November 2013

Les Cahiers du Développement Durable

12th edition

Climate Change and ElectricityEuropean carbon factorBenchmarking of CO2 emissions by Europe’s largest electricity utilities

www.pwc.fr/dd

2 | Climate Change and Electricity | 2013

Report prepared by PwC FranceLes Cahiers du Développement Durable

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PwC | 1

The carbon factor of Europe's largest electricity utilities continued to rise in 2012

In 2012, the electricity generated by the 20 utilities in our selection fell 34 TWh, from 2,127 TWh to 2,093 TWh. This 1.6% decline on 2011 is a result of the strained economic environment in Europe, with an overall decline in the European economy of 0.4% by volume and 0.7% in the eurozone1.

The CO2 emissions of European electricity utilities, however, rose 0.6%, from 727 million tonnes of CO2 (Mt CO2) in 2011 to 732 Mt CO2 in 2012. This increase is primarily due to the transfer of their output to higher-carbon energy sources for two main reasons. Indeed, these forms of energy, less costly than alternative sources in the short term, increased in the southern European countries most affected by the economic crisis (primarily Greece, Portugal, Italy and Spain). In addition, 2012 witnessed a drop in the price of a tonne of CO2 in Europe, which only encouraged the use of fossil fuels. In the US, the shale gas revolution has driven up American exports of coal to Europe at prices that are very competitive with European gas which is becoming more and more expensive.

The accident in Fukushima, Japan, in March 2011 brought nuclear power under scrutiny in some European countries, in particular in Germany which has decided to progressively phase out nuclear energy. This source of energy is being replaced by lignite coal which is becoming more widespread and accounts for

25.6% of electricity produced in Germany as compared to 22.7% in 2011.

Furthermore, the significant levels of precipitation in some countries (particularly in northern Europe) was sufficient to revive hydraulic power plants in 2012. This was not the case in Spain where, due to the drought, electricity companies produced very low levels of hydropower and resorted to coal.

Overall, the European carbon factor is on the rise, reaching 350 kg CO2/MWh in 2012, up 7 kg CO2/MWh on 2011 (+2%).

This illustrates an international trend in carbon emissions. It will now take a huge effort to meet the 2°C warming target, which would require an average decarbonisation rate of 6% per year between now and 2100 (see PwC study "Busting the carbon budget", 2013).

The carbon factor continued to rise in 2012, therefore, after increasing slightly in 2011, preceded by three consecutive years of decline.

The 20 utilities in our selection generated over 60% (61%) of emissions in Europe's electricity and heating sector (27 countries).

1: Eurostat, "Real GDF growth rate-volume : percentage change on previous year", http ://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=fr&pcode=tec00115

The biggest increases in emissions between 2011

and 2012 were recorded by:

• RWE: emissions up 17.3 Mt CO2 (12%) due to the

increase in electricity output from coal and fuel

sources.

• Vattenfall: after a decrease of 1.6 Mt CO2 in 2011, the

company's emissions increased by 7.7 Mt CO2 (10%)

in 2012 (despite an increase in electricity generated

by nuclear power and hydropower), due to an

increase in electricity generated by lignite-fired power

plants in Germany.

• EnBW: after reducing its emissions by 3.1 Mt CO2

(16%) in 2011, the utility once again increased its

emissions by 2.1 Mt CO2 (11%) in 2012, as a result of

decreased nuclear input in favour of coal.

The biggest decreases in emissions between 2010

and 2011 were recorded by:

• CEZ: emissions down 11.6 Mt CO2 (30%) due to the

action plans implemented by CEZ to reduce CO2

emissions through the renewal of coal-fired power

plants and the use of power plants with the lowest

possible carbon factor in addition to the use of the

nuclear power plant in Temelin since December 2012.

• GDF SUEZ: emissions down 5.4 Mt CO2 (9%) due to

the overall decrease in electricity production.

• EDF: emissions down 6.5 Mt CO2 (12%) due to a

significant decrease in Edison's oil and gas activities

in Italy.

• E.ON: after an increase of 4.6 Mt CO2 (5%) in 2011, the

group decreased its emissions by 3.8 Mt CO2 (4%) in

2012. E.ON invested three times more in renewable

energy than in conventional energy sources. On the

other hand, overall electricity production decreased.

2 | Climate Change and Electricity | 2013

What role will electricity from renewable sources play in tomorrow’s Europe?

Between 2011 and 2012, the use of renewable sources in the energy mix of the 20 utilities in our selection grew from 16.7% to 19.1%. The annual net output derived from renewable energy sources was up 45 TWh. In the same period, electricity generated from non-renewable sources fell 79 TWh for a total drop in output of 34 TWh.

