Climate change affects our business activities, creating significant challenges and opportunities. As our main business is refining, we are both a producer of energy products and an energy consumer. Energy consumption is not only a significant operating cost but at the same time the main source of carbon dioxide emissions. We are therefore redesigning an energy transformation toward a low carbon economy in response to increasing demands for energy and in order to ensure energy sufficiency by taking measures and implementing projects to reduce emissions.
At the same time, since our activities are primarily in Greece, a country with a large coastal front, we have already started studying ways in order to adapt to and address the consequences of climate change.
Potential risks and opportunities for the Group’s operational activities are addressed in the Emissions Trading System (EU ETS) management, and in feasibility studies for investments / activities and raw material procurement assessments.
As energy consumption is a significant operating cost for our activities, but also the main source of carbon dioxide emissions, we are investing in optimizing energy management, energy efficiency in the production process and administrative operation as well as in the use of Renewable Energy.
Concurrently, we are analyzing the scope for interventions – projects required to adapt our facilities and critical energy infrastructures to climate change. The implementation of the Group’s environmental policy related to energy and climate change is achieved and measured by a series of tools, such as setting targets and key performance indicators.
All environmental parameters are also compared through European indicators and benchmarks are used to assess the Group’s position in relation to the European industry performance. Our staff’s and social partners’ continuous environmental education across a wide range of activities within the Group is an important part of our climate change management.
In addition, the Group is actively involved in the development of energy and climate change policies at a national and European level, including the EU ETS, the Energy Efficiency Directive and others.
Our approach and results so far have been positive, with significant progress made in achieving quantitative targets, (reduction in CO2 and continuous reduction of carbon footprint) as well as external evaluation from the Carbon Disclosure Project Organization – CDP with a score of B- (in comparison to the sector’s average “C” score).
We want to reduce our carbon footprint, specifically energy consumption and carbon dioxide emissions, in order to contribute in addressing the causes and impacts of climate change. We strive toward energy transformation and to become a company that provides low carbon emission energy solutions.
Performance – Quantitative Data
Energy and climate change policy is a major challenge for the HELLENIC PETROLEUM Group due to oil refining which is one of its main production activities. Energy consumption is a high operational cost and at the same time, it constitutes the main source of carbon dioxide emissions. We are therefore planning our energy transformation toward a low-carbon economy, while responding to a continuous increase in energy demand and securing supply contributing substantially in achieving UN’s Sustainable Development Goal, SDG 7 and SDG 13.
Energy efficiency – savings & investments
Optimal energy efficiency and energy saving were and remain the basic tools for addressing climate change. Although some of the strictest fuel standards (zero sulfur content) the past decade contributed in improving air quality, at the same time energy consumption required for their production has increased. Despite this, the Group’s refineries have managed to produce clean fuels with high energy efficiency.
The use of cleaner fuel gases in the production process, such as natural gas and refinery gas, is maximized while the consumption of liquid fuels is minimized.
At the same time, in order to reduce its carbon footprint, the Group invests in Renewable Energy Sources (RES), energy efficiency and energy saving projects, as well as in new energy and transportation technologies.
5% reduction of tn CO2 emissions/tn crude oil feed index by 2020
500,000 tn CO2 reduction of the Group’s carbon footprint through the development of a Renewable Energy Sources portfolio of approximately 300MW installed capacity by 2025
Tn CO2 Emissions / tn crude oil feed
Regarding the declining trend of the tn CO2 emissions / tn crude oil feed index, which is monitored over a period of time in relation to the 2014 base year, there is a 19% decrease over the past five years that exceeds the initial target set for a 5% reduction by 2020.
Considering the change from one year to the next, 2018 in comparison to 2017, shows a small 8% increase (in 2017 there were shutdowns for maintenance).
The reduction in the index reflects the significant energy saving activities – projects and other optimization interventions implemented at the Group’s refineries.
In the framework of GHG emissions monitoring and reporting, the Group systematically monitors not only direct CO2 emissions (Scope 1) but also indirect emissions (Scope 2 and 3) to the maximum extent of its activities.
Regarding direct emissions, the Group’s refineries have been participating in the European Union’s Emissions Trading System (EU ETS) since its formation, while since 2013 they have been following all emission monitoring, calculation and verification procedures according to the Regulations for the third phase of EU ETS (2013-2020).
The following diagram shows the three refineries’ verified CO2 emissions for 2017 (for comparison) and 2018 as well as the allowances for 2018.
Verified CO2 emissions and allowances for the Group’s refineries 2018
The Group’s total energy consumption, as shown in the following diagram, has increased by 5% in comparison to 2017. This difference is mainly due to Elefsina’s refinery (EIC) extended shutdown in 2017 and the increased levels of operation in 2018.
Group’s total energy consumption 2013-2018
Investing in increasing energy efficiency, combined heat & power (CHP) units operate in all of the Group’s refineries. These CHP Units make the most out of the use of cleaner gases and other streams from the production process and thus contribute to avoiding a significant percentage of CO2 emissions (diagram below), which would have been emitted if the self-generated electricity came from the national grid power supplier.
