ESG

Natural environment

Climate change

Transition plan for climate change mitigation

[E1-1] KOGENERACJA Group does not have a formally adopted document regarding the transition plan for climate change mitigation purposes. In connection with the PGE Group Strategy aimed at decarbonising generation and achieving climate neutrality by 2050, the Group has developed a Business Strategy for 2022‑2026, which provides for gradual achievement of zero emissions in 2050. 

 This strategy presents transition goals with investments in low and zero-emission energy sources and network infrastructure. The Group's strategy is based on three pillars: 

• environmentally friendly energy
• modern energy services
• efficient and effective organisation.

 The transition goals are based on the best available technologies, enabling the use of renewable energy resources or energy storage facilities. They include strategic initiatives aimed at transforming production assets, developing and diversifying operations, and improving operational efficiency, which will help achieve the climate targets set for the Group companies, as described below.

 The transformation of generation assets assumes a gradual shift away from the use of hard coal in favour of other, more environmentally friendly fuels. The goal is to reduce and then completely eliminate greenhouse gas emissions using low and zero emission technologies. In 2024, the following activities were carried out:

• heat production was carried out at EC Czechnica 2 using the peak-load and reserve boiler plant launched in 2023, which replaced the previous coal-fired CHP plant with a low-emission unit;
• Analyses were ongoing to determine the optimal design of a new generation unit at EC Wrocław, based on zero- and low-emission technologies, aiming to increase the share of renewables in district heating.
• In 2023, a new high-capacity gas turbine was commissioned at EC Zielona Góra S.A., meeting the emission standards set out in the BAT (Best Available Techniques) conclusions.

In connection with climate change mitigation efforts, the Group’s companies are making capital expenditures (Capex) as part of the implementation of the Group strategy. 

A key element of the transition is the development and diversification of activities through active sales in cooperation with the network distributor in Wrocław, as well as the development of the local heat market in Zielona Góra. In 2024, the following projects were carried out:

• Development of own district heating networks in the areas of Zielona Góra, the Municipality of Siechnice, and the Zawidawie district through the expansion of distribution infrastructure, connections, and heat substations (5.17 MW_t in KOGENERACJA S.A. and 7.05 MW_t in EC Zielona Góra S.A.);
• The development of the "cooling from district heat" product, utilising adsorption and absorption technologies for cooling generation, through the construction of cooling units in public buildings in Wrocław and Zielona Góra, and producing cooling using district water at a temperature of 65°C. In May 2024, cooling was supplied from the absorption cooling unit installed in December 2023 to the Intensive Care Unit of the Hospital in Zielona Góra.

 Improving operational efficiency, i.e. searching for additional sources of revenue or opportunities to reduce costs by focusing on the Group’s core business and taking advantage of opportunities arising from the transformation of production assets, is a component of the transition plan. In 2024:

• activities were carried out within the special purpose vehicle Siechnice Nowa Energia Sp. z o.o. concerning the development of the assets of EC Czechnica through revitalisation and assigning new functions to the CHP facilities, which will enable their reuse, sale or transfer for socially useful purposes;
• On 14 November 2024, EC Zielona Góra S.A. and the National Fund for Environmental Protection and Water Management (NFOŚiGW) concluded an agreement to co-finance the construction of photovoltaic (PV) installations in the form of a preferential loan of up to PLN 10080 thousand. The project provides for the development of vacant land and roofs of buildings with photovoltaic panels in order to partially cover the electricity demand of the CHP plant's own needs.

 

[IRO-1] [SBM-3] The process of double materiality analysis and assessment consisted of two stages: impact materiality assessment and financial materiality assessment (risks and opportunities). This process, along with the identified impacts, risks, and opportunities related to the environmental area, is described in ESRS SBM-3, chapter I(4), Material impacts, risks and opportunities and their interaction with strategy and business model.

Policies related to climate change mitigation and adaptation

[E1-2] The environmental protection policy of KOGENERACJA Group results from conscious care for the natural environment and refers to the climate area in terms of not only mitigating climate change or adapting to such changes, but also energy efficiency and the use of renewable energy sources. Group companies generate electricity combined with heat, thus contributing to a fuller use of chemical energy of fuel, and thus to reducing environmental pollution.

The Group companies carry out their core activities based on the principles of sustainable development while taking care of the natural environment, in accordance with applicable legal provisions, environmental protection standards and internal regulations. In 2021, the companies of KOGENERACJA Group, adopted Management Board's declarations regarding the Environmental Policy whereby the companies’ authorities committed to constantly step up their activities to protect and improve the environment and prevent pollution. On 15 October 2024, KOGENRACJA S.A. once again updated the provisions of the Management Board Declaration on: Environmental Policy, Quality Policy, Occupational Health and Safety Policy, Information Security Policy, Cybersecurity Policy of industrial systems, and Business Continuity Policy of KOGENERACJA S.A.

 Being fully aware of the types and scale of threats to the natural environment, the Group companies implement the Environmental Policy by: 

• planning the development of the Group companies based on modern and environmentally friendly technologies that meet the BAT criteria; 
• identifying all environmental aspects, their periodic reviews and constant supervision of significant aspects; 
• minimising the negative impact on the environment through appropriate management in all areas of the Group's operations;
• rational and economical fuel and electricity consumption; 
• taking preventive measures to prevent failures; 
• raising employees' qualifications, awareness and commitment to environmental protection; 
• supporting and participating in the promotion of the idea of environmental protection in local and national social initiatives.

