Climate Change Data

Gazprom energoholding Group (Mosenergo, TGC-1, OGK-2, and MOEK)

Climate Impact & Sustainability Data (2012-2013, 2014-2015)

Reporting Period: 2012-2013

Environmental Metrics

Total Carbon Emissions:41,530,536.2 tonnes CO2 equivalent (2013)
Renewable Energy Share:40.9% (TGC-1 HPP share in output 2013)
Water Consumption:3,792,017 thousand cubic meters (2013)
Waste Generated:3,093,953.7 tonnes (2013)

ESG Focus Areas

  • Economic Sustainability
  • Environmental Sustainability
  • Labour Sustainability
  • Social Sustainability

Environmental Achievements

  • Reduced total amount of pollutant emissions per production unit at power plants by 8% year-on-year in 2013.
  • Successfully completed the first stage of a project to introduce EIMSGC, a specialized SAP-based business process management system in 2013, improving economic planning, contracting and repair processes.

Social Achievements

  • Drafting of the Code of Corporate Ethics of OOO Gazprom Energoholding, serving as a basis for similar codes in subsidiary companies.
  • Active contribution to improvements in the quality of life in operating regions through job creation and reliable energy supplies, supporting sports, academic and cultural events.

Governance Achievements

  • Implementation of unified corporate standards for management across generating companies.
  • Establishment of a Research and Development Council to increase efficiency of research and development activities.

Climate Goals & Targets

Long-term Goals:
  • Not disclosed
Medium-term Goals:
  • Increase profitability of own generating assets and expand business structure through mergers and acquisitions and foreign market penetration (2016-2020).
Short-term Goals:
  • Strengthen the balance sheet of companies by increasing profitability, streamlining costs and improving production efficiency (2014-2015).
  • Complete construction of CCGT units at TPP-16, TPP-20, and TPP-12 (Mosenergo).
  • Complete construction and launch of CSA facilities at Serovskaya, Troitskaya, Ryazanskaya and Novocherkasskaya GRESs (OGK-2).

Environmental Challenges

  • Decreased electricity and heat demand due to economic crisis and energy saving measures.
  • Changes in electricity prices in the unregulated market and heat tariff restrictions.
  • Changes in prices for energy carriers, services, materials and equipment.
  • Risk of non-payments for electricity and heat.
  • Accidents due to wear and tear of fixed assets.
  • Failure to meet contractual obligations by contractors.
  • Risks of weather conditions and seasonal water content changes.
  • Competition with more efficient electricity producers.
  • Government regulation risks (freezing or limiting electricity and heat tariff growth).
  • Amendments to regulations governing activities of energy sector players.
  • Risks of changes in licensing requirements.
  • Risks of changes in Russian legislation (tax and civil laws).
  • Risks during implementation of investment projects.
  • Risks related to financial markets (interest rate risk, inflation, foreign exchange risk, outflow of foreign capital).
  • Environmental risks (risk of environmental damage or pollution).
  • Social risks (risk of terrorist attacks, production failures and accidents caused by human error).
  • Corruption risks and risks of conflict of interests.
Mitigation Strategies
  • Implementation of programmes to improve operating efficiency and long-term contracts.
  • Active work within NP Market Council and NP Trading System Administrator.
  • Timely optimisation of fuel balance structure and proactive enabling measures, medium-term agreements with suppliers at fixed prices, maintenance of reserve fuel stock.
  • Optimisation of repair & operation and capital construction costs, tender-based supplier selection.
  • Work in the Commission for Payments in the Wholesale Electricity and Capacity Market, preparation of proposals on improvement of payment discipline.
  • Timely repair and modernisation, upgrading, and retrofitting, implementation of an investment programme.
  • Reinforcement of the preliminary counterparty risk analysis system, control of fulfilment of obligations by counterparties.
  • Implementation of programmes to improve operating efficiency, additional employee training and development, long-term agreements.
  • Active interaction with the Federal Tariff Service of Russia, regional energy commissions.
  • Involvement in drafting of regulations and regulatory impact assessment of draft regulations.
  • Upon expiration of licenses or in case of changes in licensing requirements, taking all possible steps to maintain current or obtain new licenses.
  • Timely review of changes in taxation and legislation, and respective adjustment of corporate procedures and processes.
  • Selection of sources of finance for investment programmes, improvement of organisation and supervision of work by everyone engaged in investment project implementation.
  • Raising of short- and long-term loans subject to optimal loan portfolio structure and value, issue of bonds subject to a favourable market situation.
  • Efforts to ensure approval of reasonable tariffs for the companies, subject to government limitations, internal cost reduction.
  • Maintaining an open currency position as minimized as possible, revision of plans for purchasing imported goods in foreign currencies.
  • Proactive steps to increase shareholder value of our companies and ensure stable share prices.
  • Control of activities to ensure compliance with Russian and international environmental standards, employee training, asset upgrading and retrofitting.
  • Environmental liability insurance.
  • Counter-terrorism activities in accordance with Russian statutory requirements, property and personnel insurance.
  • Commercial insurance, careful personnel selection, personnel briefing, training, and development, control of compliance with safety rules and work discipline.
  • Internal control to ensure no conflict of interests arises during procurement, contracting, and recruitment, implementation of the Code of Corporate Ethics.

