Snam's central role: Tomorrow's Energy Company
Environment
Emissions reduction and efficiency:
cogeneration plants, new generation heaters, electric compressors, DLE turbines, energy efficiency on real estate
Reduction of CH4 emissions:
launched leak detection and repair campaign, technology update, in line gas recompression, ecc.
Energy transition:
Snam4Mobility, Biomethane and CNG, SSLNG.
CH4 emission targets:
-15% by 2022; -25% by 2025
In this context of change and innovation, at the end of November 2018 Snam launched the new Business Plan for 2019-2022 which follows a path that will enable the Company to rise to the challenges associated with climate change and contribute to the reduction in emissions, minimising the increase in global temperature and keeping down the cost of energy for end users. Through the adoption of the new Business Plan, and consistent with the previous one, Snam aims to act as a point of reference for the Italian and European journey towards decarbonisation. Natural gas and biomethane can be used to satisfy peak energy demand, compensating and supporting the production of energy from renewable sources. Specifically, Snam intends also to investigate the potential of hydrogen as a solution for energy storage and to promote a more efficient use of intermittent renewable energy.
Its activities place Snam in a key position to lead the country in the renewal of the energy sector. For this reason, in its Business Plan, Snam follows a route developed over various fronts, from energy efficiency to sustainable mobility, from the development of biomethane to the development of innovative technologies, all sustained and driven by challenging targets. In September 2018 in Linz, together with other European energy sector companies, Snam signed a commitment to support the use of hydrogen and its potential as a sustainable technology for decarbonisation and long-term energy security in the European Union.
In addition, in its Business Plan, Snam decided to also integrate ESG criteria (Environment, Society, Governance) identifying specific targets dedicated to the environment, governance, protection of individuals and dialogue with local communities.
As far as environmental protection is concerned, under the scope of the investments announced in the Business Plan, there are also new objectives for the reduction of methane emissions, ongoing efforts to reduce emissions and the maximisation of energy efficiency and the development of new businesses, such as biomethane, CNG and SSLNG. Specifically, reviewing the objective of the previous plan to reduce natural gas emissions by 10% by 2021 compared with 2016 levels, Snam set a new target in its Business Plan to reduce methane emissions, forecasting to reduce them by 25% by 2025 (with an interim target of -15% by 2022). Detailed information on Snam’s environmental commitment is given in the Environment chapter.
To uphold the importance that the Company gives to the environmental sustainability, in 2018 Snam also subscribed to the Guiding Principles “Reducing methane emissions across the natural gas value chain”, through which Snam commits itself to reduce methane emissions from the construction and management of natural gas infrastructure and to encourage its suppliers to do the same.
Social
Snam4Safety:
a new safety model to improve the employees and contractors’ safety
Snam Institute:
100,000 hours of training
Performance management:
extended to 100% of employees
Smart working:
open to 500 employees
Snam Foundation:
corporate volunteering week, 300 employees involved
As far as the social dimension is concerned – and as detailed in the Social chapter – Snam’s special emphasis is on safeguarding its employees and suppliers, also through specific development programmes such as “Snam4Safety”, for the promotion and dissemination of the culture of workplace health and safety. As further confirmation of the Company’s commitment to the ongoing professional development of its people, the Snam Institute provides yearly around 100,000 hours of training to company employees. Attention to the social dimension is also demonstrated by the activities of the Snam Foundation, established in 2017, with the goal of making the Company’s skills and know-how available to contribute to the innovation, progress and growth of the country.
The ESG values are also included in Snam’s corporate governance; it is the only Italian company and one of four in the world to have signed a global partnership with Transparency International in the fight against corruption. The Governance chapter describes the Snam’s commitment to transparency and business ethics.
The route towards the future energy company, which uses and incorporates innovation, sustainability and development, is outlined within the scope of the TEC project – Tomorrow’s Energy Company, launched by Snam during the presentation of the 2019-2022 Business Plan. The aim of this project is to accelerate the innovative capacity of Snam and its assets to take advantage of all the opportunities offered by the development of the energy system. There are four main areas of intervention in which €850 million will be invested: greater operational efficiency (e.g. the smart gas project for the maintenance of the gas network and transportation, the use of drones for monitoring assets), the reduction of methane emissions (e.g. the campaign for detecting and eliminating leaks), new businesses (e.g. biomethane, sustainable mobility, impacts on the natural gas network of the energy mix composed of hydrogen and methane, the possibility of integrating power-to-gas technologies for the production of hydrogen from renewable sources), innovation and development of core competencies.
Not only a technological revolution, with the aim of aligning its financial strategy as closely as possible to those of the medium-/long-term ESG goals and diversifying its investor base, Snam chose to use sustainable financial instruments which will allow it to fund projects, through specific “sustainable” instruments, in the area of environmental sustainability and the development of technological infrastructure, actively contributing to the fight against climate change.
Governance
Business integrity and anti-corruption:
One of 4 companies worldwide part of the Global Forum of Transparency International
More than 2,000 ethic and integrity pacts and repetitional checks on suppliers in 2018
Effective 6 integrated governance:
ESG factors fully integrated in our governance;
BoD oversight climate risks and opportunities
Independence: 56% of BoD independent. All BoD committees chaired by Independent Directors
Diversity: 44% of the Board is made up by women
From rules to purpose: from 650 procedures to 90 rules.
