Eni for 2022 – A Just transition: Carbon neutrality by 2050

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CARBON NEUTRALITY BY 2050

INTRODUCTION	CARBON NEUTRALITY	OPERATIONAL EXCELLENCE	ALLIANCES FOR DEVELOPMENT

REFERENCE CONTEXT: CHALLENGES AND OPPORTUNITIES

The Net Zero by 2050 Challenge

IPCC underlines the need to immediately and rapidly reduce global GHG emissions and achieve net zero for CO2 emissions around 2050 in order to limit the temperature increase to 1.5°C compared to pre-industrial times. To this end, the IPCC defines several scenarios compatible with the 1.5°C target, involving the decarbonization of the energy system through the combined application of a number of levers, such as the deployment of renewable energy, end-use electrification, the use of low and zero carbon fuels and CCS, consumer behavioral change, reduction of land use change sector emissions, and neutralization of residual emissions through carbon removal actions in the land use change sector (LUC) and use of Carbon Capture and Storage applied to bioenergy (BECCS).

Eni's business model envisages a path towards carbon neutrality based on an approach that considers emissions generated throughout the life cycle of energy products and on a set of actions that will lead to the total decarbonization of processes and products by 2050. Eni's climate strategy is based on an industrial transformation plan that builds on available technology options and focuses on developing breakthrough solutions.

Evolution of the energy mix (EJ)

20,000

15,000			26%			38%
		21%
	21%		30%
10,000		23%	22%		38%		61%
24%
		20%
			21%
					20%			82%
		29%	29%
5,000	29%	28%		27%	15%
					26%
	26%	26%	22%	21%			17%	8%
	16%	15%
						8%	7%
							3%
	2020	2021	2030	2030	2030	2050	2050	2050
			STEPS	APS	NZE	STEPS	APS	NZE
	Coal		Oil		Natural gas		Non-fossil sources

Among the most well-known evolutionary paths in the global energy landscape, the IEA scenarios trace diversified future trajectories based on different assumptions, targets, and different logics of construc- tion. The Net Zero (NZE) scenario, constructed with backcasting logic, traces one of the pathways to achieving the 1.5°C target, identifying electrification, efficiency and a radical change in consumer behavior as the main levers of decarbonization, requiring an immediate shift in the energy paradigm. These elements are expected to enter the production/consumption mixes of individual Countries immediately and to grow exponentially in the near future. To chart such a course, it will already be necessary in the immediate term to adapt/modify existing energy systems, characterized by considerable complexity, or to build new ones requiring major investments. By 2050, global energy demand will be lower than today (-15% vs. 2021), a target that appears highly challenging, given a global economy projected to grow at a rate of about 3% and a population increasing by about 2 billion.

The STEPS scenario, on the other hand, includes all policies implemented and planned by Governments, while the ODA assumes the achievement of all announced net zero targets (for details Towards a Just Transition: scenario and global challenges).

Source: International Energy Agency (2022), World Energy Outlook 2022, IEA, Paris.

Towards Net Zero in 2050	39
The evolution of business	40
Advocacy and Transparency	46
GHG Metrics	47

Energy-related global CO2 emissions

Global power sector-related CO2 emissions in 2022 increased by 0.9% (vs. 2021), reaching a new peak of over

36.8 Gt. Nearly 40% of emissions are attributable to the power sector, where coal is responsible for more than 70% of emissions while generating only 35% of total electricity. Geographically, emerging Countries still account for over 65% of global emissions (~73% of emissions in the global power sector).

Source: International Energy Agency (2022), World Energy Outlook 2022, IEA, Paris.

