Sustainability Report 2018 Generating Change Table of Contents About Uniper Diversified Generation Portfolio

Sustainability Report 2018 Generating Change Table of contents About Uniper Diversified generation portfolio

We are a global energy company Foreword Sweden 1 that generates, trades, and markets power on a large scale. 4.6 GW Commitment to We also procure, store, transport, Germany Generating Change 2 and supply commodities such as 10.5 GW natural gas, LNG, and coal as well Sustainability management 3 as energy-related products. We have a broad portfolio of assets and Benelux Climate action and contracts that complement each security of supply 1.6 GW Russia 8 other perfectly. But what really sets us apart is our energy IQ: our 10.8 GW Our people 22 unique combination of industry- leading technical and commercial Environmental expertise. This enables us to United Kingdom protection 36 create value for our customers 6.4 GW Human rights and by designing individually tailored compliance culture 48 energy solutions for them, solutions that free them from having to worry Stakeholder engagement about the complex energy issues 56 they face. And we do all of this 36.6 GW 2.4 Total responsibly. We’re a team of doers 1.4 Key figures 10.3 61 who achieve their goals with energy, 3.6 Coal passion, and conscientiousness. Natural gas Uniper: “Tailoring energy solutions. About this report 75 Hydro France Managing complexity.” Nuclear 2.3 GW Other Hungary 18.9 0.4 GW

Uniper Sustainability Report 2018 Foreword

Dear reader, gradually climate-friendlier energy mix. to take steps to improve the environmental, We’re starting from a good position: we’re social, and governance performance of our We place great emphasis on providing already one of the largest operators of coal suppliers, particularly in partnership you, our stakeholders, with accurate, hydroelectric plants in Germany and in with Bettercoal, an international initative transparent information about how we Sweden, where we also have nuclear dedicated to making the coal supply chain live up to our responsibilities as company. power plants. Indeed, 65% of our gen- more sustainable. Our 2018 Sustainability Report continues erating capacity consists of low-carbon this practice. hydro, nuclear, and gas. In the future, we These are just some of the things we did to intend to focus even more on gas, the meet our responsibilities in 2018. To ensure 2018 was another eventful year. Global cleanest fossil fuel. In short, our business that we build on this progress in the years energy markets remained highly dynamic, activities will help propel the transition to ahead, in February 2019 we adopted a Sus- and there were signficant changes to a lower-carbon future. tainability Strategic Plan. Guided by the UN the energy policies of several countries Sustainable Development Goals, it consists where we have our biggest asset positions. This process is already under way. In 2018 of a set of long-term commitments that will Eckhardt Rümmler Although we had to take far-reaching meas we continued to invest in modernizing guide our activities going forward as well Chief Operating Officer and Chief Sustainability Officer ures and revise our targets for a number of and upgrading our power plants and to as quantitative improvement targets for the projects, we continued to work tirelessly to shut down older, less efficient plants. period 2019–2022. Implementing the plan lead Uniper to a successful future. These measures were a big part of why and making progress toward our targets our carbon emissions declined by 19% will help make our business more sustain- With best wishes, Despite a challenging business environ- relative to 2016, the year we became an able and more resilient. It’s all part of our ment, we remained a reliable partner independent company. Our safety perform commitment to Generating Change – in our for our customers, employees, business ance was solid as well. Total recordable business activities, within our company, partners, shareholders, and the com- injury frequency (TRIF), which measures and along our value chain. munities we operate in. We supplied our the number of accidents involving our customers with electricity and gas with employees and our contractors’ employees, I hope you find this report useful and Eckhardt Rümmler our proven reliability. Going forward, we was lower than ever and better than the informative and that you continue to follow intend to provide this reliability with a industry average. In addition, we continued us on our journey into the future.

Uniper Sustainability Report 2018 1 Sustainability at Uniper: Sustainable our commitment to Development Goals Generating Change

What makes an energy company sustainable? We believe financial stability, a shared clear vision, strong relations with stakeholders, and a commitment to addressing adverse impacts transparently are key. But so is a willingness to adapt and, more importantly, to be a positive force for change. We call this commitment Generating Change – in our business activities, at our company, and along our value chain.

We’re aware that our ability to adapt will be crucial for us to continue creating value for those who rely on us. That’s why we’ve geared our corporate strategy toward tomorrow’s energy world. We believe this world will offer us opportunities to develop new businesses and innovative solutions that will contribute to sustainable development while adding value to our company.

We generate energy. And we’re committed to Generating Change – positive change for our company, employees, customers, and enterprise partners as well as for the communities and countries where we do business.

Uniper supports the 17 UN Sustainable Development Goals. We prioritized nine SDGs that fit Generating Change with our business activities and sustainability strategy.