 The adopted environmental management policy is verified both during internal audits and by external independent institutions (e.g. Integrated Management System (ZSZ) audit, CO₂ emissions audit). The environmental area in the companies of KOGENERACJA Group is covered by the Integrated Management System, which includes, among others: Environmental Management System, compliant with the requirements of the PN-EN ISO 14001:2018 standard. 

The environmental management policy applies to all stakeholders, including the value chain. The implemented documents are available on the corporate websites of the Group companies.

Actions and resources in relation to climate change policies

[E1-3] The strategic transition plan included in the Business Strategy of KOGENERACJA Group covers modern technological solutions for generating electricity and heat, in particular low-emission technologies based on gas fuel.

The Group’s main activity is the production of heat and electricity in line with expectations and with respect for the natural environment. The Group strives to meet the growing energy needs while caring about air quality in the face of climate change and depletion of raw materials. The Group regularly monitors the consumption of raw materials and endeavours to ensure their optimal utilisation.

In 2023, the first stage of construction of a modern low-emission generating unit of EC Czechnica 2 was completed, consisting of a CC Gas Unit with a total thermal capacity of 228 MW_t, a heat accumulator and 4 water boilers with a total capacity of 152 MW_t. The water boiler facility was put into operation on 16 November 2023, while in 2024, the commissioning period of the CC Gas Unit began, and the first synchronisation of the unit with the National Power System was completed. The entire process led to changes in the use of raw materials in 2024. Compared to 2023, coal consumption decreased by 7%, while gas consumption doubled.

The last coal shipment from EC Czechnica in Siechnice took place on 14 November 2024, marking the end of coal usage at the Czechnica plant. 

In order to ensure efficient use of energy:

• Electricity and heat production processes are analysed to determine the places and size of energy losses, and then to elimination or mitigate the same.
• The parameters and indicators determining the economics of the CHP plant operations are kept constantly under control, and assessment is made of whether the optimal operating parameters of power facilities are maintained.

Targets related to climate change mitigation and adaptation

Energy consumption and mix

[E1-5] Direct energy consumption in the Group companies includes the consumption of fuels and energy in production processes and the acquisition and consumption of heat and electricity.

Energy consumption

		KOGENERACJA GROUP
	Unit	For the year ended 31 December 2024
Fuel consumption from coal and coal products	MWh	3 564 095
Fuel consumption from crude oil and petroleum products;	MWh	26 024
Fuel consumption from natural gas;	MWh	3 224 947
Fuel consumption from other fossil sources;	MWh	-
Consumption of purchased or acquired electricity, heat, steam, and cooling from fossil sources	MWh	4 610
Total energy consumption from fossil sources	MWh	6 819 676
Share of fossil sources in total energy consumption	(%)	97
Consumption from nuclear sources	MWh	-
Share of consumption from nuclear sources in total energy consumption	(%)	-
Fuel consumption for renewable sources, including biomass (also comprising industrial and municipal waste of biologic origin, biogas, renewable hydrogen, etc.)	MWh	242 507
Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources	MWh	-
The consumption of self-generated non-fuel renewable energy	MWh	-
Total renewable energy consumption	MWh	242 507
Share of renewable sources in total energy consumption	(%)	3
Total energy consumption	MWh	7 062 183

Energy intensity based on net revenue

		KOGENERACJA GROUP
	Unit	For the year ended 31 December 2024
Total energy consumption from activities in high climate impact sectors per net revenue from activities in high climate impact sectors	MWh/PLN thousand	2.8

Gross Scopes 1, 2, 3 and Total GHG emissions

[E1-6] The production of electricity and heat from fossil fuels has an impact on the natural environment, including the immediate surroundings, which is why the Group companies attach particular importance to the air quality in the area of their operations.

District heating is one of the most effective ways to reduce greenhouse gas emissions generated by burning low-quality fuels and waste in home furnaces. The heat generated in the Group companies’ combined heat and power plants, equipped with efficient denitrification, desulphurisation and dust filtration systems, contributes to improving the air quality in cities through connections to the heating network and liquidation of old coal-fired furnaces. Additionally, the cogeneration process produces electricity, which allows the energy contained in the fuel to be processed and used more efficiently.

Greenhouse gases released into the atmosphere are: carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF₆).

Greenhouse gas emissions are expressed in carbon dioxide equivalent. Carbon dioxide equivalent (CO_2e) is a metric measure used to compare the emissions from various greenhouse gases on the basis of their global‑warming potential (GWP), by converting amounts of other gases to the equivalent amount of carbon dioxide with the same global warming potential.

The calculation of greenhouse gas emissions is based on the guidelines of The Greenhouse Gas Protocol A Corporate Accounting and Reporting Standard Revised Edition, GHG Protocol Scope 2 Guidance and Corporate Value Chain (Scope 3) Accounting and Reporting Standard. Additionally, the above carbon footprint calculation process is consistent with the industry Guide developed in cooperation with the Polish Association of Combined Heat and Power Plants (PTEZ, now PTEC). The Guide is based on the ISO 14064 and GHG Protocol Standard. The Guide is provided together with an integral IT tool.

The following database publications were the sources of emission indicators: National Centre for Emission Balancing and Management (KOBiZE), DEFRA database (Department for Environment, Food & Rural Affairs), European Environment Agency (EEA) and Ecoinvent 3.6. GWP (Global Warming Potential factor) – for refrigerants, the indicators were derived from the 5th IPCC Report (Intergovernmental Panel on Climate Change).

The carbon footprint calculation standard will be maintained in subsequent reporting periods based on updated CO₂ emission factors relevant for the calendar year. The use of uniform principles for calculating the carbon footprint allows for the comparison of data within the sector.

