Abu Dhabi National Energy : TAQA Green Finance Framework

CONFIDENTIAL

Abu Dhabi National Energy

Company PJSC ("TAQA")

Green Finance Framework

April 2023

1. Introduction

1.1 TAQA Business Overview Company History and Background

Abu Dhabi National Energy Company PJSC ("TAQA", the "Group", or the "Company") is a fully diversified utilities and energy group. Listed on the Abu Dhabi Securities Exchange ("ADX", ticker: TAQA)1, TAQA provides nearly all the critical power and water infrastructure for the Emirate of Abu Dhabi. The Company has strategic government support, scale and leadership in key markets. Abu Dhabi Power Corporation ("ADPower") 2 is the majority shareholder of TAQA, holding 90% of its share capital.

TAQA was established as a publicly listed company on the Abu Dhabi Securities Exchange (ADX) in 2005. Following a transaction with ADPower in 2020, ADPower contributed to TAQA its significant power and water transmission and distribution assets, complementing an existing global portfolio of power and water generation assets as well as oil and gas operations. This transaction transformed TAQA into a fully integrated utility business with operations and assets in power and water generation, transmission and distribution, and upstream and midstream oil and gas.

In 2022, TAQA completed its acquisition of stakes in Abu Dhabi Future Energy Company ("Masdar") from Mubadala Investment Company ("Mubadala"), including a 43% controlling stake in Masdar's renewables business and a 24% effective stake in Masdar's new green hydrogen joint venture. The transaction effectively strengthened TAQA's leadership in low carbon power and water by adding significant renewable energy capacity.

The Company's portfolio spans 11 countries, including Canada, Ghana, India, Iraq, Morocco, Oman, the Netherlands, Saudi Arabia, the United Arab Emirates, the United Kingdom and the United States. Combined with Masdar our portfolio spans a total of 20 countries.

TAQA currently holds a position among the top five integrated utilities in the EMEA region3 and is committed to becoming Abu Dhabi's low carbon power and water champion - a fully integrated utility business with the scale, financial capability and expertise to play a decisive role in leading the transition to clean energy and water in Abu Dhabi and beyond.

1. TAQA was established in June 2005 pursuant to the provisions of Emiri Decree (16) of 2005 as a public joint stock company under the laws of the UAE. In August 2005, TAQA's shares were listed on the Abu Dhabi Securities Exchange (the ADX). TAQA's registered head office is at 25th Floor, Al Maqam Tower, Abu Dhabi Global Market Square, PO Box 55224, Abu Dhabi, UAE.
2. ADPower is a wholly-owned subsidiary of Abu Dhabi Developmental Holding Company ("ADQ"), one of the region's largest holding companies, which is in turn wholly owned by the Abu Dhabi Government.
3. TAQA is the top five integrated utility player in the EMEA region by market capitalization and top ten by regulated asset value (RAV) - data as of February 2022.

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Overview of Operations

TAQA's operations are segmented into three main business lines: (i) Generation (power generation - renewable and conventional, and water desalination), (ii) Transmission & Distribution ("T&D") and (ii) Oil & Gas ("O&G").

Generation4

29.9 GW of gross power generation capacity in operation and under construction

1,060 Million Imperial Gallons per Day (MIGD) of gross water desalination capacity in operationand under construction

Transmission & Distribution

11,155 km of transmission and 59,176 km of distribution electricity networks 3,422 km of transmission and 33,985 km of distribution water pipelines 1.017 million distribution customers in the UAE

	Oil & Gas4			123,800 barrels of oil equivalent (boepd)

In Abu Dhabi, TAQA is involved at almost every stage of the power and water value chain, placing the Company in a unique position to influence the sector within the UAE and drive sustainability initiatives. TAQA is integral to the power and water system and works closely with Abu Dhabi's Department of Energy ("DoE"), Emirates Water & Electricity Company ("EWEC"), Environment Agency - Abu Dhabi ("EAD") and other governmental entities to pursue national strategy goals for decarbonization and energy diversification.