Uniper Sustainability Report 2018 2 Sustainability management

Generating Change: company, the countries where we operate, Change toward sustainability into our daily and our value chain more sustainable. work, organization, and corporate culture. an interview We are confident that Generating Change with Frank Plümacher will make our company more resilient in a What does Generating Change mean for rapidly changing world. Uniper employees? We expect all our employees to think and Frank Plümacher, Executive Vice How will Uniper deliver act responsibly and to make Generating President for Sustainability and HSSE, on this commitment? Change toward sustainability part of their talks about how Uniper’s commitment to As part of our commitment, in 2018 we daily work. We’ll continue to reinforce Generating Change fits with its business designed the Sustainability Strategic Plan. their awareness and to provide them with portfolio, strategy, and corporate culture. The plan describes how sustainability the tools they need to embrace sustain- supports our long-term corporate strategy ability. This also applies to their health, and sets improvement targets for our well-being, and personal and professional environmental, social, and governance development. That’s why we respect our performance from 2019 to 2022. It also employees’ rights, provide them with a safe What does Generating Generating Change also means making explains how these targets contribute and supportive work environment, have no Change mean for Uniper? sure that we mitigate our negative impacts to the achievement of the nine United tolerance of discrimination, and support We’ve set our strategic course: while as much as possible. It means making Nations Sustainable Development Goals equal opportunity and diversity. We’ve set remaining a mainstay of Europe and sustainability a priority and a key facet of that are most relevant to our business improvement targets in these areas as Russia’s supply security, we intend to build our responsibilities and it is an approach to activities. For example, two of these goals well. For example, we intend to maintain a on our proven strengths to enter new further embedding sustainability into our are “affordable and clean energy” and low total recordable incident frequency and markets worldwide and further establish business processes and decision-making. “measures to protect the climate.” To help to increase the percentage of women in ourselves as a company that designs Not only is it the right thing to do, it is what achieve them, we set a maximum average management positions. individually tailored energy solutions and our stakeholders expect of us. carbon intensity threshold of 500 grams manages complexity for customers. As per kilowatt hour for 2018 to 2020 and we implement our corporate strategy, our What led Uniper to make this commitment? pledged to pursue at least 20 projects that commitment to Generating Change means Our commitment to Generating Change is promote decarbonization by 2022. Making being continuously aware that the decisions a concerted effort to align our responsibili- progress toward these and our other we make and the actions we take have an ties with our corporate strategy. It gives us improvement targets will be a big part of impact on people and the environment. the best chance to succeed in making our how we will further embed Generating

Uniper Sustainability Report 2018 3 Sustainability Report 2018Sustainability Report Uniper

Uniper Sustainability Strategic Plan engagement Stakeholder compliance culture Human rightsand protection Environmental Our people security ofsupply Climate actionand SSP impactareas

Material topics • • • • • • • • • • • • • • • • • reliable energy supply Stakeholder engagement Data protection Governance andcompliance chain Human rightsalongthevalue Fuels andby-products Water optimization Waste minimization Biodiversity Energy efficiency Air emissions Environmental protection Diversity andinclusion Fair andattractive employer Health andsafety Secure, affordable, and Innovation GHG emissions

Relevant SDGs

• • • • • • • • • • • Promote lower-carbon fuelsfor energy generation. • • Uniper commitments

Include decarbonization activitiesasafocus area for innovation. operations. Minimize theimpactoncommunities affected by Uniper’s transparent institutionsatall levels. Foster thedevelopment ofeffective, accountable, and ongoing dialogueregarding activities. Uniper’s Actively engagewith stakeholders toensure transparency and the businessfrom corruption risks. Continue tostrengthen compliance Uniper’s culture andprotect and humantrafficking. Have zero tolerance offorced labor, childlabor, modernslavery, use resources efficiently, andmarket Uniper’s by-products. adopt alife-cycle approach inorder toprotect theenvironment, Work withcontractors, suppliers, andindustrialcustomers to environmentally responsible mining. Promote waste reduction, landpollution prevention, and workforce. Ensure equalopportunityandpromote inclusionintheentire Have zero tolerance ofdiscrimination. same standards jointventures inUniper’s andpartnerships. environment for all employees andcontractors; promote the Protect laborrightsandensure asafe, healthy, andsecure work portfolio. generationMonitor andoptimizethecarbon intensityofUniper’s • • • • • • • • Uniper targets • over 95%by 2022. • Achieve anemployee inclusionindicator of executives by 2022. • Have women account for 25%ofUniper’s high-level Group-wide carbon intensitytarget of500gCO each year upto2022. building dialogueswithcivilsociety organizations At thecorporate level, conduct atleastthree trust- CodeofConductby 2022. Uniper’s Train 100%ofnew hires oncompliance and diligence) by 2022. socialscreeningto Uniper’s system (ESGdue Assess 100%ofnew counterparties according operational assetstoISO14001. Maintain certification of100%Uniper’s Have nosevere environmental incidents. operationalCertify 100%ofUniper’s assetsto level through 2019. Maintain a1.75combined TRIF threshold atgroup include decarbonization. Conduct, by 2022, atleast20projects whoseaims per kilowatt hour(onaverage) through 2020. ISO 45001by 2022.

2 4

Material topics for Materiality matrix Generating Change

[GRI 102-47] As our commitment outlines, The assessment also analyzed the busi- our material topics are mapped against the ness relevance of our company-specific The different bubble sizes indicate Secure, reliable the risk potential. You find more and affordable SDGs to define our strategic sustainability topics, the energy industry’s influence information on how we manage the energy supply commitments. As part of our 2018 materi- on them, and whether they correlate ESG risks in our Combined Separate GHG emissions ality assessment, we prioritized nine SDGs with one or more of the UN Sustainable Non-Financial Report. Health and that are key to our business activities, their Development Goals. In the final step of safety impact, and our strategy for the future. the assessment, experts from relevant Fair and departments discussed, validated, and attractive In our 2018 materiality assessment, we approved the results. employer very high very Diversity and reviewed and, where necessary, adjusted inclusion our company-specific sustainability topics. The following materiality matrix provides We adopted a two-dimensional approach an overview of the assessment’s results. Innovation that considered the economic, environ- The horizontal axis indicates each topics’ Fuels and high by-products mental, and social impact of our business impact on our company from the perspec- Governance and activities on these topics as well as the tive of outside stakeholders; conversely, Stakeholder compliance topics’ impacts on our company. We also the vertical axis represents our impact engagement considered the expectations of important on these topics. The various sections of Data protection Human rights along stakeholders, such as policymakers, com- this sustainability report describe our Water optimization the value chain petitors, non-governmental organizations management approach for these topics, medium

