Centrica Plc · LSE:CNA
Centrica — ESG Presentation (November 2006)
46 slides from Centrica's sustainability presentation, Nov 1, 2006
Slide 1: Building a sustainable business
Building a sustainable business Managing our social, ethical and environmental impact 1 November 2006
Slide 2: Kieran McKinney
Kieran McKinney Director of Investor Relations Centrica
Slide 3: Introductions
Introductions • Catherine May, Corporate Affairs Director, Centrica • Kieran McKinney, Director of Investor Relations, Centrica • Gearoid Lane, Director of Gas & Electricity Procurement, Centrica Energy • Jill Harrison, Director of Energy Efficiency & Social Responsibility , British Gas Residential
Slide 4: Simon Henderson
Simon Henderson Director of Corporate Reputation Centrica
Slide 5: Defining our approach
Defining our approach We seek to proactively manage the social, ethical and environmental impact of our business activities, engaging a wide range of stakeholders to minimise risk, create sustainable value for our shareholders and contribute positively to wider economic development in the regions in
Slide 6: Governance & risk management
Governance & risk management • Board Corporate Responsibility Committee sets strategy • Chaired by Mary Francis senior non-executive director • Committee members are responsible for specific CR issues • Manage social, ethical and environmental risks and opportunities.. • ..in line with our Group Bus
Slide 7: Centrica Corporate Responsibility Strategy
Centrica Corporate Responsibility Strategy • Maximise shareholder value • Underpin our values and business principles • Identify key impact areas • Consult with stakeholders • Monitor and benchmark our activities • Report and communicate our performance
Slide 8: Prioritised CR impact
Prioritised CR impact • Climate change and environmental impact • Access to energy (vulnerable customers) • Health, safety and security • Human rights and labour standards • Human capital management • Diversity and inclusion • Communities
Slide 9: Focus of today's discussion
Focus of today’s discussion • Environmental policy and strategy • Managing our impact on climate change – upstream • Managing our impact on climate change – downstream • Supporting vulnerable customers and tackling fuel poverty We’ll take questions at the end of each section
Slide 10: Simon Davies
Simon Davies Head of Environment Centrica
Slide 11: Climate Change: The Challenge
Climate Change: The Challenge The debate has changed. We have moved away from is it happening and if it is, are we causing it? TO It is happening, we are causing it and what can be done now and into the future. UK Government stated that: “…we are proposing to look at how we can radically transform t
Slide 12: Our position – a strategic response
Our position – a strategic response • Climate Change is happening • Centrica and our customers are contributing to it • Develop Group position, integrated upstream & downstream • Adaptive strategy: dealing with today’s Climate Change effects • Mitigation strategy: reducing causes of future Climate C
Slide 13: Stakeholder expectations
Stakeholder expectations • Growing public concern • Public and institutional confusion and frustration • Project finance – Equator Principles • Investment funds UK Climate Change imperatives • Developing clean energy As the UK’s leading • Saving energy energy company there is • Distributing energy g
Slide 14: Climate Change - Risks and opportunities
Climate Change - Risks and opportunities Operational Risk Adaptive Risk • Efficiency issues • Centrica • Physical risks • Customers Opportunities • Re-defined lead role in climate change • Integrated approach – across the whole business • New technologies and innovations, upstream and downstream • G
Slide 15: Environmental strategy
Environmental strategy • Move towards becoming an integrated energy company • Strategy Group for Climate Change governance and stewardship across the Group: • Statutory and environmental best practice requirements • Communications & reporting/brand/marketing/stakeholders • Operations • Energy techno
Slide 16: Environmental strategy
Environmental strategy • 2006 – 2010 Environmental Action Plan • Group Environmental Management System ISO14001: • Identification and prioritisation of risk • Group objectives • Commercial opportunities • Improved communication • Greater internal awareness of Climate Change
