Environmental Sustainability in Energy Delivery

1. Environmental Sustainability in Energy Delivery Steve Wallace Head of Climate Change and Environment

2. Energy Sustainability Security of supply Affordability (fuel poverty) Environment

3. Where does National Grid fit?

4. The environmental challenge Impact from our services and how we and our supply chain operate Our role in decarbonising the economy Environmental impact from the goods and services we provide Leadership in energy policy Reducing society’s emissions Sustainable, low carbon business Providing the infrastructure to decarbonise society Environmental impact from goods and services that are provided to us Emissions and resource efficiency

5. Where will our energy come from in 2050? ~50% from electricity at ~15g CO2(e) / kWh Generation capacity mix • Wind, nuclear & CCS dominant at ~25GW – 30GW each • ~20GW other renewables • ~15GW interconnection • ~20GW embedded generation ~115GW ~35% from gas at ~185g CO2(e) / kWh • LNG & continental imports • Bio-methane ~15% from oil at ~245g CO2(e) / kWh

6. Why do we need gas? ~1,000 GWh / day Electricity demand ~4,000 GWh / day Gas demand (avg. November day) (avg. November day) Energy use is ‘peaky’… Full electrification of heat:what you have to believe… GWh Days

7. existing electricity network potential wind farm sites interconnectors potential nuclear sites Norway Ireland Netherlands Belgium France France The transmission delivery challenge (2020)

8. Infrastructure challenge 10’s km of new cable tunnels 100’s km new HV cable 10’s new Substations 100’s new transformers 100’s km of new OHL circuits 1000’s km full refurbishment Nearly 1000km of new transmission pipe new compressor stations new compressor units 2000 km gas distribution mains replacement per year Biogas connections….

9. Right Footprint – The environmental sustainability challenge • Not exceeding the ability of the planet to deal with our emissions without reducing its capacity to do so in the future • Only using replaceable (organic) resources at less than the rate that they can be replaced and without damaging biodiversity • Only using irreplaceable resources in a way that retains their value and ensures that they remain available to future generations • Super sustainability: Put more back than we take out – add to natural capital and repair the damage done by previous generations

10. Guiding Principles • Operating as far as possible within closed loops, conserving and enhancing natural resources • Assigning a proper value to external impacts • Integrating the concepts and tools for environmental sustainability into decision making in an organisation-wide culture of sustainability • Assessing aspects and impacts to focus on those of greatest importance to business and stakeholders. • Openly reporting performance and being held accountable • Working with Government and civil society to create a regulatory and legal environment that rewards sustainable decisions

11. Priority – Greenhouse Gas Emissions Climate Change Strategy Reshaping energy markets Ensure National Grid is a sustainable, low carbon business Agents for change • Supporting Renewables • Promoting decoupling • Expanding energy efficiency • EE programs and educating customers ‘greening’ the business 2020 and 2050 targets Adaptation • Carbon Budgets • Executive Comp • Carbon price • Fleet procurement, etc • Employee engagement • US and UK task forces

12. Valuing External Impacts (GHG) Carbon price Price need to deliver 80% reduction across society £52/$83 per tonne CO2(e) Investment appraisal assessment Leadership information to inform debate based on lost opportunities Regulator supported price and incentives Investment appraisal assessment and fund

13. Loss of valuable resource £/$ value Disposal (to be avoided) Recycle Refurbish Reuse collect Removal from service Value preservation Commodity availability risk Grey spares a Refurbishment centres a s Linear to Circular Assets Consumption of resource Raw Materials Manufacture Into products Procure Stores inventory Issue to site Project delivery Asset life

14. Example – Meter Recycling • Community • Investment in local industry / community • Employment and development opportunities via REMPLOY and young offender programme • Localised sub contracted activities • Resources • Expanded scope of reclaimed materials • Salvaged components reintroduced into supply chain • Asset lifecycle optimised • Reduction in supply side resources • Increased yield via meter refurbishment • Efficient use of existing National Grid estate • Development of employees • Performance • Elimination of hazardous materials to landfill • Reduction in carbon emissions • £k100’s PA Increased revenue from recycled material • £m PA savings from meter refurbishment • Savings of circa £k10’s PA from reuse of salvaged components • Reputation • Best practice shared with industry players, energy suppliers and internal stakeholders • Visible Environmental investment in support of National Grid Policies • Realisation of commercial opportunities for National Grid • Visible support of I&D agenda • Internal recognition as centre of environmental best practice

15. Example - Closing the loop in spoil Virgin Aggregate Landfill Excavation Recycling process Residual waste Recycled aggregate to approved specifications Approved Recycled Aggregate Reducing volume of excavation by no dig or low dig options Ideal case is to stop doing the red and minimise the green per unit of main replaced Current performance: 90% recycling road spoil, saving Ca. £6m in landfill tax

16. Striving for Better Regulation • Successful collaboration between Environment Agency and industry • Better regulation initiative • Delivered a solution not a problem • Delivered approximately £1m in savings • Environmental liability managed • Materials re-use of 66% Partington (Hub) Runcorn Prescot Warrington

17. Employee Engagement