Uniper's impact on the topics the on impact Uniper's Energy efficiency (NGOs), and the financial market; we ana- the progress we achieved in the reporting Biodiversity lyzed whether from their perspective our period, and, where relevant, exceptions to Waste Air emissions impacts could have a significant influence our definition of materiality. minimization on our company and third parties and the low Environmental importance of the impacts for understand- protection ing our current and future development. low medium high very high Topics’ impact on Uniper

Uniper Sustainability Report 2018 5 How we manage our commitment

[GRI 102-11/18/19/20] The Uniper Manage- internal environmental and social risks ment Board bears overall responsibility for that could arise from our operations, adopting and implementing sustainability the likelihood of these risks, and their measures that encompass the entire potential severity. ESG risk management company. One of its members, Eckhardt is part of our overall enterprise risk Rümmler, is appointed as Chief Sustainabil- management processes. ity Officer (CSO) and periodically reports to the Supervisory Board on our strategic Our employees’ involvement is essential for sustainability activities. As our highest achieving a robust sustainability culture. governance board, the Supervisory Board We strive to encourage their involvement monitors our company’s fulfillment of its by continually reinforcing their awareness sustainability obligations. of the importance of sustainability for our company, for the countries and communi- The Management Board has assigned to ties where we operate, and for themselves the Health, Safety, Security, and Environ- as individuals. ment (HSSE) & Sustainability function the responsibility for defining our company-wide targets and key performance indicators and for identifying ESG risks and emerging issues that could affect our company.

We have in place measures to control, minimize, and mitigate our ESG risks. Our ESG risk management encompasses a governance structure, the assignment of duties and responsibilities, and applicable policies and procedures. It Our two office buildings, also includes assessing the external and Float and Capricorn, in Düsseldorf.

Uniper Sustainability Report 2018 6 Governance and monitoring

Uniper’s performance in ratings and rakings Policies and commitments We comply with anti-discrimination laws [GRI 103-2, 102-16/20] The HSSE & Sus- and regulations in the countries where Our score tainability Policy Statement, signed by the we operate. To foster diversity and inclu- CDP C Management Board and the Uniper Group sion, in 2018 we introduced a Diversity Works Council, articulates our commitment Improvement Plan. London-based CDP is a not-for-profit organization that runs a to acting responsibly by supporting the global disclosure system for investors, companies, cities, states, principles of the United Nations Global We are committed to the core conventions and regions to manage their environmental impacts. Its scores for climate and environmental disclosures range from D- to A. The Compact and other relevant internationally of the International Labour Organisation. average score in the European utilities sector is C. recognized standards for human rights, We also comply fully with the UK Modern environmental protection, and good Slavery Act in the United Kingdom and Energy Intelligence’s Top 100 Green Utilities 72nd governance along our supply chain. similar laws in other countries. This ranking of the world’s top green power generators from both industrialized and emerging markets is based on the companies’ Uniper’s Code of Conduct addresses a wide Ratings and rankings renewable energy portfolios and greenhouse gas emissions. range of issues, including compliance, We continually monitor our sustain- anti-corruption, and respect for human ability performance. But it’s always MSCI ESG Ratings Laggard (B) rights. The code, which defines our basic useful to find out how other experts Based in New York, MSCI is an independent provider of insights and principles of conduct, is founded on a think we’re doing and to learn from analytics that help investors identify ESG risks and opportunities. Its commitment to one another, the business, their feedback. Our sustainability seven ESG ratings are grouped into three categories: laggard (CCC, and the communities in which we operate. performance is rated and ranked by a B), average (BB, BBB, A), and leader (AA, AAA). It’s binding for all our employees. wide range of independent organiza- ISS-oekom C tions around the world. We realize that ISS-oekom of Munich rates companies’ ESG performance on a scale We strive to work, whenever possible, with these assessments generally rate our from D- to A+. The prime threshold for the energy industry is B-. Being third parties that have comparable prin performance as average. This provides at or above the prime threshold indicates that a company is meeting or ciples. We therefore require our suppliers further impetus for us to strive to exceeding the ESG performance standards for its industry. to sign our Supplier Code of Conduct. improve our performance in the future. Sustainalytics ESG Risk Ratings 63 out of 100 Amsterdam-based Sustainalytics rates the industry-specific ESG points risks of 9,000 companies worldwide. High score = high performance

Uniper Sustainability Report 2018 7 Climate action and

Direct CO2 emissions from fuel security of supply combustion in million metric tons

73.6 63.3 59.5

Climate change is one of the world’s biggest challenges and one of our company’s most material long-term topics. This applies in particular to the climate impact of 2016 2017 2018 the carbon emissions from our coal-fired power stations. Europe’s energy transition Reduced our direct carbon emissions from is under way, and more and more of its energy is renewable. But because the combustion of fossil fuels for power and amount of renewable energy available varies with the weather and the time of day, heat generation to 59.5 million metric tons. this ongoing growth presents the energy system with significant challenges. For example, operationally flexible conventional plants are still crucial for balancing out the fluctuations in renewables output and thus ensuring an uninterrupted power supply and grid stability. In fact, two thirds of our generating capacity can do precisely this: our lower-emission gas-fired plants and low-emission hydro and nuclear plants respond quickly to fluctuations and therefore play a key role in ensuring supply security while also promoting climate protection. 499 Reduced our total carbon intensity

to 499 grams of CO2 per kWh.