Slide 17: Questions
Questions
Slide 18: Gearóid Lane
Gearóid Lane Director of Gas and Electricity Procurement Centrica Energy
Slide 19: Our UK portfolio
Our UK portfolio • Our generation portfolio currently comprises 7 modern CCGT power stations and 2 windfarms (1 offshore, 1 onshore) – total generation capacity = 3.4 GW • We have one gas-fired power station (Langage 885MW) and 2 windfarms under construction (180MW) • Our CO2 emissions per sales 200
Slide 20: Our North American portfolio
Our North American portfolio • 3 modern CCGT power stations • Total generation capacity = 1,261MW • 3 long-term renewable power purchase agreements underpinning major new-build windfarms: • Buffalo Gap Wind Farm – 120 MW (15 years) • Buffalo Gap Wind Farm 2 – 233 MW (10 years) • Airtricity Sand Bluf
Slide 21: Our future UK fuel mix - investment plans
Our future UK fuel mix - investment plans Our current investment plans will deliver significant year on year reductions in unit CO2 emissions • £750m renewables investment • Langage - state of art gas fired station with low CO2 emissions Carbon Intensity of Centrica Electricity Generation 0.5 0.4 tC
Slide 22: Fuel mix - challenges for the future
Fuel mix - challenges for the future • Low carbon Energy Review • Reducing dependence on imports challenges • Eliminating fuel poverty • Promoting UK competitiveness The Government wants diversity in generation including nuclear and clean coal Position on nuclear Position on clean coal • Technology
Slide 23: Renewables - progress with our investments
Renewables - progress with our investments Glens of Foudland 26 MW onshore windfarm in Aberdeenshire - operational since July 2005 Braes of Doune 72 MW onshore windfarm in Stirling under construction. Centrica 100% offtaker and likely to become 50% owner Barrow 90 MW offshore windfarm in the North W
Slide 24: Renewables strategy - assets
Renewables strategy - assets • Energy Review presents opportunity for offshore wind: • Consultation on banding • Commitment to grandfathering • Targets to 2020 with guaranteed headroom • Tapering after that • All have the ability to make offshore wind economic • Planning and Grid proposals also help
Slide 25: Renewables strategy - offtake contracts
Renewables strategy - offtake contracts • Centrica is also well positioned with independent developers • Not seen as competitor onshore • Early mover in developing relationships with important developers • Large portfolio of long-term offtake contracts with independent developers • Portfolio of offt
Slide 26: Carbon Trading: Environmental and Commercial Benefits
Carbon Trading…. Environmental and Commercial Benefits Emissions Emissions below above allocation allocation • Emissions Trading focuses reductions where Allocation they are most cost-effective Allocation payment • Puts a price on polluting - investment and operational decisions must factor this in
Slide 27: Centrica and EU ETS
Centrica and EU ETS • Early recognition of importance of market • Major trader of EUAs to stimulate vibrant trading market. Involved in approx 15% of market trades in 2005; >10% so far in 2006 • Centrica moved early to secure supplies of credits - via direct agreements and fund investment • Innovati
Slide 28: Project credits
Project credits • Project credits often billed as dirty alternative to emission reductions at home • Emissions are a global problem and Emissions Trading - including project credits - should deliver emissions reductions at least cost to the economy • UN accreditation ensures projects are delivering
Slide 29: Market mechanisms - the future
Market mechanisms - the future • Beyond 2012 - it is vital to ensure that CO2 is factored into investment valuations, like operating decisions do now. • Enlargement - support expansion to other sectors, gases and countries - however Phase I has shown that care must be taken when introducing new elem
Slide 30: Questions
Questions
Slide 31: Jill Harrison
Jill Harrison Director of Energy Efficiency and Social Responsibility British Gas
Slide 32: Energy efficiency: a key business driver for British Gas
Energy efficiency: a key business driver for British Gas • Brand leadership and differentiation • Increasing consumer awareness and expectation • Leveraging our licence obligation for commercial gain • Maximising revenue potential from new and emerging technologies eg. microgeneration