		4%
			22%
40%			1%
	39%
21%		73%
Power	Transport	Coal	Oil	Gas
Industry and other sectors	Bioenergy and waste

38 ENI FOR 2022 A JUST TRANSITIONH OME

Carbon neutrality by 2050

INTRODUCTION	CARBON NEUTRALITY	OPERATIONAL EXCELLENCE		ALLIANCES FOR DEVELOPMENT	39

Towards Net Zero in 2050

WHY IS IT IMPORTANT TO ENI

Eni aims to create value and decarbonize the company, having set some of the most challeging emissions reduction targets in the energy sector, both in intensity and absolute terms, across all activities and products value chain. Our transition strategy towards cleaner and low cost fuels, for which we foresee great developement opportunities, will enable us to become an increasingly competitive energy supplier. Our technological, research and development expertise, sound governance and strong integration of activities are the driving force behind our transition.

| FRANCESCO GATTEI - CHIEF FINANCIAL OFFICER |

THE DECARBONIZATION ROADMAP AND

ENI'S TARGETS

Eni wants to be an active part of the energy sector's transition with a long-term strategy towards Carbon Neutrality by 2050, in line with scenarios that are compatible with keeping global warming within the 1.5°C threshold by the end of the century. To this end, since 2014 Eni has embarked on

tal sustainability. Despite high volatility and uncertainty, in 2023 Eni confirmed its decarbonization strategy and key medium-to-long- term emissions and business targets. The pathway towards Eni's Carbon Neutrality by 2050 includes a series of intermediate objectives that first envisage Net Zero emissions (Scope 1+2) for the upstream business by 2030 and for Eni's group by

NET GHG LIFECYCLE EMISSIONS (MtCO2eq.)

600

500

400

-35%

300

-55%

200

PROGRESS 2022	SHORT-TERM	MEDIUM-TERM
vs. Eni for 2021 commitments	COMMITMENTS	COMMITMENTS

NET CARBON FOOTPRINT (SCOPE 1+2) - BASELINE 2018

LONG-TERM COMMITMENTS

1. path of industrial transforma- tion that has gradually enabled the company to create value under challenging scenarios, helping to ensure the security of energy supplies and environmen-

2035, then Net Zero emissions by 2050 for all Scope 1, 2 and 3 GHG emissions associated with Eni's entire value chain, both in absolute and intensity terms (GHG Metrics).

100					-80%
0					Net Zero
	2022	2030	2035	2040	2050
2018

Upstream: -33%	Upstream: -50% in 2024	Upstream: Net Zero by 2030
Eni: -19%	Upstream: -65% in 2025	Eni: Net Zero by 2035

NET GHG LIFECYCLE EMISSIONS (SCOPE 1+2+3) - BASELINE 2018

-17%	-35% in 2030
	-55% in 2035

NET CARBON INTENSITY (SCOPE 1+2+3) - BASELINE 2018

-3%	-15% in 2030

-80% in 2040 Net Zero by 2050

-50% in 2040 Net Zero by 2050

DECARBONIZATION OPERATIONAL LEVERS

Eni's strategy towards Net Zero is supported by an industrial growth and transformation plan that involves the entire value chain, envisaging the optimisation and valorisation of the upstream portfolio through progressive decarboniza- tion, combined with the expansion of the bio, renewable and circular economy businesses and the offer of new energy solutions and ser-

vices. Transforming conventional activities will contribute to 90% of the absolute long-term reduction target. Upstream hydrocarbon production will decline in the medium- to-long-term, with a plateau expected by 2030 and progressive growth of the gas component reaching 60% by 2030 and more than 90% after 2040. Midstream/downstream, activities will contribute to reducing emissions, mainly through utilising gas equity and LNG, and convert-

ing conventional refineries into biorefineries. CO2 capture, storage and utilisation (CCUS) projects will have a complementary function in reducing residual emissions that are difficult to abate with existing technologies. Approximately 5% of the total absolute reduction in Eni lifecycle emissions by 2050 will be linked to compensation through carbon credits, from Natural Climate Solutions and the application of technological solutions.