1.2 TAQA's Corporate Strategy

TAQA's sustainability journey began with the announcement of a new strategic direction in 2021 of becoming a clean, low carbon power and water champion for Abu Dhabi and beyond. Since then, the Company has taken significant strides in solidifying its new purpose towards leadership in the energy and water transition.

In March 2021, TAQA announced its 2030 vision for sustainable and profitable growth which unveiled its ambition to become a low carbon power and water champion for Abu Dhabi. TAQA's 2030 Corporate Strategy focuses on two key pillars: growth and optimization, with four underpinning enablers: Capability Building, Financial discipline, ESG and Digital & Innovation.

1. Growth

• Increase gross power capacity to 50 GW (30 GW locally and 20 GW internationally) by 2030
• Expand renewable energy to comprise more than 30% of the power generation portfolio by 2030
• Expand highly efficient reverse osmosis technologies to make up at least two-thirds of its desalination capacity by 2030
• Further strengthen the position of its operating company, Abu Dhabi Energy Services (ADES), and grow new services in demand-side management, enabling public and private entities to realize energy savings targets

4 Includes operating and under construction capacities as of end of December 2022. Excludes 1GW of Sohar captive gas plant capacity.

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2. Optimization

• Achieve operational improvements and smart grid readiness via digitalization
• Reduction of exposure to hydrocarbons
• Exploration of operational efficiencies across assets in parallel with a strategic review 5 of our oil & gas portfolio which includes both retaining and divesting interests

Image: Noor Abu Dhabi, part of TAQA's renewable energy portfolio, is the largest stand-alone operational solar plant in the

world

5 The outcome of the review is to responsibly sustain hydrocarbon production in Canada and Iraq, while decommissioning UK assets in an environmentally friendly manner

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TAQA's 2030 Environmental, Social and Governance (ESG) strategy

In October 2022, TAQA further announced its comprehensive 2030 ESG strategy. The ESG strategy includes interim greenhouse gas (GHG) emissions reduction goals and is a credible step towards achieving its net-zero ambitions by 2050. Under the strategy, TAQA has committed to a 25% reduction of scope 1 and 2 emissions by 2030 across the Group, including a 33% reduction of UAE portfolio emissions compared to the 2019 baseline.

Highlights from TAQA's 2030 ESG Strategy:

Climate Change

• Achieve net zero scope 1 and 2 emissions by 2050
• Reduce scope 1 and 2 absolute emissions across the Group by 25% and in the UAE 33% by 2030, compared to the 2019 baseline6
• Expand renewable energy to comprise more than 30% of the power generation portfolio by 2030
• Enhance climate resilience through reducing risks and increasing adaptive capacity

Water and effluents

• Expand highly efficient reverse osmosis technologies to make up at least two-thirds of its desalination capacity by 2030
• Reduce losses in water distribution by 25% in 2030 compared to 2021 baseline

Occupational health and safety

• Continue reporting transparently when it comes to occupational health and safety
• Already, TAQA has made being 'safe' one of its company values as it works to cultivate a culture of safety and has several ongoing health and safety initiatives across the business

Diversity and equal opportunity

• TAQA is also looking at improving diversity and equal opportunity across gender, age, nationality, and people of determination
• TAQA is currently monitoring these areas and will look to deploy initiatives and investment to improve in these areas and has committed to having females represent 30% of its management positions by 2030

Local community engagement

• On the social side of ESG, TAQA will be putting its Corporate Social Responsibility (CSR) efforts into focus themes: Education equality and environment, aligning with several of the United Nation's Sustainable
  Development Goals (SDGs)
• TAQA is also committing to increasing CSR spend in an economically responsible way to increase its positive impact

Corporate governance

• TAQA has made a commitment to adopt best-practices when it comes to governance and go beyond local regulations and requirements
• The company has set key performance indicators (KPIs) to steer the strategy and to report periodically on the ESG performance in line with reporting standards and expectations set by leading agencies

6 GHG emissions are principally reported as per the 'financial control' approach outlined in the GHG Protocol, where GHG emissions at subsidiaries are fully consolidated (at 100%) while GHG emissions from joint ventures are consolidated using the equity method (in proportion to the beneficial ownership in the jointly controlled entity).

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