Slide 33: Tackling Climate Change Downstream
Tackling Climate Change Downstream Obligations Delivering our Beyond obligations obligations EE products Energy Savers EE Advice Line Green Electricity EEC Climate Aware Here to HELP (carbon offset) EE Advice Energy Labelling Microgeneration Energy Labelling Think Energy Business EE Programme NA Dem
Slide 34: Market mechanisms - the future
Market mechanisms - the future The size and scale of our EEC obligation has grown significantly – it is now clear that it will grow again by between 50-100% in 2008 Energy Efficiency Obligation EEC1 EEC2 EEC3 2002-2005 2005-2008 2008-2011 27TWh 49TWh 86TWh (based on 75%** increase) Annual contributi
Slide 35: Delivering market leading products, reducing costs, increasing diversity
We are delivering products that are market leading, reducing costs, and increasing diversity • 34 Local Authorities participating in 2006 Council Tax Scheme • Covering over 1.6m households • Promoted via council tax bills and LA comms • Received extensive political and media coverage • Factory gate
Slide 36: 9m homes benefited from our energy efficiency programmes in 2005
9m homes benefited from our energy efficiency programmes in 2005 CUSTOMER EXPERIENCE MIDAS Energy Savers IDTV’s Condensing Currys Boilers Energy Installers Services Social 9 million PARTNERS Housing Council INNOVATION Providers Tax homes Lighting Retail Charities Schemes B&Q Energy Savers Here to HE
Slide 37: Innovative ways to engage customers in energy efficiency
Constantly seeking innovative ways to engage our customers in the green/energy efficiency agenda • In January 2006 we launched our new Energy Savers Report, a free service that customers could use to assess the energy efficiency of their homes, was launched in 2006 • Customers can complete their hom
Slide 38: Our Energy Savers Report
Our Energy Savers Report provides customers with a simple, easy to understand, assessment of their home, together with recommendations for improvement
Slide 39: Above the line energy efficiency campaign
Above the line energy efficiency campaign comprising TV, radio, posters, press is underway, and we have plans to continue this theme throughout 2007.
Slide 40: Two green products launched into the market
Over the last year, two green products have been launched into the market British Gas is now the largest supplier of green electricity in the residential market • Over 73,000 customers now signed up to green electricity • British Gas was first to market with a carbon offset proposition for residenti
Slide 41: Broadening our green product portfolio
Broadening our green product portfolio • A range of innovative renewable technologies will be launched from 2006 to complement existing energy efficiency products – solar thermal is the first of these • Partnerships established and pilots planned in Domestic Wind, Micro CHP stirling engine, and fuel
Slide 42: British Gas Business
British Gas Business Smart Metering • Industry leadership in real time consumption data • Web based data analytics • Gas and Electricity being rolled out Green Products • 100% wind generated electricity for SMEs Corporate Consumption Advisory Services • Partnership arrangement in place with Energys
Slide 43: Supporting vulnerable customers
Supporting vulnerable customers means addressing a complex mix of issues – getting this right strengthens our brand reputation, and will enable us to address some of our wider commercial issues - Hard to reach people - Socio-demographic profiling - Housing and quality of life - here to HELP - Low in
Slide 44: Access to energy – social programmes
Access to energy – social programmes British Gas Energy Trust: • Launched August 2004 • £10m Trust Fund (funded at the rate of £3m pa) Winter Rebate • Launched September 2005, initially targeted 250k payments (£40 gas, £20 elec) in winter 2005/06 • In February 2006,rebate increased to 300k payments
Slide 45: Here to HELP coalition
Here to HELP: a unique coalition between public, private and charity sectors. With an ambition to cover 1m homes, it is the largest social initiative of its kind in the UK, and is delivering real benefit to vulnerable households Here to HELP allows us to identify Priority customers for EEC whilst pr
Slide 46: Questions
Questions