Uniper Sustainability Report 2018 Climate action and security of supply 8 ›Commitments ›Targets

Monitor and optimize the Promote lower carbon fuels Group-wide carbon intensity of

carbon intensity of Uniper’s for power generation. 500g of CO2 per kilowatt hour generation portfolio. (on average) through 2020.1

Include decarbonization activities Conduct, by 2022, at least as a focus area for innovation. 20 projects whose aims include decarbonization.

›Contribution to the UN SDGs

1We calculate carbon intensity on average from 2018 to 2020 using the financial control approach. This means that our carbon

intensity is the ratio between the direct CO2 emissions from our fully consolidated, stationary fossil-fueled power plants and power-and-heat plants and these plants’ power and heat output. It does not include plants that produce heat/steam only.

Uniper Sustainability Report 2018 Climate action and security of supply 9 Greenhouse gas emissions

[GRI 103-1/2] Climate change is a major [GRI 103-2] Since the EU Emissions Trading Uniper’s direct carbon emissions in Europe1 challenge and urgent, concerted action Scheme began in 2005, our generation Million metric tons of CO worldwide will be necessary to limit business in Europe has reduced its annual 2 global warming to 1.5 degrees centi- carbon emissions by just over 60 million 100 grade. It’s also a big challenge for an metric tons, which is around 64%. In other 95.34 energy company like us. Our industry, words, our emissions have declined further 80 which is among the biggest carbon than the current EU climate targets to cut emitters, will be increasingly affected emissions in the EU by at least 40% below 60 in the years ahead by social, regulatory, 1990 levels by 2030. We believe that the and economic developments related to EU ETS remains the most cost-effective 40 greenhouse gas (GHG) emissions. mechanism for helping Europe meet its 34.16 emission-reduction targets. 20 [GRI 103-2/3] We support the implementa- tion of the Paris Agreement and are doing We’ve achieved this reduction in two ways: 0 our part by helping gradually decarbonize by shutting down older, uneconomical 2005 2018 the energy system while simultaneously power plants and by building gas-fired ensuring a reliable energy supply. plants that supply homes and businesses 1Carbon emissions of our generation business in with lower-emission electricity, heat, and Europe calculated using the operational control steam. approach. This means that we counted 100% of the emissions from all generation assets over which we have operational control, even if our ownership stake is less than 100%. These figures do not include the emissions of Unipro, our subsidiary in Russia.

19reduction of direct % carbon emissions from the combustion of fossil fuels for power from 2016 to 2018

Uniper Sustainability Report 2018 Climate action and security of supply 10 1 Direct CO2 emissions from fuel combustion by country [GRI 305-1]

Million metric tons 2018 2017 2016 France 2.9 5.1 4.3 Germany 17.2 16.9 19.6 Hungary 0.8 0.8 0.6 Netherlands 5.5 7.9 10.9 Russia 25.3 26.4 29.4 Sweden <0.01 <0.01 0.2 United Kingdom 7.6 6.2 8.6 Total2 59.5 63.3 73.6

1We calculated our direct carbon emissions using the [GRI 305-1] Our decarbonization strategy operational control approach. This means that we focuses primarily on our direct emissions, counted 100% of the emissions from all generation assets over which we have operational control, even which account for the largest majority if our ownership stake is less than 100%. We used of our total emissions. Our direct carbon the rules of the EU Emissions Trading Scheme to emissions from the combustion of fossil calculate the data for all countries except Russia. The totals were adjusted to correct for the effects of fuels for power and heat generation rounding. declined from 63.3 million metric tons in 2Possible rounding differences between individual 2017 to 59.5 million metric tons in 2018. figures and totals. Although lower output at our conventional power plants in France, the Netherlands, and Russia was the main factor driving this Uniper employees at our gas storage facility development, technical upgrades and opera- in Etzel, Germany. tional improvements contributed as well. 11 Indirect CO2 emissions How we’re managing [GRI 305-2/3] our GHG emissions

Greenhouse Gas Protocol Scope 2 and 3 [GRI 305-4] We’re committed to monitoring Supporting the energy transition Our Scope 2 indirect emissions totaled and optimizing the carbon intensity of our Two factors – the phaseout of coal-fired

