powering asia- issues for responsible investors

ISSUES FOR RESPONSIBLE

INVESTORS

JAN 2010

POWERING ASIA

Incorporating data from TRUCOST

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Investment

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Responsible Research is an independent provider of sectoral and thematic Asian environment, social and governance (ESG) research, targeted at global institutional investors. Many of these fund managers and asset owners now find that traditional investment banking reports, financial models and public information sources can no longer be relied on to cover all risks to earnings and deliver superior returns. Companies who do not monitor and report on this ‘non-financial’ performance not only risk financial penalties for non-compliance with stricter regulatory environments but are also denied access to substantial pools of global capital which are managed according to sustainable principles.

Our approach is based on analysis of material ESG factors, which change according to sector and market. We provide our clients with local market knowledge of important regulatory landscapes in Asia, along with a fresh perspective on local operational and sectoral issues. We offer an annual subscription model for our monthly sectoral or thematic reports and give our clients access to the underlying data. Reports can also be commissioned (by investors or foundations) and kept for internal use or be offered for general distribution, as part of an general effort to promote ESG integration into the Asian investment process. Our analysts conduct seminars and webinars to discuss findings, often with contributions from experts, companies and policy-makers.

Responsible Research was founded in 2008 by our Board who have been instrumental in promoting Corporate Social Responsibility (CSR) and SRI practices in Asia for over 10 years and have significant experience in the regions emerging investment markets. This team of five works in collaboration with our full time Asian-based responsible investment analysts and the Responsible Research Alliance, a group of consultants with subject matter expertise. Together they provide a valuable balance of market and ESG knowledge, academic rigour, process management, data management, customer relationship management and senior level contacts. Many of our clients are signatories to the UN backed Principles of Responsible Investment (PRI), an investor initiative. As signatories they commit to incorporate ESG issues into their investment analysis and to support the development of ESG tools, metrics and methodologies. As a signatory to the PRI we voluntarily contribute time and resources to the Emerging Markets Disclosure Project and other collaborative initiatives. Responsible Research is also a strong supporter of independence in research, without which conflict and bias can deliver investment risk. The company is one of the founding members of the Asian Association of Independent Research Providers and also of the Asian Water Project.

CONTENTS POWERING ASIA

INTRODUCTION

COMPANY SCORING

RESULTS OF COMPANY SCORING

DISCUSSION

COUNTRY SUMMARIES

CONCLUSION

APPENDIX: COMPANY PROFILESChina Power International Dev. Ltd. (Hong Kong) China Resources Power Holdings Co. Ltd. (Hong Kong) GCL-Poly Energy Holdings Limited (Hong Kong) Hongkong Electric Holdings Limited (Hong Kong) Datang International Power Generational Co Ltd. (China) Huadian Power International Corp. Ltd. (China) Huaneng Power International, Inc. (China) GVK Power and Infrastructure Ltd. (India) KSK Energy Ventures (India) Lanco Infratec (India) Neyveli Lignite Corporation Limited (India) NTPC Limited (India) Power Grid Corporation of India (India) Reliance Infrastructure Ltd (India) Reliance Power Ltd (India) Tata Power (India) Torrent Power (India) Korea Electric Power Corporation (South-Korea)MMAC Corporation Berhad (Malaysia)Sarawak Energy Berhad (Malaysia) Tanjong Public Limited Company (Malaysia) Tenaga Nasional Berhad (Malaysia) YTL Power International Berhad (Malaysia) Aboitiz Power Corporation (Philippines) Energy Development Corporation (Philippines) Manila Electric (Philippines) Electricity Generating Public Company (Thailand) Glow Energy Public Company Limited (Thailand) Ratchaburi Electricity Generating Hldg. (Thailand)

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INVESTORS INTRODUCTION


The development of Asia’s electricity generation industry will shape the future of our climate. Global consumption of marketed energy is projected to increase by 44 percent from 2006 to 2030. The largest projected increase in demand is for the emerging non-OECD economies on average 2.3 percent per year, compared to 0.6 percent for OECD energy use. China and India are the fastest growing non-OECD countries and are expected to make up 28 percent of world energy consumption by 2030. In a business-as-usual scenario greenhouse gas (GHG) emissions are expected to rise similar to the growth in energy use. Due to the long life span of power plants, the technology choices on the fuel mix of Asia’s growing electricity sector made in the next few years will effectively “lock in” greenhouse gas emissions for the next 30 to 40 years.

