Sustainable business practices
In 2019, we improved our sustainability performance in the area of reducing our carbon footprint and contributing to the circular economy. We saw the effects of our social programmes becoming properly embedded. We are on track for achieving climate-neutral operations by 2023. Additionally, we have established a link between our good results in progressing towards a circular economy and cost savings, with increased reuse of assets leading to lower costs. Along with other infrastructure operators, we have made a start on aligning policy with our internal carbon pricing.
Working towards climate-neutral operations by 2023
Alliander is working towards having climate-neutral operations by 2023; in other words, on balance Alliander will have zero carbon emissions as a result of our network activities, offices, and vehicles in 2023. Our programme for reducing and ‘greening’ (offsetting) our CO2 emissions is bringing us step by step closer to this goal. Of the vehicles in our fleet with a yellow number plate 26% are now electric, the energy consumption of our buildings is decreasing, the network losses are showing a downward trend, and an increasing amount of the remaining losses are being offset.
In 2019, our CO2 emissions decreased by 24 kilotonnes compared to the previous year (8%), from 288 to 264 kilotonnes. With this, the effect of our greening policy was clear for the fourth successive year. With the greening of our buildings and vehicle fleet and a reduction in the network losses, the net emissions have dropped sharply in recent years. The gross emissions were also reduced as a result of the replacement of grey cast-iron gas mains and procuring green electricity to offset network losses.
Alliander’s CO2 emissions
Emissions from network and leakage losses
94% of our gross emissions are caused by network and leakage losses that arise mainly from the distribution of electricity and gas. Network losses cost us about €52 million in 2019 and can only be mitigated to a limited extent. Nevertheless, we are working to reduce our technical and administrative network losses each year.
Technical network losses
The absolute amount of the technical network losses decreased by 3.9% in 2019 compared to 2018. Where the technical network losses were previously always closely connected with the state of the economy, we are now seeing that economic growth does not necessarily result in more electricity and gas being carried by the systems and therefore greater network losses. In the current upswing, we are even seeing a decrease in our technical network losses. This is partly due to the improved efficiency of energy transmission.
Our reduction programme for technical network losses is still being pursued. To enhance safety and reduce gas leakages, each year we are replacing grey cast-iron gas pipes at various locations. This measure also helps to reduce energy loss and reduce our climate-impacting emissions.
We often base measures to reduce CO2-related emissions in the networks on a further cost-benefit assessment. Setting a calculation price for carbon emissions helps in making a cost calculation for the reduction in carbon emissions. In 2019, Enexis, Stedin and Alliander decided to work together on setting an internal price on carbon emissions. The joint introduction of a higher carbon price will lead to effective reduction measures and prevent major financial differences between the network operators. This higher carbon price is expected to be introduced in 2020.
Administrative network losses
In absolute terms, our administrative network losses were down compared with 2018. Administrative network losses arise in part from fraud, including illegally drawing off energy to grow cannabis. We rely partly on the police and judiciary, with whom we work closely, to give us active and focused assistance in our efforts to fight fraud. In 2019, we continued to work on improvements in fraud detection and the collection of unpaid accounts, by digitalising our networks for example.
Greening network losses with renewable energy
Alliander is offsetting its network losses by generating additional renewable energy in the Netherlands. In 2019, we greened 202 kilotonnes of our total network losses with Guarantees of Origin. We have made a deliberate decision to shift the procurement of energy to meet our network losses to energy from new investments in renewable sources in the Netherlands. This will allow us to ensure that our network losses are low-carbon and we will be supporting the objectives of renewable energy generation in the Netherlands. In September 2019, Alliander signed a contract with power company Ørsted to reduce our carbon emissions by around 25% annually. The contract comes into effect in 2021 and has a term of 15 years. Alliander will purchase green certificates from Ørsted’s offshore wind farm Borssele 1& 2. With this new contract, among other measures, more than 95% of the network losses will be offset over time.
Emissions from buildings
When adjusted for degree days, energy usage in our offices and other buildings has decreased. No major changes in our property portfolio occurred in 2019. Our CO2 emissions from buildings decreased by 21% compared with 2018. The remaining emissions have been offset. With our energy-neutral offices in Arnhem and Duiven, we meet the highest standards.
Emissions from vehicle fleet
The kilometres driven decreased by 1.2% compared to 2018 and, as a result, our transport-related carbon emissions were down by 4% compared with 2018. We benefited from our new policy implemented in 2018. Under this policy, we have a different compensation system for the vehicle fleet, a stricter emission standard for CO2 and nitrogen for lease cars applies (maximum 100g/km in emissions), we are moving towards a diesel-free fleet, and we are making electric driving more accessible. Like all Alliander staff, employees with a company car also get an annual train pass to encourage the use of public transport. In 2019, 26% of our vehicle fleet with a yellow number plate was electric.
In 2019, we stopped the Ecodrive project for the service vans due to service technicians feeling unsafe driving with these speed limiters. Moreover, technological innovations in energy-efficient and safe driving were difficult to apply in vans with Ecodrive. However, we plan to add more electric vans to the fleet.
The top rung on the CO2 performance ladder
Our CO2 approach and methodology were externally assessed on the basis of the CO2 performance ladder. Certification on the CO2 performance ladder provides proof of insight into the company’s own footprint (level 1), the possible reduction measures (level 2) and the competence to actually implement these measures (level 3), to make insights transparent (level 4), and to initiate innovations with supply chain partners (level 5). The CO2 performance ladder is often used as a tender award criterion. In 2019, we maintained level 5 on the ladder. This means that we know the CO2 emissions of our A-suppliers, have achieved the level 3 and 4 objectives, and are publicly committed to the government’s carbon reduction programme. We are proud of this step, but to retain our excellent position on the CO2 performance ladder we must continue mobilising and challenging our suppliers to reduce carbon emissions throughout the supply chain.
In 2019, on the basis of 2018 data it was determined that Alliander is operating within the 2°C pathway target set under the 2015 Paris Agreement; we are meeting our science-based target (SBT). This reporting year, all reduction targets have been met and no policy changes have been made that would require a new review in 2020. The SBT is based on achieving the IPCC target of ‘well below 2°C’ by 2050. This target can be broken down into the maximum CO2 emissions per sector (agriculture, manufacturing, energy, etc.) and into maximum CO2 emissions per company. This is known as the Sectoral Decarbonisation Approach. For Alliander, this means cutting total carbon emissions by approximately 38% by 2030. On the transport front we are lagging slightly behind. Overall, however, we are comfortably on track to meet the SBT, with our policy of becoming climate-neutral by 2023 and with the results achieved so far. The review validates the course we have set as a company for our climate-impacting emissions.
Climate risk and adaptation
Alliander is a member of the Delta programme. This is a Dutch government initiative for examining climate change risks at national level and for coordinating the approach to these risks. Effects and risks are assessed and action is focused on adaptation and management by our crisis and disaster organisation. Risks to existing and planned assets from such things as floods, wildfires and storms are examined. We are aware that business risks relating to the effects of climate change require attention. In line with the development in transparency guidelines relating to this issue, such as those of the Task Force on Climate-related Financial Disclosures, in 2020 we intend to conduct a targeted study of the effects of climate change on our company.