CSR

Green Bonds

Focusing on the development of low carbon energy and energy services that enable its customers to reduce their carbon footprint, the Group is firmly committed to contributing to the emergence of the green bond market, which is proving to be one of the most promising investment options in the future to finance the energy transition.

 

1. Group's emissions history

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Green Bonds are conventional debt instruments: they are bearer securities, generally listed on a regulated market and with the same level of recourse as the borrower's other senior creditors. Their special feature relates to the use of the funds raised; the proceeds of these loans are intended to be invested exclusively in so-called "green" projects, generating climate and/or other environmental benefits and also meeting social and societal criteria. ENGIE issued its first green bonds in April 2014, to support its development plan in renewable energies and energy efficiency. At the end of December 2023, ENGIE's total Green Bonds issuance reached €20.89 billion, making the Group one of the leading Corporate issuers on the Green Bonds market.

Issue and allocation history
Green bond trends

The evolution of green bonds issued each year in relation to the Group's total annual issuances (net of redemptions) is presented below.

Information on the Group's various emissions

Information on the Group's various emissions is available in the Green Finance section.

2. Allocation principles and methodology

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Since 2017, the Group's Green Bonds comply with the terms of a referential framework (Green Bond Framework, updated and renamed Green Financing Framework in March 2020 and updated again in June 2023) that ENGIE has defined for all its green emissions.

 

Information on the Group's various emissions and their associated framework is available in the Green Finance section

The principles of the Green Financing Framework of June 2023, which are a continuation of those set out in the Green Financing Framework of March 2020, are as follows: 

the funds raised are allocated to projects supporting the transition to a low-carbon economy directly linked to ENGIE’s strategy (“green eligible projects”). The green eligible projects must fall in a pre-defined category of projects and meet certain technical criteria. The eligibility criteria were determined by ENGIE and approved by Moody’s Investor Service. The second party opinion provided by Moody’s is available on ENGIE’s website at the following address: MIS SPO_Engie_Final_20230613.pdf

until the funds raised are entirely allocated to green eligible projects (or after, in case of a substantial change in allocations), ENGIE is committed to providing information in its Universal Registration Document on the fund allocations made during the period concerned;

the funds may be allocated to green eligible projects carried out after the issue of the green financing instrument, or used to refinance capex or opex on green eligible projects having taken place in the 24 months prior to the issue of the green financing instrument (vs. Green Financing Framework of March 2020: no time limit for capex, and having taken place in the 24 months prior to the issue of the green financing instrument for OPEX). The amounts allocated are calculated after deduction of any external funding already dedicated to these projects;

the funds raised can be allocated for refinancing other green financing instruments previously issued by ENGIE. For each issue, ENGIE undertakes to allocate at least 50% of the funds raised to new spending (on green eligible projects) not allocated before (vs. Green Financing Framework of March 2020: 25%);

as of December 31 of each year, the Group must hold cash (and cash equivalents) of an amount at least equal to the funds raised by the Green Bond, less amounts allocated to fund green eligible projects at that date.

 

A Green Bond Committee (recently renamed "Green Financing Committee" or Green Finance Committee, aiming to encompass all green finance subjects in general) meets regularly to discuss market developments and projects likely to be financed by the Green Bond - the so-called Eligible Projects. It is jointly led by the ESG Department and the Finance Department and brings together the Procurement Department, the Global Care Department and the main GBU concerned.

3. Contribution of funded projects to Sustainable Development Goals

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The framework-eligible categories are likely to contribute to at least two of the United Nations Sustainable Development Goals ("SDGs"), namely goal 7. Affordable and clean energy and goal 13. Climate Action.