0.27 million metric tons of CO2 (2017: 0.34 generation portfolio. We set a Group-wide power generation in some countries and million metric tons of CO2) and 0.34 million annual average carbon intensity target of greater use of climate-friendly natural metric tons CO (2017: 0.41 million metric 500 grams of CO per kWh for the period gas – could increase Europe’s emission- 2 0.27 2 tons of CO2) using the location-based million metric tons indirect 2018 to 2020. Our carbon intensity was 499 reduction potential. method and market-based method, grams of CO per kWh in 2018, a reduction CO2 emissions using the 2 respectively. These emissions therefore 1 from 506 grams of CO per kWh in 2017.3 Several countries in which we operate location-based method 2 declined year on year using both methods.1 This is consistent with our target. Through have begun to take steps toward ending year-end 2020, we intend to further refine coal-fired power generation. In July 2017, Our upstream Scope 3 indirect emissions our carbon-monitoring processes and to the French government stated its intention related to extraction and transportation of invest in upgrades and innovations that to shut down coal-fired power plants by consumed fuels totaled 10.3 million metric will reduce our assets’ carbon intensity. In 2022. In January 2018, the UK government 2 tons of CO2. addition, we’re analyzing climate scenarios, announced a phaseout date of October 0.34 policy and regulatory developments, and 1, 2025. In May 2018, the Netherlands’ million metric tons indirect the lifetime scenarios of our assets in order Ministry of Economics published a draft 1These figures include emissions from consolidated and nonconsolidated generation assets over CO2 emissions using the to define a carbon intensity target for the law under which plants that are less than which Uniper has operational control. market-based method1 period beyond 2020. 44% fuel-efficient would be closed by 2025, 2Raw estimate of upstream Scope 3 emissions whereas those above 44% could remain associated with the extraction, refining, and transportation of the raw fuel sources to an in operation until year-end 2029. Finally, organization’s site (or asset) prior to combustion using in January 2019 the Coal Commission well-to-tank (WTT, DEFRA) fuel-conversion factors. appointed by the German federal govern- 3We calculate carbon intensity on average from ment recommended gradually phasing 2018 to 2020 using the financial control approach. Uniper CO intensity 2016 - 2018 This means that our carbon intensity is the ratio 2 out coal by 2038. Although none of these between the direct CO2 emissions from our fully (grams of CO2 per kWh) countries has yet enacted a phaseout law, consolidated, stationary fossil-fueled power plants and power-and-heat plants and these plants’ power 506 the trend is clear. and heat output. It does not include plants that 502 produce heat/steam only. We initially reported We support a coal phaseout – but only if that our carbon intensity was 503 g/kWh in 2017. 499 We subsequently corrected this to 506 g/kWh. rising carbon prices alone don’t enable the 2016 2017 2018 EU to achieve a rate of emissions reduction

Uniper Sustainability Report 2018 Climate action and security of supply 12 Students provide useful insights into climate- related scenario analysis

to reach its climate targets. Moreover, we Moreover, the supply of gas will remain In 2018, five students pursuing Master’s strongly believe that the modalities of any abundant well into the future. degrees in Green Management, Energy, phaseout must be fair to the companies, and Corporate Social Responsibility at people, and regions they affect. In addition, Climate-related disclosures Bocconi University in Milan, Italy, took decisions about the future of coal-fired We carefully monitor developments at the part in a project in which they analyzed power generation must consider the Task Force on Climate-related Financial reliability of the energy and heat supply, Disclosures (TCFD), which has issued a climate-related scenarios and how especially because the feed-in of inter- consistent framework for companies to they can be used in practice to evaluate mittent renewable energy continues to make voluntary climate-related financial transition risks for energy companies increase and the expansion of grid capacity risk disclosures. We’ll continue to evaluate like us. These include risks arising from is not keeping pace with this growth. whether the framework can add value the transition to a low-carbon economy to such disclosures. An organization which could, for example, lead to the We expect Datteln 4, our technologically called CDP, formerly known as the need to reassess the future viability of advanced 1.1 GW coal-fired power plant in Carbon Disclosure Project, runs a global some assets. The students presented west-central Germany, to enter service in system for companies to report their their findings to Eckhardt Rümmler and the summer of 2020. We will not invest in environmental data, climate risks, and several of our other senior managers. It any new coal-fired power plants of our own approach to carbon management. CDP after the commissioning of Datteln 4. then assigns companies’ disclosures a was a win-win situation: the students score ranging from A (best) to F. In 2018 had the opportunity to apply their No matter what decisions are made about we responded to CDP’s sector-specific analytical skills and creativity to an coal, gas – which has the lowest carbon climate-change questionnaire for the first important sustainability issue, and we emissions of any fossil energy source – time. The questionnaire, which for the benefited from interesting insights is the best fuel to support the energy first time included questions drawn from that will assist us in our ongoing transition. Indeed, ambitious emissions TCFD recommendations, was about our evaluation of climate-related risks. reduction can only be achieved if more climate performance in the 2017 calendar gas is used in power generation, heating, year. CDP subsequently gave us a C, the transport, and industry. The importance of average score for the energy sector. The gas-fired power plants, which can swiftly questionnaire enabled us to identify poten- balance out the volatility of renewables, tial improvements which we will explore will increase significantly going forward. further in 2019.

