TAURON Group’s Environmental Policy

TAURON Group’s Environmental Policy adopted by the Management Board in 2017 and updated as needed, defines TAURON Group’s approach to the management of the issues related to the impact made by its operations on the natural environment, including the direction of its environmental activities and the principles that should be followed in the environment related matters.

The Environmental Policy includes the general principles, values and vision followed by TAURON Group in order to limit the impact on the natural environment, both as part of the direct, as well as the indirect impacts throughout the entire value chain. The document also presents the principles of responsible communications related to the environmental issues, ensuring the clarity and understanding of the operations of TAURON Group that may impact the environment as well as of the activities undertaken for the benefit of the environment.

Natural capitals used by TAURON Group – water, solar energy, biomass, minerals (coal, limestone, gas), wind – are used throughout its entire business chain. The Group’s aspiration is to use the natural capitals in a responsible manner while minimizing the negative impact on the environment and climate. A confirmation of this approach is the implementation of actions stemming from TAURON Group’s Strategy for the years 2022-2030 with an outlook until 2050, adopted by the Management Board in 2022, as part of which a significant change in the weights of the individual natural capitals in TAURON Group’s value chain was presented. This will be made possible by the Group’s ongoing decarbonization – the spin-off of the coal mining assets outside the Group (which took place as of 31/12/2022) and the readiness to sell the conventional power generation assets (TAURON power plants) based on the coal fuel to NABE (National Energy Security Agency) in 2023. The turn towards the renewable energy sources means a successive increase in the use of the wind and solar energy and a reduction in the use of the non-renewable resources, primarily solid fossil fuels. The new Strategy also emphasizes the need to intensify the efforts aimed at shoring up the circular economy.

The changes in the way the natural capital is used in the perspective of the following years of TAURON Group’s business operations will be implemented in such a way as to ensure the certainty of the electricity supply to the customers. In 2022, despite the unfavorable external environment conditions, TAURON Group had a fairly stable raw materials’ base, enabling it to supply the Group’s conventional generation assets and the external customers. The armed conflict in Ukraine triggered by Russia’s aggression caused a global crisis on the fossil fuel market, including hard coal, which in turn necessitated taking of the adequate measures by maximizing the hard coal supplies from the domestic market and supplementing the required supply volumes by importing fuel from the third countries (including Indonesia and Colombia), outside the Russian Federation’s zone of influence. By guaranteeing the fuel supplies from the domestic coal mining and importing entities, the stable power generation during the periods of the volatile or extreme weather conditions that negatively affect the security of the power system was ensured.

TAURON Group’s natural capital includes renewable and non-renewable natural resources. The deposits of non-renewable resources are exploited in a responsible, rational, regulated, systematic and sustainable manner.

The tools supporting responsible resource management as part of the natural capital include: TAURON Group’s Environmental Policy and TAURON Group’s Climate Policy. The Policies comprehensively address all types of activities carried out by the Group that involve an environmental impact and use of resources in accordance with the sustainable development principles.

For the primary raw materials used as part of the natural capital, the proximity principle is applied by the Group, thereby reducing the carbon footprint associated with the transportation.

In 2022, the Group was preparing itself for the obligation to verify the sustainable development criteria for the biomass used for electricity generation purposes.

The subsidiaries operating biomass burning installations (TAURON Wytwarzanie i TAURON Ciepło), covered by the emission allowances trading system, and the biomass supplier (Bioeko Grupa TAURON) obtained certificates of the voluntary certification system authorizing them to issue documents confirming the sustainable development criteria. Since January 1, 2022, the biomass used for the Group’s electricity generation purposes has met the so-called “sustainable biomass” criteria.

TAURON Group, acting in compliance with the legal regulations and fulfilling its obligations under the provisions of administrative decisions related to the performance of its business operations, takes into account environmental protection needs and acts in a way that contributes to the accomplishment of the broader goal of sustainable development, in particular, the implementation of a circular economy and the achievement of environmental goals in terms of resource efficiency. More information on the use of the natural capital and the results achieved is provided in the thematic sections related to: Emissions, Wastewater and Waste, Waste Management Program, and Circular Economy.

The areas of potential direct environmental impact of TAURON Group’s business activities in 2022 are presented below.

* Aval 1* TZE, TEC1 I-VI, TEC1 EW Gołdap, TEC1 Ino1, Aval 1, Wind T1, Polpawer, Megawatt Wind T4, WindT30MW, FF Park PV1, Windpower Gamów.
** direct and indirect impact, potentially negative, but also potentially positive.