 

Eligible green projectsThe United Nations SDGs identifiedUnited Nations SDG targets
Renewable energy productionSDG 7. Affordable and clean energy7.2 Increase substantially the share of renewable energy in the global energy mix
SDG 13. Climate actionThe UN SDG 13 is about taking urgent action to combat climate change and its impacts. Businesses can contribute to SDG 13 by reducing GHG emissions through renewable energy projects.
Energy storageSDG 7. Affordable and clean Energy7.2 Increase substantially the share of renewable energy in the global energy mix
SDG 13. Climate actionThe UN SDG13 is about taking urgent action to combat climate change and its impacts. Businesses can contribute to SDG 13 by reducing GHG emissions through renewable energy storage projects.
Transportation and distribution infrastructureSDG 7. Affordable and clean Energy 7.2 Increase substantially the share of renewable energy in the global energy mix 
7.3 By 2030, double the global rate of energy efficiency improvement
SDG 13. Climate actionThe UN SDG 13 is about taking urgent action to combat climate change and its impacts. Businesses can contribute to SDG 13 by reducing GHG emissions through renewable energy transmission and distribution projects.
Energy efficiencySDG 7. Affordable and clean energy7.3 By 2030, double the global rate of energy efficiency improvement
SDG 13. Climate actionThe UN SDG 13 is about taking urgent action to combat climate change and its impacts. Businesses can contribute to SDG 13 by reducing GHG emissions through energy efficiency projects.
Clean mobilitySDG 13. Climate actionThe UN SDG 13 is about taking urgent action to combat climate change and its impacts. Businesses can contribute to SDG 13 by reducing GHG emissions through energy efficiency projects.

4. Impact reporting methodology

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Calculating the contribution of eligible projects to avoided CO2 emissions

ENGIE uses the concept of avoided emissions for its customers to enhance the decarbonizing nature of its products and services. The Group has developed an internal calculation methodology and a database of emissions factors which are regularly updated to bring them into line with international standards on the subject.

For a given customer need (e.g. electricity supply), the emissions avoided by an ENGIE product or service correspond to the difference between the baseline emissions and the emissions of the ENGIE product/service. All emissions are calculated using an LCA (Life Cycle Assessment) approach. The baseline corresponds to the market average of solutions that the customer would have had access to in order to satisfy its needs, in the absence of ENGIE. For each ENGIE product generating avoided emissions, particular care is therefore taken in defining the baseline, in order to build a credible and consistent scenario over time of user behavior by country. In particular, this baseline evolves over time to reflect the decarbonization of energy systems.  

Avoided emissions

Avoided emissions can therefore be calculated over the lifetime of an ENGIE asset, or on an annual basis. In the case of green bonds, avoided emissions are expressed on an annual basis. 

 

Emissions factors are a key element in calculating avoided emissions. ENGIE uses an internal database, maintained and developed by a dedicated R&D team. It is based on the external sources (IPPC guidelines, Ecoinvent, Enerdata for example).

 

For renewable electricity generation projects, the baseline corresponds to the average electricity consumption mix of the country in which the project is located, reflecting the average of technologies supplying the country's electricity. This baseline is compared with the lifecycle emissions of the ENGIE asset (solar, wind, hydro or thermal asset consuming decarbonized fuel).

 

For energy storage projects, the decarbonizing character comes from the fact that the assets are charged with electricity when the network is experiencing low demand (and therefore when the electricity is low in carbon), and are discharged during peaks in demand in order to relieve the network, when the electricity on the network is high in carbon. The emissions avoided come from the difference in the grid's emission factor between the peak (baseline) and off-peak periods, taking into account losses at the storage asset.

 

For countries where data was available, daily peak and off-peak emission factors averaged over the year were reconstructed using hourly data. For other countries, a simplified and conservative methodology was applied: the emissions of the ENGIE asset are based on the country's average electricity consumption mix, and the baseline (i.e. the network during peak periods) is modelled by a gas turbine.

 

For renewable gas projects, the baseline corresponds to the gas mix of the country in which the project is located, including a penetration rate for renewable gases (biomethane and green hydrogen).

 

To calculate the contribution of energy efficiency projects (including green buildings) to avoided emissions, ENGIE evaluates them by multiplying the energy savings brought by the project by the emissions of the energy mix of the country where the project is developed. Avoided emissions are calculated for one year of operation of the projects, considered in the normal operating phase.

