Our social policy is one of the fundamental pillars of our governance: Alliander is future-proofed because we act to make our organisation safe, cost-conscious, sustainable and inclusive. Our social objectives focus on the facilitating capability of our energy network for sustainable energy, our CO2 emissions and the circular use of materials within our own organisation, a diverse and inclusive corporate culture and our performance as an employer. In 2021, we reassessed our guiding principles to give further substance to our sustainable and socially-oriented way of working and the actions of all our employees.
Working towards climate-neutral operations by 2023
Alliander is working towards having climate-neutral operations by 2023. In other words, Alliander will have net zero CO2 emissions caused by our network activities, offices and vehicles in 2023. In 2021, we were already at 85% of this objective relative to our reference year (2012). Our programme for reducing and ‘greening’ (offsetting) our CO2 emissions is steadily bringing us closer to this goal. Our vehicle fleet is increasingly electric or hybrid, the energy usage in our buildings shows a stable low level in 2020 and 2021 compared to the pre-COVID-19 period, and we are continuing to reduce and green our network losses for electricity.
In 2021, the net CO2 emissions of our own organisation decreased by 61 kilotons compared to 2020 (34%), falling from 176 to 115 kilotons. Net emissions have fallen sharply in recent years, largely due to greening of our network losses. The emissions also declined as a result of the replacement of grey cast-iron gas pipes and lower network losses due to increasing local power generation.
Emissions in our supply chain
In 2021, we investigated our supply chain-related CO2 emissions in greater detail. These are emissions released by our suppliers when making, transporting and delivering products and providing services. These ‘scope 3 emissions’ are characterised by the indirect influence of our organisation on the final size. These emissions fall outside the scope of our internal climate objective. Scope 3 emissions are largely calculated based on emission indicators per economic sector, multiplied by Alliander's expenditure in the sector in question. Because we also request raw material passports for products, we can be more specific about the CO2 effect of purchased components.
We see that the supply chain-related emissions in 2021 amounted to 446 kilotons CO2-eq. This is the same order of magnitude as our direct gross emissions under scopes 1 and 2. We intend to make CO2 a criterion in many of our procurement tenders (buildings, lease partners, components). In 2022, we will identify an appropriate target for scope 3 supply chain emissions, in discussion with our suppliers.
Alliander’s net CO2 emissions1
- 1 The net CO2 emissions figure for 2020 has been recalculated using the most recent emission factors (2020).
Internal CO2 price
In 2021, we used a higher internal CO2 price as a weighting factor when assessing the sustainability of our investments. Energy savings or reductions in methane leaks are assigned more importance as a result. The higher CO2 price is part of a sector-wide agreement between all network operators, initiated and coordinated by Alliander. All Dutch network operators performed their calculations using the same price of €50 per ton of CO2, and this price will progressively increase during the coming years.
The introduction of the higher internal CO2 price shows that simple measures, such as installing solar panels at all electricity substations, can be instrumental in achieving a positive business case faster. In addition, this new guideline will force us to look more closely at the use of SF6 in our transformers. The sector agreement has yet to be approved by the Authority for Consumers & Markets (ACM), but this approval is expected in early 2022.
Emissions from network and gas leakage losses
Network and leakage losses, which arise mainly during the transmission of electricity and gas, account for 93% of the gross CO2 emissions of our own organisation. Network losses cost us about €103 million in 2021 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 percentage is an accurate approximation. We report the final figures in the five-year summary.
Greening network losses with renewable energy
Alliander is offsetting its network losses by generating additional renewable energy in the Netherlands. In 2021, we greened 321 kilotons of our total network losses with mainly Dutch Guarantees of Origin. We also received 8% of the electricity network losses as green electricity. We have made a deliberate decision to progressively green our procurement for network losses with electricity from investments in renewable sources. This offsets the CO2 emissions associated with our network losses and lets us support growth in sustainable energy generation. In 2021, we made almost 80% of the total network losses sustainable by activating additional green certificates that had been contractually secured in the past.
Technical network losses
The total amount of the technical losses in the electricity network increased slightly in 2021, by 3% compared to 2020. This increase in technical network losses is mainly due to the increased level of economic activity compared to 2020. The trend over the past year is that local sustainable generation reduces the load on our cables at certain times of the day, and therefore results in a lower network loss. However, we expect further increases in sustainable energy feed-in to eventually lead to a higher load and thus a higher network loss. So we will continue to implement our reduction programme for technical network losses, which involves assessing measures based on the internal CO2 price.
The amount of our gas-related network losses decreased by 1% compared to 2020. This decrease is mainly due to the replacement of grey cast-iron gas pipes. In the coming years, the CO2 equivalent of a cubic meter of gas will be increased, so we expect to report higher gross CO2 emissions for this category in the future.
Administrative network losses
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 help us detect fraud. In 2021, we continued to work on improvements in fraud detection and the collection of unpaid amounts, for example by applying better detection techniques. As a result, we prevented and recovered more administrative network losses, achieving an improved result compared to 2020.