Against this background, we report on the importance of non-renewable electricity generation in fuelling Asia’s continued economic growth, but also note cases where the development of a country’s renewable energy sources are encouraged by a desire for energy security. We also look at how the provision of power can be used as a political tool in certain countries

The World Business Council on Sustainable Development defines several specific current ‘sustainable development’ challenges for the electricity generation sector that include diversifying and de-carbonizing the fuel mix and accelerating research and development. They have also highlighted the need to focus on end-user efficiencies that can have impacts as great as changing productive capacity and are less capital intensive.1 As transmission and distribution losses as well as inefficient use of electricity is such big issue in many developing markets there is also potentially great economic and environmental returns from simply reinforcing and smartening the grid infrastructure.

Our research, complemented by Trucost™ data on emissions, has identified some clear leaders in the areas of environmental performance, management and in terms of CSR reporting and corporate governance. We have found large companies that are excellent reporters but have a high-impact business model. There are also examples of smaller companies with a large share of renewable energy generation. Some of these are theoretically ‘investable’ to those looking to lower a portfolios carbon footprint, but have poor reporting or governance.

The companies under examination have varied business models; some are fully integrated monopolistic national power companies, others are small Independent power producers. They may focus just on transmission, distribution and/or generation. Some rely solely on imported fossil fuels, while others have large domestic reserves of clean burning natural gas.

Of the companies in our universe, the biggest CO2 emissions producers were Kepco (Korea), Huaneng Power (China) and NTPC Ltd (India). These ‘global warmers’ are estimated to each produce a staggering 180 mtCO2 or more annually. In terms of the intensity of emissions (measured against revenues), China Resources was found to have the worst record at an estimated 28,845 tCO2/US$m revenue. Compared to HK Electric, which still burns 68% fossil fuel, yet has an intensity of only 6,091 tCO2/US$m revenue, it is clear that there are some fossil fuel burners who are more efficient than others. In China most of the IPPs rely to a large extent on fossil fuels including Huadian Power and China Resources Power.

The power generation companies with the largest contribution to earnings from renewable energy include Aboitiz Power Corp and Energy Development Corporation (Philippines). Tenaga Nasional (Malaysia) and Tata Power (India) are also found to have relatively low emissions intensity despite having lower contributions from renewables.

The clear leaders in terms of CSR reporting and management were found both in developed markets with strong regulatory control (CLP Holdings (HK) and HK Electric (HK)) and, unexpectedly, in emerging markets; (Tata (India), Datang (China), Electricity Generating Corporation (Thailand)).

IntroductIonStrong environmental management is important in this sector. Climate change impacts should be recognised and managed at a company level. Potential impacts of climate change could include flooding, brownouts and unplanned outages. Access to cooling water supplies also remains a critical issue to consider. Companies who remain on top of these issues will be able to identify opportunities for new products and services, but may need to adapt internally and import the new management skills they need to grow in this new lower carbon environment.

Generally, environmental management is poor within this sector. We scored the sector on environmental and climate change management separately. No company in our universe has yet achieved global best practices where environmental impacts are strategically measured, managed, certified and targets are set. Over 60 percent of the companies covered reported zero relevant information or had no identifiable management of the issues. Kepco (Korea) contributes the most to GHG emissions amongst listed Asian power companies (total estimated CO2 emissions) but is one of the top two performers on environmental management. Conversely, some IPPs with a high proportion of generation from renewables showed no awareness of environmental management and therefore scored poorly.

Corporate governance within the power sector varies greatly according to regulatory environment, business model, stock market listing and reporting requirements, peer group performance and shareholding structure. China Resources (HK), CLP (HK) and Reliance Infrastructure (India) perform equally well at the top of the league but the Malaysian operator, Tanjong, also deserves a special mention for its Board committee structure and independence of directors. YTL (Malaysia) also performs well but would be better placed if there were more independence on the Board and if it were to have to have separate remuneration and nomination committees.

The poorest performance on corporate governance indicators are also in India – NTPC Ltd, Torrent and Power Grid Corporation which appear to have extremely poor disclosure and whose board structures do not seem to support the interests of minority shareholders. They also have the same individual serving as CEO and Chairman; this is typically seen as an indicator of poor corporate governance by most governance observers. Kepco (Korea) has a history of poor corporate governance which adds to the concerns for most responsible investors.

A final note on performance should be made regarding losses in transmission and distribution. The highest disclosed T&D losses are, not surprisingly, reported in India; NTPC Ltd (22%), Reliance Infrastructure (21%) and Tata Power (15%).