Top 5 emitters

• RWE (DE, UK): 158.5 Mt CO2, +11%

• E.ON (DE, UK, IT, FR): 85.7 Mt CO2, -4%

• Vattenfall (DE, SE, FI): 85.3 Mt CO2, +9%

• Enel (IT, ES, PT): 78.8 Mt CO2, +3%

• GDF SUEZ (FR, BE, UK): 55.4 Mt CO2, -10%

5 highest carbon factors

• DEI (GR): 1,174 kg CO2/MWh, +6%

• Drax (UK): 882 kg CO2/MWh, +9%

• RWE (DE, UK): 785 kg CO2/MWh, +2%

• Scottish & Southern (UK): 531 kg CO2/MWh, +5%

• EDP Group (PT, ES): 496 kg CO2/MWh, +20%

5 lowest carbon factors

• Statkraft (NO): 8 kg CO2/MWh, -64%

• PVO (FIN, SW): 39 kg CO2/MWh, -63%

• Verbund (AT): 82 kg CO2/MWh, -33%

• EDF (FR, UK, IT, BE, PL): 90 kg CO2/MWh, -8.2%

• Fortum (FI, SE): 91 kg CO2/MWh, +3%

PwC | 3

1. Context, purpose and limits of the study 5

1.1. In 2012, output fell due to low growth and an increased use of carbon energy sources 5

1.2. Purpose of the study 5

1.3. Limits of this study 5

2. Methodology and sources 6

2.1. Data collection in Europe 6

2.2. Coverage 6

2.3. Scope 6

2.4. Published information 7

2.4.1 European analysis (20 companies) 7

2.4.2 Results for 2002-2012 7

3. Résultats 2001-2012 8

3.1. Production – 2012 data 8

3.2. Emissions – 2012 data 10

3.3. Carbone Factor 11

3.4. Major trends in CO2 emissions for 2011-2012 14

3.5. Use of renewable energy: significant increase in 2012 15

3.5.1 Significant increase in electricity generatedfrom renewable sources 15

3.5.2 Increase in the percentage of renewable energy in the electricity mix 16

3.5.3 Relationship between the use of renewable energy and the carbon factor 16

4. Change in the energy mix – focus on renewable energy sources 18

Appendices 20

Contents

4 | Climate Change and Electricity | 2013

PwC | 5

1. Context, purposeand limits of the study

1.1. In 2012, output fell due to low growth and an increased use of carbon energy sources

With the ongoing economic crisis in Europe in 2012, European electricity utilities produced less electricity than in previous years. The economic crisis has been most stifling for southern European economies. As a result, less electricity was generated overall, despite high industrial growth in other countries such as Germany.

In addition to the economic crisis, the debate on the energy transition has also had an impact. A trend has emerged to progressively phase out nuclear energy (France has set itself a target for 2025 to reduce nuclear output to 50% and Germany is aiming to progressively shut down nuclear production) in favour of renewable energy (100% of Denmark's energy mix by 2050), even if the use of renewable energy remains controversial: the cost of electricity from renewable energy sources is high and includes additional costs for the payment of subsidies granted to the renewable energy sector, and energy storage technology that would offset high energy demand during climatic fluctuations is far from market-ready.

The European Union has set a target for 2020 to reduce its greenhouse gas emissions by 20%, increase the share of renewable energy in energy consumption to 20% and increase energy efficiency by 20%.

In 2012, our selection confirmed the trend to reduce nuclear power in Europe as several nuclear plants have been shut down, particularly in Germany.

The resulting production shortfall was not systematically compensated by renewables, as required by the energy transition, but rather by carbon fuels which have a much more competitive price against the backdrop of the economic crisis. Despite the increased use of fossil fuels, however, the share of renewable energy in the total energy mix increased this year.

Although less electricity was generated, CO2 emissions rose slightly in 2012 (0.4%) and even with a slight increase in the share of renewable energy, the CO2 emissions of the selection of utilities and hence the European carbon factor were not reduced (see Section 3.5).

1.2. Purpose of the study

The purpose of this study is to identify, consolidate, standardise and present comprehensive information on CO2 emissions by the largest European electricity utilities and to analyse the main trends between 2002 and 2012.

1.3. Limits of this study

We do not provide comments or opinions on energy prices or the impact of CO2 in the assessment of the companies included in this study.

6 | Climate Change and Electricity | 2013

2.1. Data collection in Europe

Most of the companies in our selection have posted data directly on their website or in their Annual Reports and/or Environment/Sustainable Development reports. The transparency of the data disclosed did not significantly improve in 2012. While some companies explicitly published a geographic breakdown of CO2 emissions resulting from electricity generation as well as the related carbon factor, this information is more difficult to come by in the case of other companies which publish aggregate emissions data and do not distinguish between emissions attributable to heating (not included in the scope of this study) and those attributable to electricity production. Moreover, very few utilities provide explanations for changes in emissions figures.

For companies producing both electricity and steam, aggregate CO2 emissions have been allocated to electricity in proportion to the percentage of electricity in the total energy mix.

We are aware, particularly in cases where data has been extrapolated, that some data may be approximate. However, we believe that the margin of error regarding direct greenhouse gas emissions does not exceed 10%.

Lastly, due to recent M&A activity in the energy sector, some companies included in the study have been replaced and data for previous years has been adjusted accordingly.

2.2. Coverage

The European Commission estimated Europe's total electricity output in 2012 at around 3,085 TWh2, down 0.9% on 2011. The companies in our selection therefore represent 2,093 TWh, or 68% of all electricity generated in Europe.

The emissions analysed in this report total 732 Mt CO2/year, representing nearly 60% of emissions of the European electricity sector (EU-28).

2.3. Scope

To make the results of the study as relevant as possible, our scope included only:

- European emissions3; - Emissions attributable to electricity generation (i.e., excluding emissions from subsidiaries in other sectors).

Where possible, emissions attributable to heat production were also eliminated.

When consolidated emissions data were unavailable, the figures from recent acquisitions were added using the control approach rather than the equity approach in accordance with the recommendations of the GHG Protocol4.

Changes in scope took place in 2012 at EDF to consolidate sites in Poland.

Wherever possible, historical data for companies included in this study were restated for the period 2002-2012 in order to highlight trends on a comparable scope basis.

Details on consolidation are provided in Appendix B.

Our selection now includes 20 companies.

2. Methodology and sources

3: (excluding emissions from entities outside Europe)

2: Eurostat / Environment and energy, 2011, Electricity statistics – provisional data for 2011 : http ://epp.eurostat.ec.europa.eu/statistics_explained/images/5/5b/Electricity_Statistics_2012_%28in_GWh%29.png

PwC | 7

2.4. Published information

2.4.1 European analysis (20 companies)

We analysed the 20 leading European electricity utilities based on the following criteria:

- production (in TWh). NB: we took into account electricity generated as opposed to electricity sold, which also factors in trading activities;

- emissions (in t CO2/year), corresponding to electricity generated;

- carbon factor (in kg CO2/MWh produced); - percentage of energy produced from renewable sources;

- main trends in the carbon factor, CO2 emissions and the renewable energy ratio5.