The Group companies use mostly non-coal fuels to produce heat and electricity, which has allowed them to significantly reduce emissions into the atmosphere. It is also significant that in the newly launched EC Czechnica 2 as well as in EC Zielona Góra S.A. production takes place only with the use of natural gas.

• Scope 1 – direct emissions from sources (equipment, vehicles, machines, boilers, installations) owned or controlled by the organisation;
• Scope 2 – indirect emissions from purchased electricity, heat and cool, from losses in transport and energy distribution, consumed by the company for own or leased facilities;
• Scope 3 – other indirect emissions in the company’s value chain, e.g. purchases of goods and services, business travel, commuting, capital goods, i.e. upstream and downstream emissions;
• biogenic emissions – emissions related to the natural carbon cycle resulting from combustion, fermentation, decomposition or processing of biological materials.

KOGENERACJA S.A. emits biogenic gases in the process of combustion of materials of biological origin (biomass). Biogenic emissions are not included in the carbon footprint.

Greenhouse gas emissions in individual scopes for KOGENERACJA Group [Mg CO₂e]

			KOGENERACJA GROUP
		Unit	For the year ended 31 December 2024
Scope 1
Gross Scope 1 GHG emissions		Mg CO2e	1 834 134
Percentage of Scope 1 GHG emissions in the regulated emissions trading system		(%)	98
Scope 2
Gross Scope 2 GHG emissions using the location-based method*		Mg CO2e	1 941
Greenhouse gas emissions - scope 2 gross by market-based method**		Mg CO2e	1 941
Scope 3
Total gross indirect (Scope 3) GHG emissions		Mg CO2e	543 166
1	Purchased goods and services	Mg CO2e	17 578
2	Capital goods	Mg CO2e	140 160
3	Fuel and energy-related activities (not included in Scope 1 or Scope 2)	Mg CO2e	383 516
4	Upstream transportation and distribution	Mg CO2e	-
5	Waste generated in operations	Mg CO2e	1 470
6	Business trips	Mg CO2e	23
7	Employee commuting	Mg CO2e	418
8	Upstream leased assets	Mg CO2e	-
9	Downstream transportation	Mg CO2e	-
10	Processing of sold products	Mg CO2e	-
11	Use of sold products	Mg CO2e	-
12	End-of-life treatment of sold products	Mg CO2e	-
13	Downstream leased assets	Mg CO2e	-
14	Franchises	Mg CO2e	-
15	Investments	Mg CO2e	-
Total GHG emissions		Mg CO2e	2 379 241
Total GHG emissions 1+2 location-based+3		Mg CO2e	2 379 241
Total GHG emissions 1+2 market-based+3		Mg CO2e	2 379 241
Emissions outside of scope 1-3
Biogenic emissions		Mg CO2e	87 302

Group companies operate installations covered by the greenhouse gas emission allowance trading system. Pursuant to Article 86 paragraph 1 of the Act of 12 June 2015 on the greenhouse gas emission allowance trading system, Group companies are obliged to submit annually to the National Centre for Emission Balancing and Management, by 31 March, a verified annual report on the volume of GHG emissions for the previous year, together with a verification report.

The verification was carried out at KOGENERACJA S.A. (3 installations) from 10 to 12 February 2025 and at EC Zielona Góra (1 installation) from 21 to 27 February 2025. The report verification process is regulated by Commission Regulation (EU) 2018/2067 of 19 December 2018. The audit checks the compliance of the information contained in the report with the applicable legal provisions and the monitoring plan approved in the decision authorising greenhouse gas emissions from the installation covered by the system.

GHG intensity per net revenue

		KOGENERACJA GROUP
	Unit	For the year ended 31 December 2024
Total GHG emissions location based/ net revenue	Mg CO2 / thousand PLN	0.9
Total GHG emissions market based/ net revenue	Mg CO2 / thousand PLN	0.9

In 2024, the Group’s carbon footprint increased by 3.4% compared to 2023, mainly in Scope 2. 71% of the Group’s calculated carbon footprint concerned KOGENERACJA S.A. and 29% concerned EC Zielona Góra S.A.

[E1-7] [E1-8] [E1-9]The Group does not participate in greenhouse gas offset projects. In 2024, KOGENERACJA Group did not establish any internal carbon emission unit price to be applied in processes related to managing the impacts of climate change.

Pollution

Description of the processes to identify and assess material impacts, risks and opportunities

[IRO-1] In the medium and long term, the Group has assessed the risk of higher costs associated with compliance with air pollution emission regulations and the opportunity to increase the availability of financing in connection with pollution reduction. The introduction of stricter regulations on air pollution emissions will require investments in the modernisation of technologies and purification installations, which will result in additional capital expenditure and costs for the Group. Strict regulations in this area may also result in financial penalties if companies fail to comply within the required timeframe.

Policies related to pollution

[E2-1] In KOGENERACJA Group, matters related to the reduction of environmental pollution are included in internal documents, i.e.:

• Environmental Protection Policy of the PGE Group;
• Declaration of the Management Board of the Company on the Environmental Policy of KOGENERACJA S.A.;
• Declaration of the Management Board of the Company on the Environmental Policy of EC Zielona Góra S.A.;
• General Procedure – Context and environmental planning in PGE Group;
• Procedure for managing environmental decisions at PGE Energia Ciepła S.A. and its subsidiaries;
• Procedure for managing environmental factors at PGE Energia Ciepła S.A. and its subsidiaries.

The Environmental Protection Policy aims to ensure compliance of KOGENERACJA Group’s operations with applicable laws in the area of environmental protection, to regulate the principles of monitoring potential changes in this area and to ensure safety in the process of implementing new regulations, while respecting the principles of sustainable development. The Policy applies to both our own activities and those across the value chain. The document refers to avoiding incidents and emergency situations.

