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Unaudited

Carbon dioxide

Opportunities and challenges

The use of renewable materials enables us to contribute to the development of a low-carbon economy. Trees in sustainably managed forests absorb carbon dioxide (CO2) from the atmosphere, and together with wood-based products act as carbon sinks. Stora Enso’s products help customers and society at large to reduce CO2 emissions by providing low-carbon alternatives to solutions based on fossil fuels and other non-renewable materials.

The first truly global climate agreement was approved at the Paris Climate Conference (COP21) in December 2015, and entered into force in November 2016. Stora Enso welcomes this agreement as an important milestone in sustainable global development.

The EU’s Emissions Trading System (ETS) is the biggest mandatory international system for trading greenhouse gas emission allowances, and a major element of the EU’s efforts to combat global warming. The ETS grants “carbon leakage” status to industries where it is considered that costs related to climate policies might cause businesses to transfer production to countries with less demanding requirements to reduce greenhouse gas emissions. The forest industry currently has carbon leakage status for the period 2015–2019. Plans for the period beyond 2020 are under consideration within the EU, with possible implications for the forest industry.

Our policies

During 2016 Stora Enso finalised a carbon strategy and continued to work on related policies. It is the group’s firm intention to drive down its fossil fuel use even more over the next ten years, so that it gets as close to zero as possible using technically and commercially feasible means. Relevant policies steering the group’s efforts to combat global warming include the Statement on Climate Change, and Supplier Code of Conduct and Practical Guide for Suppliers, which give guidance on how CO2 emissions can be reduced in the supply chain.

How we work

The most effective ways to reduce Stora Enso’s direct fossil CO2 emissions are to further improve the group’s energy efficiency, and to keep increasing the usage of biomass fuels. Significant investments in previous years, particularly in multi-fuel boilers, successfully generated large reductions in the group’s fossil CO2 intensity.

A new key performance indicator (KPI) focusing on the carbon intensity of the energy used by all Stora Enso’s production units was launched in 2016. Starting from 2017 Stora Enso will measure its progress based on fossil CO2 emissions (kg) in relation to energy consumption (MWh).

Stora Enso evaluates risks and opportunities related to global warming through the annual Enterprise Risk Management (ERM) process, which forms an integral part of the group’s management approach. Stora Enso also routinely calculates the financial impacts of potential cost increases in relation to emission allowances, including the financial impacts on the business of possible consequent increases in energy prices.

Stora Enso’s production units systematically work to meet their environmental regulatory requirements and to improve their energy efficiency. Their work is supported by international third-party-certified systems such as the environmental management standard ISO 14001 and the energy management standard ISO 50001.

Stora Enso’s board, pulp, and paper mills report quarterly on their direct and indirect carbon emissions, while sawmills and converting facilities report their carbon emissions annually (scopes 1 and 2 as defined by the Greenhouse Gas Protocol of the World Resource Institute and the World Business Council for Sustainable Development). A group-level estimate for other indirect emissions along the value chain (scope 3) is updated biannually. In 2016 Stora Enso continued to have its direct and indirect fossil CO2 emissions (scopes 1 and 2) externally assured to a Reasonable Level, as one of the few companies in the world to do so.

Progress

Since 2007, Stora Enso’s target has been to reduce its fossil CO2 emissions per saleable tonne of board, pulp, and paper by 35% from 2006 levels by the end of 2025. This target is periodically adjusted to take into account the changing shape of the company. This CO2 intensity target covers both emissions generated directly by Stora Enso’s own facilities (scope 1), and indirect emissions produced during the generation of purchased electricity and heat (scope 2).

In 2016 Stora Enso’s CO2 emissions per saleable tonne of board, pulp, and paper were 39% lower than the 2006 benchmark level (38% lower in 2015). The target was reached, but the group’s CO2 intensity will in the future be adversely affected by the use of coal for energy production at Beihai Mill in China. Stora Enso has begun to investigate long-term options to gradually move away from coal to biomass and other non-fossil fuels.

During 2016 the group’s fossil CO2 emissions per saleable tonne were reduced by applying more accurate CO2 factors for energy suppliers, and due to the closure of Suzhou paper mill in China, and the divestment of Kabel paper mill in Germany. The updated, more accurate market-based CO2 factor and grid energy-mix information obtained from the authorities for electricity purchased in Finland also reduced the emissions figure for 2015, by approximately 0.25 million tonnes. The total direct and indirect fossil CO2 emissions from Stora Enso’s board, pulp, and paper mills amounted to 3.08 million tonnes in 2016 (3.03 million tonnes). Direct fossil CO2 emissions decreased both in absolute terms and per unit of sales production. Direct fossil CO2 emissions per unit of sales production were 12% lower than in 2006.

Carbon neutral CO2 emissions are fossil-free emissions generated during the combustion of biomass-based fuels coming from sustainably managed forests1. Stora Enso’s operations utilise renewable biomass-based fuels to a large extent, so the share of carbon neutral CO2 emissions in Stora Enso’s total emissions is high. In 2016 80% (79%) of the total CO2 emissions from Stora Enso’s own operations were carbon neutral.

Direct emissions from Stora Enso’s operations account for 23% (21% in 2015) of the group’s carbon footprint, while emissions related to the electricity and heat Stora Enso purchases for use in its operations account for 9% (15%) of the total carbon emissions. The majority of the emissions in the group’s carbon footprint – 68% (64%) – are according to the group’s estimates generated elsewhere along the value chain: in the sourcing and manufacturing of raw materials and services (41% of the total scope 3 emissions); in the further processing of products by customers (34%); and in the transportation of raw materials to the mills and the final products to the customers (25%).

In 2016, CDP (formerly known as the Carbon Disclosure Project) included Stora Enso on its Climate A List and Supplier Climate A List, in recognition of the company’s long-term actions and strategy to reduce emissions. Stora Enso was also the only Nordic company to be included in CDP's Supplier Engagement Leaderboard for driving change in its supply chain.

1 Recommendations on Biomass Carbon Neutrality, WBCSD 2015.

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