2.4.2 Recalculation of historical data

We updated and recalculated historical production and emissions data for some companies in order to take into account recently published data.

4: For more information, see: www.ghgprotocol.org

5: Renewable energy is energy which comes from natural resources such as wind, sunlight, water and biomass and can be naturally replenished.

8 | Climate Change and Electricity | 2013

3.1. Production – 2012 data

Electricity generated by our selection of companies fell 33.6 TWh (1.6%) between 2011 and 2012, chiefly attributable to E.ON, GDF SUEZ, EDF, Dong and EDP.

EDF remained the biggest producer of electricity in Europe. In 2012, RWE, in the UK, moved up from third to second place in the ranking. The company considerably increased its production generated from coal (up 8.2 TWh) as its market price became more attractive. RWE's production generated from natural gas also increased by 3.7 TWh thanks to the commissioning of a new power plant in Pembroke.

3. Results for 2002-2012

Electricity production in Europe 2010-2012

2010 2011 2012

EDF E.ON EnelVattenfall RWE GDF Suez

Europe

Iberdrola+ Scottish

CEZ EnBW Fortum Scottish & Southern

DEI EDPUnion Fenosa

Verbund Drax Dong :Elsam +

Energy E2

PVOStatkraft Edipower

In T

Wh

594

202 194

180

180 163

76 69 60 59 54 46 40 37 36 35 27 16 15 11

-

100

200

300

400

500

600

Electricity production in Europe 2002-2012 (top 5 producers)

In T

Wh

634

594

184

202

166

194 216

180

228

180

EDF

RWE

Vattenfall

E.ON

Enel

PwC | 9

The bleak economic climate in Europe contributed to the decline in electricity output in 2012 compared with 2011.

In 2012, GDF SUEZ Europe was driven out of the top five electricity producers in Europe by the re-entry of Enel.

Difference between annual temperatures and the European 10-year average

Jan12

222018161412

European 10-yeartemperature index

Monthly Europeantemperature index

1086420

Feb12

Mar12

Apr12

May12

Tem

pér

atur

e (°

C)

June12

Jul12

Aug12

Sep12

Oct12

Nov12

Dec12

Jan13

2000-20102012

Source: CDC Climat Recherche, Tendances Carbone, no. 70, June 2012.

10 | Climate Change and Electricity | 2013

3.2. Emissions – 2012 data

Pro forma emissions by companies included in our selection were up 2.6 Mt CO2 (0.4%) between 2011 and 2012. RWE remains the biggest emitter in Europe with 159 Mt CO2, representing about 22% of total emissions by the companies in our selection and 12% of the sector’s emissions in Europe (EU-28).

Enel joined the top five emitters as a result of an increase in its emissions of 2.7 Mt CO2. It replaced EDF which has reduced its emissions by 9% due to a significant decrease in its oil and gas activities in Italy. E.ON and GDF Suez saw a slight decrease in their emissions. Vattenfall's emissions increased by nearly 10%.

CO2 emissions in Europe 2002-2010 (5 biggest groups)

In M

t of

CO

2 RWE

E.ON

GDF Suez Europe

Enel

Vattenfall

136

159

92 86

68

85

120

79

44

55

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

CO2 emissions in Europe 2009-2012 (all companies in our selection)

159

86 8579

55

54 47

27 24 24 2219 18

15 5 4 4 3 1 0 -

20

40

60

80

100

120

140

160

2009 2010 2011 2012

RWE

In M

t of

CO

2

E.ON Vattenfall Enel SuezEurope

EDF DEI CEZ Iberdrola+ Scottish

Power

EnBWScottish & Southern

Groupe EDP

Union Fenosa

VerbundDrax Dong :Elsam +

Energy E2

PVO StatkraftEdipowerFortum

PwC | 11

3.3. Carbon factor

The average carbon factor for Europe rose 7 kg CO2/MWh (2%) to 350 kg CO2/MWh in 2012 from 343 kg CO2/MWh in 2011.

In all, 12 of the 20 companies included in our study reported an increase in their carbon factor – including EnBW, which saw a 47% increase.

Once again in 2012, EDF was chiefly responsible for maintaining a relatively low average carbon factor in Europe, due to bullish production levels and its widespread use of nuclear power. The carbon factor excluding EDF would have been 452 kg CO2/MWh.

Main increases in the carbon factor in 2012

versus 2011

• EnBW recorded a 118 kg CO2/MWh (47.1%) rise

in its carbon factor compared to a decrease of

48 kg CO2/MWh in 2011, mainly due to a

decrease in nuclear energy production following

the shutdown of two nuclear power plants in

spring 2011. At the same time, more electricity

was generated from coal in 2012.

• Union Fenosa recorded a 119 kg CO2/MWh

(43%) rise in its carbon factor, mainly

attributable to a more significant share of

electricity produced from coal-fired power

plants in Spain.

• EDP recorded a 84 kg CO2/MWh (20.4%) rise in

its carbon factor. Decreased production and a

more widespread use of carbon fuel increased

emissions.

• E.ON recorded a 69 kg CO2/MWh (17.1%) rise in

its carbon factor as fossil fuels, such as coal

and natural gas, still make up a large portion of

the energy mix. Some nuclear power plants

were forced to shut down in Germany. In

addition, coal-fired power plants saw an

increase in production as a result of the low

cost of coal.