The documents indicated above refer to mitigating the impact of the Group companies on individual elements of the environment. They describe the approach to:

• pollution and emissions;
• controlling air, water and soil quality monitoring systems;
• ongoing analysis of environmental parameters;
• emission reporting;
• initiating actions to limit environmental impact;
• method of obtaining environmental permits.

Actions and resources related to pollution

[E2-2] The following actions have been taken with regard to the prevention of pollution at the Group companies:

• Inspection of fans, compressors, pumps and other devices for compliance with the requirements for the highest energy efficiency class. As a result of the review, devices that do not meet the requirements were identified and will be gradually replaced in the following years. 
• Review of systems producing heating/cooling energy and electricity from bioenergy with regard to compliance with current laws. An estimate was made of the capital expenditure required to achieve compliance. Due to the significant level of capital expenditure, analyses of the feasibility of investments will be continued.

 KOGENERACJA Group, as part of the PGE Group, is conducting a continuous process of transformation of generation assets related to achieving climate goals, including climate neutrality by 2050. The scope of investments has been defined at the PGE Group level in the Climate Neutrality Plan documents and their operationalisation in the form of the Decarbonisation Plan. These documents define the technologies, the estimated level of investment expenditure and the planned transformation timeline. 

The timeframe for asset transformation includes two perspectives: 

• medium term, i.e. phasing out coal by 2030; 
• long-term, i.e. zero net CO₂ emissions from production and ensuring 100% green energy for customers of KOGENERACJA Group by 2050;

 In 2024, no failures resulting in contamination or other environmental damage were recorded.

Targets related to pollution

[E2-3] In the environmental area concerning pollution, 1 UN Sustainable Development Goal arising from the Strategy was identified:

Pollution of air, water and soil

[E2-4] Since 2023, projects have been underway as part of the PGE EC Decarbonisation Plan, including in KOGENERACJA Group The commissioning of new installations replacing more emission-intensive sources has resulted in a significant reduction in air pollutant emissions, in particular in the scope of SO₂, NO_x and dust, while in the scope of water pollution it has resulted in a significant reduction in wastewater from technological processes.

The relevant emission parameters are continuously monitored based on metrics determined from measurements conducted by accredited entities, emission standards set in accordance with applicable law and administrative decisions, such as integrated permits, as well as emission values provided based on data from continuous monitoring systems and periodic measurements. Measurement methodologies are based on legal provisions and civil contracts. Emission data are collected and processed for internal and external reporting purposes in accordance with internal procedures for environmental statistics and reporting.

As part of the pollutant emission monitoring carried out in 2024, emissions were recorded that exceeded the applicable threshold value specified in Annex II to Regulation (EC) No 166/2006.

Air pollution

		KOGENERACJA GROUP
	Unit	For the year ended 31 December 2024
Sulfur oxide (SOx/SO2)	kg	726 000
Nitrogen oxides (NOx/NO2)	kg	1 144 000
Chlorine and its inorganic compounds	kg	102 300

The core activities carried out within the Group do not result in releases into water. The quality of industrial wastewater and rainwater is tested by accredited laboratories (sampling and analysis) with a frequency specified in administrative decisions, agreements and regulations.

The core activities carried out within the Group do not result in releases into soil. The conducted risk analysis showed no threat of the release of substances posing a risk to the soil. However, the Preliminary Technical and Economic Assessment for the initial report on the state of soil, land, and groundwater for the installation requiring an integrated permit indicated no contamination of the land surface. Due to the lack of threat of soil contamination with substances causing risk used on the premises of EC Zielona Góra, confirmed in the Preliminary Technical and Economic Assessment and in accordance with the provisions of the Integrated Permit, the company is not subject to the obligation to perform a repeated, systematic risk assessment and soil tests. At KOGENERACJA S.A. locations where the initial technical and economic assessment was performed, control tests are carried out to confirm the lack of soil contamination.

Water and marine resources

Description of the processes to identify and assess material impacts, risks and opportunities

[IRO-1] Water is used for basic processes to produce electricity and heat. The Group makes significant use of water resources for its ongoing operations, hence it has identified a significant actual negative impact on the level of water consumption, collection and discharge, and a positive impact on water withdrawal. The Group can have a positive impact on withdrawal through optimal water storage and retention (including retention reservoirs).

Policies related to water and marine resources

[E3-1] In KOGENERACJA Group, matters related to water are included in internal documents, i.e.: 

• Environmental Protection Policy of the PGE Group; 
• Declarations of the Management Board of KOGENERACJA S.A. and EC Zielona Góra S.A. 
• General Procedure – Context and environmental planning in PGE Group; 
• Procedure for managing environmental decisions at PGE Energia Ciepła S.A. and its subsidiaries;
• Procedure for managing environmental factors at PGE Energia Ciepła S.A. and its subsidiaries.

Aspects related to water and marine resources are included together with other environmental components in the Environmental Protection Policy of the PGE Group.

The policies adopted and implemented also cover the value chain. The Group’s initiatives related to reducing impacts on the aquatic environment include activities aimed at developing sustainable technologies for the generation and distribution of electricity and heat, environmental compensation, reduction of water and energy consumption, and recycling. Negative impacts are minimised, among other ways, through effective management of water and wastewater processes.

The Group companies do not operate in areas at risk of water deficit.

Actions and resources related to water and marine resources

[E3-2] At KOGENERACJA S.A. plants, water for technological purposes is taken from the Oława and Oder rivers through existing bank intakes and is used to replenish losses in the following circuits: steam-water, heating network, cooling, hydraulic ash removal and deslagging, and to supply the fire-fighting water network. Before being directed into circulation, the water is treated. At EC Zawidawie and EC Zielona Góra S.A., water for technological and social needs is taken from the local water supply network.

