A LOOK AT THE RISKS AND OPPORTUNITIES

The Group also launched a study on the transition risk related to a European alignment with a 15C trajectory the results will be

communicated in accordance with the CSRD Directive

1

1 Corporate Standard Reporting Directive

TRANSITION RISKS REVIEW – CLIMATE MITIGATION

ENGIE gas networks: a necessary transformation

toward total decarbonization

The reduction of the volume of gas in certain networks

(transport, storage or distribution) or in certain sectors

(buildings, electricity production) and the imposition

of stricter carbon criteria for methane currently represent

the most significant risks for ENGIE’s activities

and for its gas networks in particular.

The acceleration of Europe’s climate ambitions

cannot be accomplished without the use of

these assets, which guarantee European energy security

and decarbonization through their transformation.

• Continuity of the methane supply and the coupling of different

energy vectors are essential for a decarbonized energy

system since they can support the electricity network during

demand peaks. This is especially true with the development

of hybrid heat pumps.

• French networks guarantee the gas supply in Europe

in a complex geopolitical environment and will,

in the future, enable the distribution of biomethane

synthetic gas and even hydrogen. They provide assurance

to the French and European system in the event

of incidents on the other energy vectors (unavailability

or delay in the nuclear fleet, for example).

• Finally, a good portion of the transport or storage

network can be converted to hydrogen.

Renewable electricity:

a supply chain that is mature but under pressure

and a growing demand for exemplary behavior

The supply of renewable electricity is

a key element in ENGIE’s decarbonization.

At a time of accelerated development of new installed

capacities, the manufacturing ability of the wind and solar

components and batteries industry will determine

the extent to which operators are able to meet

their climate ambitions.

Thus, the value chain is a key element in the strategy

implemented by ENGIE, which has set up an action

plan designed to best integrate these risks

in investment decisions, reduce its exposure

to them by promoting the reuse and ecodesign

of turbine components the Zebra project

or solar panels and diversify its supply chain

Low carbon gas: promising technologies

to be industrialized

Accelerating decarbonization is also based on

a massive roll-out of low carbon gases

(biomethane, hydrogen and synthetic methane),

which requires substantial investment in capital

and human resources. These technologies remain

exposed to regulatory constraints and growing conflicts

of use (e.g. wood energy or agricultural waste).

Sufficient production quantities will be necessary,

particularly to guarantee the continuity of the gas-fired

power plants, which are responsible for ensuring

the balance of the electricity networks. The need

to transform or build adapted networks

could also delay the hydrogen economy.

The Group is committed to a proactive role

in low carbon gases to minimize the hazards

to its business and push back these technological

boundaries. ENGIE thus plays a significant role

in developing the new technologies around

2G biomethane and synthetic molecules (ENGIE Lab),

as well as CCS

(Carbon Capture and Storage),

which will support decarbonization efforts.

An ambition facing major

social and societal challenges

The energy transition that ENGIE is undertaking

includes major social transformations, particularly

with employees, the regions, customers and suppliers.

These transformations carry a reputational

and development risk for the Group, such as

the exclusion from certain markets on the basis

of the requirements in bid tenders and

their criteria for sustainability, or the lack

of competitiveness to attract talent.

In addition to its climate ambitions, the Group

is also committed to a Just Transition

(see the dedicated notebook) to assist

its most disadvantaged customers the regions

in which the Group operates and the employees

when fossil activities are closed down especially

in the case of the coal phaseout the coal phaseout

Development of renewable energy both mature

and in development requires an increase in training

that is both quantitative number of persons trained

and qualitative level of expertise In this regard

ENGIE has set up training courses to enhance

the skills of its employees

Renewables Academy

72 - CLIMATE NOTEBOOK