Sustainability Report 2020 Highlights in 2020
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Preem Progress book Preem’s role in the sustainable transition Sustainability Report 2020 Highlights in 2020 Highlights in 2020 Heavy investment in renewable fuels Preem aspires to be the world’s first climate-neutral petroleum and biofuel company. Our goal is to have net zero emissions at our production facilities by 2040 and create a climate-neutral value chain by 2045. To achieve this, investment and new thinking are required. Here is a selection of the most significant events during the year. New plant for Our sustainability pyrolysis oil framework The construction of a new plant in Gävle began during Arranging our essential sustain- the year, which will produce renewable pyrolysis oil from ability issues into a sustain ability sawdust. In Piteå, a plant for the production of tall oil was framework, facilitates the commu- completed. These plants are examples of how we are nication and management of our increasing the production of renewable fuels, in order to sustainability work. The framework achieve the goals of net zero emissions at our own facilities consists of seven focus areas, all of in 2040 and in our entire value chain before 2045. which are described in a separate section in our Sustainability p. 4 Report. p. 17 Contents Challenges during 4 Message from the CEO the pandemic 6 About Preem During the COVID-19 pandemic, Preem has 8 Value chain balanced its responsibility to ensure that we 10 External trends can safely produce the fuels that society 14 Vision and strategies needs, while at the same time ensuring safe 15 Materiality analysis workplaces and fuel stations for customers 17 Sustainability framework and employees. Stable economy 18 The UN Global Goals p. 12 20 Stable economy To be able to meet society’s 23 Climate demand for sustainable fuels 30 Environment and achieve our climate goals, 32 Sustainable value chain we require green investments. 36 Sustainable products p. 20 39 People and safety 42 Responsible business 45 Governance and control SEK 48 Risk management 50 Sustainability notes million 55 Contact and address 477 total investments in reducing climate impact 2. Preem 2020 Highlights in 2020 Pilot facility for carbon capture A large pilot plant for the capture of CO2 from flue gases has been put into operation in Lysekil. By capturing and storing CO2, we can reduce emissions to the atmosphere and act as a carbon sink. p. 28 The plan is to have a full-scale CCS facility in operation in 2025. Rapidly increased production through co-processing Co-processing of crude oil and renewable raw materials is a way of utilizing existing facilities and rapidly increasing the production of renewables. In the SynSat plant at the Lysekil refinery, up to 5 percent rapeseed oil is being co-processed with crude oil in a first test step. Residual products become biofuels p. 29 Preem uses residues such as crude tall oil from the forest industry and animal fats from the food industry. We have also started using rapeseed oil from the agricultural industry. The products produced at our refinery in Gothenburg have a 3 CO reduction of over 90 percent, compared to fossil fuels. 5 million m 2 of renewable fuels by 2030 p. 38 An important societal actor With Sweden’s two largest production units for fuel and energy, Preem has an important role to play in society. Our products and deliveries ensure that vital functions remain in Sweden. We are also an important part of Sweden’s crisis preparedness and defense. p. 43 3. Preem 2020 Message from the CEO Message from the CEO A challenging year with many positives The year 2020 was unlike any other. There is much to suggest that it is a year that will remain in our memories for a long time. The year was characterized by significant challenges and sacrifices – but also developments and exciting opportunities. I could not have had a more exciting start as the new CEO at Preem. e began 2020 after implementing Preem’s largest During the permit process, the basis for the project had dras- maintenance shutdown ever at the Lysekil refinery. tically weakened and after assessing the project’s profitability The stop meant that in addition to maintenance and technical feasibility, Preem’s board decided at the end of Wand mandatory inspections, we could prepare the plant for September to withdraw the environmental application. renewable production. This meant that in November 2020, for the first time, we were able to convert renewable raw materials Investments in large-scale renewable production into diesel at our refinery at Lysekil. In order to establish the large-scale production of renewable fuels at the Lysekil refinery, during the autumn we applied for Turbulent world with price wars and the pandemic a change