Climate change

Scatec contributes to the global transition to a low carbon society through its renewable energy generation. The new technology and installations necessary for this transformation also causes climate impacts through production and operation of components and land use changes from solar, wind and hydro projects. We aim to limit the climate impacts in our value chain.

Management approach

Scatec’s main purpose is to develop and operate solar PV, wind- and hydropower plants to meet this need. Our power plants provide affordable, reliable and emission free electricity in growth markets for about 20-25 years. Managing climate change impacts is an integrated part of Scatec’s overall business strategy.

Our business activities are related to large climate emissions from production of solar panels and transformers. We report on our total direct and indirect emissions resulting from our projects. In 2022 we set targets following the Science-Based Targets initiative’s (SBTi) Net Zero framework, which were approved by the SBTi in January 2023. Our targets are to minimise direct emissions by 2030 and achieve net zero emissions across our value chain by 2040

Near-Term Targets Reductions by 2030 from 2019	reduce absolute scope 1 GHG emissions by 95% source 100% renewable electricity annually (scope 2) reduce scope 3 GHG emissions 55% per kWh
Long-Term Targets Reductions by 2040 from 2019	maintain at least 99% absolute scope 1 and 2 GHG emissions reductions reduce scope 3 GHG emissions 97% per kWh

Scatec operates projects with an estimated useful life of 30-40 years. We are increasingly impacted by climate change. Therefore, taking a long-term view on risks, including climate risks, is essential. The processes of climate-related financial impact analysis, scenario analysis and climate reporting help ensure transparency, continuous improvement and enhances our understanding of how climate-related issues can affect us, how we can adapt and how we can mitigate further changes to the climate.

The highest-level of responsibility for managing climate related risks sits with the Board of Directors. The Board and the ESG Committee, which includes Board members and the Chairman, regularly review sustainability issues and climate change. The CEO and the EVP Sustainability, HSSE & Quality are responsible for assessing and managing risks. The Board assesses climate-related risks and opportunities as part of the annual review of the Decision Gate framework and Operating System processes and procedures. The management team reports monthly to the Board of Directors.

Our process of identifying and assessing climate-related risks are integrated into our multi-disciplinary company-wide risk management process. We have extensive policies and procedures in place as part of our operating system to actively manage risks related to the various parts of the Company’s operations. We reviewed climate risks and opportunities for our portfolio in 2022 aligned with the Task Force on Climate related Financial Disclosures (TCFD) recommendations and the EU Taxonomy technical screening.

In 2022, we updated our corporate level climate risk assessment to identify key climate risks and opportunities across our portfolio. Climate risks are assessed during the project planning phase as part of other risk assessments e.g. ESIA, wildfire and hydrology and flooding assessments.

To assess transitional opportunities, we use tools such as Bloomberg New Energy Finance’s New Energy Outlook (BNEF NEO) to inform our strategy and business decisions. New markets are opening due to climate-related financing such as subsidies and partnerships with regional development banks to increase access to energy. Additional opportunities are related to using renewable energy for specific purposes such as adaption to climate change, e.g. reverse osmosis, and decarbonisation of fertiliser and fuel production which Scatec refers to generally as Power to X. Scatec is well-positioned to exploit these opportunities through our experience with public-private partnerships and innovative finance solutions in collaboration with partners like the World Bank, the IFC, regional development banks, export credit agencies and Norfund.

Our physical climate risk exposure of our own operated power plants is assessed with climate scenario data from the World Bank Climate Change Knowledge Portal. We combine the extreme heat exposure and extreme rainfall risk scenarios and time frames, with our existing natural catastrophe risk database to increase understanding of related risks across our project portfolio. Hydropower project risk was assessed by a third party during 2022. We have extensive policies and procedures in place as part of our operating system to actively manage climate risks related to the various parts of the Company’s operations in addition to project specific mitigation measures.

By providing clean electricity, our renewable energy plants significantly contribute to reducing greenhouse gas emissions in every country where we operate. We take advantage of the emission reductions resulting from our plants in operation and our projects continue to be registered with the United Nations Framework Convention on Climate Change (UNFCCC) for verification and certification of electricity generation. One of our 2022 targets was for annual GHG emissions avoided by our projects under operational control to reach 2.1 mill tons by year end. Our plants reached 2.0 mill tons avoided by year end.

