GHG Emissions Intensity in Power Generation

The electricity generation in our thermal power plants reflects the decisions of the Brazilian National Electric System Operator (ONS – Operador Nacional do Sistema Elétrico), which determines the moment a specific energy generation unit is dispatched. Therefore, our emissions in the segment depend on a series of factors, including the availability of other generating units in the country, climatic conditions, and the inherent seasonality of the Brazilian electrical system.

Although we do not have targets referring exclusively to our power generation activities, we monitor our emissions intensity in these operations. Our thermal power plants are mostly gas-powered, and we have highly energy-efficient units that operate in a combined cycle and are integrated with our other steam export assets. Also, in recent years, we have concluded investments in improving the efficiency of the turbo generators at the Baixada Fluminense (RJ), Cubatão (SP), Ibirité (MG), Termobahia (BA), and Termorio (RJ) plants, allowing for a reduction in fuel consumption and in carbon emissions per energy generated. According to the 2nd Inventory of atmospheric emissions in thermoelectric plants by the Instituto de Energia e Meio Ambiente (IEMA), published in December 2022, our GHG emissions intensity per MWh is approximately 20% lower than the average of thermal power plants using fossil fuels in the Brazilian National Interconnected System. In calculating the intensities, the study did not consider the plants with cogeneration (IEMA, 2022).

In 2022, we reviewed the methodology for calculating the emissions intensity indicator at our thermal power plants, in line with the Energy Statistics Manual of the International En- ergy Agency (IEA). In the new methodology, we appropriated only the emissions related to electricity generation without considering the share of emissions associated with steam generation in our plants that operate with cogeneration.

Considering this methodology, our thermal power plants operated, in 2022, with average GHG emissions per electricity generated of 0.329 tCO2e/MWh.

In addition to the metric mentioned, starting in 2023, we will internally use a performance indicator on emissions from our thermal power plants weighted by their respective pre-determined reference performances according to the project conditions and operational situations for supplying the power system and exporting steam. This indicator, measured in percentage terms, is related to the power plants’ actual and reference energy efficiency. The total relative performance of the park is calculated as the weighted average of the energy generated by each power plant during the period.

Efficiency improvements in our turbo generators

Between 2018 and 2022, we invested in upgrading the turbo generators at the Baixada Fluminense (RJ), Cubatão (SP), Ibirité (MG), Termobahia (BA), and Termorio (RJ) thermal power plants, which represent approximately 30% of our installed capacity. These investments consist of modifying internal components and updating turbo generator control systems, resulting in increased efficiency in natural gas use for power generation.

The modernization implemented, in 2022, in Block 1 of Termorio, allows a power gain of up to an additional 27.5 MW depending on the mode of operation (7.2% of the capacity of this generation block).

Also, by 2026, efficiency improvements will be made in the other 2 generation blocks (Blocks 2 and 3) of Termorio, with a total increase of 63 MW expected (10% of the installed capacity of blocks 2 and 3).

In the five projects already implemented, the total estimated reduction is around 21,600 tCO2e/year.

With the implementation of additional efficiency improvements in the other Termorio blocks, depending on their mode of operation, the estimated further reduction in emissions is around 37,800 tCO2 in the SP 2023-2027 horizon.

Fugitive Emissions Monitoring Program

Until 2021, the fugitive emissions in our thermal power plants were accounted for and estimated based on international calculation protocols1. In 2022, the fugitive emissions from part of our thermal power plants started to be measured using the LDAR methodology – Leak Detection and Repair established by the Environmental Protection Agency (EPA, Method 21). We carried out measurements at the Termorio, Seropédica, Baixada Fluminense, and Termomacaé power plants and found annual values lower by about 98% than previously estimated fugitive emissions for these assets.

Beginning in 2023, the implementation of the fugitive emissions measurement and management program will be completed in 100% of our thermal power plants using the LDAR methodology.

Active Portfolio Management

Aligned with the strategic decarbonization goals, Active Portfolio Management foresees divestment in less efficient thermal power plants, focusing on our participation in segments with greater competitive advantage and profitability. In December 2021, we com- pleted the divestment of the Arembepe, Bahia 1, and Muricy plants, which together have a total installed capacity of 304 MW and operate on fuel oil. With the completion of this project, we estimate that we avoided around 255,000 tCO2e* in our portfolio in 2022.

Value Chain Emissions

As an integrated energy company, we monitor the absolute emissions and carbon intensity of the value chain of our global energy mix. We also consider the carbon performance of each individual product to be relevant, as there are significant differences in the carbon intensity of different oils, natural gas streams and electricity itself from fossil fuels.

In the oil and gas value chain, most emissions occur in the use stage by final consumers. Therefore, to know the real impact of our products, it is necessary to calculate our Scope 3 emissions.

To compute Scope 3, we use two categories according to the GHG Protocol: indirect emissions from sold product processing (Category 10) and indirect emissions related to the use of products delivered to the market (Category 11).

In the period from 2015 to 2022, our Scope 1 emissions (direct operational emissions) and Scope 2 (indirect emissions from the acquisition of electrical and/or thermal energy produced by third parties) amounted to approximately 12% of the total emissions reported for the value supply chain (Scopes 1, 2 and 3).

Value Chain GHG Emissions Intensity

Since 2019 (2018 fiscal year), we have used the value chain GHG emissions intensity metric as an element of analysis of our carbon risks and opportunities, aiming at monitoring our operations and business.

INTENSITY = Total Emissions (gCO2e)*

Total energy delivered through our products (MJ)

The metric allows analysis regarding the amount of GHG emissions associated with each unit of energy delivered to our consumers. As it is an indicator of total emissions, it is calculated by summing our operational emissions (Scopes 1 and 2) with those related to processing (Scope 3 – Category 10) and the use of our products (Scope 3 – Category 11). Monitoring this indicator adds robustness to our analyses, allowing us to assess the impact of the decarbonization of our assets in operation, the intensity of our mix of liquid fuels and gas, and the effects of the insertion of renewable energies or the removal of CO2. In 2022, according to this metric, the intensity of our value chain was 81.8 gCO2e/MJ.