Climate Change

63.3m metric tons CO2e

Direct scope 1 emissions from our power stations1

503 g/KWh

Uniper’s total carbon intensity2

476 g/KWh

Carbon intensity of our European Generation segment2

2.8m metric tons

Carbon emissions displaced by our hydro assets in Germany relative to the country’s energy mix

The climate challenge

Climate change is one of the biggest challenges the world faces and one of our most material long-term issues. In particular, the climate impact of the direct carbon emissions from our fossil-fueled power stations is of great significance to us and our stakeholders.

Our business will be increasingly affected in the years ahead by social, regulatory, and economic developments that are related to carbon emissions and their impact on climate change. This will present us with challenges as well as opportunities.

That’s why we defined long-term commitments for the topic of climate change:

  • Promote lower-carbon fuels like gas and LNG worldwide and expand our global gas and LNG third-party trading.
  • Develop business models for carbon utilization.
  • Promote less carbon-intensive power generation technology.
  • Monitor and optimize the CO2 intensity of our generation portfolio.

These commitments support SDG 7, 9 and 13:

The material topic climate change encompasses three subtopics: Policy and regulatory environment, direct greenhouse-gas emissions from our operations, and the physical impacts of climate change on our operations.

Policy and regulatory environment

In December 2015 representatives of 195 countries signed the Paris Agreement, pledging to limit the increase in global temperature to under 2 degrees Celsius. For the first time, the global community had set a binding climate-protection target. The efforts of governments, the private sector, and civil society must now be coordinated in a responsible manner to propel a steady transition toward a less carbon-intensive global economy.

EU policies aim to provide households and businesses with secure, sustainable, competitive, and affordable energy. The planned further development of the regulations for the internal market for electricity will lay the foundation for the EU to achieve the objectives of the European Energy Union and, in particular, the climate and energy framework for 2030.

EU Emissions Trading Scheme (EU-ETS)

We believe that the EU ETS remains the most cost-effective market-based mechanism for helping Europe meet its emission-reduction targets. After the long-awaited reform of the EU ETS in November 2017, the number of emissions allowances allocated to the Market Stability Reserve will double from 2019 onward. The excess allowances in the reserve will be cancelled from 2023. Carbon prices recently responded by trending upward and reaching a seven-year high of roughly €14 per metric ton of carbon. Experts estimate that EU ETS carbon prices could increase by up to €25 to €30 per metric ton by 2025.

The development of more flexible and lower-carbon energy generation plays a central role in the individual EU member states. In particular, this will affect the design and implementation of their capacity remuneration mechanisms.

Regulatory developments in individual countries

Germany exemplifies the complexity of energy policymaking. It intends to stop mining coal in 2018 and stop producing nuclear power in 2022. In the meantime, continuously growing subsidies drive renewables growth. It’s essential for the transition toward a lower-carbon energy system to be founded on a secure supply of energy to keep Germany’s high level of industrialization and competitiveness. Germany therefore needs to establish a stable and unambiguous policy environment that gives companies business prospects and fosters investments in new infrastructure and better technologies. The “Growth, Structural Change and Employment” Commission is to present proposals by the end of 2018 for an action program to gradually reduce and end coal-fired power generation, including a final date and the necessary ancillary measures to address legal, economic, social, and structural issues.

In 2017 we announced that we do not intend to invest in any more coal-fired power plants after we have commissioned Datteln, a 1.1 GW high-efficiency coal-fired plant in west-central Germany.

Klaus Schäfer, CEO

Similarly, many coal-fired power plants are expected to be shut down in the United Kingdom in response to EU and national environmental legislation. Following a consultation, the British government has decided end coal-fired power generation in 2025.

The Netherlands plans to phase out coal-fired power generation by 2030 at the latest, in consultation with the companies that operate the plants. It also intends to set a minimum carbon price of €18 per metric ton starting in 2020 and to gradually increase this price to €43 by 2030.

France established a capacity market in January 2017. It has considered introducing a carbon tax but has so far not passed the necessary legislation. It is expected to phase out coal-fired power plants by 2022.

Greenhouse-gas emissions (GHG) from our operations

Direct carbon emissions from our fossil-fueled power production account for the biggest share of our GHG emissions. Measured in accordance with the Greenhouse Gas Protocol, in 2017 they represented around three percent of all carbon emissions from stationary power plants and industrial plants covered by the EU Emissions Trading Scheme (EU ETS).

