The commitment to reduce our greenhouse gas emissions

It is well known that fossil fuels are the leading cause of climate change, so reducing their use is key to curb the increase of the main and most common greenhouse gas: carbon dioxide.

The Group’s commitment starts with transparent reporting of its impacts on the climate and its commitments in this area in terms of mitigation and adaptation. In terms of mitigation, the Group’s commitment is mainly achieved:

  • by purchasing renewable energy to power its business, and to sell it to its customers;
  • by increasing renewable energy production (in particular biomethane and geothermal energy);
  • by reducing its energy consumption and offering energy efficiency solutions to its customers in all segments (households, condominiums, businesses, and public administration);
  • by promoting and implementing circular economy

Since 2006, in fact, the Hera Group has been a member of the Carbon Disclosure Project (CDP), an independent not-for-profit organisation that offers businesses and countries a way to measure, track, manage and share information about climate change and on the sustainable use of water resources, on a global scale. Compliance with the CDP requires measuring and reporting all of an organisation’s performance, and the initiatives it takes to reduce GHG emissions. In 2019, Hera achieved level B on an A–D scale, above both the European and worldwide averages (level C) for the oil and gas sector.

The Group’s greenhouse gas (GHG) emissions are mainly due to its waste-to-energy and district heating plants, and to leaks from the natural gas distribution network and from landfills.

An annex to this report summarises the main data, and the indicators monitored regarding the Group’s GHG emissions, and those of our customers and suppliers. It also includes the objective for 2023 for the carbon intensity index of energy production.

GHG emissions at a glance

Consistent with our alignment with the TCFD recommendations, launched this year, we have prepared an infographic to illustrate Hera Group’s total emissions, including those produced by our suppliers and customers, by supply chain.

The Group’s total emissions (Scope 1 + Scope 2 + Scope 3) are about 11,766 thousand tonnes of CO2e.

The emissions directly produced by the Group (Scope 1) are equal to 1,519 thousand tonnes of CO2e and represent 13% of the Group’s total emissions.

The Group’s emissions from consumption of electricity (Scope 2) amount to 94 thousand tonnes of CO2e and represent only 1% of the Group’s total emissions.

The emissions indirectly caused by the Group’s activities (Scope 3) amount to 10,152 thousand tonnes of CO2e, 86% of the Group’s total emissions. According to the “Technical Guidance for Calculating Scope 3 Emissions” published by the GHG Protocol, Scope 3 emissions can be divided into two categories: upstream (upstream categories) and downstream (downstream categories). Hera Group’s Scope 3 is made up as follows:

  • upstream category (4,516 thousand tonnes of CO2e, 39% of the Group’s total emissions): emissions from production of the gas sold, emissions from the production of the electricity sold, emissions from the production of the gas consumed in industrial cogeneration plants, emissions from fuel consumption for vehicles used in services (not included in Scope 1), emissions from fuel consumption of suppliers’ vehicles for waste collection, emissions from fuel consumption of Herambiente’s vehicles for waste transport, emissions from printing paper bills, emissions from network losses (electricity), emissions from extraction and transport of fuels for electricity generation;
  • downstream category (5,601 thousand tonnes of CO2e, 47% of the Group’s total emissions): emissions from customers’ use of the gas sold, emissions from the recovered fraction of separate waste collection, emissions from energy production from joint venture plants.

 

Scope 1 and Scope 2 GHG emissions
  2017 2018 2019
Total indirect emissions – Scope 1 (t CO2e) [305-1] 1,426,401 1,355,024 1,519,350
Indirect emissions from consumption of electricity (Scope 2 market-based) (t CO2e) [305-2] 193,746 148,433 94,183
Total of scopes 1 and 2 (t of CO2e) 1,620,147 1,503,457 1,613,532
EBITDA (millions of Euro) 985 1,031 1,085
Carbon intensity index (t of CO2e emitted as Scope 1 and 2/EBITDA millions of Euro)[305-3] 1,645 1,458 1,484