4 shared values for business conduct
To diversify and expand its business, integrating new technologies related to decarbonisation and demonstrating its desire to minimise the impact of its activities, in 2018 Snam pursued an acquisition plan to support the development of biomethane, energy efficiency and new solutions for sustainable mobility.
As far as the sector for the production and distribution of biomethane is concerned, in 2018 Snam gained control of IES Biogas and Enersi Sicilia through its subsidiary Snam4Mobility. IES Biogas, founded in 2008 in Pordenone, is one of the main Italian companies in the design, construction and management of biogas and biomethane production plants with a portfolio of 200 plants throughout Italy and abroad. The inclusion of IES Biogas will enable Snam to expand its expertise in the construction of biomethane plants and integration in the transport sector. The acquisition of Enersi Sicilia – a company authorised to build a facility for the production of biomethane from the organic fraction of municipal solid waste (FORSU) in the province of Caltanissetta – will enable Snam to create its first biomethane plant, which will handle 36,000 tonnes of urban waste per year, providing neighbouring municipalities with a renewable solution for the problem of waste disposal. The plant will be created leveraging the managerial skills and know-how of IES Biogas, which will monitor its development and construction.
Through the newly established company Cubogas, wholly-owned by Snam4Mobility, Snam concluded the acquisition of the business unit of M.T.M., part of the Canadian Westport Fuel Systems Inc. Group, dedicated to the business of natural gas compressors for sustainable mobility. The company is one of the main international operators for the design, development and production of technological solutions for methane gas refuelling stations.
Still in 2018, TEP Energy Solutions also became part of the Snam Group. TEP is one of the biggest Italian ESCos (Energy Service Company) and, with more than 200 national and international customers, it operates in the field of the energy efficiency, with the main goal of guaranteeing its customers a decrease in consumption and expenses related to the energy use.
Beyond national borders, during the year Snam concluded new agreements and understandings, ratified with the aim of evaluating possible collaboration and partnerships with companies operating in international energy markets and outside Europe. A Memorandum of Understanding was signed at the Italian Embassy in Beijing, with State Grid International Development (SGID), controlled by the State Grid Corporation of China, the largest energy utility in the world. The agreement involves the joint target of evaluating possible opportunities of collaboration in China and to reduce CO2 emissions at an international level, specifically in relation to the use of new technologies, research and development into renewable gas and sustainable mobility. Future collaborations include the construction of biogas and biomethane plants for the production of electricity in rural areas of China, where Snam will contribute by making its know-how available. Possible partnerships in another two countries in which SGID operates will then be evaluated, namely Australia and Portugal, for the maintenance and optimisation of natural gas transportation networks and storage sites.
Snam’s launch in the Asian market will be strengthened further by the signing of a Memorandum of Understanding with Beijing Gas, the largest distributor and supplier of natural gas in China. This understanding involves the commitment of the two companies to evaluate possible collaborations in China, specifically in the sector of biomethane and technologies for natural gas storage. The agreement will allow Snam to evaluate expanding its business in the Chinese market, confirming its European leadership role in the gas transportation sector. At the same time, the understanding will make it possible to support the transition of the Chinese energy mix towards more sustainable fuels, through projects linked to the use of natural gas developed in a country in which the energy scenarios include the tripling of methane demand between now and 2040.
New targets for reducing methane emissions: the guiding principles subscribed by Snam
In June 2018 Snam ratified the Guiding Principles developed in 2017 by the most important environmental protection and oil&gas industry players: the Environmental Defense Fund, the International Energy Agency (IEA), the International Gas Union, the Oil & Gas Climate Initiative Climate Investments, the Rocky Mountain Institute, the Sustainable Gas Institute, the Energy and Resources Institute and the United Nations Environment Programme (UNEP). The initiative is part of undertakings promoted by the global energy industry to ensure that natural gas plays an important role in satisfying future global energy demand and in fighting climate change, one of the greatest challenges of the 21st century. The guiding principles on the issue of reducing methane emissions were ratified, not only by Snam, but also by other important players in the oil&gas market such as BP, Chevron, Eni, Equinor, ExxonMobil, Gazprom, Qatar Petroleum, Repsol, Shell, Total, Wintershall and Woodside.
By signing this agreement, Snam has made a commitment to reduce methane emissions and to steer all companies and organisations in its value chain in the same direction – from producers to end users – promoting the adoption of increasingly accurate emission measurement technologies and increasing transparency and support in formalising adequate policies and regulations on the subject.
The Guiding Principles outline a series of necessary actions:
The definition of strategies for the reduction of methane emissions and ongoing support for the development of innovative technologies that allow them to be contained.
The promotion of partnerships and collaborations with customers and suppliers with the shared goal of reducing methane emissions along the entire natural gas value chain.
The improvement of the accuracy of the technologies for monitoring emissions.
The promotion of adequate regulatory policies and instruments, which encourage improvements in performance and support the development of clean, sustainable technologies.
Transparent communication of information relating to natural gas emissions, the promotion of the adoption of standardised calculation methods which allow the comparability of the data provided.