UC RUSAL Sustainability report 2016


Climate change

Climate change

EMS approach

Addressing the effects of emissions on climate change has been among the priorities of UC RUSAL over the past decade. In 2007, the Company launched the Safe Future Strategy initiative aimed at reducing the impact on air and minimising the impact on climate. In 2008, it joined the United Nations Global Compact 'Caring for Climate – the Business Leadership Platform' initiative. In the light of the goal to reduce greenhouse gas emissions achieved in 2014, UC RUSAL, on the eve of the XXI session of the Conference of the Parties to the United Nations Framework Convention on Climate Change in Paris, made public the five climate change objectives aimed at reducing the carbon footprint and implying the refusal to purchase fossil-fuelled power, increasing energy efficiency and reducing greenhouse gas emissions, and the introduction of clean technologies, new environmental standards and a number of other measures. At the beginning of 2017 the targets were updated and their number increased from five to seven.

UC RUSAL actively joined the work of global organisations on sustainable development issues. The company is a member of the Aluminium Stewardship Initiative (ASI) and Carbon Pricing Leadership Coalition of the World Bank (CPLC), where they interact with the participants of the supply chain of aluminium products from around the world. Upon its accession to ASI, UC RUSAL participated in the development and implementation of a sustainable development standard applicable to the supply chain of aluminium products, developed by this organisation. The purpose of the Company is to certify its production according to the requirements of this standard.

In order to inform the employees about the increasing greenhouse effect as one of the global challenges and solutions offered by UC RUSAL to dramatically improve the situation in Russia, the world and the industry, a corporate 'Clean Step' education programme has been launched. It is designed to enhance the competence of staff in environmental matters, an environmentally responsible approach at their workplaces.

   Овал: 95%Seven strategic objectives of UC RUSAL for greenhouse gases until 2025

To ensure that the aluminium smelters buy at least 95% of their electricity from hydroelectric power plants and other carbon free power generating.

To reduce direct specific greenhouse gas emissions by 15% compared to 2014 at reduction processes at the existing aluminium smelters.

Овал: -15%

To reduce direct specific greenhouse gas emissions by 10% compared to 2014 at the existing alumina refineries.

Овал: -10%

To reduce the specific aluminium smelters power consumption by 7% as compared to 2011.

Овал: - 7%

To achieve the average level of specific direct and indirect energy related greenhouse gas emissions from reduction processes at the aluminium smelters not exceeding 2.7 t of CO2e/t Al.

Овал: 2,7

To use an internal carbon price when making strategic and investment decisions starting in 2017.

To support Russian and international initiatives and associations advocating active actions to prevent climate change and supporting carbon prices as long as they are aligned with the strategic goals of the company.

Овал: Supporting initiativesОвал: Internal carbon priceMeasures to reduce carbon footprint HKEx Appendix 27 KPI A1.5, A1.6.

The key actions in the area of greenhouse gas emissions in 2016 were as follows:

development of plans to reduce specific emissions from the Company's aluminium and alumina facilities;

bringing the share of electricity purchased from renewable sources to 95%, develop a carbon footprint estimation methodology for aluminium;

creation of a strategy for carbon neutrality of Russian aluminium and the beginning of its implementation.

In 2016, the Company continued to implement measures to reduce greenhouse gas emissions. In addition to the main production, the accounting and analysis of greenhouse gas emissions was also carried out at alumina and silicon production facilities.

More than 90% of the aluminium production of UC RUSAL is covered of clean renewable hydropower. Bratskaya, Irkutskaya, Ust-Ilimskaya, Krasnoyarskaya, Sayano-Shushenskaya and Boguchanskaya HPP in Siberia cover the operation of the key production facilities of UC RUSAL.

UC RUSAL reduces the share of purchased carbon-intensive electricity in production, which is fully in line with the basic principles of the Agreement adopted at the XXI session of the Conference of the Parties to the United Nations Framework Convention on Climate Change in Paris. The next thing in the agenda is to reach the fullsupply of hydropower to Novokuznetzk Alumimium Smelter

In 2015, Krasnogorskaya thermal power plant was included in the Ural aluminium smelter. In order to implement the Company's plans to reduce the carbon footprint, a programme was developed to convert to 100% combustion of gas fuel. The abandonment of coal has already reduced carbon dioxide emissions by 15%.

