Fortum withdraws from biomass buyers group

Sept. 23, 2011, London, UK – Finnish
utility Fortum has withdrawn its membership from the Industrial Wood Pellet
Buyers (IWPB) group because of its position on the way forward for biomass
sustainability. The IWPB, consisting of Denmark's Dong Energy, the UK's Drax,
Belgium's Electrabel, German utilities Eon and RWE, and Sweden's Vattenfall,
have spent the past 18 months creating a standard biomass trading agreement.
During this process, the group has worked towards standardizing industrial wood
pellets, with a focus on specifications, trading terms, and sustainability.

The IWPB, along with the European Biomass
Association and the vast majority of member states, want the European Union to
introduce binding sustainability criteria, but Finland has reservations about
an EU-wide directive. The previous EU report, in February 2010, said that there
was no need for EU-wide binding criteria and encouraged countries to introduce
their own guidelines according to recommendations made by the EU.

Fortum already adopts stringent
sustainability guidelines and told Argus and the IWPB it had to withdraw
because of differences on sustainability. “Even though we are working towards
the same goal, to facilitate trade between producers, traders, and utilities
through uniform contracting and to apply common sustainability principles, we
have felt that our way of working differs from the other members of IWPB,”
Fortum head of biomass trading Kjell Nilsson said. “By leaving IWPB, we
facilitate for other members to continue the work in a more efficient way.”

Wider arguments against binding criteria
relate to the cost of implementing such a scheme. The EU also took the view
that existing EU environmental legislation adequately covers sustainability of
forestry and agricultural production while attempting to avoid hindering
development of biomass with a so-called unnecessary administrative burden.

Those in favour of binding criteria say
that without it, the market will prove unstable and fragmented and create an
uneven playing field with contrasting policy through Europe. But Fortum, among
others, says it already has adequate measures under the current policy.

“When it comes to sustainability, Fortum
insists that all type of biomass, solid as well as liquid and gaseous, shall be
ecologically, socially, and economically sustainable when it is used in energy
applications,” said Nilsson. “Fortum shows its seriousness for the subject, for
example, by being an active participant in WWF Global Forest and Trade
Network.”