Contribution of self-generated electricity at the Group’s domestic refineries and CO2 emissions that were avoided due to self-generation, in relation to total consumption emissions
As shown in the diagram below, in 2018, the self-generated electricity comprised approximately 30% of the total electricity consumption.
Total electricity consumption per generation method
The Group also monitors indirect emissions from its activities. For example, estimates are made for CO2 emissions from sea transport of raw materials and products as well as for the carbon footprint of all activities in the Group’s office buildings (headquarters and Aspropyrgos, Elefsina and Thessaloniki refineries – “My Climate” Certification).
In 2018, HELLENIC PETROLEUM participated in the CDP (formerly the Carbon Disclosure Project) benchmarking process, the largest program requiring data collection of greenhouse gas emissions, power consumption and evaluation of the company response to climate change risks and opportunities. Note that in 2018, CDP integrated questions from the Task Force on Climate-related Financial Disclosure (TCFD), which focuses on climate change risks to companies.
For this first participation, HELLENIC PETROLEUM (one of the 5 companies in Greece to participate in the evaluation in 2018) scored a “B-“, a particularly important distinction since its placement was above average for the Oil and Gas Sector, which scored a “C” average. The Group aims to stabilize its score in Management and through the implementation of its strategy and improvement of its performance to reach the CDP’s Leadership category in the future.
Risks & Opportunities
Potential risks and related financial impacts are an integral part of the feasibility study of every project and investment, not only with regard to climate change mitigation, but also in terms of strategical adaptation to climate change impacts (i.e. in the event of physical changes, estimated to be significant for facilities near Greek coastal regions).
The obvious financial impacts concern costs, which are related to an expected allowance deficit for greenhouse gas emissions since all the Group’s refineries in Greece participate in EU ETS.
For the period of 2013-2020 (third phase of ETS) and according to the existing allocation rules, the compliance cost has substantially increased over the last quarter of 2018. This is due to the significant increase in the CO2 price (over 200% within 2018), but also to the decreasing free allocation from one year to the next in combination with the increase of cross-sectoral correction factor (CSCF). Moreover, based on the latest European Commission decisions regarding the application of a Market Stability Reserve mechanism and the restructuring of EU ETS for the 4th period (2021-2030), a higher increase of the allowances’ price (€/tn) is expected, which will directly affect future compliance cost.
It is also worth noting that since 2013 power generation is not eligible for free allocation. As a result, refineries are additionally burdened with the increased cost for purchasing electricity, since the cost of purchasing allowances for power production is passed on to the consumers.
Other potential risks include increased price for purchase of fuel and raw material, reduced demand for energy intensive products, as well as additional measures to control and reduce greenhouse gas emissions, which would be similar for the sector on a European level.
Enforcing the Group’s main strategy to increase energy efficiency has already contributed to reducing the allowances deficit and operational (energy) cost, nonetheless possible opportunities for further use of natural gas and advanced biofuels continue to be evaluated.
Biofuels & R.E.S
Biofuels are the only direct substitute for fossil fuels currently available on a large scale as transport fuel. Their use contributes to a reduction in vehicles’ carbon dioxide (CO2) emissions and to more environmentally friendly transport, without requiring significant modifications to vehicles or distribution networks.
To date, the term biofuel in the Greek market refers mainly to biodiesel, a fuel having similar properties to those of diesel, which is used as a substance (after being mixed with mineral diesel) in all diesel-powered vehicles according to European mixture specifications. Following recent Greek legislation, the Group is preparing to mix bioethanol with conventional gasoline for use in all petrol-fueled vehicles starting 2019.
Biodiesel received and used as diesel fuel
% v/v in diesel fuel
Renewable Energy Sources (R.E.S)
Over the last five years, photovoltaic power plants in Group owned properties with a total nominal power of 19 MW and a 7 MW wind farm in Pylos in the Messinia Prefecture have been constructed and are already in operation. Ten photovoltaic projects with a total nominal power of 100 kW are in operation for self-generation and self-consumption (net metering program) in an equal number of EKO and BP fuel stations. Another two photovoltaic projects with a total nominal power of 12 MW, as well as four electricity and heat generation units from biomass combustion (derived from residual agriculture) with a total capacity of 20 MW are in various stages of development. Applications for photovoltaic projects of more than 200 MW were submitted in 2018. Furthermore, in cooperation with LARCO, a portfolio of 130 MW photovoltaic as well as wind and hybrid projects are also under development.
The total energy produced by the Group’s photovoltaic plants has exceeded 27 GWh from their initial operation and the production from Messinia’s wind farm has exceeded 89 GWh respectively.
The total avoided CO2 emissions exceeds 115,000 tonnes.
Optimizing the facilities’ energy efficiency – energy saving projects
A scenario analysis study for climate change risks and opportunities and reevaluation of the internal carbon price
A study regarding the actions or projects required for the Group’s facilities’ adaptation to climate change impacts (in progress)