Kumppanit-podcast: Näin kaukolämmöstä tulee hiilinegatiivista – vieraana Jukka Joronen

Thank you, thank you for those warm words.

Well, domestic energy production looks pretty good in my opinion. Of course, there are many types of energy. On the electricity system side, we've heard that emissions are already very low and decreasing all the time, so that looks okay. On the heating side, it's a similar situation. If I look at the different responsibility areas of an energy company, the different business operations that an energy company typically has—electricity transmission, electricity production and sales, heating, network contracting, and so on—each company naturally looks at which business it has a competitive advantage in, especially in carbon neutrality. In heating, companies like ours have quite a lot of angles to work with. City energy companies are doing a good job of reducing emissions in heating cities. The electricity system is in a very good place in Finland compared to other countries. So it looks good.

Well, the technologies themselves exist, and the direction is clear. The measures are quite extensive. Energy companies are able to act and are acting very actively in Finland on these issues. As I mentioned, each energy company identifies from its own operations where it can act. If it cannot act carbon-neutrally in some business area, it probably doesn't have a very long future there. It has to look at how to make that operation carbon neutral, and then look at how competitors are achieving carbon neutrality. Then it has to see whether its own company can do that carbon neutrality project better than competitors. If it can, then it strategically heads in that direction. There are many technologies, and when we talk about energy, we also talk about many energy production mixes. Things are always examined on an hourly basis. When considering whether there is a competitive advantage in moving toward carbon neutrality, we always look at the production mix and the momentary situation. At a concrete level, if we talk about removing a certain fuel, that can be sensible. For example, coal and peat are being phased out, and we've already reduced them a lot. But when we talk about net emission reductions, which are what matter, we're talking about the production mixes. At Tampereen Energia, we have different-priced production mixes made with different fuels and non-combustion methods. Then we look hour by hour at how the energy company can reduce emissions in each situation. But the overall picture is clear. When we calculate, for example, the emissions of heating the city, with existing investments and normal year optimization, we see that by 2027, fossil fuels will account for only a few percent of energy volume. So the big picture must be grasped. But then the specific measures and how energy companies can act—ultimately, it's about first ensuring investments are competitive, then making those investments, and then hour by hour optimizing how to utilize them and minimize fossil emissions. Often, with a broad production structure and many measures, the residual emissions are largely related to the power-heat question, which has been much discussed, and weather dependency. So the big picture must be in order first.

Yes, that's correct. The City of Tampere gave us a kind of liberating or broad mandate: 'Now do a study on how to achieve non-combustion heat production for heating the city.' That is our real responsibility—heating the city. The electricity system is a different, broader whole where measures are taken on a European and Nordic scale. But this heating is more regional, and local actors like the municipal council can influence it. They did a great job, in my opinion, and gave us this assignment. It gave us a strong backbone to open up our strategy and be transparent, which perhaps hasn't been done to that extent in energy companies before. This openness also helps us realize that many of our customers want to be part of this emission reduction project. It's very important for people to be involved. Through this openness, we've shared our strategies and explained how we aim for carbon neutrality through this centralized heating system. We also respond to the call for people to feel they can be part of this project without having to disconnect from district heating and build their own energy system. All Tampere residents, as citizens and taxpayers, own the heating system since it's a city-owned company.