 

For clean mobility projects, avoided emissions are calculated by comparing the level of emissions of ENGIE projects with a baseline scenario, in this case the use for the same distance travelled of vehicles representative of the average vehicle fleet in the country or region of the project, taking into account local decarbonization trends (electrification of part of the fleet, greener fuels).

5. Projects and eligibility criteria

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The categories of projects covered by the Green Financing Framework of March 2020 are described below:

  • Renewable energy production (hydropower, geothermal energy, wind, solar, bioenergy, low-carbon hydrogen, marine energy): 

Energy transition and the development of renewable energy on a global scale are a strategic priority for ENGIE. In 2021, the Group set itself the target of stepping up its investments in renewables to enable it to install 3 GW of additional capacities in 2021, then 4 GW per year on average from 2022 to 2025, and finally 6 GW per year from 2026. 

ENGIE is targeting a 58% share of renewable energy installed capacity in its electricity production portfolio taken at 100% by 2030.

With respect to renewable gases, the Group aims to reaching 100% of renewable gases in its energy mix in 2050, with the intermediate objective of having a production capacity of 10 TWh/year in Europe. In France, ENGIE Bioz initiates, develops, finances, builds and operates biomethane production units, and is one of the market leaders.

Moreover the Group aims to have a production capacity of hydrogen by electrolysis of 4 GW by 2035.

 

  • Energy storage (electricity storage by pumped storage and batteries):

Energy storage solutions play a major role in the energy transition and are an essential link in the electricity networks. By storing energy produced at times when wind and solar sources are at their most productive, and / or when demand is lowest, they respond to the need to balance intermittent supply of renewable energy, which make up an increasing proportion of energy production. ENGIE invests in pumped storage and battery storage for this reason. 

 

  • Electricity transmission and distribution infrastructure:

In France, the Group is pursuing, through its networks business line, its efforts to develop the methanization of organic waste into renewable gases and to recover them through injection into the gas networks. This notably relates to investments to connect biomethane production units to ENGIE distribution and transmission networks.

Energy efficiency (including district heating and cooling networks): 

The development of highly efficient energy infrastructures to support the transition to a low-carbon economy is another of the Group's strategic priorities.

 

  • Clean mobility (including electric charging stations):

ENGIE is strongly committed vis-a-vis local authorities, motorway concession-holders and companies to rolling out and connecting a network of charging stations for electric vehicles that are available and competitive for the benefit of users. The Group has won several tenders in France and Belgium in this fast-growing market. 

The following additional categories are also included in the 2020 Green Financing Framework:

  • green buildings
  • carbon capture and storage 
  • sustainable management of living natural resources and land use.

They received no allocation in 2023 and were removed from the 2023 Green Financing Framework.

The technical eligibility criteria for the different categories of the Green Financing Framework are available on ENGIE’s website at the following address: 20230613_Engie_Green_Framework (VDEF).pdf

6. Allocations

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Allocation of the 2023 green bonds

Depending on the issue dates of the green bonds, they were allocated either under the March 2020 green financing framework or under the 13 June 2023 framework.

The main green eligible projects financed by the proceeds from the green bond issues carried out between January 2023 and September 2023 that meet the conditions of the above-mentioned Green Financing Framework are listed in the following table:

Table Renewable energy production

The projects (and the related capex) set out in the above table for a total of €4.70 billion are allocated globally to the green bond issued between January and September 2023, in proportions enabling finalization of the allocation of the green bonds issued between January and July 2023 and allocating partially the green bond issued in September 2023.

Of the funds allocated to green eligible projects during 2023, 1.2 billion relate to investments made during 2022 and 3.5 billion to investments made in 2023.

 

1) Renewable Energy

At end 2023, the Group’s installed electricity production capacity centralized and decentralized, taken at 100% for its renewables production businesses, reached 41.4 GW in 2023, accounting for 41% of its installed capacity. 

In 2023, ENGIE continued to expand its portfolio of renewable assets, mainly in wind and solar by developing new projects in particular in North America, South America and Europe. Investments in offshore wind continued via the joint venture Ocean Winds. 

With respect to renewable gases, ENGIE acquired in September 2023, Ixora Energy Ltd, also a leader in biomethane production in the UK, with a production capacity of 160 GWh per year. 

