3.1. Climate Action

As part of the most recent climate agenda, world’s leading energy providers are reviewing their long-term strategies, choosing to reduce their carbon footprint and achieve carbon neutrality. Being a global leader in energy and an environmentally responsible company, PJSC Gazprom rises to the challenge and draws up its measurable targets and action plans to reduce greenhouse gas emissions by 2050.

As a state-owned company, PJSC Gazprom is guided by the climate goals set by the Russian Federation and aligns its low-carbon development activities with the Low Carbon Social and Economic Development Strategy of the Russian Federation to 2050Approved by Russian Government Decree No. 3052-r dated October 29, 2021.

PJSC Gazprom’s business model is largely in line with the global shift to a low-carbon economy, since the Company’s core operations include production, transportation, storage, processing and use of natural gas, the most lowcarbon of the existing fossil fuels.

The Gazprom Group’s carbon footprint is currently one of the lowest among major oil and gas companies, due to natural gas prevailing in its product portfolio, as well as the Group’s efforts to reduce greenhouse gas emissions.

The Group’s policy on climate management is based on the guidelines of sustainable development and social responsibility to future generations.

The Chairman of the Gazprom Management Committee is in charge of climate action. Climate-related issues are considered at the meetings of the Gazprom Management Committee and taken into account by the Board of Directors when approving the Long-Term Development Program of PJSC Gazprom (the Gazprom Group), Innovative Development Program of PJSC Gazprom, etc.

Climate change issues:

• Climate-related risks;
• Climate targets (KPI);
• Measures to reduce GHG emissions.

The Coordinating Committee for Sustainable Resource Management of PJSC Gazprom coordinates activities, taking a comprehensive approach to introducing the best available technologies in business and reducing unit GHG emissions.

An annual benchmark of the actual energy and environmental efficiency indicators (KPI3 and KPI4) across Gazprom’s gas operations versus the 2018 baseline shows outperformance against targets.

Up-to-date quantitative indicators for Scope 1 GHG emissions are annually submitted and consolidated across all Gazprom Group companies as part of corporate environmental reporting.

Progress against PJSC Gazprom’s climate targets is tracked in the course of the Company’s reporting activities as it prepares its Environmental, Annual, and Sustainability reports. The actual results under these targets are posted on the Company’s website and in other public sources, in addition to being submitted to PJSC Gazprom’s Coordinating Committee for Rational Use of Natural Resources.

All Gazprom Group companies perform control and accounting of GHG emissions using the same procedure, which is based on the Methodological Guidance on the Quantification of Greenhouse Gas Emissions by Entities Engaging in Business and Other Activities in the Russian FederationApproved by Order of the Russian Ministry of Natural Resources and Environment No. 300 dated June 30, 2015.

The increase in Scope 1 GHG emissions observed in 2021 had to do with the improvement in the Group’s operating results on the back of the recovery in natural gas consumption and sales following the COVID-19 pandemic, as well as with the declining production at brownfields (the launch of booster compressor stations) and pre-commissioning at greenfields. At the same time, PJSC Gazprom managed to reduce methane emissions by 40,000 tons year-on-year in 2021, which was primarily thanks to the gas saving measures taken during repairs on the linear sections of gas trunklines. Today, the Gazprom Group has one of the smallest carbon footprints among oil and gas majors. At PJSC Gazprom, methane emissions in gas production, transportation and underground storage equal 0.02% of the gas produced, 0.19% of the gas transported and 0.03% of the gas in storage, respectively.

Gazprom Group GHG emissions (Scope 3)The calculation of all possible emissions stemming from the use of the Gazprom Group products involved accounting for all the GHG emissions under the CDP (the Use of Sold Products category), and following the Methodological Guidance approved by Order of the Russian Ministry of Natural Resources and Environment No. 300 dated June 30, 2015. To assess the СО2 equivalent of fossil methane (CH4) emissions, the conversion factor of 6 was used, mmt of CO₂ equivalent

The Gazprom Group has been engaging in R&D to draft sustainable development scenarios for PJSC Gazprom through 2050, given the low-carbon trends in the global economy. These activities included a comprehensive analysis of low-carbon strategies of global energy companies from among the Group’s peers and partners and creation of high-potential R&D solutions to adapt PJSC Gazprom to such low-carbon trends. The work on the sustainable development scenarios is slated to complete in 2022, and in 2023 they will serve as groundwork for PJSC Gazprom’s Climate Strategy through 2050 that will determine long-term targets and strategic approaches in GHG emission reduction. The strategy will take into account the specific nature and conditions of the national economy, key expectations and responsibilities placed on PJSC Gazprom, and low-carbon trends in the target markets.

PJSC Gazprom participates in the development of modern ways to monitor GHG emissions, which include methane. In the reporting year, experts from Gazprom VNIIGAZ, Gazprom Space Systems, and Gazprom Transgaz Moscow conducted an experiment to measure methane concentrations in the atmosphere following gas release at PJSC Gazprom’s production facilities. The measurements were done in the surface-layer atmosphere using spacecraft-mounted satellite gas analyzers.

The following initiatives are in place to reduce methane emissions:

• increasing energy efficiency and reducing the loss of gas, including the replacement of centrifugal compressors with electric ones;
• ramping up electricity generation from renewable energy sources;
• cutting unregulated emissions through focused efforts to find and repair leaks.

