Tackling climate change

The international scientific community is now in agreement that climate change represents a genuine threat to future generations and that it is largely the result of human activity. This increasing awareness is the result of the commitment that international scientific institutions have shown towards studying the phenomenon and expressing the need to implement and guarantee environmental protection at global level.

The "Earth Summit" United Nations Conference held in 1992 in Rio de Janeiro marked the beginning of this journey and was characterised in particular by the signing of the "Declaration on Environment and Development". It was during the third Conference of the Parties (COP) and the signing of the Kyoto Protocol in 1997 that the need to decarbonise the economy led to the first international commitment by developed countries to reduce greenhouse emissions.

This commitment only came into force in 2005 with the ratification of the Protocol by Russia and Canada. Since then, the issue of the environment, and in particular the importance of combating climate change, has run alongside those of economic development and social well-being, gaining global importance and playing an increasingly pivotal role. First the European Community and then the European Union firmly believe in the need to combat global warming.

It is no coincidence that in 2007 the European Union launched one of the most ambitious decarbonisation programmes. Known as the "20-20-20 package", the programme consisted of a series of quantitative targets for 2020 that each member state was required to meet. In particular, the package defined three main objectives: 20% reduction in greenhouse gas emissions; 20% of energy requirements satisfied by renewable sources; 20% increase in energy efficiency.

The EU's leading role in the fight against climate change was further pursued in the following decade. In October 2014 the "European Energy Union" was established, identifying the need for further and more ambitious targets for the reduction of greenhouse gases, the increased reliance on renewable energy sources and the reduction in consumption by 2030.

These ambitions led the EU to become a driving force in December 2015 when, along with 195 countries, the Paris Agreement was signed during the COP 21. The Paris Agreement, which came into force in 2016, represents an important step in the global fight against climate change caused by human activity. In fact, it requires the signatories to develop plans to reduce greenhouse gas emissions in order to limit the increase in global temperatures to "well below" 2°C, and to make every effort to keep this increase within 1.5°C.

The commitments undertaken in Paris led the EU to approve the "Clean Energy for all Europeans Package" (CEP) in November 2016, consisting of a powerful set of regulations and directives that outline the legislative framework to support the path towards the decarbonisation of the EU by 2030. The CEP defined the following main objectives for the transition towards energy decarbonisation by 2030:
• a reduction of at least 40% in greenhouse gas emissions (compared to the levels recorded in 1990);
• at least 32% of the EU's final energy consumption deriving from renewable energy;
• an improvement of at least 32.5% in energy efficiency. In particular, our business is affected by the following CEP directives and regulations:
• the revised renewable energy directive;
• the Energy Union Governance regulation proposal;
• the revised internal electricity market directive;
• the directive regarding common rules for the internal electricity market.


Thanks to the CEP, Italy and other EU Member States were required to define their 2030 decarbonisation policy at national level, through respective National Energy and Climate Plans (NECPs). These Plans must be approved by Brussels and implemented through adequate operating programmes.

In line with the 2030 Clean Energy Package, the new European Commission instated in 2019 announced the European Green Deal, formalising its will to extend its climate commitments through its pledge to make Europe carbon neutral by 2050. This target could reasonably lead to the definition of even more ambitious targets than those set for 2030. In these years of profound and rapid transformation in the energy sector, as proven throughout our history, ERG has always understood how to anticipate the evolving dynamics.

In 1992 ERG - which at the time was still operatingin the oil sector - began to generate electricity through a highly innovative system that avoided the emission of millions of tons of combustible fuel oil each year through the production of electricity.

In the early 2000s, when the 20-20-20 package was in the process of ratification, ERG entered into the wind power sector and secured a significant market share. Marking the beginning of ERG's sustainable transition, in 2008 the Group signed an agreement that would later lead to its definitive exit from the oil business in favour of a more significant presence in the wind sector and the use of a highyield gas cogeneration plant, launched in 2010.

ERG's evolution continued in 2013 when it became the leading onshore wind energy producer in Italy and one of the top ten largest producers in Europe with over 1,000 MW of installed capacity, at a time when electricity generation still relied heavily on fossil fuels in the country. The exit from the oil sector soon marked ERG's radical transformation into an independent energy producer entirely from high-yield cogeneration and renewable sources. The Group also expanded its portfolio of technologies, entering the hydroelectricity sector with the acquisition of the Terni hydroelectric complex in 2015, expanding in other European countries and making its entry into the solar industry in recent years. Following the adoption of the Clean Energy Package and the 2030 NECPs,

ERG continues to lead the way in wind generation in Italy and is one of the top European renewable energy producers, with a total installed capacity of over 3,000 MW and a production structure based on four different technologies: over 1,800 MW and 140 MW in the wind and solar sectors respectively, 527 MW in the hydroelectricity sector and 480 MW in the natural-gas based high-yield thermoelectric cogeneration sector. In line with Europe's decarbonisation policies, for the future we have drawn up a Business Plan dedicated exclusively to the development of the electric RES sector, increasing our portfolio capacity of 850 MW - with investments of over EUR 1.7 billion mainly in the wind energy sector - both in Italy and in other target countries in Europe: France, Germany and the United Kingdom.

Our 2018-2022 Business Plan is consistent with the objectives of the Italian NECP, concentrating on solar and wind energy generation and focusing in particular on the repowering initiatives, which represent one of the main areas for development outlined in the Business Plan.


 

THE NATIONAL ENERGY AND CLIMATE PLAN
 

As established by the Clean Energy Package adopted by the European Union, every Member State has committed to sending Brussels a National Energy and Climate Plan (NECPs), which establishes the path towards decarbonised energy production to 2030.

Italy submitted a first draft in January 2019 while the final version, following a structured evaluation and consultation process at national level, was sent to the Commission in early 2020.

For Italy, the main targets for national decarbonisation by 2030 can be summarised as follows:
- 30% of all gross energy consumption served by renewable energy;
- 22% of all gross energy consumption in the transport sector served by renewable sources;
- 1.3% of annual gross energy consumption in the heating and air conditioning sector served by renewable sources (indicative);
- 43% reduction of primary energy consumption compared to the PRIMES 2007 scenario (prior to the 2008 financial crash)
(indicative);
- minimum 33% reduction of greenhouse gas emissions for sectors not included in the Emission Trading System compared to emissions in 2005;
- electricity interconnection with neighbouring states of at least 10%;
- achievement of the indicative target of 55% of gross electricity consumption served by renewable sources;
- confirmation of the planned withdrawal from carbon-fuelled electricity generation by 2025.


In June 2020 the European Commission will publish its final assessment of the NECPs that must be revised in 2023 in consideration of the new targets established by the European Green Deal.
 
 

EUROPEAN GREEN DEAL
 

The European Commission has launched the European Green Deal (EGD) project, a concrete action aimed at transforming Europe into the first climate-neutral continent. The resulting legislation ratifies the EU's target to achieve climate neutrality and eliminate atmospheric CO2 emissions by 2050.

The EGD outlines a path for socially equitable transition, being designed so as not to leave behind any European region or citizen, and will trigger a cycle of public and private investments estimated to be EUR 1,000 billion by 2030.

The "General plan for the reduction of greenhouse gas emissions by 2030", which aims to achieve a reduction of 50-55% by 2030, is particularly significant. This will enable the EU to achieve "climate neutrality" (zero man-made CO2 emissions) by 2050.