Main decreases in the carbon factor in 2012 versus

2011

• PVO recorded a drop of 67 kg CO2/MWh (62.9%) in its

carbon factor due to a reduction in conventional

non-renewable energy sources (gas, coal, fuel oil). The

group's total output also fell, with a slight increase in the

use of nuclear energy.

• Statkraft recorded a 64.3% decrease (14 kg CO2/MWh) in

its carbon factor, which the company attributes to its

greater use of hydropower in Nordic countries reflected

by the increased share of hydropower in the energy mix

from 90.8% to 97.2%.

• CEZ recorded a 30% drop in its carbon factor from

566 kg CO2/MWh to 395 kg CO

2/MWh due to a greater

share of nuclear and renewable energies in the energy

mix.

• Verbund recorded a 33% drop in its carbon factor from

123 kg CO2/MWh to 82 kg CO

2/MWh. This is the result of

a greater share of renewable energy, mainly hydropower

but also solar and wind power, in the total energy mix.

NB: 2011 emissions for DEI are estimated based on the energy mix and total electricity generated.

12 | Climate Change and Electricity | 2013

Change in the carbon factor (for the 20 companies in our selection)

310

320

330

340

350

360

370

380

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Car

bo

n fa

cto

r in

kg

C

O2

/MW

h

2012 European carbon factor by utility

2009 2010 2011 2012

DEI Drax RWE GDF Suez

Europe

Iberdrola+ Scottish

Power

Vattenfall EnBW FortumScottish & Southern

EDP Union Fenosa

VerbundDong :Elsam +

Energy E2

PVOEdipower CEZE.ON Enel Groupe EDF

Statkraft

1 174

882

785

531 496 476

441 438 408 398 395

369 341 278 254

91 90 82 39

8 -

200

400

600

800

1 000

1 200

European carbon factor: 350 kg CO /MWh²In k

g/M

Wh

The carbon factor for some utilities was lower than the European carbon factor, due chiefly to an energy mix comprising mostly hydro and/or nuclear power. The companies concerned are virtually the same as in 2011 (Statkraft, EDF, Fortum, PVO, Verbund, Iberdrola & Scottish Power, GDF SUEZ and Dong) with the exception of Union Fenosa which increased its carbon factor and is now above the European average.

The modest rise in GDF SUEZ Europe's carbon factor (1.2 % or 4 kg CO2/MWh) remains slightly below the European carbon factor. In 2012, EDF had the fourth lowest carbon factor in our selection of companies.

PwC | 13

Position of the top 20 companies in relation to the European carbon factor

0

20

40

60

80

100

120

140

160

100 200 300 400 500 600 700

Mt

CO

2

TWh

European Carbon Factor 350 kg CO2/MWh

1

E.ON

2

Enel

3 RWE4

Vattenfall

5

GDF Suez Europe

6

Iberdrola + Scottish Power

7

CEZ

8

EnBW

9

Fortum

10

11

Scottish & Southern

12

DEI

13

EDP

14

Union Fenosa

15

Verbund16

Drax

17

Dong : Elsam + Energy E2

Edipower

18

PVO19

Statkraft20

Groupe EDF

1

20

6

8

7

4

59

2

3

1014

13

1112

15

16

18

1917

14 | Climate Change and Electricity | 2013

3.4. Major trends in CO2 emissions for 2011-2012

Companies track changes in their CO2 emissions from one year to the next. We sought to identify the main trends that emerged in 2012:

The biggest increases in emissions between 2011

and 2012 were recorded by:

• RWE: emissions up 17.3 Mt CO2 (12%) due to the increase in electricity output from coal and fuel sources.

• Vattenfall: after a decrease of 1.6 Mt CO2 in 2011, the company's emissions increased by 7.7 Mt CO2 (10%) in 2012. This is due to an increase in electricity generated by lignite-fired power plants (1.7 TWh) in Germany, despite an increase in electricity generated by nuclear power and hydropower.

• EnBW: after reducing its emissions by 3.1 Mt CO2 (16%) in 2011, the utility once again increased its emissions by 2.1 Mt CO2 (11%) in 2012 as a result of decreased nuclear output in favour of coal.

The biggest decreases in emissions between

2011 and 2012 were recorded by:

• CEZ: emissions down 11.6 Mt CO2 (30%) due to the action plans implemented by CEZ to reduce CO2 emissions through the renewal of coal-fired power plants and the use of power plants with the lowest possible carbon factor in addition to the use of the nuclear power plant in Temelin since December 2012.

• GDF SUEZ: emissions down 5.4 Mt CO2 (9%) due to the overall decrease in electricity production.

• EDF: emissions down 6.5 Mt CO2 (12%) due to a significant decrease in Edison's oil and gas activities in Italy.

• E.ON: after an increase of 4.6 Mt CO2 (5%) in 2011, the group decreased emissions by 3.8 Mt CO2 (4%) in 2012. E.ON invested three times more in renewable energy than in conventional energy sources. On the other hand, total electricity production decreased.

Major trends in CO2 emissions between 2011 and 2012

RWE

Vattenfall

Union Fenosa

E.ON

GDF Suez Europe

CEZ

(15)

(10)

(5)

-

5

10

15

20

Mt C

O2

PwC | 15

3.5. Use of renewable energy: significant increase in 2012

3.5.1 Significant increase in electricity generated from renewable sources

Our analysis of the 20 biggest electricity companies shows that electricity generated from renewable sources increased considerably by 45 TWh (12.6%) from 2011 to 2012.

Taking into account the overall decrease in output over the same period (1.6%), the share of renewable energy in the total electricity output increased significantly over the past two years from 16.7% in 2011 to 19.1% in 2012 above the 2010 level when renewable energy accounted for 17.0% of the mix.