Chart showing Carbon Intensity of our universe


Responsible investors in Asia will need to remain aware of the complexity and inter-linkages in the issues of power generation for sustainable development. If we are to secure balanced global growth, eradicate poverty and minimize the devastating impacts of climatic change there are bound to be trade offs and disappointments. Investors should also be aware of the complicated long-term ecosystem impacts of renewable energies. Hydroelectric plants, for example, have been associated with extremely high methane emissions when the reservoirs are at a low level, and we do not yet know the long-term social and economic costs of resettlement from fertile river valleys and diversion of ‘source’ rivers. Biomass generation can have long reaching negative environmental impacts in terms of reduction in overall biodiversity when primary forest is converted to intensively farmed monoculture plantation.

There is also the inevitable question of who will end up paying the price for our ‘stewardship’ of radioactive uranium and plutonium. The World Nuclear Organization itself admits that that there are ‘no final disposal facilities (as opposed to interim storage facilities) in operation in which used fuel can be placed.’ Their website states that, ‘There is currently no pressing technical need to establish such facilities, as the total volume of such wastes is relatively small...The general consensus favours its placement into deep geological repositories, initially recoverable.’2

We look to global responsible investors who participate in the Asian power markets to add these issues to their decision-making criteria and collaborate and engage with these companies to develop more sustainable growth horizons and better disclosure. This process should enable long term capital flows to support investment in cleaner generation and more efficient distribution with an aim of reducing the carbon intensity of the sector over time.


INVESTORS COMPANY SCORING

Source: Bloomberg’s 19th Decemeber 2009

Companies Covered by Market Capitalization (In US$ m)


We scored 30 Asian electric utilities companies in 7 markets according to specific environmental and social criteria and according to several corporate governance metrics.

Companies were selected based on market capitalisation (we had a target of US$500m free float and above) and location (we covered China, Hong Kong, Korea, Malaysia, the Philippines, Thailand and India). There were no qualifying companies in Indonesia, Singapore and Taiwan.

The scoring covers different aspects of the companies′ ESG performance. The scoring was performed on the basis of publicly available information found on company websites, annual reports and environmental, sustainability and CSR reports. In some cases, it was difficult to locate precise information, for example information on CO2 intensity measured in g CO2 / MWh.

Where possible, we took data from recent disclosures. However, not all the desired information is available in one easily accessible location and in a comparable format. Some companies do not report on all the issues of interest to this research paper. We have collected information according to the parameters of the report (publicly available information) on a ‘best efforts’ basis but cannot guarantee that it is factually correct. The scoring covers different aspects of the companies′ ESG performance and is, itself subjective.

Responsible Research cannot guarantee completeness and accuracy as the companies themselves have provided much of the information. Other risks to accuracy include that we may have collected data on different dates and therefore the most recent improvements in reporting may not be included. Lastly, there may be omissions if information has been released outside the website or published reports, for example expansion plans of utilities may only show partial long term strategy. Where we note ‘n/a’ the information does not seem to be available publicly.

The emissions data and information on reported controversies was taken from Trucost™ and RepRisk™, both widely acknowledged as global leaders in their field. Trucost™, a specialist in assessing environmental impact, provided quantitative data on CO2 emissions and environmental impact. Trucost™ measures emissions of GHG from sources directly owned or controlled by a given company, adds emissions that arise from purchased electricity consumed in owned or controlled equipment or operations, and includes all GHG emissions from business travel and supply chains. GHGs are measured either by recording emissions at source by continuous emissions monitoring or by estimating the amount emitted using activity data (such as the amount of fuel used) and applying conversion factor

We provide the following information (where relevant to the business model):• The country in which it is listed• The business model • The generation capacity in MW• The split of the companies’ generation capacity into fuel sources • Capacity expansion plans (where available)• Operational efficiency metrics, for example generation efficiency of

thermal plants or distribution losses for transmission and distribution companies (when disclosed)

• Quantitative estimates from Trucost™ on 2008 CO2 emissions:o CO2 emissions intensity (the cost associated with the CO2 emissions

assuming a carbon price of 32 USD/t CO2 equivalents)o the cost of total direct environmental impacts).