We used the following coefficients to estimate Scope 1 emissions: the Defra 2019 coefficients (expressed in CO2e) for motor vehicle fuels (diesel, petrol, natural gas, LPG) and for the consumption of diesel, LPG, and biogas for other uses; the coefficient of the Ministry for the Environment (expressed in CO2e) for natural gas consumption (excluding vehicles). It should be noted that the emissions associated with consumption of diesel fuel and LPG for other uses and natural gas for uses other than district heating and waste-to-energy plants were considered starting from 2017. Greenhouse gas emissions from landfills were estimated considering the methane contained in the biogas given off by the landfill matter, plus carbon dioxide from the combustion of tapped biogas, from which the portion of biodegradable substances was removed; for waste-to-energy plants, the estimate was carried out by considering the carbon dioxide during combustion of the non-biodegradable portion of waste and of the other fuels used in the plant; the gas network losses were estimated and considered completely dispersed in the atmosphere – the GWP considered is 25 for natural gas and 298 for N2O, (4th Assessment Report IPCC). On the other hand, to estimate electricity consumption emissions (Scope 2), we used Ispra’s “National Inventory Report 2019” coefficients for the location-based method and the AIB’s “European Residual Mixes, Results for calendar year 2018” for the market-based method (expressed in CO2e). The indicator does not include the Trieste trigeneration plant, the emissions of which can be estimated at 3.5% of the total.

In 2019, the Hera Group released 1.6 million tonnes of Scope 1 and Scope 2 GHG (+7.3% compared to 2018). This increase is mainly due to a different classification of Hera Servizi Energia’s methane consumption, in line with the figures for energy consumption and production, considered as Scope 3 until 2018 and as Scope 1 starting this year (direct consumption). Direct emissions (Scope 1) amounted to 1.5 million tonnes of CO2e, up compared to 2018 (+12.1%). The increase is mainly caused by the reasons explained above. Instead, the following have decreased: (i) emissions from waste-to-energy plants (-2.8%); (ii) emissions from district heating (-2.1%); (iii) emissions from fuel consumption for vehicles (-2.1%).

The emissions indirectly caused by electricity consumption (Scope 2) amounted to 94 thousand tonnes, down from 2018 (-36.5%), as a result of the increase of the share of renewable energy used to power the activities managed by the Group, which in 2019 accounted for 74% of overall consumption. This has allowed the Group to save more than 250 thousand tonnes of CO2, about 18% of the Group’s total. The value of the Scope 2 emissions specified above takes into account the company’s energy purchase choices (market-based method), i.e. the share of renewable energy purchased with Guarantee of Origin certificates and the share of electricity purchased without certificates. For this second component, the emission factor relative to the national residual mix was used. The Scope 2 emissions calculated under the location-based method amount to 237,642 tonnes. This value is based on the company’s location and therefore uses the average emission factor of the national fuel mix without taking into account the company’s purchase choices.

The intensity index of emissions, obtained by comparing GHG emissions with the Group’s EBITDA in 2019, increased slightly compared with the previous year due to the increase in Scope 1 emissions (+2% compared with 2018). There was, however, a positive trend over the three years (-12% compared to 2017). The revenue ratio shows an improvement, going from 245 tonnes of CO2e per million Euro in 2018 to 233 in 2019, due to a 13% increase in revenue in 2019 compared to 2018.

Scope 3 greenhouse gas emissions (thousands of tonnes)
  2017 2018 2019
Sales of natural gas (thousands of t CO2e) 5,433 5,469 4,862 
Sales of electricity (thousands of t CO2e) 4,989 4,381 4,122 
Emissions from energy production and consumption (not included in Scope 1 and 2) (thousands of t CO2e) 118 115 432 
Emissions from services provided (thousands of t CO2e) 806 777 736 
Total (thousands of t CO2e) 11,346 10,471 10,152 

The Defra 2019 coefficients (expressed in CO2e) have been used to estimate Scope 3 emissions, except for emissions from the sale of non-renewable electricity, for which the coefficients of the Ispra “National Inventory Report 2019” have been used. The Sales of natural gas item includes the production of the gas sold (upstream) and its use by customers (net of gas purchased with CO2 emissions offset). The sales of electricity item includes the generation of electricity sold to customers (net of purchased renewable electricity). Emissions concerning energy production include the production of the gas consumed (upstream) in industrial cogeneration plants operated as a service by HSE and the emissions produced by the Tamarete, Teverola, and Sparanise plants operated as joint ventures. Emissions from services provided include: (i) the extraction and transport of fuels used in the Group’s vehicles; (ii) the use of vehicles by suppliers for waste collection; (iii) the use of vehicles by Herambiente for waste collection; (iv) the use of glass, plastic and paper sent for recovery; (iv) printing bills. Emissions relating to energy consumed include electricity grid losses and the extraction and transport of fuels used to generate electricity.

