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Energy & Climate Change
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Why is it material?
Climate change affects our business activities, creating significant challenges and opportunities. As our main business is refining, we are both a producer of energy products and an energy consumer. Energy consumption is not only a significant operating cost but also the main source of carbon dioxide emissions. In response to increasing demands for energy and in order to ensure energy efficiency by taking measures and implementing projects to reduce emissions, we are re-designing energy transformation toward a low carbon economy.
As our activities are primarily in Greece, a country with a large coastal front, we have begun to study ways to adapt to and address the consequences of climate change.
Potential risks and opportunities for the Group's operational activities are addressed in the Emissions Trading Scheme’s management, and in our investment / activity feasibility studies and raw material procurement assessments.
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Our approach
As energy consumption is a significant operating cost for our activities, but also the main source of carbon dioxide emissions, we are investing in optimizing energy management, production processes and operational management energy efficiencies, along with the use of Renewable Energy.
Concurrently, we are analyzing the scope for interventions - projects required to adapt our installations and critical energy infrastructures to climate change.
The implementation of the Group's environmental policy related to energy and climate change is achieved and measured by a series of tools, such as setting targets and performance indicators.
All environmental parameters are compared to European indicators and benchmarks are used to assess how we compare with the European industry performance indices.
Our staffs’ and social partners’ continuous environmental education across a wide range of activities within the Group is an important part of our climate change management effort. In addition, the Group is actively involved in the development of energy and climate change policies at a national and European level, including the EU ETS, the Energy Efficiency Directive and others.
Our approach and results so far have been positive, with significant progress made in achieving quantitative targets, in CO2 intensity index by implementing energy efficiency projects in the Group's refineries and by continuously reducing our carbon footprint through RES investments.
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Our ambition
We want to reduce our carbon footprint, specifically energy consumption and carbon dioxide emissions, in order to contribute in addressing the causes and impacts of climate change. We strive toward energy transformation and to become a company that provides low carbon emission energy solutions.
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Sustainable Development Goals (SDGs)
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Performance – quantitative data
Energy and climate change policy is a major challenge for the Hellenic Petroleum Group due to oil refining which is one of its main productive activities. Energy consumption is a large operational cost and at the same time it constitutes the main source of carbon dioxide emissions. We are therefore planning our energy restructuring activities toward a low-carbon economy, while responding to a continuous increase in energy demand and securing supply. We are striving to contribute substantially in achieving SDG 7 and SDG 13.
Energy efficiency increase- energy conservation & investments
Optimal energy efficiency and energy saving still remain the basic tools for addressing the greenhouse effect. Although some of the strictest fuel standards (zero sulfur content) the past decade contribute in improving air quality, at the same time energy consumption required for their production is increased. Despite this, the Group’s refineries have managed to produce clean fuels with high energy efficiency.
The use of cleaner fuel gases in the production process, such as natural gas and refinery gas is maximized while the consumption of liquid fuels is minimized.
At the same time, the Group invests in renewable energy, increased energy efficiency and energy saving projects, as well as in new energy and transportation technologies in order to reduce its carbon footprint.
Goals
- 5% reduction of tn CO2 emissions/tn crude oil supply index by 2020.
- 250,000 tn CO2 reduction of the Group’s carbon footprint by investing in Renewable Energy Sources (minimum 100MW power) by 2025.
In 2017, the CO2 emissions per ton crude oil index continued to decrease despite the significantly increased operation levels, while exceeding the initial goal set (-25% against the initial goal of -5% for 2020). This result depicts the contribution of significant energy saving activities – projects and other optimization interventions that took place in the Group’s refineries.
Performance
As far as the monitoring and reporting of GHG emissions is concerned, the Group systematically monitors not only direct CO2 emissions (Scope 1) but also indirect emissions (Scope 2 and 3) to the maximum extent of its activities.
Regarding direct emissions, the refineries have been participating in the European Union’s Emissions Trading System (EUETS) since its formation, while since 2013 they have followed all emission monitoring, calculation and verification procedures according to third phase EU ETS regulations for 2013-2020. The carbon footprint of the three refineries comprises 4% of the country’s total greenhouse gas emissions.
The following diagram shows the three refineries’ verified CO2 emissions for 2016 (for comparison) and 2017 and emission allowances for 2017.
The Group’s total energy consumption, as shown in the following diagram, is reduced by 12% in comparison to 2016. This difference is mainly due to Elefsina’s refinery (EIC) shutdown.
Investing in increasing energy efficiency, combined heat & power (CHP) units operate in all of the Group’s refineries, which contribute to avoiding a significant percentage of CO2 emissions (diagram below) that would have been emitted if the self-generated electricity was purchased from a supplier with a different fuel mix (such as PPC, the Public Power Corporation).
As shown in the diagram above, in 2017, the self-generated electricity comprised 27% of total electricity consumption.
The Group also monitors indirect emissions from its activities. For example, estimates are made for CO2 emissions from sea transport of raw materials and products as well as for the carbon footprint of all activities in the Group’s office buildings (headquarters and Aspropyrgos, Elefsina and Thessaloniki refineries – “My Climate” Certification).
Risks management – risks & opportunities
Potential risks and financial impacts are an integral part of a feasibility study for every project and investment, not only with regard to climate change mitigation, but also as a strategy to adapt to climate change (i.e. in the event of physical changes, estimated to be significant for facilities near coastal regions of Greece).
The obvious financial impacts concern cost related to the lack of allowances for greenhouse emissions, as all the Group’s refineries in Greece participate in EU ETS.
For the period of 2013-2020 (third phase of ETS) and according to the existing allowance allocation rules, the compliance cost has substantially increased over the last months of 2017 due to the decreasing allowance allocation from one year to the next in combination with the increase in the cross-sectional correction factor (CSCF) and the significant increase in the allowances’ price. Moreover, based on the latest European Community decisions regarding the application of a Market Stability Reserve mechanism and the restructuring of EU ETS for 2021-2030, a larger increase of the allowances’ price (€/tn) is expected, which will directly affect the future compliance cost.
It is also noted that as of 2013, free allowances are not distributed regarding power generation activities. As a result, refineries are additionally burdened with the increased cost for purchasing electricity, since the cost of purchasing electricity production allowances is passed on to the costumers.
Other potential risks include fuel and raw material increased purchase price, a reduced demand for energy intensive products, as well as any additional measures to control and reduce greenhouse gas emissions, which would be similar for the industry on a European level.
Enforcing the main Group strategy to increase energy efficiency has already contributed to reducing the deficit and operational cost of carbon, nonetheless possible opportunities of introducing natural gas and advanced biofuels continue to be evaluated.