Scoring categories:We reviewed companies for sustainability according to their disclosure and performance in these six main areas:

1. CSR Management and Reporting2. Environmental management3. Climate Change Management4. Health and Safety Management5. Corporate Governance6. Controversies

the Asian utilities Environment and Social ratingWe have selected the following weightings of our scores on the 30 companies to

deliver a ranking within the sector for sustainable investors.

note on Asian utilities Environment and Social rating It is not easy to make fine distinctions on sustainability issues based on disclosure alone. The scoring and weighting system we have selected to identify sustainable utility leaders in Asia is significantly impacted by a company’s climate change score, which in turn relates to its fuel mix, a decision which is typically dictated by government policy, not the Board. The scores are, of course, therefore partly a reflection of a company’s fuel and generation mix based on domestic resource availability and related government policies. It may not be correlated to other material dynamic variables or inform on whether a particular management team is doing a good job with the cards they have been dealt. Further work needs to be done in this sector over time to develop deeper strategic sustainability ratings based on a blend of governance, active strategy implementation, adaptation and mitigation.

cSr management & reporting:Companies should be transparent about how they address environmental and social issues to allow for informed decision-making by clients, regulators, stakeholders and investors. A Corporate Social Responsibility strategy is most effective if there is senior management and/or board level commitment. Issues that should be addressed include among others CSR reporting, stakeholder management, community relations, land acquisition and resettlement for new projects and participation in Global Compact.

Scoring:0: no relevant CSR disclosure (beyond philanthropy)1: examples of CSR initiatives, no or very little quantitative information,

some management commitment2: comprehensive reporting (i.e. companywide, including quantitative

data, possibly GRI compliant) clear management commitment to CSR


Scoring:0: no relevant information on climate change1: the company acknowledges that climate change is an issue, provides

some data on greenhouse gas emissions and undertakes some efforts to increase efficiency / reduce emissions

2: the company provides comprehensive data on greenhouse gas emissions. It has set clear targets for improvements of efficiency or reduction of emissions and achieved improvements.

Not yet applicable for Asia: The company provides comprehensive quantitative data on greenhouse gas emissions; it has a clear set of targets for the improvement of efficiency or reduction of emissions, in addition to a summary of achieved improvements.

Health & Safety Management:

Companies that take care of their employees tend to have higher staff retention, higher productivity and higher employee motivation. Hence, there is a sound economic rationale behind investing in a strong Health & Safety program.Relevant questions:

• Do employees undergo Health & Safety training? • Does the company have a Health & Safety management system in place?• Does the company report on work related accidents, injuries and fatalities?• Does the company report on human rights issues?• Does the company comply with international Health & Safety standards?

Scoring:0: No mention of Health & Safety management at all.1: A Health & Safety management system is in place. The company

invests in training, but doesn’t report on work related accidents or fatalities, or human rights. The company’s Health & Safety program doesn’t comply with international Health & Safety standards.

2: The company has a Health & Safety team in place, provides training to employees, reports on work related accidents and has received an internationally recognized certification.

corporate Governance:

We analyzed and scored the following corporate governance measures: separation of Chairman and CEO, independency of board, independence of Audit Committee, independence of Remuneration Committee, independence of Nomination Committee and disclosure of remuneration.

Scoring:0: no separation of chairman / CEO2: Separation chairman / CEO:

Independency of board0: Between 0%-32% of the board is independent1: Between 33%-65% of the board is independent2: Between 66%-100% of the board is independent

Independence of Audit Committee0: Between 0%-32% of the Audit Committee is independent1: Between 33%-65% of the Audit Committee is independent2: Between 66%-100% the Audit Committee is independent

Environmental management:

Considering the impact that power utility companies have on the environment, Asian utilities should be prepared to measure and manage their environmental risks. Environmental impacts differ between fuel types, for example the generation of nuclear waste for nuclear power generators, biodiversity impacts in the case of hydropower and air pollution from coal fired power plants.

Relevant questions include:

• Does the company disclose local air pollutants, i.e. SOx, NOx and particulates (absolute and per MWh)?

• Does the company have an environmental management strategy or guidelines in place?

• Do companies perform comprehensive environmental impact assessments before constructing new plants?

• Does the company invest in emissions reduction technology? Does it achieve emission reductions?

• Does the company disclose water use? Are reductions in water consumption achieved?

• For nuclear power operators: How is nuclear waste handled? Are there provisions for the decommissioning of used plants? How high are these provisions?

Scoring:0: no indication of environmental management that goes beyond legal

compliance, no relevant information on climate change. No management team in place.

1: Environmental management system in place but few details given about its scope. The company provides some data on environmental impacts

2: A well-defined environmental management team is in place. The company has environmental goals and targets but important data is missing, for instance, information on water use or emissions. Some proactive environmental initiatives, for example some emissions reductions achieved.