Yes, yes. So we have three generic-level steps. First, we need to achieve low emissions, and we've already come a long way. Then carbon neutrality, and then carbon negativity. Low emissions involves reducing the use of peat, natural gas, and oil, and making certain investments to quickly eliminate the worst fuels. That included a waste-to-energy plant, a woodchip heating plant, switching from peat to biomass, and starting to utilize waste heat. In the carbon neutrality phase, when the base load is no longer fossil but renewable fuels, the next step is to find even more environmentally friendly options. That's where electric boilers and heat storage come in. Electric boilers are great for peak load because when there's wind, even in severe frost, you can use them to replace peak fuels. When combined with a district heating storage—which, by the way, is 40 times cheaper to store wind power in than in an electric battery—it's always worth doing these first because of scale advantages. So combining an industrial-scale electric boiler with a district heating storage allows us to capture wind power. This is already forming a biomass-wind-based heating system, which is certainly one of the most environmentally friendly concepts possible. This is happening in many cities across Finland. Then, if we think about the next steps, we are increasing the amount of electricity further, which reduces the need for biomass. There has been some fear about the growth of biomass use, but actually the peak demand for biomass in this type of use is already at hand. For us, the need is clearly decreasing. Biomass should be used where it's limited and not for electricity generation; it's better to replace fossil fuels in heat production. Then we come to the third step: carbon negativity. That involves the promise of carbon capture, which has been much discussed and is even in the government program. When we have point-source biogenic carbon dioxide sources, capturing that CO2 can truly make the city's heating system a net carbon sink. The forest takes CO2 from the air, we capture it at the power plant, and store it permanently. So the city's heating system acts as a major carbon-capturing system. There are many other technologies too. In district heating, compared to individual solutions, district heating is not a monopoly but competes with ground-source heat pumps. But it has certain advantages, including the possibility of carbon negativity and the scale benefits of heat energy storage and maintenance. These are large plants that can provide heat as a service. Then there's the waste heat aspect, which is also being added. The top three non-combustion methods are: the electric boiler, optimized hourly so you only use it when the wind blows; second, the significant strength of district heating in utilizing waste heat from production processes that are being built in the district heating network area—for example, the hydrogen economy. We have a very good joint project with Renas where they will produce hydrogen, combining hydrogen economy, low-emission transport, and city heating. When such a hydrogen facility is built in the network area, we get the waste heat, and the amount of waste heat can increase if these plants are sited smartly. These are the best non-combustion methods: hourly optimized electricity use and waste heat from carbon-negative processes. In addition to having a very low-emission, carbon-neutral heating system, the carbon handprint becomes quite significant.

The key challenges, I would say, are timing. Timing is the most important thing. In some climate issues, it's been noticed that those who were early—I came to Tampereen Sähkölaitos in 2003, when emissions trading had just started—at that time, you could see that the price of emission allowances needed to be very high to achieve the goals. You might think that if you start buying them immediately, you win the most. But actually, in the early 2000s, all proactive players got their fingers burned. Finland had significant wind power production then, but it was too early; the time wasn't ripe yet. On the other hand, you can't be too late either. If we wait for some epoch-making physics discovery—like fusion—to solve everything, it won't come. Then you might find that others are making investments little by little, and suddenly the operating environment changes so much that certain things look very expensive now, but a couple of years later, the environment drives you to realize that this is actually good. So it requires a certain courage and good timing. Other challenges: if we talk about the hydrogen economy, it's quite complex; you have to run many contracts simultaneously. Immaturity is also a factor. But my view is that technology exists; it doesn't require anything too speculative. In our plans, we've tried to avoid overly speculative technologies and use those that exist, even if they aren't yet scaled. We don't know what will happen when we really ramp up production, but technological development will certainly occur. Perhaps the challenges are more about complexity, requiring a good team, good cooperation, courage, and timing. Not so much technological development itself; you shouldn't rely too much on that. Now, with the energy crisis, the need to get rid of Russian fuels, and the Paris Agreement limits looming, stakeholders are no longer interested in visions but in what can actually be done concretely.

