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 capacity of our energy network for sustainable energy, our CO2 emissions, the circular use of materials, our efforts to promote biodiversity, a diverse and inclusive corporate culture and our performance as an employer. We discuss the latter topics in the section An attractive and inclusive employer with equal opportunities for all.
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 2022, we were already at 85% of this objective. We are working to improve this score by reducing our CO2 emissions and by becoming more sustainable. Our vehicle fleet is increasingly electric or hybrid, gas consumption in our buildings is falling and we are continuing to reduce the environmental impact of our network losses for electricity.
Our direct gross emissions in 2022 were lower than in 2021. Our network losses fell. We did not reduce our environmental impact to the same extent as in previous years. It is still our objective to become climate neutral in 2023.
Emissions in our supply chain
We investigated the supply-chain-related ‘scope 3’ CO2 emissions further in 2022. These include the emissions released by our suppliers when making, transporting and delivering products and providing services. As an organisation, we have an indirect influence on the scale of these emissions. Therefore, they are not covered by the scope of our own internal climate objectives. Scope 3 emissions are largely calculated based on emission indicators per economic sector, multiplied by Alliander's expenditure in the sector in question.
The supply-chain-related emissions in 2022 amounted to 510 kilotons of CO2-eq. This is higher than our direct gross emissions under scopes 1 and 2. CO2 reduction is one of the award criteria in our tendering processes. We began identifying an appropriate target for our scope 3 emissions in 2022. This revealed that the way that parties in our sector calculate scope 3 emissions varies widely. Furthermore, the costs of eliminating these emissions entirely can be high. In 2023, we will publish a proposal for improved collaboration within the sector and a potential common target.
Alliander’s net CO2 emissions 1
- 1 The net CO2 emission result for the years 2018-2021 was restated based on the most recent data and emission factors.
Internal CO2 price agreed with the regulator
Since 2021, we have 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 greater weight as a result. The higher CO2 price is part of a sector-wide agreement between all network operators, which was initiated and is coordinated by Alliander. Following intensive discussions led by Alliander, the ACM approved the price agreements between the network operators in February 2022. All Dutch network operators now perform their calculations using the same price of €100 per ton of CO2. This price will progressively increase during the coming years. The introduction of the higher internal CO2 price means that simple measures are more likely to present a positive business case. In addition, this new guideline forces us to look more closely at the use of SF6 in our transformers.
Emissions from network and gas leakage losses
Network and leakage losses that arise mainly during the distribution of electricity and gas account for 92% of our gross CO2 emissions. We saw an increase in network losses in 2022. This is probably due to the strong growth in renewable energy feed-in and the ensuing higher load on the network. Electricity network losses cost us about €264 million in 2022 and can only be mitigated to a limited extent. Nevertheless, we take action each year to reduce both our technical and administrative network losses, as described below. The network losses percentage is an accurate approximation. We report the final figures after two years in the Five-year summary appendix.
Greening network losses with renewable energy
Alliander is offsetting its network losses by generating additional renewable energy in the Netherlands. We made 175 kilotons of our total network losses sustainable with Guarantees of Origin in 2022 and also received 28% of the electricity network losses as green electricity. We have made a conscious decision to progressively green our procurement for network losses with electricity from investments in renewable sources. This approach ensures that our network losses are low-CO2 and supports growth in renewable energy generation. By employing contracted additional green certificates in 2022, we made 86% of the total electricity network losses sustainable with Dutch wind-power certificates and around 56% of the gas network losses sustainable with EU Gold Standard certificates.
Alliander recognises that purchasing electricity sustainably with Guarantees of Origin does not take account of the simultaneity of generation and consumption. Because the electricity network must remain balanced at all times, the system works better if network users coordinate the timing of their consumption and (purchased) generation. This concept is known as 24/7 matching. We calculated the matching score for Alliander for 2022 based on the consumption due to network losses, electricity consumption in offices and electric-vehicle mobility. Our own generation from solar panels on the roof and wind power purchased with Guarantees of Origin was then offset against this consumption. The matching was calculated on a quarterly basis to ensure alignment with the Dutch electricity market. The result for 2022 was a matching score of 58.9%.
We are investigating how we can increase this score in the coming years. This may include diversifying the generation technology of the electricity we purchase or by adding storage or demand management.
24/7 consumption and origin of electricity purchased by Alliander
Technical network losses
The total technical electricity network losses rose by 8% in 2022 compared to 2021. This increase in technical network losses was mainly due to the increased network load compared to 2021, which resulted from an increase in local sustainable generation. This meant that our cables had to carry higher loads at certain times of the day. This resulted in higher network losses. We expect further increases in sustainable energy feed-in to eventually lead to a higher load and thus higher network losses.
Our total gas-related network losses stayed stable relative to 2021. 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. In view of the steep rise in energy prices, we looked closely in 2022 at how to minimise that impact. Disconnections and the absence of contracts automatically lead to higher administrative network losses for the network operator. Measures implemented by the national government in partnership with suppliers and network operators kept the number of disconnections and customers without a contract to a manageable level.