in the refinery’s environmental permit for a revamp At the beginning of the year, we saw significant turbulence of the existing so-called Synsat plant, which today produces in the commodity markets with falling crude oil prices, and in environmental class 1 diesel. The revamp, which will enable us March came one of the biggest price declines in decades. The to produce up to 950,000 cubic meters of renewable fuels, is reason was largely a global overproduction of oil when Saudi estimated to reduce climate emissions by up to 1.7 million tonnes Arabia and Russia launched a price war. At the same time, the CO2 annually at the end use phase. In November, we were able, demand for oil-based products fell sharply with the COVID-19 for the first time at the Lysekil refinery to convert renewable pandemic, and in April, US crude oil traded at negative prices. raw materials into diesel on a small scale in the Synsat plant. We quickly realized that these factors would have signifi- Our refinery in Gothenburg is home to our Green Hydro cant economic consequences around the world and for us Treater plant (GHT), which was rebuilt to increase renewable as a company. To handle this, we worked during the year to production. The plant, which, among other things, converts reduce our overheads and certain investments. This was to crude tall oil into renewable diesel, increased capacity by be financially responsible and ensure a continued profitable 40 percent, from 230,000 cubic meters to 320,000 cubic Preem that can continue the transition to large-scale produc- meters of renewable diesel per year. tion of renewable fuels. During the year, Pyrocell’s facility at Setra Kastet’s sawmill in Gävle broke ground. Pyrocell, which Preem owns together Safety first with the wood industry company Setra Group, will produce Preem always puts safety first. Therefore, it is particularly grati- non-fossil pyrolysis oil as a raw material for the production of fying in a year like this that we show one of the best results ever renewable fuels. in personal and process safety with very few incidents. This is At SunPine in Piteå, another unit for the production of crude proof that we are responsible and that our efforts to create a tall oil has been completed. Through the investment of SEK 400 safe workplace are prioritized despite global turbulence. million, the production of crude tall oil can increase to approx- imately 150,000 cubic meters per year. Crude tall oil is used as Preem’s expansion of its Lysekil refinery a raw material in Preem’s fuel Preem Evolution Diesel. One of the most talked about topics in Sweden during the year Sweden’s largest pilot plant for capturing CO2 started during has been Preem’s planned expansion of the refinery in Lysekil. the year at our refinery in Lysekil. The pilot project will evaluate At the beginning of March, hearing took place in the Land and the entire value chain, from capture to storage, and is a collab- Environment Court of Appeal. In June, the court announced oration with Chalmers, Sintef, Aker Solutions and Equinor. The that the plans for Preem’s refinery in Lysekil were admissable. project is carried out with support from the Swedish Energy The decision was then passed on to the government for a final Agency and CLIMIT. decision on the matter. 4. Preem 2020 Message from the CEO New collaboration on fuel stations At Preem’s unmanned station at Sätrahöjden in Gävle, Coop Mitt AB will establish the first unmanned store that will be open 24 hours a day. This innovative pilot project aims to offer a simpler and more accessible retail solution for the consumer. Slowed economy and organizational review Sales revenue for Preem decreased during 2020 to SEK 58,190 Our ambition to million from SEK 84,694 million the previous year, a decrease of 31 percent. The operating result, adjusted EBITDA, decreased to restructure our SEK 1,960 (3,330) million. COVID-19 has led to a sharp slowdown operations around in the global economy, which has affected the demand for re- the large-scale fined products and put severe pressure on our entire industry. production of It will be some time before market demand returns. Therefore, it was decided that an announcement on planned renewable fuels redundancies was necessary to ensure the company’s con- mean that we are tinued profitability and enable our sustainable transition. The well equipped for announcement will not affect our production capacity or the staffing needed to maintain the business in a reliable manner. the future. Despite the slowdown in the global economy, Preem is an economically sound company with a stable financial situation, and we are well positioned for the future. Preem’s fantastic employees Our company consists of competent and committed individuals who work together for our transition.