NET GHG LIFECYCLE EMISSIONS (SCOPE 1+2+3)

POLICY	2023-2026 Strategic Plan; Eni's responsible engagement on climate change within the business association; Eni's
	position on biomass; Eni's Code of Ethics.
MANAGEMENT	The organisational structure functional to the energy transition process with two General Directions: Natural Re-
AND ORGANISATION	sources, for the optimisation and progressive decarbonization of the Upstream portfolio and Energy Evolution, for
MODELS	the expansion of bio, renewable and circular economy activities and the offer of new energy solutions and services;
	a dedicated central function that oversees climate change strategy and positioning; energy management systems
	coordinated with the ISO 50001 standard, included in the HSE regulatory system, for the improvement of energy
	performance and already implemented at all major Mid-Downstream sites and being extended to the entire Eni Group;
	organisation of technological research and development aimed at the creation and application of low carbon footprint
	technologies, fully integrated with renewable sources, the use of biomass and the valorisation of waste materials, as
	well as the development of technologies for the exploitation of new forms of energy or energy carriers with low or no
	carbon footprint.

FOR MORE INFORMATION

wEni for 2022 - Sustainability Performanceweni.comwEni's Code of Ethics wAssessment of industry associations' climate policy positions

2018	505
MtCO2eq.
2030	328
MtCO2eq.
2050	0
	Net Zero							CO2
	UPSTREAM	MIDSTREAM	DOWNSTREAM	CCUS	OFFSET

FOCUS ON

The role of Carbon Credits

Eni plans to compensate its residual emissions by leveraging Natural Climate Solutions initiatives and applying technological solutions in various areas, aiming to progressively maximise the carbon removal component. The identified initiatives ensure the compensation of emissions by generating high-quality carbon credits, certified according to the highest international standards both for the climate change mitigation component, such as the Verified Carbon Standard - VCS, and for the contribution to the achievement of the SDG Sustainable Development Goals (such as the Sustainable Development Verified Impact Standard - SD VISta and Climate, Community and Biodiversity - CCB). In this context, in addition to forest conservation and protection activities according to the REDD+ scheme, which started in 2019 with the Luangwa Community Forest Project (LCFP) in Zambia, in 2022 Eni started technology-based carbon credit generation initiatives with the Clean Cooking in Côte d'Ivoire project.

• Eni's responsible engagement on climate change within business associations

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INTRODUCTION	CARBON NEUTRALITY	OPERATIONAL EXCELLENCE		ALLIANCES FOR DEVELOPMENT	41

BUSINESS TARGETS TOWARDS NET ZERO BY 2050

Eni's strategy towards Net Zero

portfolio, the development of both CO2 storage projects and Natural Climate Solutions projects, and the integration with biorefining by

is supported by cross-cutting activities that aim both to optimise existing solutions and to seek breakthrough innovations that

FOCUS ON
Eni's commitment to reducing methane	0.43
emissions

is underpinned by an industrial transformation plan deployed through the distinct and synergetic paths of the two General Direc- tions: Natural Resources, active in the optimisation and progressive decarbonization of the Upstream

developing an innovative agri-hub network, and Energy Evolution, active in the expansion of bio, renewable and circular economy activities and the offering of new energy solutions and services. In addition, the transformation plan

can accelerate decarbonization (Innovation). Eni's decarbonization strategy is based on a plan that considers market dynamics and the Company's evolution, articulated through specific objectives for each business line.

CONTEXT: Eni is aware of the importance of reducing methane emis- sions, given its high climate-altering potential and recognised role in global warming mitigation opportunities in short-to-medium-term.

ACTIVITY: Eni is committed to implementing actions to monitor and mi- nimise methane emissions along its Oil & Gas value chain and confirms its goal of keeping upstream emission intensity below 0.2%. To further improve the accuracy and transparency of methane emissions reporting,

2.89

0.34

2.29

0.28

1.82

MAIN BUSINESS TARGETS

RETAIL

SUPPLY CONTRACTS |

2023

2025

2026

2030

2035

2040

2050

>10

>11

>15

>20

MLN CUSTOMERSa

RENEWABLES

INSTALLED CAPACITY | GWa

>3

>7

>15

>30

60

ELECTRIC

CHARGING POINTS | Ka

~20

>30

~35

~160

MOBILITY

BIOREFINING

MLN TON/YEAR

>3

>5

OIL & GAS

NATURAL GAS PRODUCTION |

60

>90

% OF PORTFOLIO

a) Plenitude 100%.