Experts from PJSC Gazprom and Gazprom VNIIGAZ took part in drawing up the legislative framework for the draft law On Limiting Greenhouse Gas EmissionsFederal Law No. 296-FZ On Limiting Greenhouse Gas Emissions dated July 2, 2021 came into force on December 30, 2021, new rules and regulations, and draft Russia’s 2050 Development Strategy with Low Greenhouse Gas Emissions devised by the Ministry of Economic DevelopmentStrategy approved by resolution of the Russian Government No. 3052-r dated October 29, 2021.

Despite there not being any mandatory requirements, the Gazprom Group companies follow the recommendations of the TCFD in their strategic planning, corporate governance, risk assessment, and disclosures in terms of corporate reporting. The Group discloses information on climate risks and opportunities that may affect its financial standing.

Expanding the Russian NGV fuel market is one of PJSC Gazprom’s key sustainable development projects. PJSC Gazprom’s gas filling network is present in 63 constituent entities of the Russian Federation across eight federal districts. Gazprom Gazomotornoye Toplivo, the single operator representing the Gazprom Group in the development of the NGV fuel market in Russia, manages the largest retail network of gas filling facilities and controls over 70% of methane consumption as a motor fuel. The operation of NGV vehicles can significantly improve the environmental situation on a national scale.

In 2021, compressed natural gas sales at the Gazprom Group’s filling stations reached 948 mcm, allowing to reduce GHG emissions by 1.8 mmt of CO₂ equivalent. Over the last nine years methane has helped reduce greenhouse gas emissions by nearly 10.4 million tons of CO₂ equivalent.

As an environmentally oriented global energy company, the Gazprom Group is committed to conserving energy resources and enhancing the energy efficiency of its operations.

Improving energy efficiency is one of our priorities that underpins the Group’s technological advance, limits potentially negative impacts associated with climate change and enables us to consolidate the economic efficiency of our operations. Activities to improve energy efficiency rely on federal legislative requirements, the principles of rational use of resources, and the obligations set forth in the Energy Efficiency and Energy Saving Policy of PJSC GazpromApproved by resolution of the Management Committee of PJSC Gazprom No. 39 dated October 11, 2018.

The Gazprom Group is committed to improving energy efficiency throughout the life cycle of its production facilities. All investment projects to construct and reconstruct the Group’s facilities undergo expert review for compliance with requirements, including those related to energy efficiency.

This is a three-year program covering production, trunkline transportation, underground storage, processing, distribution of natural gas, power and water supply to the Unified Gas Supply System facilities and the operation of UGSS power-generating equipment.

The Program’s short-term priorities include lower natural gas and electricity consumption associated with compression and prevention of gas bleeding during repairs at UGSS facilities.

To achieve the Program targets, the Group will do the following:

• take steps to construct new facilities with energy efficiency indicators on a par with global counterparts;
• upgrade gas pumping units, which will significantly cut fuel gas consumption and GHG emissions;
• introduce technologies and solutions to streamline the operation of energy equipment at UGSS facilities and reduce gas losses;
• implement natural gas saving measures, perform well surveys without releasing gas into the atmosphere, use mobile compressor stations (MCS) for natural gas evacuation during repairs, detect and eliminate gas leaks on process equipment.

The Group’s energy consumption and purchases increased because of higher production volumes in 2021. Electricity sales increased by 14.4% due to the recovery in consumer demand. Energy consumption from renewable sources increased due to the substitution of conventional generation with solar power plants.

In 2021, higher consumption of energy from crude oil fuels came on the back of a change in domestic logistics. The consumption of energy from natural gas increased due to the redistribution among resources used for generation.

In 2021, the Group consumed much more solar energy due to the commissioning of additional solar power capacities. The increased consumption of energy produced by hydro power plants became possible due to structural changes in energy supply.

The Group sees a steady decline in the specific consumption of natural gas for internal process needs during transportation.

The 2011–2020 target was 11.4% versus 2011, with the actual reduction in specific consumption during this period reaching 27.3%.

In 2021, product transportation volume increased by 11.4% versus 2011, while the specific consumption rate was 16.7% lower due to achieved energy efficiency improvements. Slower reduction in specific consumption of natural gas relative to 2020 is due to the growth of all production indicators, which required the utilization of additional gas transmission facilities.

The Energy Saving and Energy Efficiency Improvement Program of PJSC Gazprom sets out key relevant measures for all types of activities with a focus on enhancing (maintaining) the energy efficiency of production processes and reducing fuel and energy consumption, including by minimizing energy losses.

PJSC Gazprom leverages technologies that have proven to be highly effective:

• using distribution stations to deliver gas to customers;
• blowing natural gas from the section under repairs into an active pipeline;
• using gas from a compressor shop’s process pipelines for internal needs;
• process solutions to reduce gas losses during operation and repair of wells.

The key contributor is gas trunkline transportation. During trunkline repairs in 2021, the Company stopped the release of over 1.71 bcm of gas (28.10 mmt of СО₂ equivalent), including more than 744 mcm (12.23 mmt of СО₂ equivalent) by means of MCSs versus the target 700 mcm.

To accelerate the introduction of new energy-saving technologies and relieve CAPEX burden, PJSC Gazprom is actively working to attract more investments under energy service agreements. Currently, the following large-scale projects are running based on the energy service concept:

• Construction of a turboexpander power unit at the Dobryanka-2 gas distribution station;
• replacement of removable flow parts of centrifugal compressors;
• replacement of the existing lighting with energy efficient appliances.

Total investments in these most significant projects exceed RUB 6 billion, with the economic effect for the Group expected to reach almost RUB 27.5 billion throughout the equipment life cycle.