Companhia Energetica de Minas Gerais CEMIG : 2023 Greenhouse Gas Emissions Inventory

Corporate GHG Emissions Inventory - CEMIG 2024

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Companhia Energética de Minas Gerais - CEMIG Greenhouse Gases Emissions Inventory Audited Final version

June 2024

Corporate GHG emissions inventory - CEMIG 2024 (base year 2023)

Public

English

55

Final

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SUMMARY
INTRODUCTION	8
About Cemig	9
METHODOLOGY	11
GHG Protocol	11
Inventory Limits	11
Organization Boundaries	11
Time limits	12
Greenhouse Gases	12
Sectors of activity	13
Data collection	15
Emission Sources	16
Updates to Cemig GHG inventories for base years 2021, 2022 and 2023	18
RESULTS	19
General	19
Scope 1	20
Stationary Combustion	22
Mobile Combustion	23
Agriculture	24
Land Use Change	25
Fugitive Emissions	26
Scope 2	27
Electricity Consumption	28
Transmission, Generation and Distribution System Losses	29
Scope 3	29
Use of goods and services sold	30
Purchased goods and services	30
Capital goods	30
Fuel and energy-related activities not included in scopes 1 and 2	31
Waste generated in the operation	32
Business travel	32

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Employee commuting	33
Investments	34
COMPARATIVE ANALYSIS YEARS 2020-2023	36
ANNEX I - TOTAL EMISSIONS IN TONNES OF GAS AND TONNES OF CO2 EQUIVALENT
- 2023	42
ANNEX - DECLARATION OF VERIFICATION	50
REFERENCES	54

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List of Figures

Figure 1 - Global surface temperature change relative to 1950-2100 (Source: IPCC,

2021)	8
Figure 2 - Flowchart of Key Notations	16
Figure 3 - Cemig's scope 1 emissions by emission category	21
Figure 4 - Direct emissions from stationary combustion by Cemig operating unit	23
Figure 5 - Cemig's direct emissions from mobile combustion	24
Figure 6 - Direct emissions from Agriculture by operating unit	25
Figure 7 - Direct emissions from Land Use Change by Cemig D	25
Figure 8 - Direct fugitive emissions by Cemig operating unit	27
Figure 9 - Scope 2 indirect emissions by emission category	27
Figure 10 - Emissions from electricity consumption by Cemig operating unit	28
Figure 11 - Indirect emissions from the business travel category by operating unit	33
Figure 12 - Indirect emissions from the commuting category by Cemig operating unit	34
Figure 13 - Emissions proportional to investments (tCO2e)	35
Figure 14 - Historical series of Cemig's emissions	37
Figure 15 - Historical series of Cemig's Scope 1 emissions	38
Figure 16 - Historical series of Cemig's Scope 2 emissions	40
Figure 17 - Historical series of Cemig's Scope 3 emissions	41

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List of Tables
Table 1 - Global warming potentials by gas (Source: IPCC, 2013)	13
Table 2 - Sources of emissions and notation related to Cemig's activities. 2	16
Table 3 - Summary table of emissions by category	19
Table 4 - Scope 1 emissions by precursor	21
Table 5 - Share of emissions removed by biome	26
Table 6 - History of SF6 emissions	26
Tabel 7 - Scope 3 emissions by emission category	29
Tabel 8 - Electricity trading emissions by subsidiary	31
Table 9 - Distribution of historical emissions in Scope 1 and variation in the period 2022-2023.
....................................................................................................................................................................	38
Table 10 - Average grid emission factor (tCO2/MWh)	39
Table 11 - Historical series of Scope 2 emissions	40
Table 12 - Historical series of Scope 3 emissions	41
Table 13 - Cemig - Emissions in metric tons, by type of GHG	42
Table 14 - Cemig - Emissions in metric tons of CO2 equivalent (tCO2e)	42
Table 15 - Cemig - Biogenic emissions (tCO2e)	42
Table 16 - Emissions of other GHGs not regulated by the Kyoto Protocol	43
Table 17 - Emissions per operating unit	44
Table 18 - Cemig D - Emissions in metric tons, by type of GHG	44
Table 19 - Cemig D - Emissions in metric tons, by type of GHG (tCO2e)	45
Table 20 - Cemig GT - Emissions in metric tons, by type of GHG	45
Table 21 - Cemig GT - Emissions in metric tons, by type of GHG (tCO2e)	46
Table 22 - Gasmig - Emissions in metric tons, by type of GHG	46
Table 23 - Gasmig - Emissions in metric tons, by type of GHG (tCO2e)	47
Table 24 - Centroeste - Emissions in metric tons, by type of GHG	47
Table 25 - Centroeste - Emissions in metric tons, by type of GHG (tCO2e)	47
Table 26 - Cemig SIM - Emissions in metric tons, by type of GHG	48
Table 27 - Cemig SIM - Emissions in metric tons, by type of GHG (tCO2e)	48
Table 28 - Cemig H - Emissions in metric tons, by type of GHG	48
Table 29 - Cemig H - Emissions in metric tons, by type of GHG (tCO2e)	49
Table 30 - Cemig Trading - Emissions in metric tons, by type of GHG	49

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Table 31 - Cemig Trading - Emissions in metric tons, by type of GHG (tCO2e)

49

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INTRODUCTION

According to the Intergovernmental Panel on Climate Change (IPCC) - one of the main organizations in charge of compiling scientific studies on climate change - the average global temperature of the Earth's surface has increased by about 1.1 °C since the end of the nineteenth century, with the period from 2011 to 2020 being the warmest on record. Also according to the agency, the current state of temperature and climate change is unprecedented in history (IPCC, 2021).