We rely partly on the efforts of the police and judiciary, with whom we have collaborative agreements, to help us detect fraud. In 2022, we continued to improve our fraud detection and recovery of losses suffered due to the absence of contracts for new and existing connections. We recovered more administrative network losses and achieved better results in 2022 than in 2021.
Emissions from buildings
The energy consumption in our offices and buildings fell in comparison to 2021. This was primarily due to reduced gas consumption. This was partly the result of the replacement of the gas-heated logistical locations in Nijkerk and Apeldoorn and the opening of the central distribution centre on Laan van Zodiak in Apeldoorn, which does not use natural gas. The energy purchased for buildings is fully greened through Guarantees of Origin.
The construction of our new, sustainable Amsterdam Westpoort location, which replaces Amsterdam Spaklerweg, is proceeding steadily. Our offices in Apeldoorn and Amsterdam will be energy neutral once they are completed. We began major renovations at our locations in Doetinchem and Leeuwarden in 2022. Both projects will be completed in 2023. We also moved out of the data centre on Hofmanweg in Haarlem and moved to a new, more sustainable data centre on Oudeweg in Haarlem.
The remaining Alliander offices will meet the A, B or C energy label criteria by 2023 at the latest.
Emissions from vehicle fleet
The number of kilometres travelled rose by 86% in 2022 compared to 2021. Partly as a result of this, the amount of fuel consumed by lease cars and service vehicles increased by 14%. The main reason was that more employees commuted to and from work following the COVID crisis. Our compensation system for travel costs was amended in response to price increases. We will reassess whether to continue using the standard compensation rates in 2023.
We have imposed strict standards for CO2 and nitrogen emissions from lease cars (max. 100 grams CO2/km). Diesel cars are not permitted and we encourage the use of electric vehicles. Like all other Alliander employees, lease car drivers can also use an NS business card for train journeys. In 2022, we prepared to take the decision to transition to a fully electric vehicle fleet. The associated policy is expected to be implemented in 2023. We provide a more detailed summary of the emissions from our vehicle fleet in the Other non-financial information appendix.
Top rung on the CO2 performance ladder
We assess our approach to and the reduction of our climate footprint based on the criteria for the CO2 performance ladder. We have now performed at the highest level for several years. This demonstrates our understanding and implementation of the following:
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 are transparent about our performance and ambitions (level 4)
we work on innovations with our supply chain partners (level 5)
CO2 reduction is one of the award criteria in our tendering processes. We know the CO2 emissions of our main suppliers, we have achieved the level-3 and level-4 objectives and we are committed to the government’s CO2 reduction programme. In 2022, the operation and scope of our certification were reassessed externally and confirmed.
Science-based targets are business objectives that align with the two-degree scenario in the Paris Agreement. In 2022, we signed up to the Science-Based Target Initiative (SBTi) for verification in 2023. In 2020, it was determined that Alliander's CO2 reduction policy for scope 1 and scope 2 emissions is in line with the science-based targets. This goal can be broken down into the maximum CO2 emissions per sector and 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 about 21% by 2025 in comparison to 2020, and 42.4% by 2030. We are also obliged in 2023 to define our objectives for scope 3 emissions for the final verification.
Climate risks and adaptation
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 have been part of the Alliander risk management framework since 2021. This means that climate risks are included in the annual risk session with the Management Board. The results give an initial impression of the risks that may arise due to climate change.
Outcomes in 2022 and follow-up action
The results indicate a potentially high risk of damage and loss of company 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 concluded that more research on climate scenarios is needed to increase the accuracy of our assessment of the possible risks due to climate change. A Climate Adaptation working group is investigating the potential physical effects of climate change on network components and energy infrastructure under the Netbeheer Nederland banner. The group is also developing proposals for climate adaptation measures. This is in line with the TCFD’s recommendation and will be developed further in 2023.
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
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 new standards for sustainable power station design. In 2022, we published a brochure that explains how we integrate sustainability into our power station construction projects. We began preparing an assessment framework and associated standards for green roofs in partnership with Movares. To speed up developments relating to biodiversity, we formed a partnership with Naturalis in 2022 to translate Alliander’s far-reaching ambitions for biodiversity into specific actions. We also began a study of the measurement of the impact on biodiversity in partnership with Naturalis and the Impact Institute.
Ecological Main Structure - Infrastructure
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 900 km2 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. This led to the start of a pilot in 2022, in which we are investigating the extent to which it is possible to implement biodiversity measures at our medium-voltage facilities or even to design them in a nature-inclusive way.
We carried out a pilot in 2022 at our Westwoud substation in which sheep are used instead of mowing. The long-term experiment into reducing the nutrients in the soil in the switching areas that began in 2021 was continued in 2022. We implement our mowing policy with the assistance of the Dutch butterfly foundation (Vlinderstichting). A policy was agreed in 2022 that prevents the use of chemical pesticides in paved switching areas. An investment proposal to gradually make the switching areas greener was also approved.