with the support of a third party, Eni is proceeding with a measurement campaign on key-operated assets, which will be completed during 2023 and will allow a new reduction target to be set once completed. Eni also participates in major international methane partnerships, including OGCI's

• Aiming for Zero Methane Emissions Initiative under which Eni is com- mitted, among other things, to monitoring and testing innovative emissions measurement and mitigation technologies. Eni is also a signatory to the
• Methane Guiding Principles (MGP) initiative and therefore is committed to five fundamental principles in managing methane emissions (reduction, performance improvement, accuracy, policy and disclosure). Among oth- er activities promoted by MGP, Eni collaborated with other companies in the sector and international organisations to the definition of the European methane strategy.

0.19 0.19

0.97 0.97

0.10 0.09 0.09 0.08 0.55

0.28 0.23 0.18

2014

2015

2016

2017

2018

2019

2020

2021

2022

Upstream methane fugitives (MtCO2eq.)

Upstream methane emission intensity (%)

CCS PROJECTS

depleted gas reservoirs and existing

recently launched, the start-up

THE DECARBONIZATION OF TRADITIONAL BUSINESS

Eni's strategy aims to fulfill the essential pillars of the energy trilemma, achieving significant reductions in GHG emissions in parallel with energy security and accessibility. Hydrocarbon production will grow in 2023-2026, with a plateau expected through

2030 and progressive growth of the gas component, reaching 60% by 2030 and more than 90% after 2040. At the same time, Eni confirms its decarbonization tar- gets, which aim to achieve Net Zero emissions (Scope 1+2) for the upstream business by 2030, with intermediate reduction targets of 50% by 2024 and 65% by 2025 compared to 2018, based on the levers of energy efficiency,

approach to project development and continuous control of operating expenditure, Eni has built a resilient Oil & Gas portfolio, with a gas share of around 52% of Eni's total proven reserves in 2022. The remaining share of the O&G portfolio includes many conventional, low-emission intensity projects. Analyses carried out on 2P reserves showed that the average Brent break-even

Projects for CO2 capture and storage in depleting offshore reservoirs, or reuse in other production cycles, are a vital element in Eni's energy transition strategy. CCS will help reduce net emissions from Eni's operations and provide a solution for other hard-to-abate emitting sectors besides the energy sector. Leveraging its portfolio of CCS projects already under development, utilising

infrastructure, Eni has set the goal of achieving storage of around 10 MTPA equity by 2030, with a total gross capacity of 30 MTPA. One of the most advanced projects is HyNet, located in Liverpool Bay, which is scheduled to start-up in 2025 with a storage capacity in the initial phase of 4.5 million tonnes per year. For the Ravenna Phase 1 project, whose development was

is scheduled for early 2024, and Ravenna Phase 2 plans start-up by the end of 2026. Eni is also pursuing a second project in the UK, using the depleted Hewett field, potentially ready by 2027 and aimed at decarbonization of the Bacton and Thames Estuary areas. Opportunities are also being explored in North Africa and Middle-East, among which the BES project in Libya.

storage capacity

10 MTPA

equity by 2030

UPSTREAM NET GHG SCOPE 1+2 VS. PRODUCTION

Indexed

zero routine flaring and methane emission minimisation. CO2 cap-

price, which guarantees a return on investment equal to the cost

FLAGSHIP CCS PROJECTS

-65%

NET CARBON FOOTPRINT

(Scope 1+2) by 2025 (vs. 2018)

2022	2023	2024	2025	2026
		Production	Net emissions

ture and storage projects will contribute to reducing Eni's net emissions, while Natural Climate Solutions initiatives will offset residual emissions.

By adopting a model that is based on successful exploration at competitive costs, reducing the time-to-market of bringing reserves into production, a phased

of capital, is lower than current crude oil prices, thus supporting fast investment returns, which for new projects are less than five years. This improves the resilience of the O&G portfolio to low carbon scenarios by mitigating the risk of stranded assets (Resilience of the low carbon scenario strategy).

