In 2024, the following topics related to climate change were identified as material for PGE Capital Group:
Due to the scale of its activities and its ownership of brown and hard coal assets, PGE CG is currently the largest emitter of greenhouse gases in Poland. Converting the chemical energy contained in these fuels into electricity and heat results in high quantities of greenhouse gases being released into the atmosphere. This can contribute negatively to climate change, which in turn may lead to adverse weather events affecting the environment. Negative impacts may be observed over the operational horizon of high-emission assets, depending on the pace of investment in alternative energy sources and the phasing out of high-emission units in Poland.
PGE CG also reports significant levels of energy consumption, primarily in energy generation processes (for brown coal mining and generation of electricity and heat), as well as in distribution (transmission losses). Due to its reliance predominantly on fossil fuel-based assets and the distribution of energy that, in the National Power System, is mostly coal-based, the energy consumed is non-renewable, which negatively affects resource use.
Information on identified risks (including physical and transition risks) is provided in [ESRS – 2 SBM -3] in the table: Results of the assessment of significant risks and opportunities, taking into account their location in the value chain. In addition, detailed information about physical and transition risks, applied methods and the results of analysis are included in chapter 3.3 of the Management Board Reports on activities.
The analysis of the resilience of the Group’s strategy and business model in relation to climate change is carried out periodically and includes the identification of assets, internal processes and supply chains that may be directly affected by climate change and its market and regulatory implications. The latest resilience analysis was conducted in 2024. During the reporting period, the Group used internal scenarios describing the development of the energy, fuel and heat markets, which include weather condition data as one of the sets of variables used in forecasting models.
PGE CG analyses changes in the market and economic environment and creates macroeconomic scenarios used to assess operational and investment decisions. The reference point for PGE CG is the current situation on energy markets and in the economy. The methodology for defining future market development scenarios is based on several key elements:
- international regulations – related to EU legislation on energy and climate policy, particularly within the Fit for 55 package. The assumption is the pursuit of climate goals set out in climate policies,
- CO₂ emissions – related to rising costs of emission allowances,
- technological changes – related to the transformation of the electricity system’s technology mix and the increasing share of installed renewable energy capacity,
- prices of energy raw materials,
- economic development and growing demand for electricity.
These scenarios include weather condition data as one of the variable sets in forecasting models.
At the same time, PGE CG monitors benchmarks from external institutions concerning the development of the energy market, fuel prices, and CO₂ emission allowance prices, which are presented across multiple scenarios. Each of the above factors is analysed in the short-, medium- and long-term perspective. Assumptions and adopted scenarios are updated at least annually in order to reflect changes in highly uncertain factors, such as raw material prices and climate policies. Each update of macroeconomic scenarios leads to the verification and ongoing evaluation of project values.
In the short term, the PGE Capital Group (PGE CG) has limited capacity to implement changes to its overall business model. This is due, among other things, to statutory provisions concerning energy security, existing energy sales contracts, and ongoing investment projects. Furthermore, the Group’s companies hold licences for mining, generation, distribution, and trading and sales of energy, which entail obligations arising from the conditions of these licences and applicable legal regulations.
Adaptation to climate change and climate transition in the short term may include actions that remain under the company’s control, such as:
- maintaining high availability of pumped-storage power plants and flexible generation units;
- maintaining appropriate stocks of energy fuels;
- identifying and eliminating risk factors for energy infrastructure, including terrain obstacles, shrubbery, wind exposure, icing or high temperatures.
In the medium term, PGE CG can implement initiatives that adjust its business model, enabling reduced climate impact or better adaptation to climate change. Adaptation in the medium-term perspective may include, among others:
- increasing the share of underground cable lines in the network infrastructure, which are not exposed to extreme weather events,
- optimising the structure and parameters of district heating installations,
- monitoring changes in energy and heat demand profiles,
- introducing technologies that limit the negative impact of weather conditions (e.g. prevention of icing, overheating or damage caused by strong winds),
- ensuring reliable means of communication,
- using waste heat.
PGE CG aims to achieve climate neutrality by 2050. The Group plans to remain present across all elements of the current supply chain, except for coal-based mining and generation. The business model will change in terms of applied technologies, the structure of revenues and costs, as well as the range of services provided and products sold. These changes will affect the qualifications required of the workforce. In view of the decentralisation of energy and the increasing complexity of systems, the Group anticipates significant automation in managing the operation of production assets.
PGE CG plans to modernise its district heating assets to maintain the status of efficient systems. The Decarbonisation Plan for the District Heating segment provides for the phase-out of coal combustion in district heating by the end of 2030.
PGE CG makes use of the option to omit the disclosure of anticipated financial effects in the first reporting year; therefore, they are not included in the disclosures related to the resilience analysis.