This increase was mainly attributable to favourable weather conditions and normal precipitation levels in 2012. The main source of renewable energy remains hydroelectricity, which represents 15,8% of the total electricity generated in 2012 (out of a sample of 14 electricity utilities accounting for 83% of 2012 output for the selection).

The European Union has set a target of 20% of renewable energy in the final energy consumption mix by 2020 (all types including electricity, heating, transport). The current level (19.1%) of electricity generated from renewable energy sources appears to be on target. However, a target set by Directive 2001/77/EC requiring 21% of electricity to be generated from renewable sources beginning in 2010 was not attained by the selection of utilities.

Electricity generated from renewable energy sources in Europe 2010-2012

(all companies in our selection) in TWh

Change in the percentage of electricity generated from renewable energy

sources between 2010 and 2012 by all companies in our selection in TWh

364 356 403

500

1 000

1 500

2 000

2 500

2010 2011 2012

The share of renewable energy in the energy mix continued to rise and matched its 2010 level.

Renewable sources

Non-renewable sources

19,1%16,7%17,0%

Main changes in electricity generated from renewable energy sources between

2011 and 2012

-100%

-50%

0%

50%

100%

Scottish & Southern

Groupe RWE

Verbund

GDF Suez Europe

Union Fenosa

EDP

+ 6,4 TWh

+ 3,2 TWh

+ 3,6 TWh

- 2,4 TWh- 0,9 TWh

- 4,9 TWh

The utilities that produce the largest share of electricity from renewable energy sources are not high on this list which essentially features medium-sized utilities that are investing heavily in renewable energy to catch up.

In 2012, Scottish & Southern and RWE increased their use of renewable energy by 72% and 41%, respectively, mainly reflecting improved weather conditions as compared to 2011. Verbund increased output generated from renewable energy in 2012 by 26%. Verbund's renewable energy production is mainly from hydraulic energy sources and increased in 2012 as a result of favourable weather conditions which increased the yield of its hydraulic power plants by 22%. Lastly, Statkraft is still the utility that is most dedicated to renewable energy which accounts for 98% of its energy mix, mainly attributable to its hydraulic production capacities which rose 24% in 2012. Electricity from renewable sources generated by EDP fell by almost 25%, from 19.4 TWh in 2011 to 14.5 TWh in 2012.

EDF E.ONEnel Vattenfall RWEGDF Suez

Europe

Iberdrola+ Scottish

CEZEnBWFortum Scottish & Southern

DEI EDP Union Fenosa

Verbund DraxDong :Elsam +

Energy E2

PVOStatkraft Edipower

2010

2011

2012

16 | Climate Change and Electricity | 2013

This mainly reflects a steep decline of almost 50% in the hydrological index in Spain and Portugal, which in turn impacted the production of hydropower. Union Fenosa's and GDF SUEZ Europe's modest decreases in energy generated from renewable sources (16% and 8%, respectively) are attributable to an increase in the use of their coal-fired power plants, mainly a result of economic policies that encourage the use of coal. Drax also decreased production generated from renewables by nearly 50% between 2011 and 2012 and as a result returned to its 2009 level of 1.5 TWh, which only accounts for 5% of the energy mix, as a result of a significant decline in the use of biomass, which is its only source of renewable energy.

3.5.2 Increase in the percentage of renewable energy in the electricity mix

Percentage of renewable energy in the mix (all companies in our selection)

Percentage of renewable energy in 2011 Percentage of renewable energy in 2012

EDFE.ONEnel RWEGDF Suez

Europe

Iberdrola+ Scottish

Power

EnBWFortum Scottish &Southern

DEI EDP Union Fenosa

Verbund DraxDon :Elsam +

Energy E2

Statkraft EdipowerVattenfall CEZPVO

98%87%

47%40%

32% 29% 28% 26%21% 17% 16% 15% 12% 12% 12% 10% 8% 6% 5% 5%

0%

20%

40%

60%

80%

100%

120%

NB: Data on EnBW and Edipower prior to 2011 are included in EDF.

In the selection of companies, 19.1% of electricity was generated from renewable energy sources in Europe in 2012. This percentage rose from 2011 (16.7%), with an increase of 45 TWh in electricity generated from renewable sources in 2012.

Statkraft, Verbund and, to a lesser extent, Fortum have upheld their high dependence on renewable energy, primarily hydropower. In contrast, CEZ, Drax and RWE use very little renewable energy in production, with the share remaining roughly stable at around 5%. However, this does not reflect efforts made by CEZ and especially RWE whose use of renewable energy increased considerably but was drowned out by an increase in overall production.

3.5.3 Relationship between the use of renewable energy and the carbon factor

The graph below presents the carbon factor according to the percentage of renewable sources in each company’s

energy mix, in order to analyse the relationship between renewables and the carbon factor:

Carbon factor level according to the percentage of non-renewable energy sources within the energy mix

-

200

400

600

800

1 000

1 200

Car

bon

fact

or (

en k

g C

O2/

MW

h)

Percentage of non-renewable energy in the mix

1

E.ON2

Enel3

RWE4

Vattenfall5

GDF Suez Europe6

Iberdrola + Scottish Power7

CEZ8

EnBW9

Fortum10

Statkraf t11

Scottish & Southern12

DEI 13

EDP14

Union Fenosa15

Verbund16

Drax17

Dong : Elsam + Energy E2Edipower

18

PVO

19

EDF

20

13

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1

3

4

12

1110

9 8

76

5 214

16

17

18

19

20

15

PwC | 17

We continued to observe a significant correlation between the two criteria: utilities generating a large percentage of electricity from non-renewable sources tend to have a higher carbon factor.

This does not apply to PVO and EDF, which generate 56% and 79%, respectively, of all their electricity output from nuclear energy.