UK

HyNet

START-UP

2025 Phase 1

(storage capacity 4.5 MTPA) 2030 Phase 2

(storage capacity 10 MTPA)

TOTAL STORAGE CAPACITY 200 MT CO2

ITALY

Ravenna

START-UP

2024 Phase 1

(storage capacity 25 kton/y) Fine 2026 Phase 2

(industrial scale capacity 4 MTPA)

TOTAL STORAGE CAPACITY > 500 MT CO2

LIBYA

BES CO2

Management

START-UP

2027 storage capacity 2.5 MTPA

TOTAL STORAGE CAPACITY 50 MT CO2

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INTERVIEW

+13,000

EV charging points

FOCUS ON

NEW ENERGY SOLUTIONS

Eni is pursuing the transformation of its traditional businesses and the growth of its new activities by generating value and supporting its customers in reducing emissions. Plenitude, Eni's Benefit Corporation (Società Benefit) integrating renew- ables, customer energy solutions and an extensive electric vehicle (EV) charging network, is developing its renewable projects pipeline and has reached its 2022 target of more than 2 GW of installed capac- ity. Eni's objectives in this area will be achieved through the organic development of a diversified port- folio, complemented by selective asset and project acquisition transactions and strategic partnerships

EVOLUTION OF PLENITUDE

RENEWABLES		60
Installed capacity (GW)
			>30
		>15
>2	>3	>7

2022 2023 2026 2030 2035 2050

on the national and international level, which will enable the progressive increase of Plenitude's installed renewable capacity with more than 15 GW by 2030, reaching 60 GW by 2050. In an evolving mobility sector, which envisages a constant increase in the number of electric vehicles in circulation in Italy and Europe, Plenitude has one of the largest and most widespread networks of public electric vehicle charging infrastructures with more than 13,000 charging points distributed throughout the Country, aiming at a total of 30,000 units by the end of 2026, rising to 160,000 by 2050. Finally, integrating retail activities, with a customer base growth to more than 11 million

~160

	RETAIL
	Customers (mln)			>20
	ELECTRIC MOBILITY
	>15
	Charging points (k)
10	>10	>11	~35
>30
		~20
13
2022	2023	2026	2030	2050

by 2026 and more than 20 million by 2050, renewable energy and electric mobility, offers significant synergies from an operational per- spective, as well as ensuring diversification and financial resilience.

Versalis is committed to the achievement of Carbon Neutrality in 2050 through the promotion of chemistry from renewable sourc- es, the identification of sustainable feedstock supply alternatives, and the continuous development of solutions in the area of circularity. Research and technology development are also carried out through partnerships, such as Matrìca

• the JV established in 2011 be- tween Versalis and Novamont in Porto Torres - which specializes in the production of bioproducts from renewable sources. In addi- tion, Versalis looks at the contin- uous strengthening of integration in its technologies: in December 2022 it acquired the technology for the production of enzymes from DSM (a global company focused on the health, nutrition and bio- science sectors), thus integrating it with the proprietary technology Proesa®, applied in the Crescenti- no plant, for the production of sus- tainable bioethanol.

ALLIANCES FOR

DECARBONIZATION

The most recent IPCC analyses have shown that decarbonization is an ongoing process, but there still needs to be an emissions gap concerning the Paris targets. How do we bridge the gap between where we are and where we should be with the energy transition?

Although the climate challenge is now high on the political agenda of all governments and the impacts of climate change are already evident, the actions implemented so far still need to be improved. However, much has been achieved, and the development of renewable energy over the last ten years is undoubtedly a success story that, on the one hand, allows us to look to the future with optimism and, on the other hand, obliges us to continue working towards achieving the objectives of the Paris Agreement. As highlighted in IRENA's World Energy Transitions Outlook, the energy transition is un- derway. It will inevitably lead us to a new energy system dominated by renewables, complemented by hydrogen and the sustainable use of bioenergy. Over the past decade, the cost of electricity generated from renewables has fallen dramatically

especially in the current energy crisis, play an essential role in addressing the "energy trilemma", i.e. the balance between environmental sustainability, security of supply and competitiveness. However, it remains clear that there is a need to accelerate investment in transition technologies, which must at least quadruple by 2022 to reach the 1.5°C target.