Yes, yes, that's a very good point. It's actually quite an exciting situation. When you think about CHP production—traditional Finnish combined heat and power, which has excellent efficiency and centrally heated cities while also producing electricity—at Tampere, we used to produce equal amounts of electricity and heat, about two terawatt-hours each. Nowadays, our electricity production has dropped a lot from that old technology. But that was the strength in a certain sense: we have a very good platform to which we can now attach new technology. The district heating network makes it easier to switch fuel, for example from natural gas to waste heat or biomass, compared to Europe where every house has a gas pipe—it's harder to feed something else in. But with water as the medium, it's easy to make big centralized changes; it's a fast route to climate-friendly heating. So that's the foundation. Now that we no longer have the traditional power plants that produce both electricity and heat, I see the hydrogen economy as a future CHP. When these actors come and we have discussions, one thing is the waste heat from hydrogen production—half is heat, half is hydrogen. I see a parallel: future CHP could be hydrogen production plants that, instead of producing electricity and heat, produce hydrogen and heat. With careful planning, these plants could be the future CHP, and we already see the first steps in our network.

Well, it requires carbon capture. That's the future thing. That's how it's achieved. There are two types: carbon capture for storage, which creates negative emissions by actually removing CO2, or CCU, where it's captured and utilized to replace fossil fuels, for example in transport. But that doesn't create negative emissions. CCS technology exists; it just needs a functioning regulation, a business model, and a suitable operating environment. The reason we dare to talk about this as realistic is precisely the operating environment. If we look at IPCC scenarios, all scenarios clearly require that we also technically remove CO2 from the atmosphere. When we start removing CO2 from the atmosphere, the technologies are quite limited at this stage. Again, I emphasize not to talk about anything too speculative. What is currently available and what we can base our plans on includes DAC (Direct Air Capture), BECCS, and biochar, among others. BECCS (Bioenergy with Carbon Capture and Storage) is currently the most affordable of the known options. When we consider the quantities, all these technologies are needed, that's clear. But BECCS is among the most competitive. Unless some completely new, amazing invention comes along, that won't change. And if we have to do it according to the IPCC—we must eventually start removing CO2 from the atmosphere to meet the limits—then the operating environment will rise to a level that makes this possible. There will be certain prices, subsidies, and conditions that make the equation work. I can't say how, but one way or another, the environment will gradually change so that it becomes sensible, if it is necessary and the most cost-effective way. And if we're going in that direction, which country would be sensible for utilizing bioenergy in carbon capture? It would be a country like Finland, with lots of forest industry, forests, few people, and many district heating networks that steadily operate through cold winters. So if it happens anywhere, it will happen in Finland. That's why we perhaps dare to present these visions quite boldly in our strategy.

Yes, yes. Well, I would very much hope for things related to the E-number calculation and the recognition of district heating. The EU wants district heating a lot—at least in discussions, it's very popular—but not all regulation supports it. They don't recognize that if you make centralized heating solutions that are environmentally positive, it's still better than disconnecting from district heating and doing it in a single building. I would hope they truly understand the strength of the district heating system, especially in a cold country like Finland. It's the fastest way to achieve climate-friendly heating. The second thing I would hope from the EU is that the utilization of bioenergy in the BECCS world would also be included. They are currently working strongly on the regulation of negative emissions, and I hope it will be high-quality and enable these projects. The market seems to have demand; the signal is such that it doesn't necessarily require direct feed-in tariffs or something to force projects through, but it does require clarity, long-term consistency, and predictability in the regulatory environment. And when we start, we have customers for those CO2 removals, and we have the plant existing, so there won't be surprises.

No, nothing else really, except that net emissions are what matter. When making plans and considering your own heating solutions or whatever, make sure you don't outsource emissions by drawing a balance sheet boundary around yourself and then outsourcing emissions to, say, a peak-load natural gas plant somewhere. Net emissions are what count. When net emissions are reduced, district heating is a solution, not a problem.

Well, my innovations are quite related to how I've managed to push something forward, bring it to a conclusion, and achieve consensus. If we talk about carbon neutrality innovations, my innovations probably involve thinking about what kind of cooperation models, terms, and contracts we use to carry out projects. There have been a few quite good ones, and we've moved forward. They've given me the feeling that I've done something that significantly advances this work.

Thank you, thank you.