The Oława River is the source of raw water for the water treatment system at EC Czechnica 2. The demand for water is supplemented by industrial sewage generated as a result of the operation of equipment for technological processes and by rainwater and meltwater. An 840 m3 underground retention tank is used to collect rainwater. It receives purified rainwater, retains it and then pumps it to the raw water tank to be used as an alternative source of water for the technological purposes of the water treatment plant.

At EC Zielona Góra S.A. water for technological and social needs is taken from the local water supply network. At EC Zielona Góra S.A., technological and domestic wastewater as well as rainwater from the plant premises are discharged into the municipal sewerage system. Monitoring of the quantity and quality of discharged sewage is carried out in order to maintain the conditions for discharge of sewage into the sewerage system.

All activities related to water use are carried out on the basis of administrative decisions, i.e. water-law permits (EC Zawidawie and EC Czechnica) and integrated permits (EC Wrocław and EC Zielona Góra S.A.).

The Group rationally manages its water resources and cares about its quality. Actions are undertaken to reduce water consumption in production processes by increasing the operating efficiency of production equipment, optimising heat recovery, eliminating leaks in technological installations and optimising equipment for water sampling technology.

Since the operator of the installation is obliged to perform measurements of the quality of river waters, the chemical laboratory, accredited since 2015, carries out the analyses required for constant control and operation of individual technological nodes of the CHP plant. In 2018, the accreditation was extended and its scope expanded.

Targets related to water and marine resources

[E3-3] In the environmental area of water and marine resources, 1 UN Sustainable Development Goal arising from the Strategy was identified:

Water consumption

[E3-4] The Group companies monitor measurement devices or systems, which allows them to determine the amount of water taken and sewage discharged, and to obtain data for the purpose of carrying out current tasks. The Department of Safety and Environment at KOGENERACJA S.A. and the Support Division of EC Zielona Góra S.A. conduct ongoing analyses of the quality of discharged and introduced sewage and participate in initiating necessary modifications and improvements of the measurement systems for collected water and discharged and introduced sewage.

Water consumption

		KOGENERACJA GROUP
	Unit	For the year ended 31 December 2024
Total water withdrawal	m3 k	30 550
Total water consumption	m3 k	1 061
Total water consumption in areas at water risk, including areas of high-water stress	m3 k	-
Total water discharged (sum of sewage, used water and unused water)	m3 k	29 489
Total water storage and storage changes	m3 k	-

Water consumption intensity indicator

		KOGENERACJA GROUP
	Unit	For the year ended 31 December 2024
Total water consumption/ net revenue	m3/ EUR 1 million	1 783

Resource use and circular economy

Description of the processes to identify and assess material impacts, risks and opportunities

[IRO-1] The Group carries out production processes using natural resources: hard coal, gas, biomass. The use of resources limits their availability and the process of their extraction or acquisition influences the change of ecosystems, which is why the Group is taking action to gradually replace natural resources.

In 2024, coal-based production at EC Wrocław and until 30 June 2024 at EC Czechnica affected the production of combustion by-products, such as ash, slag, ash-slag mixtures and gypsum from flue gas desulphurisation plants as well as landfilled waste. The Group identified significant impacts in the areas of resource and waste impacts, both positive and negative.

Policies related to resource use and circular economy

[E5-1] In line with the assumptions of the circular economy (CE), the Group aims to minimise the negative impact on the natural environment in its operations, which is one of the ways to achieve the goal of climate neutrality by 2050. 

In implementing the initiative to implement the principles of circular economy in the Group companies, the following documents were introduced and are applicable in the PGE Group:

• Waste Management Plan;
• Environmental Policy of the PGE Group;
• Code of Ethics of the PGE Group;
• Code of Conduct for Business Partners of PGE Group Companies.

The aim of the Waste Management Plan is to implement the principles of the circular economy in the District Heating Segment by ensuring the reuse, regeneration of products or recycling after the end of use of devices that are part of production assets and accompanying infrastructure, taking into account the waste management hierarchy according to the principles of the circular economy. The scope of this Plan covers production assets and infrastructure that were created as a result of implemented investment, research and development projects as well as projects related to the transmission and distribution of electricity.

The Plan covers strategic development, research and development investments and projects related to the transmission and distribution of electricity, as well as taking into account the waste management hierarchy that implements the principles of the circular economy:

• in own activities carried out in the District Heating Segment,
• in contracts concluded with contractors for supplies, services and construction works.

 In accordance with the Code of Conduct for Business Partners, the criteria for selecting technology and equipment suppliers take into account the assumptions of the circular economy. Business Partners are expected, as part of responsibly conducted business activities, to prevent environmental risks and limit negative impacts on the natural environment by limiting pollutant emissions, minimising the amount of waste produced and optimally using resources.

Actions and resources in relation to resource use and circular economy

[E5-2] The Group companies apply the principles of circular economy in all areas of their operations. 

The Group operates an integrated waste management system through:

• rational management of materials and raw materials
• economic use of combustion waste (slag and fly ash as a raw material for road construction, cement industry, general construction)
• selective waste collection
• subjecting the generated waste first to recovery and then to neutralisation processes
• storing waste until it is collected, in a way limiting its negative impact on the environment and in specially prepared and designated places
• storing hazardous waste in special, dedicated containers placed in tanks or in specially prepared places with hardened or sealed ground to protect soil and water environment against contamination
• transferring waste only to the recipients who have appropriate waste management permits
• maintaining individual installations in good technical condition.