The energy transition requires an unprecedented collective effort, not least because of recent events that have brought the issue of energy security back to the centre of the climate debate. What role does IRENA play in facilitating collaboration between institutions and com- panies, such as Eni?

The energy transition cannot be achieved without strong collaboration between institutions and com- panies. In the 2013-2020 period, the private sector was responsible for 75% of global investments in renewable energy. Since 2020, IRENA has signed strategic agreements with some of the most important companies in the energy sector, and we are now working on implementing several important initiatives. With Eni, for example, we have developed

alliance aims to accelerate the decarbonization of industrial sectors, which account for over 30% of global emissions and nearly 40% of global energy consumption. This initiative is also particularly relevant because of the difficulties associated with hard-to-abate sectors, where individual companies only sometimes have the solutions to tackle decarbonization independently.

What are the most promising technologies according to IRENA, and how will the Alliance for Industry Decarbonization support the acceleration of their development?

Faced with the urgency of the climate challenge, we must choose the fastest path to emission reduction, pri- oritising existing solutions and those with the greatest chance of reaching technological maturity within this decade. IRENA's World Energy Transitions Outlook identifies energy efficiency and electrification facilitated by renewables as the primary levers to accelerate the energy transition. Hydrogen, on the other hand, will play a vital role in the transition of "hard- to-abate" sectors, where the great challenge of replacing coal needs to be addressed. To create a hydrogen

Interview with

Francesco La Camera

Chief Operating Officer of the International Renewable Energy Agency (IRENA) since 2019, he has more than 30 years of experience in climate change, sustainability and international cooperation.

Eni Sustainable Mobility and the vertical integration model with agri-businesses

Eni Sustainable Mobility, established at the beginning of 2023, is the vertically integrated group Company that will support Eni's energy transition, combining the offer of increasingly sustainable fuels with advanced services dedicated to motorists in Italy and Europe, leveraging a network of 5,000 service stations, which will be upgraded to support electric as well as hydrogen-based mobility. Eni Sustainable Mobility will manage Eni's biorefineries, biomethane business and continue the development of new projects, including those in Livorno and Pengerang in Malaysia, currently under evaluation and in Louisiana (USA), where a biorefinery in Joint Venture with PBF has been built and is in start-up.

One of the distinctive elements of Eni's biorefining strategy is the progressive vertical integration through the innovative agri-business mod- el, which envisages the production of vegetable oils from raw materials that do not compete with the food chain, significantly contributing to local development and circular economy. The development plan of the identified activities involves agreements with local farmers and cooperatives to whom oilseed production is outsourced, and Eni's construction of oil collection and extraction centres (agri-hubs). The supply chain by-products, will be destined for local markets and possibly for export. In October 2022, the first cargo of vegetable oil for biorefining, produced at Eni's Makueni agri-hub in Kenya, departed toward the Gela biorefinery. In addition to the vegetable oil, Eni has already begun exporting used cooking oil (UCO) collected from hotel chains, restaurants and bars in Nairobi, through a project underway that promotes the culture of recycling, raising awareness on the environmental and health benefits of properly disposing of waste oil, generating income from waste. This model will be replicated in other African Countries, longtime Eni partners. These developments have led Eni to accelerate its strategy and relaunch biorefining capacity targets, aiming to target more than 3 million tons per year by 2025, compared to the 2 million announced in 2022, and more than 5 million tons per year by 2030.

