Nornickel Scenarios for Climate-Related Risk Assessment
November 2022
Nornickel Scenarios for Climate-Related Risk Assessment
Executive Summary
- Earth's climate will continue to change, driving the urgency of physical risks, while global decarbonisation pace and targets may change, with the impact of transition risks on the Company changing accordingly
- Despite geopolitical factors, climate-relatedrisks remain relevant to international and Russian regulators and key stakeholders, as well as the industrial and strategic safety of the entire Company and its individual assets
- TCFD (Task Force on Climate-Related Financial Disclosures) is a generally accepted international framework that establishes the principles and approaches for businesses to build climate risk management systems
- The Company is implementing a TCFD roadmap to support one of the goals under its Environmental and Climate Change Strategy
- The Company has developed scenarios to assess the two key categories of climate risks - physical and transition risks, which will help design respective mitigation and adaptation measures
Source: Company data | 2 |
Nornickel Scenarios for Climate-Related Risk Assessment
How Relevant is Climate Change for Nornickel?
Internal demand and objectives
- Prevention and adaptation to climate-related physical risks to ensure safety and continuity of operations (prevent accidents similar to the diesel spill at HPP-31)
- Mitigation of the transition risks related to the decarbonisation of the global economy (a risk of demand reduction for the Company's metals in the long run as Europe, for instance, is planning to phase out ICE vehicles by 2035)
- Monitoring of the changes in the global ambitions regarding the pace of energy transition and decarbonisation timeline and goals
External demand
- Customers (consumers of metals) and ESG ratings (EcoVadis, Sustainalytics and MSCI ESG) keep climate risk management on their radar screens
- Investors, banks and other international stakeholders remain a relevant option, but now in a longer-term
TCFD offers a framework on how to meet
these objectives…
…and provides guidelines for a climate-
related risk management system
(Nornickel is currently implementing a
roadmap to comply with TCFD)
Source: Company data | 3 | |
Notes: 1. Heat and power plant №3 | ||
Nornickel Scenarios for Climate-Related Risk Assessment
Global Decarbonisation Ambitions Are Put to a Stress-test
- Coal consumption: record consumption levels in most countries…
- In 2022, an increase of 0.7% is expected globally, followed by a further increase in 20231
- India - increase of 7% in 20221
- China - decrease of 3% (largely due to COVID-19 restrictions)1
- EU - increase of 7% by 20221
- …but so is the growth of renewable energy
- China - increase of 92%2
- USA - increase of 81%2
- India - increase of 23%2
- Rule of thumb: sustainable economic growth is conditioned upon energy costs NOT exceeding 10% of GDP
- Energy costs expected to reach 13% of GDP globally in 20223 and at 15% of GDP in Europe in 20234
Meeting the targets set by the Paris Agreement has become even more challenging
More uncertainty around transition risks emerged, while physical risks are likely to increase further
Source: 1. IEA data; 2. Ember think tank; 3. Bloomberg; 4. Goldman Sachs research | 4 |
Nornickel Scenarios for Climate-Related Risk Assessment
Transition Risks & Opportunities: Phased-out Internal Combustion Engines to be Replaced with Electric Vehicles
Global Production Forecast for ICEs (including HEVs) and Electric Vehicles
Announced Ambitions to Ban ICE Vehicles in Selected Key Markets
[million units]
100 | 60 | |||||
95 | ||||||
90 | 50 | |||||
85 | 40 | |||||
80 | ||||||
75 | 30 | |||||
70 | ||||||
65 | 20 | |||||
60 | 10 | |||||
55 | ||||||
50 | 0 | |||||
2016 | 2020 | 2024 | 2028 | 2032 | 2036 | 2040 |
ICE vehicles (LHS) | ICE vehicles forecast (LHS) | |||||
EVs (RHS) | EVs forecast (RHS) |
Country
(vehicle sales
in 2021)
China (25.6 million)
USA (14.9 million)
Japan (4.4 million)
Germany (2.6 million)
France (1.7 million)
Canada
(1.7 million)
UK (1.6 million)
Target
year
2035
2030-
2035
2035
2035
2030-
2040
2035
2030-
2035
Comment
Partial ban: electric vehicles (including hydrogen vehicles) are to make up 50% of vehicle sales, with HEVs making up the other half
Ban in individual states: Washington, D.C. - sales ban on new ICE vehicles from 2030; California, Massachusetts, New York, New Jersey from 2035
Sales ban on new ICE vehicles
Sales ban on new ICE vehicles, except for synthetic fuel vehicles
Sales ban on new ICE vehicles from 2040 (Paris from 2030)
Sales ban on new ICE vehicles
Sales ban on new ICE vehicles, except for plug-in hybrids; sales ban on new HEVs from 2035
Source: Company data, public sources | 5 |
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OJSC MMC Norilsk Nickel published this content on 21 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 November 2022 13:29:02 UTC.