In 2017 our direct carbon emissions from the combustion of fossil fuels for power and heat generation declined to 63.3 million metric tons (2016: 73.6 million metric tons), mainly because of reduced generation in Russia and Germany, the closure of units 1 and 2 at Maasvlakte power station in the Netherlands, and the increased use of gas rather than coal in the United Kingdom.

Development of Uniper’s carbon emissions in Europe1

m metric tons CO2e

The decline in our direct carbon emissions reflects an ongoing trend. From 2005, the year of the EU ETS’s entry in force, the assets composing our European Generation segment have decreased their direct carbon emissions by around 60% and have thus declined further than the current EU climate targets.

 

Regulatory uncertainty in most of the jurisdictions where we operate makes it difficult to predict the absolute and specific carbon emissions of our fossil-fueled generation portfolio. Nevertheless, we set a group-wide carbon intensity target of 500 g of CO2 per kilowatt hour (on average) from 2018 to 2020. For the next decade, we see further potential for reductions due to our stable hydro and nuclear business, the effects of possible coal phase out in many European countries and an overall stronger role for climate-friendly natural gas.

The carbon intensity of our consolidated assets was 503g of CO2 per kWh in 2017, almost unchanged compared to 2016 (502g of CO2 per kWh).

The carbon intensity of our European Generation segment’s consolidated assets was 476g of CO2 per kWh in 2017, lower than 2016 (481g of CO2 per kWh).

Uniper portfolio carbon intensity trends2

g/KWh

Climate-related financial disclosures

Furthermore, we closely monitor developments at the Task Force on Climate-related Financial Disclosures (TCFD), which plans to design a framework for voluntary, consistent climate-related financial risk disclosures that companies can use to provide information to their investors and stakeholders. We will continue to assess whether the framework for disclosing climate-related risks in the context of financial reporting can add value to Uniper and its stakeholders in the future. We’re also participating in the new edition of the Climate Disclosure Project (CDP).

Indirect scope 2 emissions

In addition to our direct emissions and carbon intensity, we also report indirect scope 2 emissions from purchased electricity, heating, and cooling.

0.25m metric tons of CO2e

Indirect scope 2 emissions (location-based method)1

0.32m metric tons of CO2e

Indirect scope 2 emissions (market-based method)1

We also compile data on the indirect scope 3 emissions along our value chain resulting from business travel, commodity trading, fuel procurement, and so forth. We plan to publish scope 3 data in the future.

Contributing to a lower-carbon energy world

We support global efforts toward low-carbon energy generation. Together, gas-fired and hydroelectric capacity accounts for more than 50% of our European portfolio, enabling us to support the transition toward low-carbon energy generation.
With an average thermal efficiency of just under 50% and comparatively low carbon emissions per kWh, our gas-fired fleet in Europe helps reduce our carbon intensity. Gas demand is forecast to increase by 45% between now and 2040.3 We therefore intend to intensify our activities in generation and trading to realize the potential of natural gas as a viable supplement for renewables in tomorrow’s energy world.

We are conducting numerous modernization projects to make our generating units more efficient, in particular by enabling them to start up and shut down faster. This reduces fuel consumption, costs, and carbon emissions. We’re implementing these measures primarily at our combined-cycle gas turbines, because they can achieve the highest levels of fuel efficiency.

Climate-friendly hydropower accounts for about 10% of our total generating capacity and 13% of our generation portfolio in Europe. Our 110 hydro plants in Germany meet the energy needs of 1.6 million households.

In Germany alone, each year our hydro assets prevent the emission of 2.8 million metric tons of carbon based on the country’s current energy mix.

In Sweden, we have further 68 hydro plants. Sweden aims to use 100% renewable energy by 2040. As the country’s third largest hydropower producer, we’ll continue to be a mainstay of its low-carbon energy supply.

In Sweden, climate-friendly nuclear power meets about half of the country’s power needs and is a key part of its low-carbon energy system. Uniper is the majority owner of Oskarshamn nuclear power plant (NPP) and a minority owner of Ringhals and Forsmark NPPs. The top priorities of our nuclear power business are responsibility and safety.

