Hera's actions to reduce CO2 emissions: OUR COMMITMENT

Reference Scenario

Global temperatures are constantly rising, severely impacting the environment, health and the economy. Efforts to reduce emissions are proving ineffective in limiting the increase in global temperatures to within 1.5 °C. Some aspects of climate change are therefore inevitable and require adaptation actions. In order to urge governments to get more involved, several grassroots movements have arisen, including the famous Fridays for Future, which brings together, in the streets, young people from all over the world. However, the most recent COP25 intergovernmental climate conference in Madrid ended without tangible results. 

Under the Europe 2020 programme and the 2030 Climate and Energy Policy Framework, the EU has set two targets to reduce greenhouse gas emissions in the short and medium term: -20% by 2020 compared to 1990 emissions, and -40% by 2030. In Italy, the PNIEC defines the strategy for 2030. However, the 2020 targets have not yet been met in Italy.

As at the beginning of 2020, Europe presented the Sustainable Europe Investment Plan, which should be accompanied by a fully-fledged European Climate Law. By September 2020, the Commission will present a plan accompanied by an impact assessment to responsibly increase the EU's greenhouse gas emission reduction target for 2030 to at least 50% and onwards to 55% below 1990 levels, to achieve climate neutrality by 2050. In Italy, a partial Green New Deal was included, through a set of mechanisms aimed at reducing emissions, in the 2020 Budget Law approved on 15 October 2019.

Hera to fight climate change

The Group's commitment starts with transparency and reporting of performance and objectives and extends to the many projects for generating energy from renewable sources and reducing energy consumption. During 2019, the Hera Group launched a process to study and analize the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the European Union Guidelines on the communication of climate-related information, published in 2017 by the Financial Stability Board. Hera will gradually comply with the recommendations of the Task Force and integrate them into its reporting tools. The alignment process defined was approved by the December 2019 Management Review and involved setting up a dedicated cross-functional team, including not only the Shared Value and Sustainability Department, but also Risk Management, Strategic Planning and Energy Management.

Our commitment to support energy efficiency, use renewable energy sources, and to fiight climate change are top priorities in the UN’s 2030 Agenda, and objectives 7 and 13 of the Agenda define specific targets. HERA Group's businesses that are pushing ahead with smart energy use within the scope of the Global Agenda, generated an EBITDA of Euro 75.2 million. More specifically, Euro 52.2 million came from the promotion of energy efficiency and 23.0 million from a more widespread use of energy from renewable sources, as reflected in the Shared value EBITDA in the 2019 Sustainability Report. The EBITDA for greenhouse gas emission reduction initiatives corresponds to the total EBITDA value of the entire Smart Energy Use driver.

Our objective, as reported in this report, is to measure consumption in order to define energy improvement actions that reduce the environmental impact and to reduce the greenhouse gas emissions for our actions and those of our supply chain.

Group emissions and actions to reduce them

Consistent with our alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), launched this year, the following infographic presents Hera Group's total emissions, including those produced by its suppliers and customers.

The Group's total emissions (Scope 1 + Scope 2 + Scope 3) are about 14,205 thousand tonnes of CO2e*.

The emissions directly produced by the Group (Scope 1) are equal to 1,519 thousand tonnes of CO2e and represent 10% 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 12,592 thousand tonnes of CO2e*, 89%* 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 (5,621 thousand tonnes of CO2e*, 45%* of the Group's total emissions): emissions from production of the natural gas sold, emissions from 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 production and fuel consumption of suppliers' vehicles used for waste collection, emissions from production and fuel consumption of Herambiente's waste transport vehicles, emissions from printing paper bills, emissions from electrical grid losses, electricity consumed, emissions from extraction and transport of fuel used to generate electricity.
• downstream category (6,971 thousand tonnes of CO2e*, 55%* of the Group's total emissions): emissions from customers' use of the natural gas we have sold, emissions from the recycling of separate waste we have collected, emissions from energy produced by plants operated under joint venture agreements.

*the figures differ from those published in the 2019 Non-Financial Declaration due to the inclusion in the scope of reporting of emissions from gas and electricity sales volumes of Estenergy, consolidated in the Hera Group from 31/12/2019.

2019 RESULTS AND GROUP TARGETS FOR REDUCING GREENHOUSE GAS EMISSIONS

* "Green" offers: Hera Impronta zero (electricity from renewable sources and offset CO2 emissions from methane gas combustion) and Natura option (electricity from renewable sources);
**Including the Estenergy Group (consolidated from 31/12/2019) and net of CO₂e emissions from the combustion of methane gas offset by the Hera Impronta Zero offer equal to 32 kt of CO2e in 2019, 1,373 kt in 2023 and 1,373 kt in 2030 and lower CO2e emissions (892 kt in 2019, 708 kt in 2023, 708 kt in 2030) thanks to the sale of renewable electricity.
For more information see the "Hera: supporting companies and households" section of this report and the 2019 Sustainability Report.