Sources of electric power for aluminium smelters

The reduction of greenhouse gas emissions and carbon footprint is one of the main strategic objectives of UC RUSAL. The Company is systematically working to increase the share of the so-called low-carbon aluminium in total production. Low-carbon aluminium is considered to be the metal, for the production of one tonne of which greenhouse gas emissions in CO2 equivalent are minimal and in line with the best indicators of the global aluminium industry. The carbon-free production strategy of UC RUSAL is based on the maximum reduction of direct and indirect energy emissions of greenhouse gases and the replacement of the undiminished portion of emissions by the reductions from the projects outside the Company.

The second important area is the development of the inert, carbon-free anode. If successful, direct greenhouse gas emissions from aluminium production will be zero, and other pollutants will also be minimised. UC RUSAL of all companies in the industry has advanced the most in the solving of this problem and is testing technology at the industrial site. As a result of these tests, a decision will be taken in 2018 to gradually retrofit the potrooms.

Under the existing agreement with the International Aluminium Institute (IAI), UC RUSAL maintains annual accounting of greenhouse gas emissions and energy consumption in the production of primary aluminium, energy use in casting production and alumina production, and the use of anodes and anode paste.

Results

Direct greenhouse gas emissions of reduction plants, mln. tonnes of CO2 eq. G4-EN15, HKEx Appendix 27 KPI A1.2.

The increase in absolute emissions in the reporting year compared with to previous period is due to an increase in output.

Direct specific emissions of greenhouse gases of reduction plants, tonnes of CO2 eq per tonne of aluminium G4-EN18, HKExAppendix 27 KPI A1.2.

The strategic objective 'to reduce the amount of direct greenhouse gas emissions to the atmosphere by aluminium smelters by 50% compared to 1990 by 2015 has been achieved and maintained below the specified level.

The Company has set a strategic objective to reduce the direct specific emissions of aluminium production by 15% by 2025, and by 10% the direct specific emissions of alumina production compared to 2014. Emission reduction programmes developed during the reporting year have resulted in a reduction by 1.49% in emissions compared to 2015.

Since 2015, UC RUSAL has participated in the CDP Global Initiative (Carbon Disclosure Project), and together with other leading world companies has committed itself to disclosure of information about its greenhouse gas emissions. Information about greenhouse gas emissions from aluminium, alumina and silicon facilities was published as part of the preparation of the annual CDP report.

In the previous period, work has been done to improve the method of calculation of direct greenhouse gas emissions, and new techniques were developed to calculate the carbon footprint from aluminium production and to calculate indirect emissions from the generation of purchased power. In addition, activities to calculate the carbon footprint of primary aluminium in the framework of the creation of the greenhouse gas accounting system were implemented in 2016, which, under Russian law, are expected to start operating after 2017 on the production facilities with emissions over 150 thousand CO2 eq per year. G4-EC2

The draft of the Company's strategic objectives until 2025 regarding greenhouse gases has been developed.

Participation of UC RUSAL in the Climate Partnership of Russia

On the eve of the XXI session of the Conference of the Parties to the United Nations Framework Convention on Climate Change in Paris in 2015, UC RUSAL, together with several other Russian companies, put forward the initiative to bring together the efforts of domestic businesses to reduce environmental impacts and prevent climate change, which is achieved by supporting the Climate Partnership of Russia and by signing the relevant communication.

Russian companies have also asked all participants of the international negotiation process to conclude a legally binding agreement that will enable countries to take joint responsibility for climate change. Such agreement implies a single, universal format of commitments for all countries, unified mechanisms to ensure the implementation of these commitments and full monitoring of their implementation. The participants of the initiative advocate equal conditions of international competition for all participants of the process, and suggest the introduction of market-based mechanisms to encourage business to switch to new production technologies.

In turn, the companies that signed the communication committed themselves to: strive to produce products consistent with the principles of low-carbon, green economy. (Please see also the section 'Interaction with Stakeholders. Participation in industry organisations and international initiatives.) In July 2016, the representatives of the Company participated in the ordinary, third meeting of the members of the Climate Partnership of Russia.