PGE Group’s intention is to deliver strategic investments in compliance with the EU Environmental Taxonomy. The basis for development investments, in line with the Group’s strategy, are investments in renewable energy sources, electricity distribution and zero- and low-carbon conventional sources.
PGE Group, as a public interest entity preparing non-financial statements in accordance with the amended Accounting Act, which implements Directive 2014/95/EU of the European Parliament and of the Council into Polish law, is required to disclose for 2021 the extent to which its business activities can be considered environmentally sustainable. This requirement stems from EU Regulation 2020/852 on the establishment of a framework to facilitate sustainable investment, amending EU Regulation 2019/2088 and from the Delegated Regulations on the establishment of a framework to facilitate sustainable investment (hereinafter: EU Environmental Taxonomy, Taxonomy).
Pursuant to art. 10 of the Delegated Act of July 6, 2021, for the period from January 1, 2022 to December 31, 2022, non-financial companies will only disclose the percentage of business activities eligible for the Environmental Taxonomy and business activities not eligible for the Environmental Taxonomy, within its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change), in total:
and related qualitative information (explanatory) – determined in accordance with the Commission Delegated Regulation (EU) 2021/2178.
Pursuant to the Commission Delegated Regulation (EU) 2021/2178, economic activity qualifying for taxonomy in disclosures for 2021 means the economic activity described in the Commission Delegated Regulation (EU) 2021/2139.
In order to prepare disclosures for 2021, a thorough analysis of the activities carried out in all segments and companies of the PGE Group was carried out, as a result of which activities eligible for the Taxonomy were identified, i.e. those that are consistent with the description of activities listed in Annex I (Climate Change Mitigation) or Annex II (Adaptation to climate change) to Commission Delegated Regulation (EU) 2021/2139.
1 Commission Delegated Regulation (EU) 2021/2178 of 6.7.2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by clarifying the content and presentation of the information on environmentally sustainable business activities to be disclosed by companies subject to Article 19a or 29a of Directive 2013/34/EU and specifying the method to comply with this disclosure obligation, OJ L 443.
PGE Group's activities in the context of the EU Environmental Taxonomy
PGE Group’s business is organised into seven operating segments:
- Conventional Generation,
- District Heating
- Renewables
- Supply
- Distribution
- Circular economy
- Other Operations.
Taking into account the NACE (Nomenclature statistique des Activités économiques dans la Communauté Européenne) classification of economic activities in the European Union, the following activities are carried out within the above segments:
- Mining of lignite – NACE 05.20
- Production of electricity – NACE 35.11
- Distribution – NACE 35.13 and 35.30
- Sales – NACE 35.14
On the basis of supplementary annexes to Commission Delegated Regulation (EU) 2021/2139 of June 4, 2021, a selection was made of those activities that were carried out by PGE Group entities in 2021. These are:
- 4.1. Production of electricity using photovoltaic technology
- 4.3. Production of electricity from wind energy
- 4.5. Production of electricity from hydropower
- 4.8. Production of electricity from bioenergy (biomass)
- 4.9. Transmission and distribution of electricity
- 4.10. Electricity storage
- 4.11. Thermal energy storage
- 4.15. Distribution in district heating/cooling systems
- 4.20. Cogeneration of heat/cooling and electricity from bioenergy (biomass)
- 4.24. Generation of heating/cooling from bioenergy
- 4.25. Generation of heating/cooling from waste heat
The Group’s organisational structure was analysed, taking into account also companies operating in other areas, which were been specified however due to the fact that these activities are ancillary to the Group companies’ core business.
2 Commission Delegated Regulation (EU) 2021/2139 of 4.6.2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing technical eligibility criteria for determining the conditions under which an economic activity qualifies as a significant contributor to climate change mitigation or adaptation, and whether that economic activity does not cause significant damage to any other environmental objective, OJ L 442.
In the next step, the individual business segments of PGE Group were assigned to two categories:
- category I – for PGE Group’s business areas that qualify for the Taxonomy,
- category II – for PGE Group’s business areas that do not qualify for the Taxonomy.
In special cases, when within a given segment there were activities both included and not included in the Taxonomy, an additional division was made within a given segment, classifying it by type as having partial qualification.
This is the case for the segments Conventional Generation and District Heating, within which the production of electricity and heat from biomass and the distribution of heat were included among the activities eligible for the Taxonomy.
