Introduction

Recent years have brought a lot of significant changes in the external environment of the TAURON Group. The most important of them, from the point of view of the Group's business operations, are the climate and environment related changes. The global warming, increase of the pollution and a serious smog problem in Poland that have been observed for years, is forcing specific actions to minimize the negative impact of the Group's operations on the environment. The rising threat results in the tightening of the decarbonization policy and support for the activities aimed at protecting the environment and counteracting global warming, adopted and regulated at the level of the European Union and Poland.

The table provides a summary of the main external factors that impact the selection and implementation of the TAURON Group’s strategic directions.

Factors

political and regulatory

  • European Green Deal – EU climate neutrality by 2050 project
  • Further tightening of environmental standards (including coal quality standards, anti-smog measures), the need to adapt generating units to the BAT conclusions
  • Winter package and limitation of support systems for conventional energy (EPS 550)
  • Renewable energy and energy efficiency directives, EU ETS emissions trading system
  • Operation of the capacity market, support for individual RES technologies (auction system, cogeneration support mechanism)
  • Prospect of not being able to take advantage of the ETS derogation for the modernization of coal assets
  • New financing instruments: e.g. modernization fund – excluding support for the coal projects
  • Poland’s Energy Policy Draft, National Plan for Energy and Climate
  • Risk of introducing regulations in the banking sector leading to an increase in capital allocation ratios for loans dedicated to financing coal assets

environmental

  • Increase in average global temperature as a result of greenhouse gas emissions
  • High level of dust air pollution in Poland (smog)
  • High level of greenhouse gas emissions – Poland emits 18% more greenhouse gas per capita into the atmosphere and over 3 times more in relation to GDP than the EU average
  • Increasingly frequent occurrence of extreme weather conditions: droughts, hurricanes, severe heat waves, heavy rains and floods (causing not only the destruction of households, but also of the transportation and energy infrastructure)
  • Further rising of sea levels; irreversible changes in river ecosystems and the Baltic Sea (eutrophication, loss of water biodiversity)
  • Depletion of natural resources (including coal, wood and water)
  • Increased importance of the circular economy and minimizing of waste generation

economic and market-related

  • Rising electricity generation costs (high prices of CO2 emission allowances)
  • Reduction or lack of financing for conventional energy, preferential financing for renewable energy
  • RES cost competitiveness, rising RES generation
  • Increase in costs of materials, services and labor
  • Limited possibilities of steam coal mining (deposits getting more and more difficult to access),
  • Thermal modernization activities, increase of energy efficiency
  • Generational and competence gap problem
  • Difficulties in recruiting qualified staff

social

  • Increase in anti-carbon sentiment among the public
  • Increase in society’s ecological awareness
  • Improvement of the image of companies using energy from renewable energy sources
  • Increased customer awareness and customer requirements in terms of the quality of services provided and customer service, changing customer needs
  • Change in the customer’s approach to the way electricity is consumed

technological

  • Falling prices for renewable and distributed technologies
  • Development of prosumer energy, island installations, off-grid,
  • Development of electromobility
  • Development of energy storage
  • Digitization of the energy sector, development of smart metering and new billing technologies
  • Technology development with respect to the circular economy
  • Emergence of energy self-sufficient buildings – Near Zero Emission Buildings

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