Uniper Sustainability Report 2018 Climate action and security of supply 13 [G4-DMA] Maximizing efficiency and climate protection CO2 Value Europe

A key aspect of our growth strategy is to Cogeneration – producing both electricity Together with around 40 other com- supply by-products of power generation and heat – has increased Grain 6’s thermal panies and institutions, at the end of to industrial enterprises located near our efficiency to more than 81%. In the fourth 2017 we founded CO2 Value Europe, an power plants. This has two advantages. quarter of 2018 alone cogeneration enab- initiative to promote the development First, it enables us to earn additional, sta- led Grain 6 to displace 25,000 metric tons of a scalable carbon capture and usage ble revenue that isn’t exposed to commo- of CO2 because no additional fossil fuel (CCU) industry. We currently hold the dity prices. Second, it improves our plants’ had to be consumed to generate the heat. presidency of the initiative. The aim is thermal efficiency, because they derive to use carbon as a valuable resource more useful energy from each unit of fuel. Generating change is about demonstrating for alternative production processes, that a secure energy supply and more like manufacturing chemicals and fuels. One of these by-products is waste heat, climate protection can go hand-in-hand. Although a CCU industry doesn’t yet exist, which is needed for a wide range of indus- Grain 6 is just one of many examples it would have applications for a wide trial processes. In 2018, the engineers at of how we’re making it a reality. variety of other sectors and is potentially Grain 6, one of our combined-cycle gas feasible along the entire value chain. turbines in the United Kingdom, improved CCU’s potential for reducing net carbon the design of its heat pipe. This enabled emissions is substantial. In its first year it to again begin supplying waste heat of existence, CO2 Value Europe achieved to its neighbor, Grain LNG terminal, significant growth. It formed a number of which uses the heat to regasify LNG. subsidiaries and is considering forming others, including on other continents.

Alongside our engagement for CO2 Value Europe, we sit on the Advisory Board of

the Global CO2 Initiative and are a founding member of the German Energy Agency’s (dena) Global Alliance Power Fuels.

Uniper Sustainability Report 2018 Climate action and security of supply 14 Innovations for a How we manage innovation low-carbon future

[GRI 103-1] Innovation is crucial to our reflects the three pivotal trends that are [GRI 103-2/3][G4-DMA] Innovation plays After careful review, we selected several ability to generate change. It makes our transforming the energy industry: decar- a key role in our support for the transition main innovation areas, of which three are existing businesses more efficient, more bonization, decentralization, and digi- to a low-carbon future. Our innovation related to decarbonization: new flexibility, competitive, and more sustainable. Also, talization. We’re actively helping shape team has two main objectives: to develop carbon recycling, and hydrogen. All three it enables us to establish new businesses these trends and, as described below, are scalable business models that could be offer potential synergies with our existing that support the transition to a low- developing innovative businesses that fit viable over the medium term and to serve businesses, help prepare our company carbon future. Our innovation strategy the energy world the trends are creating. as our company’s innovation radar by for a low-carbon future and support our tracking technologies and market develop- commitment to promote lower-carbon ments that potentially pose threats or offer fuels. We’ve also committed to conducting opportunities. at least 20 projects by 2022 whose aims includes decarbonization. We collate knowledge on emerging technologies by gathering information from publications, conferences, our own experts, and other sources. We then use this information to identify potential new business opportunities as well as regulatory or market risks to our existing businesses and devise effective responses.

Wall with results from decarbonization projects internal innovation 10 workshop. already underway

Uniper Sustainability Report 2018 Climate action and security of supply 15 Our main innovation areas related to decarbonization [GRI 103-2][G4-DMA]

New flexibility Carbon recycling Hydrogen

Flexibility supports the transition to a We see CO2 not as a waste product but as We believe low-carbon hydrogen and low-carbon energy world in two ways. a valuable resource that can be captured hydrogen-based fuels can play a key First, it balances out the fluctuations in and used in the production of a variety role in decarbonization and offer new renewables output; this capability will help of products, such as building materials, business opportunities, particularly in support the integration of large amounts chemicals, and fuels. We have more than mobility but also in heating, industry, of renewables capacity. Second, the a decade of experience in developing and power generation, and other sectors. flexibility provided by energy storage or testing equipment to capture CO2 from our When electrolysis equipment is powered conversion is able to capture more of this power plants’ exhaust stream. Going for- by renewable energy, it stores this energy output. We’re pioneering the development ward, we intend to build on this experience in a chemical molecule: hydrogen. This of innovative technologies for new forms and continue to expand our knowledge process is viable on an industrial scale of flexibility. For example, we’re among about CO2 conversion; to name one example and makes it possible to store renewable the first companies in the world to use a among many, we’re in the process of identi- energy for a long time. Hydrogen can be process known as power-to-gas to convert fying industrial enterprises near our power used as fuel cells to power vehicles as well surplus renewable energy into hydrogen plants that need CO2 for their production as buildings and other equipment. Fuel and methane and inject them into the gas processes. Carbon recycling has the cells only emit water, not CO2. Hydrogen pipeline system. We also helped develop potential to make a significant contribution can also be combined with CO2 to produce M5BAT, a utility-scale battery for on-site to decarbonization: by permanently binding chemicals and synthetic fuels, such as storage of surplus low-carbon energy Uniper employees at our power-to-gas CO in building materials and other prod- synthetic diesel, kerosene, and methane. unit in Falkenhagen, Germany. 2 production. Moreover, many of our existing ucts or by replacing chemicals and fuels Alongside continuing to refine our existing power plants – particularly gas, hydro, and power-to-gas facilities, utility-scale bat- that otherwise would have been produced power-to-gas hydrogen production plants nuclear – can adjust their output within teries, charging infrastructure for electric using fossil fuels, thereby avoiding these (see p. 17), we’ll explore new applications minutes and are thus excellent sources of vehicles, and demand response (industrial emissions. We’re actively engaged in for clean-burning hydrogen. flexibility. Consequently, our objective is to processes that can adjust their consump- creating a global carbon recycling industry. assemble a diverse portfolio of flexibility tion in response to the amount of electricity For more information, see the information options encompassing our power plants, available in the grid). on CO2 Value Europe on page 14.