The inversely proportional link between the share of renewable energy in the energy mix and the carbon factor remains weak as in 2011. In 2012, several utilities increased their production of renewable energy thus reducing their carbon factor, in particular PVO and Statkraft, while other utilities saw their carbon factor rise (Union Fenosa and Drax). This confirms the link between a low share of renewable energy in the mix and a strong likelihood of a high carbon factor. Other electricity companies, however, saw their carbon factor rise while boosting their use of renewable energy (EnBW, Scottish & Southern and E.ON).

The following companies stand out in the graph above:• Union Fenosa's carbon factor increased significantly

(43%) and its share of renewables decreased (14%) which is mainly attributable to the replacement of renewable energy with coal, the result of the Royal Decree 134/2010 which encourages the use of coal.

• PVO slashed its carbon factor but only slightly increased its share of renewable energy, resulting from a decline in conventional non-renewable energy sources (gas, coal and fuel oil) and a slight increase in nuclear and hydraulic power.

• Statkraft's carbon factor also decreased significantly even though the share of renewable energy only grew by 3%. The issue here is the saturation point: renewable energy accounts for 98% of the mix and further increases are unlikely, despite its efforts (it increased the use of renewable energy by 24% as compared to 2011).

• Scottish & Southern's share of renewable energy increased substantially (by 82%). However, the utility's carbon factor did not drop but rose by 5%, reflecting an increase in the use of coal-fired power plants as overall electricity output increased.

• EnBW's carbon factor increased significantly despite a rise in the share of renewable energy. This is due to the shutdown of nuclear power plants which resulted in an increase in the use of coal-fired power plants despite the utility's desire to increase the share of renewable energy in the mix mainly through the use of hydropower given the weather conditions in 2013, and wind power.

In 2012, five companies did not increase the amount of electricity generated from renewable sources in their energy mix, compared to eight in 2011 and six in 2010. Some of these companies attribute this trend to the financial interest of coal, an energy source with a very attractive price. In theory, renewable energy sources clearly contribute to a reduction in the carbon factor.

In 2012, the rise in the carbon factor (2%) is due to the increase in the carbon intensity of non-renewable energy (which increased 5.5%) offset in part by a decrease (3.5%) of the electricity generated from non-renewable sources in the energy mix.The increase in the carbon intensity of non-renewable energy is related to the change in the price of fuel costs in Europe between 2011 and 2012 when the price of coal fell by more than 30% and the price of gas rose by more than 10%.

Change in the carbon factor for 2011-2012 according to the change in electricity generated from renewable sources in 2011-

2012

-80%

-60%

-40%

-20%

0%

20%

40%

60%

-100% -80% -60% -40% -20%

0%

20% 40% 60% 80% 100%

EDF

E.ON

Enel

RWE

Vattenfall

GDF Suez Europe

Iberdrola + Scottish Power

CEZ

EnBW

Fortum

Statkraft

Scottish & Southern

DEI

EDP

Union Fenosa

Verbund

Drax

Dong : Elsam + Energy E2

Edipower

PVOChange in the renewable energy ratio 2011-2012

Cha

nge

in t

he c

arb

on

fact

or

2011

-201

2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

20

1

2

3 45

7

8

9

10

11

1213

15

14

16

17

1819

6

18 | Climate Change and Electricity | 2013

4. Change in the energy mix – focus onrenewable energy sources

We analysed the energy mix of 14 electricity companies in our selection, which represent 83% of the output used in our calculation of the carbon factor of Europe's electricity utilities.

Hydropower is still the main source of renewable energy used by the selection of 14 electricity utilities (15,8% of total output). Hydropower offset the sharp drop of 1.9points recorded in 2011 by the 14 electricity companies selected with an increase of 1.8 points in 2012. These differences are attributable to weather conditions.

Wind power is the second source of renewable energy for the selection of 14 electricity utilities and accounts for 1.4% of total output. Biomass and photovoltaic power account for 0.6% and 0.2%, respectively, of total output.

This analysis carried out between 2011 and 2012 revealed a substantial decrease in nuclear energy (1.5 points) and a less severe decrease for fuel oil (0.9 points). The Fukushima disaster following the earthquake and tsunami in March 2011 and the scrutiny brought against nuclear power in several countries worldwide, including

Europe, has had real consequences, in particular for the energy mix in Germany. The reduction of power production from nuclear sources in Germany was not offset by EDF nuclear plants in France and in the UK.

Despite the increased share of renewable energy in the energy mix from 16.7% in 2011 to 19.1% in 2012, coal still remains an attractive alternative to nuclear energy for the 20 companies in our selection.

Overall, electricity generated from non-renewable energy decreased by nearly 79 TWh between 2011 and 2012 for the 20 companies in the selection and electricity generated from renewable energy sources increased by 45 TWh during the same period.

As a result, the electricity market saw an increase in the share of renewable energy in 2012. However, this failed to reduce the European electricity sector's greenhouse gas emissions within a still stagnant economic environment.

Change in the energy mix (TWh)

NB: this graph only includes available data on the energy mix of electricity utilities: EDF, E.ON, Vattenfall, EnBW, Verbund, RWE, Enel, CEZ, Fortum, Statkraft, DEI, Union Fenosa, Dong, and PVO.