(-88% for solar PV; -68% for onshore wind; -60% for offshore wind), and at the same time, investment has almost doubled, reaching a record USD 499 billion in 2022. Renewables are a winning economic choice and,

1. capacity-buildingprogramme to in- tegrate the African continent into the biofuel supply chain. Eni and IRENA are also collaborating in the Alliance for Industry Decarbonization. This

market, it is necessary to work simultaneously on supply and demand. The Alliance for Industry Decarbonization offers a platform for collaboration between sectors to pursue this goal.

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€13.8 bln

low and zero carbon spending in 2023-2026

CAPITAL ALLOCATION EVOLUTION

Eni is committed to aligning its plans and investment decisions with the decarbonization strate- gy. The evolution towards a fully decarbonized product portfolio will be supported by progressive growth in the share of investments dedicated to low and zero carbon activities, reaching 30% of total investments by 2026, 70% by 2030

to about 75% on average over the 2040-2050 period. Spending on zero and low carbon activities will amount to €13.8 billion over the 2023-2026four-year period1. In the medium-to-long-term, the share of expenditure dedicated to Oil & Gas activities will be gradually reduced, with the progressive phase-out of investments in activities and products with high carbon intensity and evaluating the main investment

is integrated with Eni's financing strategy, having issued in 2021 the industry's first sustainability-linked bond in the O&G sector, whose interest rate is linked to the energy transition targets announced by the company. To this end, at the beginning of 2023, Eni issued the first bond intended for the Italian public market linked to its sustainability objectives for an initial value of €1 billion, an amount doubled to

one adopted by management and, in particular, with respect to the IEA's Net Zero Emission (NZE). This stress test also comprises a scenario in which prices assumed by management are reduced by 10%. Below are the results of the sensitivity analysis expressed in terms of the percentage reduction in the margin of safety given by

the excess of future cash flows over book values (i.e., headroom). The stress test performed by Eni's management on the value in use of O&G assets based on the price and cost assumptions of the IEA NZE scenario showed impairment and potential write-downs of assets considered non-material according to management's judgment, con-

firming the quality and resilience of Eni's assets. These stress tests were performed by updating the hydrocarbon price and CO2 cost assumptions in the cash flow pro- jections, not considering possible changes in other factors (e.g., vol- umes, discount rate).

• Climate Change Risk in 2022 An- nual Financial Report

and up to 85% by 2040. After 2035, these activities will generate positive free cash flow and contribute

projects consistently with emission reduction targets. Further- more, the decarbonization plan

meet the high demand that led to the offer being closed in just five days (finance).

	Headroom value in use of				Recruitment at 2050
	O&G CGUs vs. Book values surplus %				in real terms USD 2021
	Deductible CO2 costs		Non-deductible CO2 costs		Brent price		European gas price		CO2 cost
			($/b)		($/mmbtu)		($/tonne)
Eni Scenario	>100%	-	43	5.3		EU/ETS CO2 cost projections +

LOW AND ZERO CARBON INVESTMENTS 2023-2026 (€ bln)

Electricity generation from renewable sources	4.6
Reduction of GHG emissions	3.4
Circular economy	3.5
Research for decarbonization, circular economy and new energy solutions	0.6
Retail portfolio development (including e-mobility)	1
Other initiatives (including Natural Climate Solutions and Venture Capital)	0.7

CAPITAL ALLOCATION

Traditional

85%

70%

30%

Low and zero carbon

2026 2030 2040

					forestry cost forecast
10% prices haircut	80%	-	39	4.8	EU/ETS CO2 cost projections +
prices Eni scenario					forestry cost forecast
IEA NZE 2050 scenario	55%	49%	24	3.8	250-180 per tonne of CO (a)
					2

(a) Price differentiated according to economy classified as "advanced" or "emerging".