Uniper Sustainability Report 2018 Climate action and security of supply 16 Making transport more Power-to-gas: harnessing sustainable with LNG more clean energy [G4-DMA]

With the amount of freight hauled by road On particularly windy, sunny days, wind system. Our work at Falkenhagen and continuing to increase, liquefied natural and solar farms sometimes have to curtail other locations proves that power-to-gas gas (LNG) offers a quick and efficient and even suspend production because technology responds to rapid fluctuations way to make heavy vehicle traffic more the grid doesn’t have enough capacity to in renewables output, is market-ready, sustainable: trucks that run on LNG emit transmit their output. That’s renewable and promises to become even more less CO2, nitrogen oxides, and particulate energy gone to waste. Power-to-gas can efficient and affordable going forward. matter than diesel-powered trucks and help: instead of taking wind turbines are also much quieter. Moreover, LNG or solar arrays offline to prevent grid contains 600 times more energy per unit congestion, their output can be used to of volume than normal natural gas. In run on-site electrolysis equipment that view of these advantages, we’re drawing produces hydrogen and methane, which on our expertise in LNG supply to esta- is then injected into the gas pipeline blish a business in LNG truck fueling. system. In short, power-to-gas can enable us to harness more clean energy. In 2018 our subsidiary LIQVIS opened its first permanent public LNG filling One of our power-to-gas units is at a station in Berlin, Germany. This marked wind farm near Falkenhagen in eastern an important step in our plan to esta- Germany. Through year end 2018, it had blish a network of LNG filling stations produced a total of 8 GWh of hydrogen. In across Europe. The German Federal 2018, we added equipment that enables

Ministry for Transport and Digital Infra- this unit to use CO2 from a nearby bio- structure has taken steps to accelerate ethanol plant to transform the hydrogen the development of this network by into methane. We believe that green subsidizing the purchase of LNG trucks methane has greater promise because and by exempting LNG trucks from it has the same chemical properties freeway tolls until year-end 2020. as natural gas and can therefore be Our power-to-gas activities stored in unlimited quantities in the gas contribute to SDG 7, 9 and 13.

Uniper Sustainability Report 2018 Climate action and security of supply 17 Secure, affordable, and How we manage our reliable energy supply generation fleet

[GRI 103-1] A secure and reliable energy technical expertise and energy services need for big plants. Third, as mentioned [GRI 103-2/3][G4-EU10] We own and supply is essential for societies to help provide Europe and Russia with a above, several countries where we operate about 37 GW of conventional function and for their economies to be secure, affordable, and reliable supply operate have taken steps to stop coal-fired generating capacity (gas, coal, hydro, competitive. That’s why it’s the center- of power, gas, and steam. generation in the not-so-distant future. nuclear, fuel oil, and biomass) in Europe piece of our strategy. Consequently, our On the other hand, the gradual exit of coal and Russia. This fleet is highly efficient, core business is our main contribution But we also face challenges. First, the and Germany’s upcoming phaseout of flexible, and diversified. More than half to society. Our generating capacity, our growth of renewables is reducing the nuclear capacity will tighten the supply (65%) of our capacity is low-emission midstream gas business (wholesale operating hours of conventional power side in the mid-2020s, which is likely to hydro, nuclear, and gas and thus fully sup- supply, underground storage, and stakes plants. Second, distributed generation create better market environment for our ports the energy transition. Our largest in transport pipelines) as well as our continues to proliferate, lessening the generation portfolio. asset positions are in Germany, Russia, the United Kingdom, Sweden, the Nether- lands, and France. In addition to producing electricity and providing stability to the grid, many of our plants supply heat, process steam, compressed air, and other products to nearby industrial enterprises and utilize some of these enterprises’ waste streams.

Our overall strategy is to continue main- taining and optimizing all our assets, to grow our portfolio in areas where the market or regulatory environment is especially supportive, and to generate more income from by-products like steam and compressed air.

Etzel gas-storage facility in Germany at night.

Uniper Sustainability Report 2018 Climate action and security of supply 18 We periodically upgrade the technology Fully consolidated generating capacity by technology and country 2018 and processes at our assets so that we continue to ensure high rates of availability MW at year-end 2018 Gas Coal Hydro Nuclear Other Total (by and efficiency and to prevent unplanned country) downtime. Some of these upgrades also improve our assets’ climate performance. Russia1 8,479 2,283 - - - 10,762 Germany 3,333 3,802 1,991 - 1,418 10,544 Our generation fleet’s reliability Our key performance indicator for the United Kingdom 4,375 2,000 - - 34 6,409 reliability of our generation business is average asset availability. Our power Sweden 947 - 1,579 1,400 662 4,588 generation fleets in Europe and Russia France 828 1,190 - - 244 2,262 had an average asset availability of 79.1% in 2018, lower than in 2017. We investigate Netherlands 526 1,070 - - - 1,596 each outage carefully to determine the Hungary 428 - - - - 428 causes so that we can prevent similar problems at other plants and keep our Total (by technology) 18,916 10,345 3,570 1,400 2,358 36,589 fleet’s availability at a high level. 1Includes an asset in the Czech Republic.

of our generating capacity is low carbon (hydro, gas and 65 % nuclear)

Uniper Sustainability Report 2018 Climate action and security of supply 19 How each of our fuels supports supply security [GRI 103-2/3]