GRI disclosures

GRI 302-1 and 3
GRI 305-1, 2 and 3

GRI 302-1 and 3: Energy

Scatec’s energy consumption consists of electricity from the grid and own production, as well as fuels for vehicles and equipment. Energy consumption and intensity is presented in the table below.

Type	Unit	2019	2020	2021	2022	Change 2021 - 2022
Energy consumption (electricity and fuel) ¹⁾	MWh	21,506	19,712	19,305	27,182	41%
Electricity use	MWh	13,953	16,660	15,527	16,721	8%
Renewable electricity consumption (I-RECs)	MWh	0	5,743	2,394	13,809	477%
Electricity production (operational control)	GWh	1,654	2,817	3,461	3,582	3%
Energy consumption per unit of produced energy (operational control) ²⁾	GWh	0.013	0.007	0.006	0.008	36%

¹⁾GRI 302-1
²⁾GRI 302-3

GRI 305-1, 2 and 3: Emissions

Scatec calculates and reports our GHG emissions according to the Greenhouse Gas Protocol and our carbon inventory is divided into three main scopes of direct and indirect emissions. Our GHG emissions for 2019-2022 is presented in the table below.

Scope	Unit	2019	2020	2021	2022
Scope 1	tCO₂e	1,987	1,011	1,237	3,131
Scope 2 (Location-based)	tCO₂e	6,657	8,875	8,690	8,357
Scope 2 (Market-based)	tCO₂e	6,682	6,106	7,508	800
Scope 3	tCO₂e	345,035	175,867	28,951	1,468,943
- Purchased goods & services	tCO₂e	1,630	2,036	2,643	5,313
- Purchased capital goods	tCO₂e	327,749	168,241	19,626	1,451,834
- Well-to-tank: fuels/electricity	tCO₂e	2,759	2,759	3,202	3,208
- Upstream transportation	tCO₂e	8,953	1,393	827	3,535
- Waste generated	tCO₂e	78	68	93	11
- Business travel	tCO₂e	3,666	753	568	2,437
- Employee commuting	tCO₂e	201	294	912	1,574
- Investments (hydropower)	tCO₂e	0	0	1,080	1,031
Total Scope 1, 2 (market based) and 3	tCO₂e	353,704	182,984	37,696	1,472,873

KPI performance against targets, 2019-2022:

KPI	Unit	2022	2021	2020	2019	Target 2030
GHG emissions (Scope 1 and 2)	tonnes CO2e	3,930	8,745	7,117	8,669	-97%
GHG emissions intensity (Scope 3)³⁾	tonnes CO2e/GWh	410	8	62	209	-55%
Deploying electric vehicles (EVs) on sites	sites w/EVs	0	0	0	0	100%
Renewable electricity consumption (I-RECs)	% RE use	83	15	34	0	100%

³⁾GRI 305-4: GHG emissions intensity

GRI 305 descriptions

GRI 305-1: Direct (Scope 1) greenhouse gas emissions

Total Scope 1 emissions: 3,131 tCO₂e
Greenhouse gas emissions include CO₂, CH₄ and N₂O and SF₆.
Bioethanol is used in small scale for sites in Brazil. Emissions from land use change may be reported in future based on upcoming changes to the GHG Protocol.
2019 base year emissions were 1,987 tCO₂e and was chosen as it is first year Scatec included material Scope 3 emissions.
The GWPs used in the calculation of tCO2e are based on the Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report (AR4) over a 100-year period. CO₂ = 1, CH₄ = 25, N₂O = 298, SF₆= 22,800
The sources of the emission factors are described below, in the ‘Methodology’ section.
Consolidation Approach: Operational control
Standards, methodologies and assumptions are described below, in the ‘Methodology’ section.

GRI 305-2: Energy indirect (Scope 2) greenhouse gas emissions

Total Scope 2 emissions Location-based: 8,357 tCO2e
Total Scope 2 emissions Market-based: 800 tCO2e
Electricity factors include CO₂, CH₄ and N₂O
2019 base year emissions were 6,682 (6,657) tCO2e market based (location based) and was chosen as it is first year Scatec included material Scope 3 emissions.
The GWPs based on IPCC Fourth Assessment Report (AR4) over a 100-year period. CO₂ = 1, CH₄ = 25, N₂O = 298, SF₆= 22,800
The emission factor sources are described below, in the ‘Methodology’ section.
Consolidation Approach: Operational control
Standards, methodologies and assumptions are described below, in the ‘Methodology’ section.