FOCUS ON

Climate risks and opportunities

STRATEGY RESILIENCE TO LOW CARBON SCENARIOS

Decarbonization initiatives announced or initiated by the governments of many Countries to achieve the goals of the Paris Agreement, the push by civil soci- ety, NGOs and the financial system, as well as evolving consumer preferences and growing awareness of

conditions under which operations are conducted. Eni's economic and financial exposure to the risk arising from the introduction of new carbon pricing mechanisms is also examined by the Board of Directors both at the preliminary stage of authorization of the individual investment and at the subsequent six-monthly monitoring of the entire

pliance with profitability thresholds in light of possible changes in the regulatory framework that could, for example, increase the cost of emissions. Given that Upstream assets have very extended useful lives, the assessments of economic resilience depend heavily on management's assumptions about future hydrocarbon prices. To this

Risks related to climate change are analysed, assessed and managed by considering the aspects identified in the TCFD recommen- dations, which refer both to the risks related to energy transition (market scenario, regulatory and technological evolution, reputation issues) and to physical risk (acute and chronic) associated with climate change. The analysis is carried out using an integrated and cross-cutting approach that involves specialist functions and business lines, including the related risks and opportunities assessment. The table below summarises the main climate-related risks and opportunities identified by Eni (wRisk and uncertainty factors). To seize the opportunities and minimise the risks associated with climate change, Eni is implementing a long-term strategy aimed at transforming its business model to achieve the 2050 Carbon Neutrality target, in line with the international community's commitments, i.e. achieving Net Zero emissions from all processes and products marketed by the Group over their entire life cycle.

climate change and preservation of natural ecosystems, could result in the displacement of hydrocarbon demand by renewables and other zero or low-emission energy carriers in the medium to long-term. Transition risk management includes regular review of the portfolio of assets and new investments for the development of Eni's hydrocarbons reserves, in order to identi-

project portfolio. In particular, Eni considers the management of the risk of reserve depreciation to be of paramount importance and has adopted a strategy and actions to mitigate such risk. The selection of Oil & Gas development projects is based on strict industrial-financial criteria, and the emission profile of operations is analyzed through sensitivities to potential impacts

end, price variables reflect man- agement's best estimate of the fundamentals of the various energy markets that incorporates current and foreseeable decarbonization trends. As an additional monitoring and evaluation tool and as recommended by the TCFD guidelines, Eni verifies through stress testing the recoverability of the book values of Oil & Gas investments,

TRANSITION RISKS

Normative

Scenario

Technological

Reputational

RISKS

Decline in global hydrocarbon demand due to regulatory, market or technological factors

Increased regulatory requirements and associated operating and investment costs

Legal proceedings relating to climate change

"Stranded asset" risk

Uncertainty about market development and profitability for new products

Negative effects on share performance

Deterioration of industry/company appeal for talent attraction & retention

OPPORTUNITIES

Development of renewables and low carbon energy

Diversification of raw materials for biorefineries and the chemical industry and development of new products

Energy efficiency interventions with the adoption of BAT

Reassessment of assets from a circular perspective

CCS development and decarbonized products

R&D, innovation and partnerships for the development of new products and services for decarbonization

Distinctive positioning in climate benchmarks and positive impact on stakeholder perception

fy and assess potential risks associated with changes in emissions regulatory regimes or the physical

related to the introduction of carbon taxes. In addition, Eni regularly monitors major projects for com-

which constitute 70% of Eni's fixed assets, with respect to decarbonization scenarios other than the

PHYSICAL RISKS

Acute

Eni has developed an assessment process that includes both its assets and those of third parties that may have an impact on Eni's operations. The process, which is constantly evolving based on the results of the first implementations, based on data provided by specialist data providers, assesses the inherent risk of assets against identified acute and chronic risks. The strength and effectiveness of existing mitigation actions are assessed for exposed assets, identifying the residual risk (per individual asset). Assets still exposed at residual risk level are analysed in more detail as part of the Asset Integrity process, identifying downstream, where necessary, further mitigation actions to be implemented.

1. In contrast to the EU Taxonomy Regulation, this expenditure also includes JV interventions, all expenditure that contributes to the reduction of emissions (e.g. energy efficiency and routine flaring abatement interventions), and that which supports the development of the Plenitude customer base.

Chronic

Eni also pays attention to the socio-economic and environmental impacts in the Countries where it operates and has developed guidelines and measures as methodological support for the identification of adaptation actions in the Countries of interest.