Gas CCGTs in the United Kingdom to black start; Wilhelmshaven, Germany, to be operational capacity in Europe. Our 109 hydro plants Natural gas, which will help Europe transition that is, power up independently of the grid as early as 2022. This unit could send in Germany meet the electricity needs toward a more diversified and lower-carbon after a widespread outage. This enables out 10 bcm of gas per year, thus further of 1.6 million households. Our 76 plants energy mix, is a big part of our business. them to provide electricity needed to restart diversifying Europe’s gas supply. in Sweden make us the country’s third We operate a large fleet of gas-fired power other power stations and keep outages as largest hydropower producer, and support plants, procure billions of cubic meters of short as possible. In addition, we have stakes in gas trans- Sweden’s energy transition, which aims natural gas and LNG each year, have stakes mission pipelines (such as OPAL in eastern at Sweden’s energy supply being 100% in several gas transmission pipelines, and We procure natural gas from a variety of Germany) and finance projects to build renewable by 2040. Going forward, we operate underground gas storage facilities. producers in several countries, mainly new ones. These assets provide important intend to maintain and optimize these vital Russia, the Netherlands, and Germany. pathways for the import and transport of assets so that they can continue to provide The two advantages of gas-fired power To further diversify our gas supply in the gas and therefore play key roles in ensur- a reliable source of zero-carbon power. plants are that they have relatively low years ahead we will also procure up to ing supply security. carbon emissions and also can start up and 1.5 billion cubic meters (bcm) of gas per Nuclear adjust their output quickly in response to year from Azerbaijan. Finally, we’re one of Europe’s leading gas We’re the majority owner and operator of changes in renewables output, helping to storage companies. We own and operate a Oskarshamn 3 nuclear power plant (1.4 GW) ensure an uninterrupted electricity supply. In 2018 we procured 390 TWh of gas under total of around 8 bcm of underground gas in Sweden and have minority stakes in In January 2019, transmission system long-term contracts. We also buy and storage capacity in Germany, Austria, and two other nuclear plants, Ringhals (1.2 GW operator TenneT awarded us a contract that sell gas on a forward and a spot basis at the United Kingdom. We have 6.5 bcm in attributable to us) and Forsmark (0.3 GW will add to our portfolio of such plants: it Europe’s trading venues. We traded a total Germany alone, which makes us its largest attributable to us). Our focus is on continu- selected us to build a 300 MW combined- of 2019 TWh of gas in 2018. Along with operator. Our storage business helps keep ally enhancing operational excellence and cycle gas turbine (CCGT) at Irsching power pipeline gas, we purchase LNG. We also the gas supply secure even during demand meeting new safety standards. After an station near Ingolstadt. From 2022 onward, have stakes and long-term capacity book- spikes in cold winter months. extensive modernization and lifetime-ex- the CCGT will supply power at times of ings several LNG in Europe. In addition, in tension program, all three plants are in the system stress, thereby making the grid in December 2018 Uniper and Mitsui O.S.K. Hydro prime of their operating lives and able to be southeast Germany even more reliable. In Lines concluded an agreement to build a Hydro makes up about 10% of our total low-carbon mainstays of Sweden’s supply addition, in 2018 we equipped two of our floating storage and regasification unit in generating capacity and 14% of our security for the decades ahead.

Uniper Sustainability Report 2018 Climate action and security of supply 20 Increasing availability, reducing costs

We strive continually to maximize the Power production by primary energy source reliability and availability of our power plants. One way we do this is by main- TWh 2018 2017 2016 taining and refurbishing the components 1 of our combined-cycle gas turbines Gas 60.5 61.9 73 (CCGTs) so that they last longer than the Coal 31.8 35.8 40.9 manufacturers originally intended. This Nuclear 10.7 11.1 13.6 enables us to lengthen the intervals between major turbine outages, reduce Hydro 10.3 11.8 11 unavailability, and save a lot of money. Renewables2 0.2 0.2 0.2 It also further deepens our knowledge of CCGTs, knowledge that we can share Biomass 0.3 0 - within our company and market to Total3 113.9 120.8 138.7 other operators worldwide through our engineering services business. 1Figures include production from oil. 2Figures include production from non-material wind and solar assets (aggregated installed capacity 95 MW). 3Possible rounding differences between individual figures and totals. The program, which we started about four years ago, is called Parts Life Extension Coal Despite this challenging environment, (PLE). We’ve completed PLE projects Our coal portfolio will shrink due to policy we’ll continue to operate our coal assets at several power stations, typically and regulatory changes in Europe. Deci- efficiently during their remaining life- deferring major outages by around one sions about the future of coal-fired power time and, if economically viable, seize year. Currently, PLE projects are under generation must consider the reliability opportunities to improve their commercial way at seven of our power stations across of the energy and heat supply, especially position. Whenever possible, we’ll work Europe, involving a total of 16 CCGTs. because the feed-in of intermittent renew- continually to increase these assets’ Going forward, we plan to take PLE to able energy continues to increase and the efficiency and therefore reduce their seven more of our power stations. expansion of grid capacity is not keeping environmental footprint. pace with this growth. Phasing out coal shouldn’t result in people’s lights going out.

Uniper Sustainability Report 2018 21 Our people 73 nationalities Our top priority is to work safely, working at Uniper look after our people’s health, and protect them from harm. Our commitment to health and safety also extends to the employees of our business partners and to the people who live near and visit our facilities. We aim to provide a supportive work environment in which our people feel confident sharing their ideas and trying new approaches.