Kyoto emissions trading officially starts in 2008, but the European Union has decided that it can already commence from the beginning of 2005. This has meant a busy year during 2004 for Stora Enso in various countries where mills have been applying for emission permits and allowances.

Milestones in emissions trading

• 1997 EU CO₂ emission reduction targets set at country level
• 2004 Mill-specific allocations derived from National Allocation Plans in 25 EU member states
• 2005 Emissions trading starts in the EU on a trial basis
• 2008–2012 First Kyoto commitment period
• 2012– Post-Kyoto period

Emissions trading is a corporate issue

Even though the targets to reduce greenhouse gases are country-specific, and allowance allocations are mill-specific, Stora Enso aims to optimise emission reductions at Group level in order to reach the most cost-efficient solutions. Emissions trading is to be handled in practice as follows:

Mills are responsible for:

• applying for CO₂ permits and allowances;
• monitoring CO₂ emissions and reporting third-party-verified figures to the authorities;
• surrendering CO₂ allowances.

Stora Enso Energy Services and Stora Enso Financial Services are responsible for:

• monitoring country-specific balances for Stora Enso mills;
• handling national and/or international emissions trading;
• hedging of future emission allowances.

In practical terms this means that each mill “owns” its CO₂ emissions and allowances. Where a mill achieves a positive or negative balance, the first step is to trade with other Stora Enso mills in the same country, at prices defined in the emissions trading markets. Sometimes it may also be feasible to trade nationally with external parties. Trade over national borders is also possible, but could increase bureaucracy and costs.

Green trading based on bio-fuels

Due to the Group’s very high level of bio-fuel utilisation, Stora Enso has been able to engage in green electricity and certificate markets for three years. In 2004 altogether 18 European mills have been involved in such trading.