Not yet applicable for Asia: A comprehensive and certified environmental management system. The company is aware of its environmental impact and addresses them in a structured way across the whole company..

climate change Management:Greenhouse gas emissions represent the power utility sector’s biggest influence on the environment. Due to the potential for upcoming CO2 regulation in Asia, GHG emissions have the potential of becoming a financial risk for companies.Relevant questions include:

• Is the company aware of the issue of climate change? • Does the company know its carbon footprint? • When requested to do so, did the company answer the Carbon Disclosure

Project (CDP) questionnaire? • Does the company undertake efforts to increase its energy efficiency? • Are there targets for reduction of CO2 emissions? • Have reductions been achieved (in absolute and relative terms)?• Are there programs for demand side management, for example smart

metering, peak load shaving and support of customers in energy efficiency improvements.


Independence of Remuneration Committee0: Between 0%-32% of the Remuneration Committee is independent1: Between 33%-65% of the Remuneration Committee is independent2: Between 66%-100% the Remuneration Committee is independent

Independence of Nomination Committee0: Between 0%-32% of the Nomination Committee is independent1: Between 33%-65% of the Nomination Committee is independent2: Between 66%-100% the Nomination Committee is independent

Disclosure of remuneration0: No disclosure what so ever1: Partial disclosure2: Full disclosure

controversies and reputational risk:

We also provide data on some controversial issues in which the studied companies are, or have been, involved and for which, as a result, they have received negative publicity. The data on controversies was derived mostly from the internet-based tool RepRisk™ that screens global media regarding negative press coverage of companies, projects and organizations. This information was complemented by information from other sources, such as the Business & Human Rights Resource Centre.


INVESTORS

RESULTS OF COMPANY SCORING


Environmental and Social disclosure and performance We found that disclosure on environmental and social issues is still very weak among Asian utility companies (see table, below). Out of the 30 power utility companies, ten provide no business related environmental or social information, a third do not publish any CO2 emissions data or mention their impact on climate change. About half of the companies we looked at (47 percent) do not disclose detailed information on environmental management systems. Nine companies received zero points on the Environmental or Social scoring.

The company scoring gives us insight into several different aspects of the companies´ environmental impact and ESG performance.

Greenhouse gas impact

In the table below we present the GHG emissions of each company. There are wide differences between the generation mixes and GHG intensities of the companies we looked at. Only a few companies have a very high share of renewables in their generation portfolio. These are Energy Development Corporation and Aboitiz Power Corporation from the Philippines as well as the Indian company Tata Power. The significant presence of renewable assets in the generation portfolios of Philippine companies can be explained by the abundance of geothermal and hydro electrical power generation sites in the Philippines.

The Chinese companies have a high share of coal in their generation portfolio. We expect that the two companies that do not provide capacity splits, Datang International and Huaneng Power, have a share of coal based generation in their portfolios that is similar to their Chinese peers. Consequently these companies have high carbon intensities. Neyveli Lignite Corporation also has very high carbon intensity as its generation is based entirely on lignite coal. The three utility companies with the highest absolute CO2 emissions are Korea Electric Power Corporation, NTPC Limited and Huaneng Power International.

There are, quite logically, large differences in the carbon intensity of pure generation companies and companies that are also or exclusively involved in transmission and distribution. These two groups are not comparable in terms of carbon intensity. Carbon intensity is influenced by each company’s total business, including business other than power generation. For example, Neyveli Lignite has large mining operations, which are more carbon intensive than the property development, gaming and leisure business that Tanjong Public does on the side.

The companies with the highest renewable contributions and lowest carbon intensity are marked in green; the least favourable ones are marked in orange.

Influence of greenhouse gas emissions on Asian electric utilities


Companies with scores of 60% and above, a total of six, could be considered ‘sustainability’ leaders in the Asian utilities sector. CLP Holdings Limited and Electricity Generating Public Company both received over 80% for their environmental and social performance and thereby outperformed all other companies in our universe. Other leaders include Hong Kong Electric Holdings Limited, Datang International, Reliance Infrastructure and Tata Power. There seems to be a strong correlation between the size of Asian utilities and environmental and social performance. Six of the top ten companies by market capitalisation are recognized as leaders here.

Many laggards in the environmental and social rating, such as Neyveli, Huadian, Huaneng and China Resources, have high carbon intensity, defined as tonnes of CO2 emitted per one million US Dollars of revenue.

National average environment and social scores ranged from 16.3% to 82%. Chinese utilities had the lowest average score and Hong Kong the highest. Malaysia (25.6%) and India (25.8%) were the poorest performers after China but Thailand had a national average score of 54.3%,

Despite the low average rating of Chinese utilities, there are some notable examples of companies improving their disclosure and performance. Datang, for example, published quite an extensive sustainability report in 2008, in which the company provided detailed data on emissions of SO2 and NOx and water and waste treatment.