2011 2012 -

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

Hydrogen

Biogas

Geothermal

Solar PV

Biomass

Other renewable sources

Wind

Other non-renewable sources

Gas

Fuel oil

Hydraulic

Nuclear

Coal

PwC | 19

20 | Climate Change and Electricity | 2013

Appendices

A. Company data

Country Company

2004 2005 2006 2007

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

FR/UK/IT/

PL/BEEDF 616 68,751,628 112 619 71,537,878 116 614 68,796,816 112 608 71,422,491 117

DE/UK RWE 183 139,100,000 761 182 142,700,000 784 185 142,400,000 771 173 147,060,000 848

Eastern/

Central/

Northern

Europe/UK/

IT/FR

E.ON 245 101,385,062 413 229 101,174,880 442 221 100,795,400 456 247 106,043,010 429

IT/ES/PT Enel 222 111,917,253 514 206 106,523,438 528 193 92,992,808 495 185 92,252,200 498

PT/ES EDP 39 23,893,710 614 42 28,255,000 677 43 24,484,000 565 43 23,422,000 544

SE/DE/UK Vattenfall 174 69,971,000 403 190 80,417,500 422 165 74,500,000 450 184 84,502,500 459

EuropeGDF SUEZ Europe

125 40,825,000 327 123 39,361,000 319 129 40,403,000 314 148 50,520,233 341

ES/UKIberdrola + Scottish Power

0 0 0 0 0 0 0 0 0 0 0 0

CZ/PL/BG CEZ 62 35,706,546 575 60 33,300,000 555 66 36,261,327 553 73 46,853,740 640

GR DEI 53 53,287,500 1,015 53 52,592,000 994 52 50,483,000 969 54 53,040,000 984

FI Fortum 56 7,928,571 143 52 1,993,708 38 54 5,820,800 107 52 3,340,800 64

NO/SE/FI Statkraft 34 0 0 49 0 0 46 0 0 45 229,000 5

UKScottish & Southern

23 12,184,800 524 39 18,900,000 486 41 25,210,000 622 47 25,880,000 555

ES Union Fenosa 27 16,539,300 612 29 16,487,000 572 31 15,822,000 514 34 18,203,375 535

AT Verbund 30 4,437,000 149 29 3,810,000 131 28 3,701,000 132 28 3,407,000 120

UK Drax 25 20,519,000 838 25 20,519,000 830 27 22,764,847 840 27 22,503,000 844

DKDong: Elsam + Energy E2

29 15,766,397 552 29 15,766,397 552 26 11,874,624 464 20 8,547,437 432

FI/SE PVO 18 4,950,000 280 13 1,671,585 126 18 4,731,278 264 17 4,250,000 250

DE EnBW 73 19,229,245 263 74 17,811,200 242 75 18,050,900 241 74 17,713,500 241

IT Edipower 25 14,909,800 587 23 11,382,050 539 25 13,477,806 542 24 12,775,117 531

2,142 788,222,027 368 2,152 793,852,468 369 2,150 788,890,347 367 2,168 816,681,526 377

PwC | 21

2008 2009 2010 2011 2012

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

613 74,694,603 122 567 62,520,836 110 583 54,559,981 94 600 58,876,859 98 594 53,508,736 90

194 144,460,000 747 169 133,700,000 792 200 142,700,000 715 183 141,200,000 772 202 158,500,000 785

239 100,074,100 418 216 84,700,000 393 225 84,891,459 390 220 89,500,000 406 180 85,740,000 476

186 83,000,000 447 170 77,247,998 454 179 67,552,154 378 179 76,129,529 425 180 78,786,450 438

40 19,783,000 500 42 20,007,000 477 45 14,699,000 330 41 16,919,000 412 36 18,005,000 496

178 81,717,000 459 175 79,118,000 452 188 79,269,000 423 181 77,637,900 428 194 85,327,000 441

145 47,575,442 327 144 46,497,991 322 150 48,827,157 325 181 60,865,465 337 163 55,434,000 341

0 0 0 0 0 0 87 22,570,356 258 73 19,366,878 264 76 19,261,232 254

68 40,375,540 597 65 37,195,443 569 68 38,845,671 568 68 38,739,133 566 69 27,154,432 395

52 52,200,000 996 50 49,700,000 992 46 46,500,000 1,022 42 45,932,408 1,107 40 47,300,000 1,174

53 2,156,600 41 49 2,021,300 41 54 4,510,800 84 55 4,725,600 88 54 4,872,000 91

53 1,604,700 30 57 1,600,100 28 57 1,693,400 30 52 1,161,900 23 60 483,900 8

46 22,720,000 496 39 19,300,000 491 47 23,100,000 494 49 24,500,000 504 46 24,426,000 531

18 7,263,102 398 29 9,480,240 330 38 368 279 38 14,000,000 279 37 14,774,000 398

29 2,885,000 101 30 2,213,932 74 31 3,232,112 104 30 3,659,619 123 35 2,902,000 82

27 22,299,000 818 24 19,845,250 815 28 23,964,647 844 26 21,466,000 813 27 23,908,189 882

19 7,433,436 401 18 6,928,622 383 20 6,814,612 337 20 6,835,160 335 16 4,477,892 278

22 2,916,788 131 15 2,875,309 187 18 3,887,037 221 15 1,587,037 106 15 572,840 39

67 16,967,200 254 66 15,850,445 241 66 19,674,200 299 60 19,674,200 251 59 21,800,000 369

24 12,129,886 514 19 9,083,980 481 16 6,926,400 441 14 6,234,300 454 11 4,384,860 408

2,166 769,467,637 355 1,946 654,952,021 337 2,144 655,372,683 306 2,127 729,010,989 342.8 2,093 731,618,530 349.5

22 | Climate Change and Electricity | 2013

B. Consolidated results

Country Company

2004 2005 2006 2007

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

France EDF-France 487 20,470,800 42 494 23,707,200 48 491 19,632,000 40 483 20,523,250 43

UK EDF Energy 25 20,477,828 812 23 18,480,300 807 25 20,777,200 818 26 21,060,450 826

Italy Edison 61 35,557,800 583 33 22,135,218 663 39 21,407,916 542 41 22,015,791 531