Minimizing of the negative impacts on the environment is effectively implemented by TAURON Group taking into account the specifics of the operations conducted, technological development and access to the environmentally friendly technologies. TAURON Group’s activities are in compliance with all environmental regulations. The environmental management systems in place at TAURON Group confirm the implementation of environmental activities with due diligence and care for the natural environment. The environmental procedures and instructions functioning at TAURON Group strictly assign roles and responsibilities in the individual processes as well as the procedures to be followed. TAURON Group implements training and awareness programs for employees.

Some of TAURON Capital Group’s subsidiaries have implemented a certified environment management system in accordance with the ISO14001 standard. TAURON Wytwarzanie subsidiary, representing conventional electricity generation, has additionally received the certificate of the European Community’s Eco-Management and Audit Scheme (EMAS), the EU’s environmental certification system, aimed at creating a sustainable development culture in an organization and efficient management of available resources and energy, operating pursuant to Regulation (EC) No 1221/2009 of the European Parliament and of the Council of November 25, 2009, on voluntary participation by organizations in the European Community’s Eco-Management and Audit Scheme.

Through the implemented Eco-Management and Audit Scheme (EMAS), TAURON Group communicates the environmental management issues to the internal and external stakeholders, evaluates and improves environmental performance in one of its largest lines of business (power generation). The operational processes implemented by TAURON Group are subject to external and internal auditing as part of the systems and certifications maintained in accordance with the certificates listed in the table below. The purpose of the environmental management systems in place within TAURON Group is to ensure continuous improvement of the organization in the environmental matters and minimize the negative impact on the natural environment by identifying areas for improvement, creating and implementing activities aimed at improving quality, increasing the efficiency of operations and minimizing the negative impact on the environment, while the certifications obtained as part of the environmental management systems in place confirm that TAURON Group ensures the high quality of its production processes, products and services and meets the requirements of customers and all stakeholders, while implementing activities aimed at protecting the environment and ensuring occupational health and safety. Table below presents the environmental management system, while Table below presents the quality and security (safety) management systems in place at TAURON Group in 2022.

Other subsidiaries of TAURON Group do not meet the level of materiality due to the scale of their direct impact on the environment.

TAURON Group, as a rule, no longer invested in environmental protection installations for the coal-fired generating units in 2022, which was possible as a result of the time derogations received (under administrative decisions introducing changes to the integrated permits in a procedure involving a public participation) and the investment program aimed at adjusting the „capacity market” and the „BAT Conclusions” completed in mid-2021. In 2022, TAURON’s environmentally upgraded coal-fired power units were operating with a regime that met the requirements of the „BAT Conclusions” and thus further reduced the emissions of sulfur dioxide, nitrogen oxides and dust into the air, as well as additional reductions in the emissions of other air pollutants such as chlorine, hydrogen fluoride and mercury from the existing sources.

As part of the investments and sustainable development in the area of the conventional power generation, the focus was on the tasks related to connecting new facilities to TAURON Ciepło's district heating networks, as well as the continuation of the Low Emission Elimination Program through further connections of the buildings, previously heated by the individual sources, or the continuation of the investments in ZWB EC 2 in Czechowice Dziedzice (construction of a new source based on the gas fuel).

In addition, TAURON Ciepło carried out large investment tasks with pro-environmental effects, the most important of which included:

TAURON Dystrybucja, by implementing the modernization and replacement of the existing assets on an ongoing basis, especially the tasks related to the alteration of the switchgear systems, indoor substations or transformer/switch substations (GPZs), makes a direct contribution to the improvement of the soil and groundwater safety.

TAURON Group assumes responsibility for the natural environment and the consequences of using its resources. The Group’s subsidiaries estimate that the amount of charges to be paid for the business use of the environment in 2022 is approximately PLN 34.9 million, as shown in Table below.

This is due to the fact that all of the operating generating units of TAURON Wytwarzanie and TAURON Ciepło have already achieved the levels of concentrations of the substances emitted into the air in accordance with the best available techniques. In 2022, TAURON Group’s generation units were operated with extraordinary intensity as a consequence of the requirements of the National Power System (NPS – KSE) operator and, as a result, the direct absolute air emissions of the NOx, SO2 compounds and dusts increased in relation to the previous year due to the rise of the production output. In spite of that, the emissions of TAURON Group in 2022 are significantly below the levels defined as the maximum allowed annual loads of the substances released into the air according to the permits.

