The TCFD is a G20 Financial Stability Board (FSB) working Group set up after the 2015 COP 21 conference with a view to improving companies’ financial transparency in climate-related matters. EDF was one of the first organisations in the world to support the TCFD recommendations published in June 2017. These recommendations set out the climate reporting components companies are expected to provide in their reference documents, for four broad areas: governance, strategy, risk management, and indicators. Since 2018, EDF group’s non-financial performance statement includes a concordance table that provides an exhaustive list of how the Group is addressing the TCFD recommendations. EDF group is also committed to a continuous improvement process, of which the ultimate aim is to achieve full alignment of its reporting with TCFD recommendations.
CDP (formerly the Carbon Disclosure Project) is an independent, non-profit body set up in 2000 supported by over 800 investors. It encourages listed companies worldwide to supply information about their strategies to combat climate change in order to rate these and facilitate information to stakeholders, including companies, investors, and politicians. EDF’s response to the CDP questionnaire is public(2).
Energy production today accounts for about 60% of global anthropogenic greenhouse gas emissions, 40% of which(4) is related to the production of electricity and heat. The electricity and heat production sector alone produces 25% of anthropogenic CO 2 emissions (IPCC, AR5). In France, the EDF group’s carbon performance gives it an advantage(5), even if, due to its size, the Group remains a carbon emitter in terms of Scope 1 emissions and significant indirect emissions of Scope 3. The decarbonisation of electricity production is recognised as an effective vector for reducing CO2 emissions; at the same time, a consensus has been reached on the prospects for very strong growth in global electricity demand (almost 80% by 2050).
EDF group identified climate risk as a priority risk in 2018, addressing it in a report from the Group’s Scientific Council in March 2019, as well as in detailed analysis presented to EDF group’s Executive Committee and the Board of Directors Audit Committee in October 2019. section 3.6.3 gives a detailed description of the risks and opportunities identified in this analysis, as well as their potential impact on the Group’s business; these risks are also listed in section 2.2.3 “Group transformation and strategic risks – 3B Adaptation to climate change: physical and transition risks”. In its analysis of climate risks, EDF group has adopted the classification put forward by TCFD, which draws a distinction between physical risks and transition risks.
EDF group’s exposure to climate risks and, more especially, political risks, is atypical. With an electricity production mix that is 90% decarbonised worldwide(6), the proportion of EDF’s electricity production that is directly exposed to EU ETS carbon prices is well under 10%. As a result, contrary to many other electricity and energy firms, the fact that policy objectives are increasingly being informed by the climate emergency, together with the increase in carbon prices, particularly in the EU ETS, actually deliver excellent opportunities to play to the Group’s strengths.
By 1999, Storms Lothar and Martin had already led EDF to work on mitigating the physical impact of climate change on its activities. EDF group went on to develop a climate incident plan in 2004, followed by an initial climate change adaptation strategy in 2010. This document lays out the foundations of the Group’s commitments in terms of adaptation, and identifies actions to be implemented across all business lines: evaluating the impacts of climate change on future and existing activities; adapting existing installations to make them less sensitive to climatic conditions and more resilient to extreme weather events; incorporating climate change scenarios in the design of new installations; and adapting the Group’s offers, internal operations, and expertise to encompass climate change.
In this initial adaptation strategy, physical risks relating to climate change were the priority, in particular production infrastructures with a lifespan of over 40 years, such as nuclear power plants and hydropower dams. Wind and solar farms, being less cumbersome, easier to decommission, and with a typical lifespan of less than 20 years, were seen as being less exposed to climate risks.
Following the publication of the TCFD recommendations in 2017 (see section 3.2.1.1.6) and the “climate risks” brief presented to the Board of Directors (see section 3.2.1.1.7), EDF group has undertaken to update its climate change adaptation strategy in 2020, adopting a holistic method covering not only physical risks, but also risks relating to transition. This national strategy goes hand in hand with adaptation plans developed by each of the Group’s entities, to be updated at least once every five years.
Immediately after publication of the IPCC’s first report in 1990, EDF group resolved to develop internal skills focusing on climate issues. Unlike any other major electricity company, EDF group now has a team of some fifteen permanent researchers investigating the consequences of climate change on its existing and future production fleets for nuclear, hydro, wind, and solar power, etc., changes in production potential from renewable energy, and trends in energy demand.
EDF R&D’s Climate Department was set up in 2014. It acts as an interface between constantly-changing scientific knowledge about the climate and EDF group’s business lines. It provides EDF group’s different business lines with climate data that can immediately be used to quantify climate-change-related risks and develop appropriate adaptation plans. EDF systematically takes the IPCC’s worst-case scenario (currently, RCP 8.5) into account in its impact and design studies.
EDF group has also developed an operational unit to monitor meteorological phenomena and forecast their impact on water catchment sources: groundwater, rivers, and the sea. Located in Grenoble, this unit provides 24/7 monitoring of hydro-meteorological phenomena that represent a risk to EDF’s production fleet.
Resilience to extreme natural phenomena has always been taken into account in the safety rules imposed by the Nuclear Safety Authority (ASN) for France’s Basic Nuclear Facilities (installations nucléaires de base, INB). The aim of the adaptation actions launched by EDF, in particular since France’s 2003 heatwave, has been to increase the safety margin and maintain production levels during such periods; in 2003, some power plants had to reduce output so as not to further heat river water, leading to a production loss of 5.5TWh, equivalent to 1% of EDF’s production that year.
The “Grands Chauds” (“Heatwaves”) plan launched in 2008 resulted in EDF making improvements to cold water source cooling efficiency for some of its power plants, and hardening reactor building electronics so that they can withstand temperatures in excess of 50° C.
(1) See section 3.6.4 “TCFD recommendations” and section 3.5 “Non-financial rating”.
(2) For detailed results, see section 3.5 “Non-financial rating”.
(3) See chapter 2 “Risk factors and management”.
(4) CO2 Emissions from Fuel Combustion, International Energy Agency, 2018 (chiffres 2016).
(5) See section 3.2.1.1.1 “EDF group’s ambition”.
(6) See section 1.1 “Key Figures”.