EDF (FR, UK, IT, PO, BE)

616 68,751,628 112 619 71,537,878 116 614 68,796,816 112 608 71,422,491 117

Germany RWE 149 116,000,000 779 149 120,000,000 808 148 117,700,000 794 176 158,000,000 897

UK RWE UK 34 23,100,000 681 33 22,700,000 680 37 24,700,000 677 34 22,000,000 651

RWE 183 139,100,000 761 182 142,700,000 784 185 142,400,000 771 173 147,060,000 848

Other EU

countriesE.ON

UK E.ON UK 35 25,086,000 719 37 28,000,000 750 36 25,500,000 710 41 30,000,000 730

Italyformerly Endesa Italia

21 11,484,000 550 23 11,681,000 500 25 13,307,240 530 22 11,707,170 530

Spain E.ON Espana N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

France E.ON France 10 9,435,315 985 9 7,993,880 920 8 7,588,160 920 8 6,835,840 880

Germany E.ON Germany N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

E.ON Group 245 101,385,062 413 229 101,174,880 442 221 100,795,400 456 247 106,043,010 429

Portugal formerly Endesa N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Italy Enel Provizione 126 63,408,000 503 112 56,200,000 501 104 48,500,000 467 94 46,723,200 496

Spain

Viesgo generacion (formerly Endesa)

6 5,013,000 823 N/A N/A N/A 7 N/A N/A N/A N/A N/A

Enel 222 111,917,253 514 206 106,523,438 528 193 92,992,808 495 185 92,252,200 498

PwC | 23

2008 2009 2010 2011 2012

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

Production

(TWh)

Emissions

(Kt CO2)

kg CO2/

MWh

484 18,436,590 38 454 18,506,880 41 476 19,109,000 40 472 14,360,000 30 466 16,409,000 35

27 21,860,640 804 72 23,795,870 330 64 N/A 219 73 15,805,000 218 83 20,909,000 251

50 26,228,973 523 42 20,218,086 486 43 21,518,201 503 35 18,630,431 527 24 9,075,472 373

613 74,694,603 122 567 62,520,836 110 583 54,559,981 94 600 58,876,859 98 594 53,508,736 90

180 141,000,000 785 128 107,900,000 845 140 108,400,000 777 129 112,000,000 868 130 116,600,000 895

38 25,000,000 665 27 16,600,000 622 34 18,900,000 551 30 16,200,000 542 44 26,900,000 613

194 144,460,000 747 169 133,700,000 792 200 142,700,000 715 183 141,200,000 772 202 158,500,000 785

44 25,700,000 580 37 19,500,000 530 27 17,765,553 660 30 18,730,000 620 N/A N/A N/A

22 11,707,170 530 17 7,500,000 450 18 7,199,175 410 17 7,590,000 450 N/A N/A N/A

N/A N/A N/A 13 6,500,000 520 11 5,672,077 510 11 5,980,000 550 N/A N/A N/A

4 8,166,930 2,094 N/A N/A N/A N/A N/A N/A 6 4,600,000 710 N/A N/A N/A

N/A N/A N/A N/A N/A N/A N/A N/A N/A 101 38,200,000 380 N/A N/A N/A

239 100,074,100 418 216 84,700,000 393 225 84,891,459 390 220 89,500,000 406 180 85,740,000 476

N/A N/A N/A N/A N/A N/A 1 706,000 783 2 1,664,982 783 41 N/A N/A

96 44,500,000 462 84 37,076,701 441 81 34,376,000 423 79 36,844,733 466 75 N/A N/A

N/A N/A N/A N/A N/A N/A 70 23,291,000 333 77 34,566,000 451 41 N/A N/A

186 83,000,000 447 170 77,247,998 454 179 67,552,154 378 179 76,129,529 425 180 78,786,450 438

24 | Climate Change and Electricity | 2013

C. Bibliography

• Caisse des Dépôts et Consignations, Climat Recherche, Tendances Carbone, no. 77, February 2013.• Eurostat/Environment and Energy, 2011, Electricity statistics – provisional data for 2011: http://epp.eurostat.ec.

europa.eu/statistics_explained/images/5/5b/Electricity_Statistics_2012_%28in_GWh%29.png• Eurostat, Real GDF growth rate-volume: percentage change on previous year, available on http://epp.eurostat.

ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=fr&pcode=tec00115

PwC Low Carbon Economy Index 2013 – Busting the carbon budget, available on http://www.pwc.com/gx/en/sustainability/publications/low-carbon-economy-index/index.jhtml

Authors

Olivier MullerSyrine El AbedCathelijne Klomp

Contacts

PwC

Thierry RaesPartner, Sustainable DevelopmentStrategy groupTel. +33 1 56 57 12 13thierry.raes@fr.pwc.com

Philippe GiraultPartner, Energy sectorTel. +33 1 56 57 88 97philippe.girault@fr.pwc.com

Olivier MullerDirector, Energy – Climate ChangeStrategy groupTel. +33 1 56 57 80 44olivier.muller@fr.pwc.com

Alexis Chauffert-YvartManager, Renewable EnergyStrategy groupTel. +33 1 56 57 87 16alexis.chauffert-yvart@fr.pwc.com

PwC63, rue de Villiers92208 Neuilly sur Seine Cedex

Enerpresse

17, rue d’Uzes75002 Paris, FranceTel. +33 1 40 13 35 60Fax. +33 1 42 33 38 19

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. In no event shall PricewaterhouseCoopers Advisory or any member fi rm of the PwC network In no event shall PwC or any member fi rm of the PwC network be liable for any consequences of a decision made on the basis of any information contained herein.© PricewaterhouseCoopers Advisory 2013. All rights reserved.