Currently, there are no longer programs in place aimed at reducing the emissions of substances discharged into the air, other than the greenhouse gases. The last such program was implemented in the wake of the publication of the BAT Conclusions, and it was completed in 2021. The ad hoc retrofitting work is currently being carried out on the air protection equipment at the sources burning the solid fossil fuels. Further reduction of the Non-GHG Air Emissions will follow the planned successive change in the Group’s fuel mix.

As part of its operations related to the environmental management TAURON Group is conducting an ongoing monitoring of the emissions of the NOx, SO2 compounds and dusts into the atmosphere and the emissions in 2022 and 2021 are presented in Tables below.

TAURON Group’s costs and expenditures for the projects related to environment protection are presented in Table below.

TAURON Wytwarzanie’s  the 910 MW power generation unit and Łagisza Power Plant in Będzin meet the highest quality requirements for the combined (steam and water) cycles and are equipped with the water conditioning (treatment) installations based on the modern membrane techniques.

The climate changes observed, including the hydrological drought phenomenon that has been growing in strength in recent years, directly affect the availability of the resources considered as renewable, such as, for example, water. The sustainable use of these resources is implemented in the energy industry, among others, by applying the operational limits on the amount of water taken directly from the environment (surface and groundwater intakes) presented in Table below.

The Group does not consciously declare water reduction targets for energy production purposes at this time, as it is conducting activities related to:

• the spin-off of TAURON Wytwarzanie outside TAURON Group,
• a change in the energy mix toward the wind power and photovoltaics, both of which do not involve water intake.

Thus, by implementing both of the above measures in the following years, the water intake will fall by a minimum of 70%.

The consumption of water used in the production processes by TAURON Group in 2022 is shown in Tables below.

By optimizing the waste water treatment processes, modernizing and applying the new waste water treatment methods, as well as a result of decommissioning the Stalowa Wola open cooling facility, TAURON Group significantly reduced the total quantity of waste water produced already in 2021 relative to 2020. For this reason, no additional initiatives were carried out in 2022 in this regard, since, as in the case of the water intake, the volume of the waste water generated and required to be treated will decrease by a minimum of 70% after the completion of the spin-off of TAURON Wytwarzanie and the increase of the RES sources’ capacity in the Group.

The quality and quantity of the waste water is subject to an ongoing monitoring and the total volume of waste water produced (discharged) as a result of TAURON Capital Group’s operations in 2022, including its utilization method (destination), is shown in Tables below.

Decommissioning of the units using the solid fuel at TAURON Wytwarzanie in Stalowa Wola in 2021 led to the significant reduction of the amount of waste water discharged to the surface waters (rivers) – in 2020 it was 85 205 063 m³.

In accordance with the principles of the Environmental Policy, the Group has a waste treatment hierarchy in place. The Group’s waste management program consists of activities that are adequate to the profile of the individual subsidiaries:

• prevention/avoidance,
• reuse/substitution of the natural materials,
• customer-facing services related to repairs that eliminate or reduce the generation of household electro-waste.

The amount of hazardous waste generated in 2022 came in at 891 Mg, which represented less than 0.1% of the waste generated as part of the operations. This quantity is a marginal quantity in the entire area of the generation operations.

All site where hazardous waste is generated and stored are subject to the monitoring and measurement of hazardous waste in order to minimize the amount of hazardous waste generation and optimize processes with respect to hazardous waste management

TAURON Capital Group is actively looking for solutions that would implement the idea of the Circular Economy whose goals include:

• taking care of the natural environment,
• reducing the harm caused by the waste produced,
• maximizing the use of the by-products of the combustion related to electricity generation or of the coal mining,
• minimizing the costs related to the disposal (neutralizing) of environmentally harmful waste and providing new functionalities to the areas transformed as a result of industrial activities,
• partnership collaborations in the field of circular economy.

As part of the operations of TAURON Group, the cycles of substances produced by the Group are closed and the re-use of the combustion and mining by-products is being spread in the economy and industry. The reuse of the substances contributes to the protection of natural resources and the reduction of the amount of waste deposited in landfills.

TAURON Capital Group is seeking to implement the model of circular economy. It is planned that the maximum quantity of the process waste generated should be used within TAURON Group, thus reducing the consumption of natural resources and curtailing the carbon footprint.

3.2 million Mg of the process by-products, coming from thermal combustion and mining of coal, was generated in 2022, with as much as 62% of that quantity brought to the market as full value products to be used, among others, in the construction, road building, mining or agricultural sector. The balance of the waste was handed over to further authorized recipients with whom TAURON Capital Group’s subsidiaries have agreements in place that guarantee its further economic utilization, among others in land reclamation, macro-leveling and filling of the post-mining voids in mining.

