In 2020, we further improved our sustainability performance in the area of reducing our carbon footprint and contributing to the circular economy. We have seen the beneficial effects of our social programmes becoming properly embedded for several years now and 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. In 2020, we were already at 74% of this objective. Our programme for reducing and ‘greening’ (offsetting) our CO2 emissions is bringing us step by step closer to this goal. Our vehicle fleet is increasingly electric or hybrid, the energy usage in our buildings is falling and we are continuing to reduce and green our network losses for electricity.
In 2020, our CO2 emissions decreased by 38 kilotonnes compared to 2019 (16%), moving from 243 to 205 kilotonnes. This clearly demonstrates the effect of our greening policy for the fifth successive year. Emissions have fallen sharply in recent years, partly due to greening of our network losses. Emissions also fell due to continued replacement of grey cast-iron gas pipes, lower network losses due to increasing local generation of renewable energy, falling CO2 emissions associated with our buildings and mobility, and the effect of the COVID-19 pandemic; we saw a dramatic drop in energy usage in our buildings and commuting mileage.
Alliander’s CO2 emissions1
- 1 The CO2 emission result for 2019 has been recalculated according to the most recent emission factors.
Emissions from network and leakage losses
Network and leakage losses that arise mainly during the distribution of electricity and gas account for 94% of our gross CO2 emissions. Network losses cost us about €68 million in 2020 and can only be mitigated to a limited extent. Nevertheless, we are working to reduce our technical and administrative network losses each year.
The network losses percentages shown for the last two years are estimates.
Greening network losses with renewable energy
Alliander is offsetting its network losses by generating additional renewable energy in the Netherlands. In 2020, we greened 80 kilotonnes of our total network losses with Guarantees of Origin and also received 39% of the electricity network losses as green electricity. 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. This approach ensures that our network losses are low-carbon and supports growth in renewable energy generation. In 2020, we made almost 71% of the total network losses sustainable by activating additional green certificates that had been contractually secured in the past.
Technical network losses
The absolute amount of the technical network losses decreased by 11% in 2020 compared to 2019. 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. The decrease in our technical network losses can partly be attributed to improved energy efficiency and partly to increasing renewable energy generation by customers.
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.
Internal CO2 price
We use an internal CO2 price as a weighting factor when assessing our investments. Energy savings or reductions in methane leaks are assigned more importance as a result. In 2020, Alliander took the initiative in persuading all the network operators to reach a sector-wide agreement on (higher) internal CO2 pricing. This year, the network operators all decided to perform their calculations using the same CO2 price of €50 per ton of CO2 in 2021, and will progressively increase this price during the coming years.
Administrative network losses
The total size of the administrative network losses increased due to the addition of gas network losses. In absolute terms, our administrative network losses for electricity were down compared with 2019. Administrative network losses are caused by fraud, e.g. illegally tapping into the electricity supply to grow cannabis, or the absence of contracts for new or existing connections. 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 2020, we continued to work on improvements in fraud detection and the collection of unpaid accounts, by digitalising our networks for example.
Emissions from buildings
The energy usage in our offices and buildings has reduced. This is partly due to the implementation of energy-saving measures identified in energy scans and partly due to reduced occupancy of the buildings as a result of the COVID-19 crisis. The CO2 emissions decreased by 10% compared with 2019. All the emissions from the buildings have been greened. The difference between energy generation and usage at our office in Duiven was actually positive in 2020.
In 2020, we presented our plans for a new office in Amsterdam-West. This will be Alliander’s third energy-neutral office, following on from the head office in Arnhem and the regional office in Duiven.
Emissions from vehicle fleet
We achieved a 29% overall reduction in our CO2 emissions for mobility relative to 2019. The number of kilometres driven fell by 62% compared to 2019, mainly as a result of the COVID-19 pandemic, and 24% less fuel was required for our lease cars and service vehicles. Our policy remained unchanged. Under this policy, we have an austere 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. Lease car drivers, like all other Alliander employees, can also use an ‘NS business card’ train pass. In 2020, 28% of our vehicle fleet with a yellow number plate was fully or partly electric (2019: 26%).
In 2020, 80 employees participated in a pilot called ‘samen fietsen’ that encourages the use of bicycles for business-related travel. The idea is to increase the use of bicycles as an alternative mode of transport to, from and between work locations. In September and October, employees cycled a total distance of 14,600km during business hours. #samenfietsen has clear health benefits and is also a good way of reducing CO2 emissions. We plan to continue this scheme in future years.