In addition, we intend to play a bigger role in innovative technologies such as renewable energy storage and carbon utilization. In December 2017 Uniper assumed the presidency of CO2 Value Europe, a new association of stakeholders along the carbon value chain. In this platform, we work with 42 other founding members from different sectors and countries to develop solutions for the industrial use of carbon in a responsible way.

ECO-Culture, one of Russia’s biggest agricultural companies, is building a large complex of greenhouses near our Berezovskaya power plant, which is currently undergoing repairs. When these are completed, Berezovskaya will provide heat and CO2 to the greenhouses. This will enable it to derive more energy from each unit of fuel and to put some of its carbon emissions to good use.

Storing renewable energy

We invest in pilot projects and innovative technologies to become a more flexible business and to support the transition to a low-carbon future. We’re convinced that power-to-gas is an important technology for this transition. Power-to-gas uses renewable electricity to power electrolysis equipment that transforms water into climate-friendly hydrogen. Europe consumes about 80 billion cubic meters of hydrogen each year. Industrial hydrogen production is typically fueled by natural gas, which results in carbon emissions. Green hydrogen from power-to-gas is a climate-friendly alternative for many applications, including industry and mobility. But the most important benefit is its ability to partner with natural gas: Germany’s gas infrastructure provides capacity for storing this renewable energy.

We were one of the first companies in the world to operate a power-to-gas demonstration unit. The three-year trial was conducted in Falkenhagen in northeast Germany. The unit used electrolysis to transform surplus electricity from numerous nearby wind turbines into hydrogen. A total of 8 GWh of hydrogen was injected into the natural gas pipeline system. The trial demonstrated that renewable energy could be stored efficiently as gas, thereby decoupling energy production from energy consumption. Power-to-gas technology works well. It responds reliably to the sharp fluctuations in wind power output, is market-ready, and promises to become even more efficient and affordable going forward.

But there are technical limitations to how much hydrogen can be part of the gas mix in the natural gas pipeline system. Enriching green hydrogen with CO2 to produce climate-neutral methane, which is synthetic natural gas, offers greater potential: The aforementioned technical limitations do not apply to synthetic natural gas, which is fully compatible with the existing gas infrastructure. As a result, large quantities of wind and solar power could be transformed into gas and stored for later use. For the energy transition to succeed, making better use of surplus renewable power is essential. Power-to-gas’s solid performance encouraged us to go a step further by adding equipment that enables the unit in Falkenhagen to produce methane, which we believe has greater promise because it can be stored in unlimited quantities. The power-to-gas methane trial at Falkenhagen, which began in May 2018, is part of a European research consortium called STORE&GO, which will run through 2020.

We’re also partnering with companies such as BP to produce P2G biofuels. Unlike biofuels made from agricultural products, however, power-to-gas hydrogen isn’t yet classified as a biofuel in Europe. This means that its potential to promote low-carbon mobility will depend on the future policy and regulatory environment.

Alongside power-to-gas, we continue to develop further storage technologies such as power-to-power using utility-scale batteries for on-site storage of surplus electricity at wind or solar farms.   Secure and reliable energy supply

Physical impacts of climate change

Two of our tasks in the years ahead will be to evaluate the potential long-term implications of climate change for our asset portfolio and to achieve a better understanding of the physical impact of climate on our activities in emerging and developing countries.

Computer modelling shows that the side effects of climate change – extreme weather, rising sea levels, and water scarcity – will be felt in heavily populated regions of the world including Central Europe and Great Britain. They will affect power stations and other industrial facilities located on the coast or next to large rivers. Over time, our operations could be adversely affected by climate-induced phenomena such as severe storms or rendered inoperable through drought conditions.

Our Asset Risk team oversees screening exercises for our assets to determine the potential physical risks associated with extreme weather and other climate related issues. Potentially significant risks are then escalated and subject to a full risk assessment with appropriate controls implemented.

Our hydro fleet for example, addresses the physical risks arising from extreme weather conditions, such as rapid water level fluctuations. Its operations along large rivers periodically include the construction of dams and the reinforcement of riverbanks.   Local acceptance

1These figures encompass all consolidated Uniper entities as well as nonconsolidated entities over which we have operational control.

2Data source: reported emissions (under EU-ETS and Russian Scheme); method: electricity generation adjusted to reflect heat and steam components; consolidation approach: financial control.

3International Energy Association (IEA) – World Energy Outlook 2017.