 

Actions are being taken to close the raw material cycle, optimise the use of resources, protect natural resources and minimise the adverse impact on the climate and the natural environment, including by reducing the amount of waste produced and striving for zero emissions.

Since 2015, a flue gas desulphurisation installation has been operating at EC Wrocław, which has reduced sulphur dioxide emissions. This is made possible by the wet flue gas desulphurisation method, which involves washing previously de-dusted flue gases with an aqueous suspension of limestone. The result is a harmless synthetic gypsum that can be reused in construction and agriculture, among other places. The flue gas desulphurisation technology is continuously improved and adapted to evolving environmental requirements as well as the deteriorating quality parameters of coal. 

In 2023, the wastewater treatment plant of the wet flue gas desulphurisation installation at EC Wrocław was modernised in order to adapt the installation to BAT conclusions by reducing the emission of pollutants in wastewater in the form of sludge and heavy metals. In addition, this modernisation made it possible to increase the capacity of wastewater discharge from the absorber, which had a positive impact on maintaining the parameters of the desulfurisation process in 2024.

EC Zielona Góra S.A. transfers waste generated during the preparation of water for production in the form of sludge from water decarbonation to farmers for the purpose of liming acidic and very acidic soils. These sediments have a chemical composition similar to limestone flours, the basic component of which is calcium carbonate. Every year, sediment quality tests are performed to confirm compliance with the requirements for lime fertilisers containing magnesium. Research also confirms the lack of negative impact on land quality.

In 2024, by order of the General Director of PGE Energia Ciepła S.A., a Task Force on Water and Wastewater Management was established for the entire PGE Group, including KOGENERACJA Group. The objective of the Task Force was to carry out a comprehensive analysis of the current water and wastewater management system, taking into account compliance with environmental requirements, planned changes resulting from the Decarbonisation Plan, and the implementation of circular economy principles. 

As part of the analysis, technical solutions were proposed to enable compliance with environmental requirements. Additionally, development paths in the field of water and sewage management were indicated, taking into account the provisions of the EU Taxonomy and the CE guidelines. The conclusions from the analyses and the results of the team’s work were presented to the Management Board. The decision-making process regarding the implementation of dedicated projects is currently underway. 

Goals

[E5-3] In the environmental area concerning the circular economy, 1 UN Sustainable Development Goal arising from the Strategy was identified:

Resource inflows

[E5-4] Resources introduced into technological processes include hard coal, natural gas, biomass, and heating oils.

Raw materials consumption

		KOGENERACJA GROUP
	Unit	For the year ended 31 December 2024
Coal	Mg	581 070
Biomass	Mg	87 156
Natural gas	tys. m3	392 018
Heating oils	Mg	2 246
Limestone flour	Mg	10 674

In the production processes at EC Czechnica carried out using a biomass boiler, the Sustainable Development Criteria System for Biomass of the Oil and Gas Institute (KZR INIG) was implemented and certified. Annual certification of biomass quality guarantees that the raw material burned in the installations comes from sustainable sources and is zero-emission in accordance with the regulations. The KZR INIG certificate [National System of Green Certificates (KZR) managed by the National Institute of Oil and Gas (INIG)] is available on the corporate website of KOGENERACJA S.A.

Resource outflows

[E5-5] The purpose of KOGENERACJA Group is to produce heat and electricity, and these are the basic products of technological processes.

The combustion of hard coal is inherently associated with the generation of so-called combustion by-products (CBPs), including: 

• slag mixtures, fly ash, and gypsum. These materials are 100% transferred to PGE Ekoserwis S.A., a company responsible for their management – either as fully recoverable products or as waste (e.g. the use of ash and slag in road construction, hydraulic engineering, or the construction industry); 
• used technological water and sewage, which, in accordance with the relevant permits, are discharged into the environment.

 The CBPs are perceived as a resource that can bring not only profits but also savings, e.g. due to the costs of waste storage and disposal. 

Resource outflows

		KOGENERACJA GROUP
	Unit	For the year ended 31 December 2024
Ash	Mg	107 025
Slag	Mg	22 493
Synthetic plaster	Mg	15 860

Waste

		KOGENERACJA GROUP
	Unit	For the year ended 31 December 2024
Waste sent for recovery
Hazardous waste	Mg	-
Preparation for reuse	Mg	-
Recycling	Mg	-
Other recovery processes	Mg	-
Non-hazardous waste	Mg	148 217
Preparation for reuse	Mg	-
Recycling	Mg	387
Other recovery processes	Mg	147 830
Total amount of waste sent for recovery	Mg	148 217
Waste sent for disposal
Hazardous waste	Mg	481
Combustion	Mg	1
Landfilling	Mg	-
Other disposal processes	Mg	480
Non-hazardous waste	Mg	6 130
Combustion	Mg	-
Landfilling	Mg	5 787
Other disposal processes	Mg	343
Total amount of waste sent for disposal	Mg	6 611
Total amount of radioactive waste	Mg	-
Total amount of waste
Total amount of waste generated*	Mg	154 831
Total amount of non-recycled waste	Mg	154 444
Percentage of non-recycled waste	%	99,75

Estimated financial effects resulting from impacts, risks and opportunities related to pollution, water and marine resources, resource use and the circular economy

[E2-6], [E3-5], [E5-6] KOGENERACJA Group uses the possibility of omitting disclosure in the first reporting year.

EU Taxonomy

KOGENERACJA S.A., as a public interest entity preparing non-financial reports in accordance with Directive 2014/95/EU of the European Parliament and of the Council, is obliged to disclose for 2024 the extent to which its operations can be considered environmentally sustainable. This requirements stems from Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088, and from the Delegated Regulations on the establishment of a framework to facilitate sustainable investment. 