The following table indicates PGE Group’s operating segments with their classification in the Taxonomy and indication of the related type of activity included in the delegated act:
| PGE Group segment |
Qualification for EU Environmental Taxonomy in terms of its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change) |
Type of activity according to delegated act in terms of its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change) of EU Environmental Taxonomy |
| Renewables | YES |
4.1. Production of electricity using photovoltaic technology
4.3. Production of electricity from wind energy 4.5. Production of electricity from hydropower 4.10. Electricity storage |
| Distribution | YES |
4.9. Transmission and distribution of electricity
4.10. Electricity storage |
| Conventional Generation | PARTIALLY |
Only within the following scope:
4.8. Production of electricity from bioenergy (biomass) 4.20. Cogeneration of heating/cooli |
| District Heating | PARTIALLY |
Only within the following scope:
4.11. Thermal energy storage 4.15. Distribution in district heating/cooling systems 4.20. Cogeneration of heat/cooling and electricity from bioenergy (biomass) 4.24. Generation of heating/cooling from bioenergy |
| Supply | NO | |
| Circular economy | NO |
In addition, the „Other Operations” segment was divided, which is responsible for, among other things, IT, accounting and HR services provided to other PGE Group companies. Taking into account the nature of these services related to support of core activities, it was assumed that costs incurred by PGE Systemy, which is responsible for IT area in PGE Group, and PGE Synergia, which is responsible for the payroll area, and Elbest Security, providing physical security services, will be allocated to other segments in proportion to the support provided (determined on the basis of mutual settlements) and classified or not classified in the Taxonomy, analogically to the segment for which the given support was provided. The percentage breakdown of the support provided was determined on the basis of the level of turnover achieved by support companies in individual segments. In addition, the turnover and operating costs of the companies: PTU ETRA, Energetyczne Systemy Pomiarowe and Bio-Energia, which support the activity of the Renewable Energy and Distribution segment, were assigned as qualifying to the Taxonomy, while costs incurred by other companies, accounted for within the „Other Operations” segment, were not qualified for the Taxonomy.
The final calculation of the Taxonomy qualification indicators required to be reported for 2021 was based on financial data allowing the allocation of specific volumes to the segments and the activity within the segment.
Due to the presentation of data from the entire PGE Group, the following indicators were calculated based on consolidated data.
This is the value of turnover from products or services related to business activities, which was classified in the Taxonomy within its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change), broken down by segments of PGE Group.
| PGE Group segment | Value of turnover eligible for EU Environmental Taxonomy within its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change) [PLN million] |
| Renewables | 1,051 |
| Distribution | 6,415 |
| Conventional Generation | 90 |
| District Heating | 303 |
| Supply | 0 |
| Circular economy | 0 |
| Other Operations | 4 |
| Total | 7,863 |
This is the value of operating expenditures corresponding to assets or processes related to business activities that have been classified in the Taxonomy within its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change), broken down by segments of PGE Group.
| PGE Group segment | Value of operating expenditures eligible for EU Environmental Taxonomy within its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change) [PLN million] |
|---|---|
| Renewables | 899 |
| Distribution | 4,382 |
| Conventional Generation | 92 |
| District Heating | 336 |
| Supply | 0 |
| Circular economy | 0 |
| Other Operations | 79 |
| Total | 5,788 |
This is the value of capital expenditures corresponding to assets or processes related to business activities that have been classified in the Taxonomy within its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change), broken down by segments of PGE Group.
| PGE Group segment | Value of capital expenditures eligible for EU Environmental Taxonomy within its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change) [PLN million] |
|---|---|
| Renewables | 181 |
| Distribution | 1,358 |
| Conventional Generation | 2 |
| District Heating | 70 |
| Supply | 0 |
| Circular economy | 0 |
| Other Operations | 0 |
| Total | 1,611 |
PGE Group data
PGE Group’s indicators for 2021 were calculated based on the following data:
| Turnover | |
|---|---|
| Activity eligible for EU Environmental Taxonomy within its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change) | Activity not eligible for EU Environmental Taxonomy within its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change) |
| 14.9% | 85.1% |
| Capital expenditures | |
| Activity eligible for EU Environmental Taxonomy within its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change) | Activity not eligible for EU Environmental Taxonomy within its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change) |
| 34.6% | 65.4% |
| Operating expenditures | |
| Activity eligible for EU Environmental Taxonomy within its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change) | Activity not eligible for EU Environmental Taxonomy within its objective 1 (Climate change mitigation) and objective 2 (Adaptation to climate change) |
| 11.2% | 88.8% |
The revenue, operating costs and capital expenditures specified in the denominator in the above calculations are taken from PGE Polska Grupa Energetyczna’s consolidated financial statements for 2021.
The investments currently being implemented by the Group will result in an increase in taxonomy indicator values, not only within the first two objectives, but also in the next four objectives, which will be implemented by the European Union in the near future. At the same time, the scale of the conventional coal-fired energy generation business, which is to be spun off at the beginning of 2023, is of key importance for the 2021 results. Last year, it had a decisive impact not only on revenue and operating costs but also on overall capital expenditures, primarily through maintenance expenditure required to operate the business.