year and this is to a very large extent thanks to the EPS system,” he told a conference call, adding that over the long term also gas would need to become green.
Ursula von der Leyen, the new president of the European Union’s executive Commission, laid out the details of her “European Green Deal” in January, promising to reform also the emissions trading system that taxes industries.
Fortum, which has been trying to gain control of its German rival Uniper for two years, reiteraited its target to close the transaction by the end this quarter.
Lundmark said discussions with Uniper’s new management had been constructive and welcomed Uniper’s recent decision to shut down its hard-coal-fired power plants in Germany over the next five years.
“As long as coal has to be used for security of supply in Germany..., we share Uniper’s view that it makes sense to use it,” Lundmark said, referring to Uniper’s newest and most modern coal-burning units.
In November, Fortum received approval from Russian authorities to close the Uniper transaction, subject to certain conditions.
“The clarification of these conditions is somewhat delayed, due to the recent change of the Russian government,” Fortum said in a statement.
Fortum’s fourth-quarter comparable operating profit rose 20% from a year earlier to 398 million euros ($438 million), above the 357.3 million expected by analysts in a poll provided by the company and driven by higher hydro volumes.
The company also said it would initiate a strategic review to assess possible divestment of its district heating and cooling businesses in Poland, Estonia, Lithuania,Latvia, and Järvenpää in Finland.
“Market conditions are very favourable to obtaining high pricing as the outlook is stable even if the return on capital is not that high,” Inderes’ analyst Juha Kinnunen said in a video comment.
A similar announcement in June to assess its district heating and cooling business in Estonia and in Joensuu, Finland, concluded in the divestment of the Joensuu operations in January for some 530 million euros.
Reporting by Anne Kauranen; editing by Alex Richardson/Jason Neely/Jane Merriman