Figure 1 presents the history of the increase in the global average temperature between 1950 and the projections for 2100 (according to different emission scenarios, the result of hypotheses about different policies adopted by countries). As presented in the IPCC's sixth report (AR6) on climate change (IPCC, 2022), the global average rise in temperature may exceed 1.5ºC, increasing the need to establish policies and actions to reduce GHG emissions.

Figure 1 - Global surface temperature change relative to 1950-2100 (Source: IPCC, 2021).

According to IPCC reports, the cause of climate change is anthropic, and this information is corroborated by most international scientific research. Although there are controversies in the political environment and civil society, the scientific literature reviewed by peers since 2012 shows a consensus of more than 99% concerning this finding. (Lynas, 2021)

Reducing GHG emissions is the only way to ensure that the global average temperature does not exceed the goals set during the Paris Agreement in 2015. For this reason, Cemig records GHG emissions in all its subsidiaries and operations. The company aims to monitor the impact of its activities on the environment to devise strategies to reduce its emissions, thus contributing to the objective of limiting the increase in global temperature to 1.5 °C. This tracking allows the company to identify key sources of emissions and prioritize reduction initiatives.

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About Cemig

Cemig is one of Brazil's main electric power companies and has a wide range of operations throughout the sector's production chain, from generation to transmission and distribution of electricity. It also operates in the distribution of natural gas through Gasmig.

According to the 2023 Management Report and Financial Statements, Cemig has a stake in 68 generation plants, 57 of which are hydroelectric, 9 wind and 2 solar, totaling an installed capacity of 5,190 MW. Its energy matrix is composed of 97% hydroelectric, 3% wind and 0.08% solar.

According to the report, in transmission, the company operates a transmission network with a length of 5,060.39 km, making it the second largest energy transmission group in the country. This transmission system is responsible for transporting large blocks of energy from the major generating centers to the consumer centers.

In distribution, the document highlights the performance of Cemig Distribuição S/A (or Cemig D) stands out, which is one of the largest distributors of electricity in Brazil in terms of network extension, serving approximately 97% of the State of Minas Gerais. In addition, it has the highest service rate for low-income consumers in the country, supplying electricity to 42.9% of the total residential-class consumers1.

Cemig is also dedicated to the natural gas distribution business through Gasmig, the exclusive distributor of piped natural gas throughout the territory of Minas Gerais, serving the industrial, residential, commercial, compressed natural gas (CNG), liquefied natural gas (LNG), natural gas vehicle (NGV), and thermoelectric segments.

In 2022, Cemig's Board of Directors approved the company's Net Zero Commitment, which aims to reduce the company's emissions and achieve emissions neutrality by 2040. The company has also committed to developing a science-based GHG emissions reduction target, as recommended by the Science Based Targets initiative (SBTi), which establishes guidelines and methodologies for developing science-based emissions reduction targets to limit global warming to 1.5°C.

Among the goals proposed, but not yet approved by the SBT initiative, are:

• 90% reduction in Scope 1, 2, and 3 absolute GHG emissions by 2040, considering the base year 2021, reaching a residual value of 1,015,446.09 tCO2e (Gasmig's emissions included).

• 69.4% reduction in absolute GHG emissions of Scopes 1 and 2 by 2030 (base year 2021).

• 42% reduction in Scope 3 GHG emissions by 2030 (base year 2021).

• 75.8% per MWh reduction in Scopes 1, 2, and 3 GHG emissions by 2030, considering 2021 as the base year, excluding Gasmig's emissions. For 2022, the target corresponds to 0.1 tCO2/MWh; for 2030, the intensity target is 0.033 tCO2/MWh.

1 Quem Somos', Cemig, visitado em maio de 2024, https://www.cemig.com.br/quem-somos/.

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• Increase the annual renewable electricity supply from 0% in 2021 to 100% by 2024.
• 65% reduction in the intensity (percentage of actual SF6 loss/total installed mass of SF6) of sulfur hexafluoride (SF6) losses in 2019 and 2027 as the target year.

Setting targets was only possible because, since 2011, Cemig has been measuring its emissions through Emission Inventories. The company will continue to execute them, year- on-year, so in the future the company can monitor the success of its mitigation actions, assessing whether the decarbonization path is aligned with the established goals and with the necessary path to limit the increase in global temperature to 1.5°C. In this sense, the company has also been preparing its Climate Transition Plan.

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