In 2022, TAURON Wytwarzanie brought to the market as much as 100% of ashes and boiler slag coming from coal combustion as by-products from 7 system (utility scale) power plants (including the NJGT division, which is now a part of the TAURON Wytwarzanie), to be used in construction, (building industry), road engineering, mining and agriculture.

The below figure presents the structure (composition) of ashes, sludge, gypsum and aggregates generated by TAURON Capital Group, brought to the market in 2022.

TAURON Group’s power plants produced 200 thousand Mg of ashes in 2022 that was used as a valuable raw material in fire prevention by the coal mines. The ashes from TAURON Group’s power plants and combined heat and power plants cover 100% of the demand for ashes to be used for fire prevention at TAURON Wydobycie's coal mines.

100% of TAURON Ciepło's by-products, i.e. 205 thousand Mg, is reused in various industries.

TAURON Wydobycie processes post-mining waste, as a result of which high quality construction and road aggregates are obtained. 127 thousand Mg of aggregates and materials produced from the post-mining waste were placed on the market in 2021.

The below figure presents the structure (composition) and quantities of the combustion and mining by-products generated by TAURON Group, brought to the market in 2022.

TAURON Group focuses on the local cooperation and the use of waste materials, using the waste stored in settling tanks and at waste dump (landfill) sites.

All of the above activities contribute to reducing of the consumption of natural resources, e.g. aggregates, sand or gravel.

In line with its strategy, TAURON Group is developing a new product segment to meet the needs of the household and SME customers. offering the service that involves the professionals repairing, at the source, the malfunctions of the internal electrical installations, radio and television equipment, household appliances, PCs, air conditioning equipment, internal water and sewage systems, locks on front doors and broken windows. The launch of the service offering involving the electricians, locksmiths, glaziers, plumbers or other professionals allows the life cycle of the used products to be extended by repairing them, which is implemented as part of the introduction of activities aimed at spreading circular economy promoting activities.

TAURON Group’s approach to dealing with assets and sites after the business operations have been completed thereupon varies depending on the nature of the individual operations and has changed in connection with the planned transition of the sector is shown in Table below.

After the final termination of the activity, the necessary measures are taken to control and, if it would be reasonable, reduce the spread or limit the amount of the substances identified as posing a risk (hazard). In this way, taking into account the current and future use of the land, there is no significant risk to the human health or the environment from the contamination of the soil and groundwater as a result of the prior activities allowed in the permit.

An important change in the trend associated with the transition of the sector is the move away from treating land historically associated with landfill as wasteland, and, instead, assigning it new functions, such as, for example, using it for photovoltaic farms. Due to the specifics of the support structures used to mount solar panels that do not require a high bearing capacity of the native soils, the land previously excluded from the economic use is being restored to the electricity generation functions, without having to exclude the biologically active areas from such use.

TAURON Capital Group has knowledge of the areas that are valuable from the nature point of view, whose locations are subject to its impact, including the NATURA 2000 network areas, which is presented in Tables below.

Locations in NATURA 2000 areas where activities (operations) are conducted.

One of such NATURA 2000 areas has been established due to the need to ensure hydrotechnical protection of the Upper Vistula River from the saline mine drainage from coal mines, as part of the industrial infrastructure of the Brzeszcze Coal Mine. The „Brzeszcze” underground water retention and dosing reservoir and discharge site is located in the Natura 2000 protected area Special Protection Area ”Stawy w Brzeszczach” (Ponds in Brzeszcze) PLB 120009, with an area of 3065.9 hectares. This area covers complexes of breeding ponds in the upper Vistula River valley, located on both sides of the river. The Vistula River, meandering in its valley, forms small oxbow lakes. The refuge is home to 14 bird species listed in Annex I of the Birds Directive (out of 180 included in the Directive) and 9 species listed in the Polish Red Book (PCK). During the breeding season, the area is inhabited by at least 1% of the national population of the following bird species listed in the Polish Red Book: little bittern, purple heron, little tern, blind-winged warbler, coot, crake, redshank, black-capped warbler, laughing-stock, and barred warbler. The bittern, black tern and great crested grebe are relatively high in numbers.

In addition, the deposit currently exploited by Kopalnia Wapienia “Czatkowice” is located in Park Krajobrazowy Dolinki Krakowskie (Dolinki Krakowskie Landscape Park), whose western border is directly adjacent to the Natura 2000 area “Dolinki Jurajskie” and the nature reserve „Dolina Eliaszówki” (Eliaszówka Valley). The „Czerna” Natura 2000 area, the „Krzeszowice” Natura 2000 area as well as the rest of the „Jurassic Valleys” Natura 2000 area also located in close proximity to the Limestone Mine.