Highest step of the CO2performance ladder
Our approach and methodology were externally assessed on the basis of the CO2 performance ladder. In 2020, we again achieved a positive result and were audited at level 5 on the ladder. Certification on the CO2 performance ladder proves that:
we know our own footprint (level 1);
we are aware of possible reduction measures (level 2);
we are capable of actually implementing those measures (level 3);
we report the information transparently (level 4);
we initiate innovations together with supply chain partners (level 5).
The CO2 performance ladder is often used as a tender award criterion. This means that we know the CO2 emissions of our main suppliers, have achieved the level 3 and 4 objectives, and are publicly committed to the government’s carbon reduction programme.
In 2020, it was proposed that we add biodiversity as a new area of focus to the CSR policy. In our building and pipe and cable laying activities, we are already bound by spatial conditions under the Dutch Nature Protection Act, which defines the legal framework for biological diversity and the protection of endangered species of animals and plants and their natural habitats. We also want to focus more intensively in our operational processes on minimising or mitigating damage to biodiversity. For example, we are preparing our own policy for sustainably designing our substations. In addition to energy-neutral and circular operations, biodiversity is an important theme. For example, green roofs, natural forms of plot separation or local water storage. We will start implementing this policy in 2021.
Alliander participates in a broader coalition of infrastructure companies, which see opportunities to use the land they own and manage for large-scale nature recovery. In total, the national infrastructure companies in the Netherlands manage roughly 900km2 of land, so a collaboration among these companies to promote biodiversity will have a national impact. The ‘Ecologische Hoofdstructuur Infra’ project (Ecological Main Structure - Infrastructure) started in 2020.
In line with the example set by TenneT, Alliander wanted to investigate how our sites could contribute to biodiversity. As part of this initiative, we launched a pilot scheme for sinus mowing in 2020. Sinus mowing is the term for mowing in a meandering pattern rather than well-defined, straight lines. This pilot project was implemented under the supervision of the Dutch Butterfly Foundation (‘Vlinderstichting’). Sinus mowing leads to greater variety in the number of plants and shrubs and their structure, providing a better habitat for insects. The pilot was successful. Alliander plans to introduce sinus mowing outside the switching areas as part of the normal land management activities in 2021.
Science-based targets (SBTs) show companies how much and how quickly they need to reduce their greenhouse gas emissions to keep global warming below 2°C. In 2020, it was determined that Alliander operates within the 1.5°C limits set under the 2015 Paris Agreement. 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. In Alliander’s specific case, this scenario means a total CO2 reduction of around 21% before 2025, and 42.4% before 2030, in comparison to 2020. 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 appropriateness of the course we have set as a company for our climate-impacting emissions. Alliander is working towards having climate-neutral operations by 2023.
SBT identifies three emissions categories. Our climate targets for Scope 1-2 greenhouse gas emissions are in line with the Science-Based Targets criteria. Scope 3 supply chain emissions are not in our scope, as we can only influence these emissions indirectly.
Dealing with climate risks and adaptation; TCFD
Climate change requires companies to accept responsibility for reducing CO2 and accurately analyse the risks for the organisation. These risks may be physical (e.g. flooding), but they can also be related to the business and commercial environment; i.e. changes to the tax regime.
In 2020, we started a process to gain a clear picture of the physical and transition risks. We have assessed the potential impacts of climate change based on the recommendations of the international Taskforce on Climate-related Financial Disclosures (TCFD). We have completed the first steps in the TCFD approach, leading to a qualitative understanding of our risks. The risks have been worked out for two scenarios: far-reaching global warming as a result of policy that is implemented too late or not at all (the ‘4 degrees scenario’) and an optimistic scenario in which humanity succeeds in meeting the Paris objectives and limiting global warming.
The TCFD analysis shows that we comply with approximately two-thirds of the recommendations, provided we report more of the information available to us. We plan to achieve this in 2021.
Physical risks and opportunities
Our physical risks are mainly associated with supply chain dependencies in the event of extreme weather conditions and flooding. This includes potential damage to our own equipment and components or TenneT’s high-voltage pylons. As we have energy networks in Noord-Holland and Friesland, rising sea levels also pose a risk. Furthermore, high temperatures lead to higher electricity consumption due to a greater demand for cooling throughout society.
Transition risks and opportunities
Network operators are part of the solution in the transition to a sustainable energy supply. There are more transition opportunities than transition risks. The opportunities relate to growing electrification in society and the growth of green gas generation. The risks relate to the feasibility of fulfilling our task and phasing out the gas infrastructure.
Extreme weather events like drought, heat waves, wildfires and heavy rainfall
Damage to infrastructure
Rising sea level
Damage to energy supply chain, assets and at customers
Increasing average temperature
Damage to company assets
Technological innovation and market changes
Decrease in natural gas distribution in our networks in combination with the transition to other sources for heating
Changes in policy and regulation
Cost allocation of energy transition