TAURON Group against the backdrop of the world’s greatest challenges – climate changes and insufficient resources

Material factors impacting TAURON Group’s growth Short-term outlook

There is no doubt that humans impact the climate system, and this fact is evidenced by the increase in the concentration of greenhouse gases in the atmosphere and the observed warming. There is also no doubt regarding the relationship between this rise and the increase in the temperature on Earth. The concentration of carbon dioxide in the atmosphere has reached very high value over the recent decades. We are observing successive, shameful records: the highest temperature, the hottest summer, the smallest area of the Arctic ice cover in the history of satellite measurements, etc. Extreme weather conditions are becoming more and more common.

It should be emphasized that energy and climate change issues are closely related, as the manufacturing industry, transportation and energy sectors are responsible for the majority of the EU’s greenhouse gas emissions. The assumption is that a reduction of emissions in the energy sector is easier to achieve in a shorter timeframe than in the other sectors mentioned above, due to the focus on solid fossil fuels and the possibility of providing substitution using renewable sources. As a result, transforming electricity generation is of essential importance for tackling climate change. Satisfying energy needs while reducing greenhouse gas emissions is the main challenge for the EU, and especially for Poland.

Climate change and progressing environment degradation pose a threat for Europe and the rest of the world and require an urgent response. To meet these challenges, the European Council called for more efforts to combat climate change and asked the European Commission to accelerate the works on the EU’s climate neutrality, in line with the EU’s international commitments under the Paris Accord.

As a result, the European Green Deal strategy was announced in December 2019, and the 2050 climate neutrality target was approved. The European Green Deal is a newly proposed EU growth strategy that aims to transform the European Union into a climate-neutral, fair and prosperous society with a sustainable, resource-efficient and competitive economy. The European Green Deal requires a holistic approach, i.e. the participation of all of the EU actions and policies in achieving its goals; all of the current policies related to climate neutrality will be subjected to a review and, if required, revised in line with the greater climate ambitions. It is assumed that reforms will be implemented, first and foremost, in those sectors of the economy that have the greatest impact on climate change and the environment, including the mining and energy sectors.

In addition, the European Council approved a new binding EU target in December 2020, assuming the reduction of the national net greenhouse gas emissions by at least 55% by 2030, as compared to the 1990 levels.

It should be emphasized that achieving climate neutrality by 2050, as a result of the social and economic transition, will be a great challenge for Poland and the Polish energy sector. The regulations stemming from the European Green Deal will have a significant impact on the operations of TAURON Group in the short and long term.

More information on the Group’s impact on the climate and adaptation to climate change is provided in section TAURON Group’s Climate Policy.

Dependence on fossil fuels, in addition to a significant impact on the climate, means that the industrial sector based thereupon must take into account their supply limitations, deterioration of the availability conditions and finally exhaustion, which in the long run leads to the worsening conditions for economic growth. Insufficiency of the resources in the energy sector is controlled using operational limits stemming from the legal mechanisms, e.g. licenses specifying the allowed scope of extraction of a hard coal or limestone deposit, or water law permits specifying limits for the use of water resources in case of activities related thereto. The quantities of water taken directly from the environment (surface and groundwater intakes), as well as the quantities and quality of wastewater that can be discharged into the environment are limited. For these reasons, whenever possible, technical solutions allowing for the so-called closing of the circuits, i.e. reusing water within technology process circuits with lower quality requirements. Also, the use of water to produce electricity in hydropower plants is limited by additional conditions specified individually for each power plant, such as the water damming level or the minimum flow due to the biological requirements.

Insufficiency of resources can also constitute an opportunity for the energy and mining industries, as these sectors can be a source of materials that can replace the increasingly limited natural aggregates. The ashes, slag, gypsum from desulphurization processes, produced as by-products for years, or post-mining aggregates that accompany coal processing, are becoming more and more sought after on the market, due to the fact that such substances, produced as integral parts of the energy production process, as a result of burning solid fuels and processing of extracted minerals, can be used without any further processing in an environmentally safe manner as substitutes for natural aggregates.