GRI 305-3: Other indirect (Scope 3) greenhouse gas emissions

Total Scope 3 emissions: 1,468,943 tCO2e
All emission factors are in tCO₂e and include CO₂, CH₄, N₂O and SF₆
No indirect biogenic emission sources we can report on
Scope 3 emissions are calculated for the following activities; Purchased goods & services, Capital goods, WTW – Well to wheel, Upstream transportation, Waste generated, Business travel, Employee commuting, and Investments.
2019 base year emissions were 345,035 tCO₂e and was chosen as it is first year Scatec included material Scope 3 emissions.
The GWPs based on IPCC Fourth Assessment Report (AR4) over a 100-year period. CO₂ = 1, CH₄ = 25, N₂O = 298, SF₆= 22,800
The sources of the emission factors are described below, in the ‘Methodology’ section.
Standards, methodologies and assumptions are described below, in the ‘Methodology’ section.

Methodology

Scatec calculates and reports our GHG emissions according to the Greenhouse Gas Protocol “A Corporate Accounting and Reporting Standard, Revised edition”, “GHG Protocol Scope 2 Guidance – An amendment to the GHG Protocol Corporate Standard” and the “Corporate Value Chain (Scope 3) Accounting and Reporting Standard”.

The Global Warming Potential (GWP) used in the calculation of carbon dioxide-equivalents (CO₂e) are based on the Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report (AR4) over a 100-year period.

The carbon inventory is divided into three main scopes of direct and indirect emissions.

Scope 1 includes all direct emission sources. This includes all use of fossil fuels for stationary combustion resulting from onsite backup generators, transportation (in owned, leased, or rented vehicles), and fugitive emissions of sulphur hexafluoride (SF₆) from electrical equipment. Emission factors used for fuels are from the Department for Environment, Food, and Rural Affairs (DEFRA), 2022. Data is collected monthly and reported externally on an annual basis.

Scope 2 includes emissions from all purchased/acquired and consumed electricity, heat, steam, or cooling. The electricity consumed from the national grid is consumed during the night to keep the transformers energised, to heat the inverters to keep them dry (avoid moisture build up) and for securing auxiliary services. Smaller amounts are used from the national grid for lighting and other O&M purposes. The electricity emission factors are based on national gross electricity production mixes from the International Energy Agency’s statistics (IEA Stat). Emission factors per fuel type are based on assumptions in the IEA methodological framework.

Primarily two methods are used to “allocate” the GHG emissions created by electricity generation to the end consumers of a given grid: the location-based and the market-based method. The location-based method reflects the emission intensity based on the power generation connected to the grid. The market-based method reflects a contractual allocation of emissions from electricity production where companies choose to purchase, or not purchase, renewable electricity available on the grid through contractual instruments (contracts, certificates, or supplier-specific information). Our Scope 2 emissions are reported using both methods. Data is collected monthly and reported externally annually.

Scatec purchases International Renewable Energy Certificates (I-RECs). In 2022, 13,809 MWh of renewable electricity was sourced through the cancellation of own I-RECs from our operations and purchased I-RECs for Honduras and Malaysia. Each I-REC represents proof that 1 MWh of renewable energy has been produced and includes the environmental benefits this renewable energy has generated. Scatec also consumes own generated renewables on most sites, however this is not always gathered or measured.

Scope 3 includes indirect GHG emissions resulting from the company’s activities upstream and downstream. Data is collected and reported externally on an annual basis.

Emissions from capital goods are calculated based on procurement figures and best available emissions factors (either standard values or environmental product declarations (EPDs)).
Emissions for purchased goods and services, such as usage of fuels from construction contractors of financial data.
Fuel- and energy-related activities upstream – Well-to-wheel: are calculated based on scope 1 and 2 activity data using emission factors per fuel type from DEFRA and assumptions in the IEA methodological framework.
Upstream transportation is calculated using the EcoTransIT online calculator based on actual volumes transported from manufacturer port of origin to site, and general transport emission factors.
Business travel emissions are based on data gathered by and received from Scatec’s travel agencies.
Employee commuting emissions are calculated based on data collected from an employee survey and Defra emission factors.
Investments are calculated based on equity share of scope 1 and 2 emissions.
Waste data is estimated based on number of employees in offices, and consumption data for waste from construction activities.