Supply Chain Management

Responsible Procurement
  • Bidding procedures
  • Assessment of supplier reliability and good faith using ISO 9001:2008

Climate-Related Risks & Opportunities

Physical Risks
  • Seasonal water content changes
Transition Risks
  • Changes in electricity prices
  • Changes in prices for energy carriers

Reporting Standards

Frameworks Used: GRI 4

Certifications: ISO 14001:2004

Awards & Recognition

  • Government of Moscow award for Best Completed Project Using Green and Energy Saving Technologies (Mosenergo)
  • Crystal Drop award (TGC-1)

Reporting Period: 2014-2015

Environmental Metrics

Total Carbon Emissions:39,128,989 tCO2e (2015)
Waste Generated:2,998,729.3 tons (2015)

ESG Focus Areas

  • Economic Sustainability
  • Environmental Sustainability
  • Labour Sustainability
  • Social Sustainability

Environmental Achievements

  • Total pollution emissions of the Group’s electricity generation fleet were reduced by 34% from 2010, with greenhouse gas emissions cut by 14%, and water consumption and disposal reduced by 30%
  • Commissioning of new high-performance CCGT generating units with advanced low-emission gas turbine combustion chambers to reduce specific emissions of pollutants
  • Retrofitting and upgrades of hydro turbine equipment using environmentally friendly materials
  • Construction of run-around systems for process water supply at heat power plants to reduce chemical and thermal pollution of water bodies

Social Achievements

  • Establishment of the Shared Staff Training Centre (SSTC), which pools resources across all training centres operated by Gazprom energoholding Group’s production companies
  • Contribution to the social development of the regions where our companies operate through job creation and reliable supplies of heat and electricity
  • Targeted aid to children, senior citizens and industry veterans

Governance Achievements

  • Consolidation of corporate governance functions of the Group’s companies within OOO Gazprom energoholding
  • Changes in the heat supply structure for Moscow (transfer of MOEK’s heat generating facilities to Mosenergo, and hand over of heat distribution networks operated by Mosenergo to MOEK)
  • Implementation of various operational efficiency projects across the Group's companies

Climate Goals & Targets

Medium-term Goals:
  • Increase the profitability and optimise the structure of our business by capturing attractive opportunities for disposal of non-core assets, M&A activity, and penetration of foreign markets
Short-term Goals:
  • Strengthen the balance sheet of the Group’s companies by increasing the profitability of operations, streamlining costs and improving production efficiency
  • Continue efforts to centralise the entire generation fleet within Mosenergo, while concentrating all heat distribution networks and distribution functions within MOEK
  • Significantly reduce the debts of our companies and increase the amount of funds paid out as dividends

Environmental Challenges

  • Challenging macroeconomic conditions in 2014–2015 and the resulting decline in the demand for electricity and heat
  • Higher costs of servicing foreign currency debt and restricted access to external financing
  • Sanctions introduced by some countries against Russia’s industrial majors
Mitigation Strategies
  • Timely measures to mitigate the adverse effects the external factors had on the Group’s performance
  • Cost-cutting and operational efficiency initiatives
  • Diversification of material and equipment sourcing and wider engagement with Russian suppliers
  • Successful replacement of some imported equipment with locally manufactured or South East Asian products

Supply Chain Management

Responsible Procurement
  • Competitive tendering
  • Focus on counterparties with impeccable business reputation and compliance with laws and ethics
  • Amendments to procurement regulations to provide SMEs with exclusive access to certain opportunities

Climate-Related Risks & Opportunities

Physical Risks
  • Acts of nature
  • Termination of transport services to remote areas
Transition Risks
  • Changes in electricity prices
  • Uncertainty in heat tariff restrictions
  • Changes in prices for energy, services, materials, and equipment
  • Higher levels of non-payment of electricity and heat bills
  • No demand for a portion of generation capacity offered at the CCO auctions

Reporting Standards

Frameworks Used: GRI 4.0, Electric Utility Sector Supplement

Certifications: ISO 14001:2004 (Mosenergo)

Third-party Assurance: GRI’s “Materiality Disclosures Service” experts

Awards & Recognition

  • Government of Moscow award for environmental protection efforts
  • Russian Federation Government Prize for the upgrade of K-300 unit at Kirishskaya GRES