Efficiency metrics:

We also reviewed declared operational efficiency metrics, which give an indication of how well a company runs its business given its line of business.

The new mandatory reporting on coal consumption per MWh of electricity produced for Chinese utilities has led to much improved disclosure there (see table below), although significant differences among companies is still seen. China Resources Power and China Power International have lower efficiencies than Huaneng, Huadian and Datang. In general, the newer and larger a coal-fired power plant is, the more efficient it is. China Power International, for example, has a large proportion of old plants.

For distribution and transmission companies, system losses are the most relevant metric, not only from an environmental point of view, but also from a profit perspective: decreasing system losses directly affects a company’s margin and profits. We were unable to find information on system losses for four out of the 12 transmission and distribution (T&D) companies. Some of the companies reporting on this metric have very low losses. Most notably Korea Electric Power, followed, surprisingly by Torrent Power, which scores 0 points in our Environmental and Social scoring. Some of the T&D systems in India and Malaysia show very high systems losses: NTPC, Reliance Power, and Tenaga Nasional.

corporate Governance

The table below gives an overview of the six Corporate Governance metrics that we looked at. The average corporate governance scoring was 7.2. The best three utilities in terms of corporate governance are China Resources Power, CLP Holdings and Reliance Infrastructure which all scored an 11. The worst corporate governance performers, according to our metrics, are Kepco and Power Grid Corporation of India which both scored a three out of 12. Compared to its peers in Asia Kepco’s Corporate Governance reporting is lacking in transparency and minority shareholders rights may not be represented with this structure; information on its board, remuneration committee and nomination committee is lacking. It is the only company in our universe that doesn’t report on these issues.

Use of Coal by Chinese IPPs- Information from company websites

Country Coal efficiency (g CO2 / MWh)China Power International Dev. Ltd. HKG 334.4China Resources Power Holdings Co. HKG 340.5Datang Inter. Power Generational Co CHN 326.8Huadian Power International Corp. Ltd. CHN 326.2Huaneng Power International, Inc. CHN 325.9GCL-Poly Energy Holdings Limited. HKG -

System losses at Asian power utilities with a Transmission and Distribution business

Table showing Corporate Governance metrics of Asian power utilities


Many power projects are highly controversial in their planning and construction phases and some continue to be controversial later on when they are perceived to contribute to local environmental pollution. Larger utilities, especially, are therefore regularly mentioned in relation to controversies on land rights and resettlement, and receive complaints because of local pollution. The construction of hydro dams tends to be particularly difficult, as dams require large areas of land and mostly need to resettle local communities.

On top of this environmental and social controversy, some companies are involved in activities that may constitute grounds for exclusion from a screened investment portfolio. Some examples include Tanjong Public Ltd, which has a gaming business as well as Power Grid Corporation of India and Kepco, which have been implicated in activities in Burma, a country governed by a military regime. Lastly we note that Tata Power manufactures tanks for the Indian military.

case Study: cLP, a leader in cSr Management and reporting CLP has emerged as a clear leader in the sector in Asia. The company recognised early on that the reality of climate change was going to bring risks and opportunities to their business model and that they needed to respond decisively and strategically. They participated in the first round of the Carbon Disclosure project in 2002 and set internal renewable energy targets of 5% of generated power in 2004. It reached this figure in 2007 and finalised its long-term CLP Group Climate strategy in the same year. By this time they already had in operation a both a nuclear plant (since 1994) and an advanced coal plant (2006) and were researching alternative energy sources for future investment. CLP has continued to participate in global coalitions and reporting initiatives such as the World Business Council on Sustainable Development and the Greenhouse Gas Protocol. They use the GRI reporting guidelines and have selected the EN16-18 criteria to report on total direct and indirect greenhouse gas emissions by weight. They will also report on their initiatives to reduce greenhouse gas emissions and define the reductions achieved. Opportunities have come their way since they began their low carbon strategy: they have been recognised by the DJ Sustainability Index and by the Innovest Climate Leadership Index as ‘Best in Class’ and, in fact, are the only HK based company to make the DJSI Asia Pac 40 index. Since 2005 they have been managing CDM projects under the Kyoto Protocol and, in 2003, they launched an Energy Innovation Fund. Today CLP actively manages its emissions and has set long-term targets for further reductions. Their aim is to reduce emissions from 0.84 kg CO2/kWh to 0.2 by 2050 (their estimates), which is a 75% reduction to support the 550ppm global emissions target. CLP aims to achieve the reductions through changing their fuel mix to favour clean coal, nuclear and natural gas, and to invest in renewable energy generation. They will also achieve substantial reductions from their work on grid efficiencies and conservation. The company recognises that they should also focus on improving disclosure in order to improve performance, enhance their brand and reputation. CLP has a strategically managed community outreach and investment programme which enables it to engage more easily with its stakeholders. Despite its leading position with respect to CSR reporting and performance, one has to note that CLP has a high percentage of coal in its generation mix (including relatively old and inefficient plants) and is continuing to expand its coal fired capacity