The biodiversity action program with respect to historical activities is based on key principles:

• re-establishing habitat types – an attempt to re-establish nesting sites that were disturbed during the works conducted as part of the investment project,
• re-establishing biodiversity values – an attempt to re-establish biodiversity if it was disturbed during the works conducted as part of the investment project,
• re-establishing ecosystem services – an attempt to re-establish the ecosystem if it was disrupted during the works conducted as part of the investment project.

The biodiversity action program through restorations of forest ecosystems is being implemented by Kopalnia Wapienia “Czatkowice” (Czatkowice Limestone Mine) based on the „Technical design for the recultivation of the post-mining pit of the Czatkowice Mining Plant.” The design envisages the recultivation to restore forestry in an area covering more than 73 hectares. It defines the species composition of the cultivation, the characteristics of the required planting material, the timing of the works and the schedule of the cultivation care for a period of five years after its establishment.

TAURON Capital Group, when carrying out the RESd evelopment projects, always takes into account the requirements set forth in the decisions on environmental conditions in terms of the measures aimed at protecting biodiversity, in particular, it implements the following principles:

• site selection – selecting an adequate site for an investment project that will have the least negative impact on biodiversity,
• design – designing facilities so that they pose the least threat to the species living in the investment project’s area,
• scheduling – sticking to the set incremental (gradual) plans for completing the works so as not to generate more days during which the construction works are conducted, which reduces the threat to animals.

The principles and directions of actions, according to the Environmental Policy, include:

1. Promoting nature protection, and in particular the preservation of habitats, plant and animal species located within the key locations, in order to protect biodiversity and the functioning of ecosystems.
2. Taking into account the impacts of the key assets on

In 2022, the promotion of the conservation of nature, and in particular of biodiversity, was carried out by way of:

• conducting of a campaign entitled „Our Stork”,
• implementing of the project „What to plant not to replant”,
• cooperation as part of the product offering Electricity + Forest in which tree planting is carried out on behalf of customers together with the Lasy Państwowe (State Forests), or the holding of, for example, educational walks in the forest.

TAURON Group’s approach to the biodiversity issue in the medium term takes on a new importance in connection with the potential decommissioning of the permanently retired generation assets and the assigning of the new functionalities to the post-industrial (brownfield) sites (including the ones associated with the developing of the zero-carbon assets).

Each „new” or „restored” location (site) considered for the operations of the Group’s subsidiaries is subject to analyses and assessment with regard to the possibility of preserving the integrity of ecosystem and is subjected to a nature inventory taking (including a preliminary one without the long-term monitoring of nature), including with respect to biodiversity of the existing and the adjacent flora and fauna, along with the identification of the favorable conditions for its preservation and even growth.

The proposed photovoltaic farms are planned to be implemented while preserving the largest possible biologically active area as possible.

In 2022, only one of the Group’s plants was classified as conducting such activities – Łagisza Power Plant in Będzin belonging to TAURON Wytwarzanie. As a consequence, a public disclosure on the procedure to be followed in case of an occurrence of an industrial accident is prepared and made available to the public on the website. In connection with the above, a document defining the rules of the functioning of the power plant in case of an emergency threat has been made available, along with a description of events and situations that may occur at the power plant’s site.

The document includes: the characteristics of the stored hazardous substances that determine the plant’s classification as a high-risk plant, including their names or categories and the hazards they pose, the information on the ways the public should be warned and act in the event of an industrial accident’s occurrence, agreed with the competent authorities of the State Fire Brigade Service, the way the public should act in the event of an industrial accident’s occurrence.

Substances produced by TAURON Group that are the by-products of combustion were subjected to detailed toxicological and ecotoxicological studies as part of which their impact on health, human life and the environment was analyzed. The assessment of their chemical safety was carried out during the registration process with the European Chemicals Agency in accordance with the requirements of the REACH regulation. Guidance on the use of individual substances was indicated in the chemical safety reports and information sheets compiled for these substances.

The Group’s use of chemical substances is subject to supervision and monitoring. The way chemical substances are managed is subject to periodic external inspections and supervision by such authorities as the Epidemic and Sanitary Stations or the Environmental Protection Inspectorates. Surveillance is in place, as well as registers of chemical substances used at workplaces at individual generation units are maintained. The registers are subject to periodic reviews and additions. The handling of individual chemical substances is adapted to the guidelines provided in the substance safety data sheets. Employees who use chemical substances in their daily duties are trained and acquainted with the guidelines of the substance safety data sheets that contain the principles of handling chemical substances.