Since 2017, we have been calculating our Scope 3 emissions, i.e. indirect GHG emissions that occur as a result of the company’s activities, but from sources that are not owned or directly controlled by the organisation. This category may include activities both upstream and downstream of the business perimeter, such as the extraction and production of purchased raw materials or emissions occurring in the use-phase of the products sold.

Starting this year, consistent with our alignment with the TCFD recommendations, we have decided to refine the calculation of Scope 3 emissions. The main additions concern the GHG emissions of Herambiente’s vehicles used to transport waste, which are included in the “Emissions from services provided” category, and the addition of the category “Emissions from energy production from joint venture plants”, which includes Hera’s share of the emissions produced by three joint venture thermoelectric power plants (included in the category “Emissions from energy production (not included in Scope 1 and 3)”).

In 2019 the total Scope 3 emissions amounted to 10.2 million tonnes CO2e, about ten times the Group’s total direct and indirect emissions (Scopes 1 and 2). The higher values are those for the sale of electricity and gas (9 million tonnes) to customers. Emissions from the sale of natural gas decreased due to: (i) reduction of gas sold, (ii) reduction of emission coefficients, (iii) effect of offsetting emissions from gas sales through the “Hera Impronta Zero” offer (discussed in more detail in the next paragraph). The share of emissions related to electricity sold decreased due to the reduction of the emission coefficient. The increase in emissions from energy production and consumption is mainly due to the addition, starting in 2019, of emissions from the three joint venture thermoelectric power plants. Lastly, the reduction of emissions from services provided, despite the addition of GHG emissions from Herambiente’s waste transport vehicles, is caused by the reclassification of HSE emissions due to methane consumption from Scope 3 to Scope 1 (this is in fact direct consumption of the company), as previously explained in the comments on Scope 1 emissions.

The commitment to reduce our GHG emissions

As part of the ISO 50001 management system, 343 energy consumption reduction measures have been defined by Hera Spa, InRete, AcegasApsAmga and Marche Multiservizi, some of which have been implemented and some of which will be implemented by 2020, and which achieve an overall savings of over 13,740 toe/year (over the 2021 target of reducing consumption by 5% compared to 2013) and over 24 thousand tonnes of CO2 per year. In addition, 300 other energy efficiency improvement measures have been implemented, are in progress or are planned by Herambiente, Hera Servizi Energia, AcegasApsAmga Servizi Energetici and Hera Luce, for a total of 21,875 toe/year of overall savings, reaching more than 38 thousand tonnes of CO2 per year.

Carbon intensity index of energy production
  2017 2018 2019
Waste-to-energy plants (t CO2e) 421,236 412,162 400,531 
District heating (t CO2e) 206,552 190,181 201,412
Landfills and biogas from biodigestion (t CO2e) 275,871 248,310 224,243 
Total (t CO2e) 903,660 850,652 826,186
Electricity and thermal energy produced by plants (MWh) 1,815,543 1,764,084 1,825,178   
Carbon intensity index of energy production (kg/MWh)[305-4] 498 482 453 

Considering the emissions generated by the plants that produce electricity and heat specified in the table, the carbon intensity index of energy production in 2019 was 453 kg/MWh, 22% below the 2013 baseline (-20% compared to 2015) and down compared to 2018 (-6%) as a result of lower emissions: (i) from waste-to-energy plants, as a result of lower energy production; (ii) from district heating plants, as a result of lower electricity production from the cogeneration plants.

The measures already in place and those planned by the Hera Group will enable us to further reduce the carbon intensity index of our energy production in the years to come. By 2023, we expect to decrease the carbon intensity index of our energy production by 26% (417 kg of CO2/MWh) compared to 2013, mainly by producing biomethane from organic waste and as a result of further decreasing the use of landfills to treat municipal waste.

The EU-ETS (European Union Emission Trading System) sets a cap on the total level of emissions allowed to all participants in the scheme, but it also allows them to trade emission quotas on the market according to their needs. The Hera Group has 9 plants that are authorised to emit greenhouse gases on the basis of Emissions Trading regulations, for a total installed furnace power of 520 MW. The carbon dioxide emissions recorded in 2019 (162,679 tonnes), were higher than those of 2018 (158,924 tonnes despite milder weather). All the plants supply district heating networks whose energy demand depends on seasonal factors, but in 2019 there was greater electricity production from the largest