INVESTORS DISCUSSION


The company ranking according to indicators for greenhouse gas intensity, which was presented earlier, may give the impression that companies are actively making choices when it comes to using innovative or efficient technologies. For the most part companies do not have this flexibility. Most fuel choices are still dictated by governments or others for a variety of reasons:

The sector is still in the process of privatization. Governments still own a controlling stakes, and take the decisions. In addition, due to the long life span of power plants, today’s generation mix is mostly a legacy of past decisions. In many countries, fuel choice is partly dictated by natural conditions, namely local availability of coal and gas, and natural potential for renewable energy.Investments in certain fuel imports, for example natural gas via pipelines or LNG terminals are expensive and are generally supported by governments for reasons of energy diversification and security.

Therefore when investing in a company with a very low carbon intensity and a high percentage of renewables, such as the Philippine Energy Development Corporation, it does not necessarily correlate that it is an innovative, forward looking company. Rather, it could be a company that happened to be in the right geographic location and regulatory environment to take on a low-carbon business profile. Expansion plans can give an insight into how forward-looking a company is, especially if one goes into details to understand what type of coal-fired technology or gas fired plant is being installed, and how efficient and clean the proposed technologies are.

The efficiency metrics that we looked at give an insight into how well a company operates its existing asset base. Unfortunately companies, generally, do not all report the same metrics, and many don’t address the efficiency of their operations at all.

The scoring shows how, in general, the larger players have the most advanced ESG reporting and management systems. This pattern of ESG performance can be observed in most sectors. In our utilities universe, there are some notable exceptions of relatively large companies such as Tenaga Nasional and Chinese utilities Huaneng Power and China Resources Power being laggards. There are also small companies such as Electricity Generating Public Company with leading ESG performance scores. But overall large companies still tend to have the best ESG performance.

These large companies tend to be large polluters, in absolute terms, and have an insignificant percentage of renewable energy in their generation portfolios. Still they may be best positioned to shift their fuel mix to non-traditional sources using the latest technologies and profiting from transfer of cleaner technologies from developed countries when governments get more serious about the issue of climate change. The governmental backing NTPC receives from Japan and the US when it comes to research and application of clean coal technologies clearly illustrates this potential.

copenhagen update:

Despite global frustrations at the lack of tangible progress at Copenhagen, we feel that the debate has come a long way, especially as the countries in our universe, notably China and India, have collaborated on responses and begun to form a collective developing country action group which can engage with the USA. The Copenhagen round resulted in US$30bn of ‘climate change aid’ to developing nations to be given next 3 years and a stated goal of US$100bn a year to developing countries by 2020 to fund research, development, adaptation and mitigation strategies. Still, we think that it would have been helpful for business to get a clearer understanding of the direction of global climate policy from the Copenhagen conference. The next steps to watch out for will be the nationally appropriate mitigation actions that developing countries will submit to the UNFCCC by January 31st, 2010, and a renewed attempt for a global climate deal at the next UNFCCC climate conference in Mexico at the end of 2010.

Please note that there are no ‘Annex 1’ countries in our coverage and none are, therefore, obliged to report on progress under the United Nations Framework Convention on Climate Change. Some do, however, and we include reference to those submissions here.



INVESTORS

COUNTRY SUMMARIES


China’s alternative energy outlook is promising. At the end of 2008, wind power in China accounted for 12.2 GW of electricity generating capacity. The original 2010 target set by the Chinese government, in 2007, was 10 GW. However some estimates suggest that by next year the total installed capacity will be closer to 20 GW. According to the newest NDRC plan China aims to have 30 GW of wind generating capacity by 2020 (equivalent to 85 MT of CO2 abatement). In April 2009 a senior energy official13 reported that China is well on its way to having 100 GW of wind power capacity by 2020. As a result of the successful early uptake the Vice Chairman of NDRC proposed revising the target to 100 GW wind by 2020 in June 2009.