As a whole, total amount of €2.6 billion was allocated to developed green eligible projects in the field of renewable energy. When fully operational, these projects should contribute to avoiding greenhouse gas emissions by a minimum of 2.36 million metric tons of CO2 eq. per year.

 

2) Energy storage

The green eligible projects in question include:

  • The acquisition of Broad Reach Power, a Houston-based company specializing in battery storage activities. The transaction involves 350 MW of operational assets, 880 MW of assets under construction with commissioning expected before the end of 2024, and 1.7 GW of projects at an advanced stage of development;
  • the Dinorwig (1,728 MW) and Ffestiniog (360 MW) pumped storage facilities in the United Kingdom, owned and operated by First Hydro, which is 75% owned by ENGIE;
  • the Coo pumped storage plant (Belgium) where investments are being made to expand its storage facilities in order to increase its installed power by 79 MW;
  • the power battery storage project at Hazelwood in Australia.

In 2023, a total amount of €1.7 billion was allocated to green eligible projects developed in the field of energy storage. When fully operational, these projects should contribute to reducing greenhouse gas emissions by a minimum of 0.46 million metric tons of CO2 eq. per year.

 

3) Transmission and distribution networks for renewable gases 

In 2023, a total amount of €155 million was allocated to green eligible projects developed in these fields. When fully operational, these projects should contribute to reducing greenhouse gas emissions by a minimum of 0.49 million metric tons of CO2 eq. per year.

 

4) Energy Efficiency

In 2023, ENGIE continued to develop urban heating or cooling networks in Europe and mainly in France.

For this year, a total amount of €206 million was allocated to green eligible projects developed in the field of energy efficiency. When fully operational, these projects should contribute to reducing greenhouse gas emissions by a minimum of 0.34 million metric tons of CO2 eq. per year.

 

5) Clean mobility 

In 2023, a total amount of €48 million was allocated to green eligible projects developed in the field of low-carbon mobility. When fully operational, these projects should contribute to reducing greenhouse gas emissions by a minimum of 0.02 million metric tons of CO2 eq. per year.

 

IMPACT REPORTING

The impact reporting only takes into account the new projects displayed above. Reallocated projects following the buyback of previous issues are not taken into account in the impact reporting.

In full operation phase, the projects are expected to contribute to avoid emissions of 3.7 million tons of COeq per year: 

  • for renewable projects: 2.36 million tons of CO2eq/year 
  • for storage projects: 0.46 million of CO2eq/year
  • for transmission and distribution networks for renewable gases: 0.49 million of CO2eq/year
  • for energy efficiency projects: 0.34 million tons of CO2eq/year
  • for clean mobility projects: 0.02 million tons of CO2eq/year

 

The breakdowns by technology and by region of the impacts in tons of CO2eq per year of the projects are presented below (at 100%).

Avoided emissions by category
Avoided emissions by region

The contributions to avoided emissions are presented in the following table using different weighting methods: 

a) at 100% regardless of the Group’s ownership rate and regardless of the nature of the capex

b) according to the Group's ownership rate and regardless of the nature of the capex

c) considering only the development capex at 100%

d) according to the Group's ownership rate and taking only the development capex

 

Avoided CO2 emissions (tCO2eq/year) by technology

 

(a) linked to all capex at 100%

b) linked to all capex at % of ownership

c) linked to development capex at 100%

d) linked to development capex at % of ownership

Wind power

844,490

371,398

844,490

371,398

Solar Power

1,271,630

597,825

1,271,630

597,825

Geothermal

29,703

7,426

29,703

7,426

Bioenergy

200,603

143,603

186,632

129,632

Hydro

10,376

10,376

-

-

Energy storage

466,116

462,305

224,363

220,552

Renewable gas

487,149

487,149

487,149

487,149

Hydrogen

5,191

5,191

5,191

5,191

Energy efficiency

340,713

290,453

340,713

290,453

Clean mobility 

19,516

5,358

19,516

5,358

Total

3,675,487

2,381,084

3,409,387

2,114,984