Emissions from buildings
The energy usage in our offices and buildings has increased slightly. A colder winter led to higher gas usage. The energy purchased for buildings is fully greened through Guarantees of Origin.
Our new logistics centre in Apeldoorn, built according to the Breeam Excellent guidelines for sustainable material use and energy efficiency, was completed in 2021. We also started using the Basisweg location, which has been renovated to the Breeam Outstanding classification. We have started construction of our new Amsterdam Westpoort premises, replacing Amsterdam Spaklerweg. All Alliander offices will meet the A, B or C label criteria by 2023 at the latest.
Emissions from vehicle fleet
The number of kilometres travelled decreased by 21% compared to 2020, mainly due to the COVID-19 pandemic. The amount of fuel consumed by lease cars and service vehicles decreased by 8%. 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 2021, 33% of our vehicle fleet with a yellow number plate was fully or partly electric (2020: 28%).
Alliander has worked systematically to reduce the electricity consumption of its IT facilities during the past 10 years. A calculation performed in 2021 shows that the total CO2 footprint of our IT facilities in 2020 was actually 49% lower than in 2010.
Top rung on the CO2performance ladder
Once again, external experts assessed our CO2 management approach and methods against the CO2 performance ladder in 2021. This comprehensive review of our efforts was again rewarded with 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 CO2 reduction programme. In 2021, we performed a detailed analysis of our supply chain emissions for the first time.
Science-based targets are objectives that are in line with the two-degree scenario of the Paris Agreement. These objectives can be broken down into the maximum CO2 emissions per sector (agriculture, manufacturing, energy, etc.) and into the 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 21% before 2025, and 42.4% before 2030, in comparison to 2020. In 2020, it was once again determined that Alliander's CO2 reduction policy for scope 1 and scope 2 emissions is in line with the science-based targets. In respect of these emissions, we will be climate neutral by 2023.
Cycling along the one-metre border
In June 2021, Alliander participated in a long-distance cycling event along the -1m water level line, an initiative organised by the Cycling for Climate foundation. The idea was to focus attention on the effects of climate change and encourage the use of bicycles as an alternative mode of transport to, from and between work locations.
In 2021, biodiversity was added as a theme to our social policy. Under the Dutch Nature Protection Act, we are already bound by spatial requirements in our building and construction activities. In addition to that statutory duty, we want to focus more intensively in our operational processes on minimising or mitigating damage to biodiversity. To give an example, we are now working on a new policy for sustainable power station design. We also promote biodiversity with green roofs, natural boundary partition forms and local water storage. We started implementing this policy in 2021.
Ecological Main Structure - Infrastructure
Alliander participates in a broader coalition of infrastructure companies, which see opportunities to link the land they own and manage for large-scale nature recovery. Dutch infrastructure companies manage roughly 900 km2 of land in total, 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.
After a successful pilot project to assess ‘sine-wave mowing’ (meandering mowing) in 2020, we started a trial in 2021 to assess the use of sine-wave mowing as a standard upkeep approach outside the switching areas. Sine-wave mowing leads to greater variety in the number of plants and shrubs and their structure, providing a better habitat for insects. A total of 59 sites (187,000 m2) are eligible for this. In addition to meandering mowing, our mowing strategy at various locations focuses on increasing biodiversity, for example by leaving flowering plants growing along ditch edges. The biodiversity-friendly mowing policy is a method that we implement with the aid of the Dutch Butterfly Foundation.
Dealing with climate risks and adaptation; TCFD
Alliander aspires to be 'future-proof'. One aspect of this is dealing effectively with the risks and opportunities presented by climate change. These risks may be physical, e.g. flooding, but they can also be related to the business and commercial environment; e.g. changes to the tax regime. Alliander uses the guidelines of the Taskforce on Climate-related Financial Disclosures (TCFD) as the starting point for its approach. Following on from this, climate risks will be part of the Alliander risk management framework from 2021 onwards, meaning that climate risks will be analysed and mitigated just like other types of risk.
Outcomes in 2021 and follow-up action
The risk management framework indicates a potentially high risk of damage and loss of assets due to flooding. The effects of drought and high temperatures can also pose a risk to the continuity of our operations. During the analysis of the results, we came to the conclusion that more research on climate scenarios is needed to increase the accuracy of our assessment of possible longer-term effects due to climate change. This is in line with the TCFD's recommendation and will be addressed through further action in 2022. A new TCFD guidance document was published at the end of 2021. Alliander has taken note of this and is incorporating the new developments into its climate policy.
Physical risks and opportunities
Our physical risks mainly stem from supply chain effects in the event of extreme weather conditions and flooding. This involves potential damage to our own components or TenneT’s high-voltage pylons. Given the low elevation of some of our service areas, rising sea levels also pose a risk. Furthermore, higher temperatures lead to higher electricity consumption due to a greater demand for cooling throughout society.
Transition risks and opportunities
Our networks are an indispensable element for ensuring a successful transition to a sustainable energy supply. The transition offers opportunities: growing electrification in society and the growth of green gas feed-in in our networks. But there are also transition risks: the demanding but unavoidable pace at which we must fulfil 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