For the purposes of preparing the 2024 disclosures, an analysis of the activities conducted was carried out, which resulted in the identification of activities that qualify for the Taxonomy system, i.e. those that are consistent with the description of the activities listed in the Commission (EU) Delegated Regulations: 

• 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives 
• 2023/2485 of 27 June 2023 amending Delegated Regulation (EU) 2021/2139 establishing additional technical screening criteria for determining the conditions under which certain economic activities qualify as contributing substantially to climate change mitigation or climate change adaptation and for determining whether those activities cause no significant harm to any of the other environmental objectives 
• 2023/2486 of 27 June 2023 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention and control, or to the protection and restoration of biodiversity and ecosystems and for determining whether that economic activity causes no significant harm to any of the other environmental objectives and amending Commission Delegated Regulation (EU) 2021/2178 as regards specific public disclosures for those economic activities. 

 The financial data presented in the disclosure for eligible activities includes the following: 

• revenue (turnover) from business activities that are taxonomy-eligible, related capital expenditure or operating expenses; 
• purchases from eligible activities; 
• related additional (explanatory) information (notes). 

 

The basis for recognising a given activity as eligible was a comparison of the actual activity with the description of the activity specified under: 

• Annex I (Climate change mitigation – CCM); 

or 

• Annex II (Climate change adaptation – CCA); 

to Commission Delegated Regulation (EU) 2021/2139, together with the above-mentioned amendments and: 

• Annex I (Sustainable use and protection of water and marine resources – WTR); 
• Annex II (Transition to a circular economy – CE);
• Annex III (Pollution prevention and control – PPC); 
• Annex IV (Protection and restoration of biodiversity and ecosystems – BIO); 

to Commission Delegated Regulation (EU) 2023/2486. 

The codes indicated for each of the climate targets are the required designation resulting from Commission Delegated Regulation (EU) 2023/2486. 

The basis for calculating the indicators of turnover, capital expenditure (Capex) and operating expenditure (Opex) were the definitions set out in Annex I to Commission Delegated Regulation (EU) 2021/2178. When calculating the indicators for KOGENERACJA Group, appropriate consolidation eliminations were taken into account, in accordance with the principles of preparing the consolidated financial statements. 

Taxonomy-eligible activity means an economic activity described in Commission Delegated Regulation (EU) 2021/2139, 2023/2485 and 2023/2486.

Taxonomy-eligible activity  is activity that makes a substantial contribution to the achievement of at least one of the environmental objectives, does not cause significant harm to any of the other environmental objectives of the Taxonomy, is carried out in compliance with the minimum safeguards set out in Article 18 of Regulation (EU) 2020/852, and meets the technical screening criteria established by the European Commission. 

As part of the implementation of the process described above, the following detailed activities were carried out in KOGENERACJA Group:

Step 1: Division of activities of KOGENERACJA Group

The Group's activities are organised in one sector: Energy production and energy services in the macro-sector: Utilities.

Step 2: Identification of economic activities eligible under the EU Environmental Taxonomy

Based on Annexes I and II to Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021, in accordance with Commission Delegated Regulation (EU) 2022/1214 of 9 March 2022, and Annexes I–IV to Commission Delegated Regulation (EU) 2023/2486, Taxonomy-eligible economic activities, which in 2024 were present within KOGENERACJA Group as part of its business operations or procurement processes, were identified.

 1)    Activities that generated revenue as part of the Group’s business operations – turnover as well as the related CapEx and/or OpEx were reported. 

• CCM 4.1 Electricity generation using photovoltaic technology; 
• CCM 4.15 Distribution in heating/ cooling systems; 
• CCM 4.20 Cogeneration of heat/cool and power from bioenergy; 
• CCM 4.21 Production of heat/cool from solar thermal heating; 
• CCM 4.24 Production of heat/cool from bioenergy; 
• CCM 4.30 High-efficiency co-generation of heat/cool and power from fossil gaseous fuels; 
• CCM 4.31 Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system; 
• CCM 4.9 Electricity transmission and distribution.

 2) Other purchasing activities: 

• CCM 4.1 Electricity generation using photovoltaic technology;
• CCM 4.15 Distribution in heating/ cooling systems;
• CCM 4.20 Cogeneration of heat/cool and power from bioenergy; 
• CCM 4.29 Electricity production from gaseous fossil fuels; 
• CCM 4.30 High-efficiency co-generation of heat/cool and power from fossil gaseous fuels; 
• CCM 4.31 Production of heat/cool from fossil gaseous fuels in an efficient district heating and cooling system; 
• CCM 4.9 Electricity transmission and distribution. 

Step 3: Determination of indicators for EU environmental taxonomy-eligible and aligned activities for 2024

The calculation of the Taxonomy indicators required to be disclosed for 2024 was based on financial data enabling the assignment of specific values to identified Taxonomy-eligible activities.

Individual types of activities have been assigned to only one Taxonomy-eligible activity. No part of revenue, Capex or Opex was double counted. When a business activity generating revenue (turnover) is considered Taxonomy-eligible, the Capex and Opex associated with that activity are fully allocated to it and are no longer assessed for eligibility under other activities. The remaining Capex and Opex values (not related to eligible, turnover-generating activities) were assessed with a view to their possible classification into the category of purchases from eligible activities. Individual Capex and Opex were assigned to one activity only. In situations where it was possible to assign them to more than one activity, the one that best suited them was selected.

To calculate the indicators in the denominator, the value of turnover and Capex (spend on tangible assets and acquisitions) were used, respectively, consistent with the values given in the consolidated financial statements of KOGENERACJA Group for the period ended 31 December 2024. The Opex denominator was calculated based on the accounts with costs meeting the definition of Opex based on Regulation 2021/2178.

EU Environmental Taxonomy-eligible turnover of KOGENERACJA Group

This is the value of turnover from the sale of products or services related to economic activities that have been identified as Taxonomy-eligible under one of the following climate targets – “Targets I-VI”: 

• I – Climate change mitigation (CCM); 
• II – Climate change adaptation (CCA);
• III – Sustainable use and protection of water and marine resources (WTR);
• IV – Transition to a circular economy (CE);
• V – Pollution prevention and control (PPC);
• VI – Protection and restoration of biodiversity and ecosystems (BIO);

 The numerator of the indicator includes revenue from contracts with customers under IFRS 15 that Taxonomy‑eligible. The denominator is total revenue reported in the consolidated statement of comprehensive income and in Note 1 Sales revenue. 

EU Environmental Taxonomy-eligible CapEx of KOGENERACJA Group

According to the definition in Regulation 2021/2178, the value of capital expenditure represents additions to tangible and intangible assets during the financial year considered before depreciation, amortisation and any re-measurements, including those resulting from revaluations and impairments, for the relevant financial year and excluding fair value changes. This value also includes additions to tangible and intangible assets resulting from business combinations.

Detailed information on capital expenditure is presented in the Consolidated Financial Statements of KOGENERACJA Group for the period from 1 January to 31 December 2024, III Notes, point 32 Capital expenditure.

EU Environmental Taxonomy-eligible OpEx of PGE Group

Regulation 2021/2178 defines Opex as direct non-capitalised costs that relate to research and development, building renovation measures, short-term lease, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment by the undertaking or third party to whom activities are outsourced that are necessary to ensure the continued and effective functioning of such assets.

Opex analyses in terms of the Taxonomy mainly covered accounts that record maintenance, renovation, repair, and off-balance sheet lease costs, in accordance with the Opex interpretation guidelines published by the European Commission in the Official Journal of the EU in October 2022. The sum of the turnover of these accounts, taking into account consolidation eliminations represents the denominator.

The numerator is the part of the denominator corresponding to activities that have been identified as Taxonomy-eligible for Objectives I-VI.

Assessment of Taxonomy alignment

Taxonomy-aligned activity is activity that makes a substantial contribution to the achievement of at least one of the environmental objectives, does not cause significant harm to any of the other environmental objectives of the Taxonomy, is carried out in compliance with the minimum safeguards set out in Article 18 of Regulation (EU) 2020/852, and meets the technical screening criteria established by the European Commission. 

The alignment assessment of the identified eligible activities listed above initially involved an analysis of the technical screening criteria applicable to each type of activity, as set out in the Delegated Regulations: 2021/2139, 2023/2485, and 2023/2486, with regard to the substantial contribution criteria and the “do no significant harm” principle. 

A due diligence assessment was carried out to analyse the extent to which the business activities conducted by the PGE Group comply with the requirements, i.e. the minimum safeguards, set out in Article 3(c) in conjunction with Article 18 of Regulation (EU) 2020/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable investment. As defined in Article 18 of the above Regulation, minimum safeguards are the procedures implemented by an undertaking that is carrying out an economic activity to ensure the alignment with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work and the International Bill of Human Rights. 

In accordance with the guidelines of the PSF (Platform on Sustainable Finance) Report, the due diligence was conducted based on the following methodology: 

• test based on procedures, i.e. examination of internal regulations and procedures of KOGENERACJA Group in the context of compliance with applicable regulations and guidelines, carried out on the basis of documentation provided by KOGENERACJA Group; 
• a results-based test, focusing on final convictions or penalties, in relation to each of the areas examined, taking into account their materiality, conducted on the basis of statements of KOGENERACJA Group;
• a database analysis conducted on the basis of publicly available information in the registers of the Business and Human Rights Resource Centre (“BHRRC”) and the National Contact Point established in accordance with the OECD Guidelines for Multinational Enterprises; 
• general examination of publicly available information on the activities of KOGENERACJA Group 

The following areas were covered by the analysis: 

• disclosure of strategic and internal matters; 
• human rights; 
• workers' rights; 
• prevention of corruption and bribery; 
• consumer and competition protection; 
• tax policy; 
• environmental policy. 

 

In the areas mentioned above, the Group has adopted procedures that meet the standards set out in the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. In addition, it applies extensive measures that are consistent with both applicable national law and international regulations. 

No charges have been brought against the Group by the BHRRC, nor is there any case pending with the National Contact Point, which is reflected in the register of penalties imposed by common courts and public administration bodies maintained by the Group. 

The analysis excluded the occurrence of negative premises constituting a failure to provide minimum safeguards, which are indicated in the PSF Report as risk factors. 

Indicators of KOGENERACJA Group

The indicators of KOGENERACJA Group for 2024 are presented in the tables below, developed on the basis of the templates included in Regulation 2023/2486, where:

• Y – Yes, means that the activity is taxonomy-eligible and taxonomy-aligned with regard to the relevant environmental objective
• N – No, means that the activity is taxonomy-eligible but not taxonomy-aligned with regard to the relevant environmental objective
• N/EL – Non-eligible, taxonomy-non-eligible activity with regard to the relevant environmental objective.

The proportion of turnover derived from products or services associated with taxonomy-aligned economic activities

The proportion of capital expenditure derived from products or services associated with taxonomy-aligned economic activities

The proportion of operating expenditure derived from products or services associated with taxonomy-aligned economic activities

The proportion of turnover, Capex and Opex derived from products or services associated with taxonomy-aligned economic activities