In 2007 the government announced plans to expand China’s installed solar capacity to 1,800 MW by 2020. Central to the PRC Government’s plans is the “Golden Sun” stimulus program. Under this program the Ministry of Finance subsidizes half of the construction costs of an on-grid solar power plant, including transmission expenses. The Ministry of Finance will also pay subsidies of up to 70% to develop independent photovoltaic power generating systems in remote regions. In May 2009, the Director of the NDRC Energy Research Institute changed the 2007 goal and announced plans to increase China’s solar power capacity to 20GW by 202014 15 (equivalent to 55MT of CO2 abatement).

Recently China has underlined its renewable ambitions when the presidents of the United States and China announced joint initiatives in mid November 2009. These plans are aimed at boosting renewable energy, sharing data and best practices on grid modernization, energy efficiency, the use of electric vehicles and launching a U.S.- China clean energy research centre.

There is clear potential for cleaner energy in China. Wind resources are mainly distributed in the North-Western provinces and coastal areas. The Chinese Meteorology Research Institute estimates China has 253GW onshore and 750GW offshore wind power potential. Researchers from Harvard and Beijing Tsinghua University have found that China could meet all it’s electricity needs from wind power through 203016.

recent Events:

China’s leaders are facing up to the challenge of how to maintain buoyant economic growth while avoiding the catastrophic impacts of climate change. China has therefore enacted significant carbon reduction measures—mainly in energy efficiency and renewable energy—that have economic co-benefits. The potential for further reductions is great and China is on the path to successfully limit its growth in CO2 emissions17.

The Chinese government’s concerns about energy security and the effects of climate change have catalyzed policies that are significantly lowering China’s energy intensity and rate of GHG growth. Chinese leaders announced multilateral cooperation on climate change during Mr. Obama’s visit to China in November 2009 but it seems they expressed valid concerns that the gap between developed and developing countries on legally binding emission targets is too great to overcome at the Copenhagen round.

China released its first National Communication on Climate Change in December 2004. The State Development Planning Commission and the National Coordination Committee on Climate Change authored the report. It is available online at the UNFCCC website. There has been no communication on agreements following Copenhagen.

Total installed generation capacity (MW) NA

Energy mix (as % of total installed capacity)3 Thermal (80.95%), Hydro (16.41%), Nuclear (1.99%), Renewable (0.65%)

Total electricity generated 2008 (TW Hours) 3,433.4 billion

Electricity demand growth rate4 5.23% (2008), 3.75% (Expected 2009)

Price of electricity per kWH (USD cents Nov-09)5 7.14CO2 intensity of coal-fired elect. generation6 893CO2 intensity of elect. generation7 758CO2 emissions (from all sources, 2008)8 9 6,896.5 million metric tonesCO2 emissions per capita (from all sources, 2008)10 6.26 metric tones

The National Development and Reform Commission (NDRC), a central government agency, regulates the Chinese electricity market. The market has been moving towards privatisation for several years and Independent Power Producers have been operational since the late 1990s. Today around 40% of the power generation companies are privately owned with virtually all other parts of the industry being state-owned. Provincial governments determine power-purchasing prices, but any price adjustments need to be approved by the NDRC.

The Chinese government has taken significant steps to increase energy efficiency and promote the deployment of renewable energy. Steps taken include:

• The 11th five-year plan (2006 – 2010): China pledged to cut energy consumption per unit of gross domestic product (GDP) by 20%, or 4% each year.

• In early 2009, China passed a national stimulus bill, allocating $147.6 billion to energy efficiency and R&D, and $50.9 billion to pollution control. In June 2009, the government also announced US$ 87.8 million in subsidies to promote the use of energy-saving lighting products11.

• The National Development and Reform Commission (NDRC) have set ambitious targets for alternative power generation. It is expected that 10% of consumption will be delivered form alternative sources in 2010 and up to 15% by 2020.

• The Renewable Energy Law of 2006 and subsequent regulations provide support measures for alternative energy projects including mandatory off-take of all renewable energy-sourced power generation. Portfolio standards require power producers with capacity above 5GW to have attributable non-hydro renewable power capacity of at least 3% of total installed capacity by 2010, and 8% by 2020.

• In the summer of 2009 China announced a series of incentives for renewables, including: a fixed feed-in tariff for wind power projects with four differentiated tariffs for different classes of wind power; subsidies to promote the use of energy-saving light bulbs; and subsidies to use renewable energy in green building projects in pilot cities and rural areas. The Chinese government also offers tax exemptions and a government-backed renewable energy fund. The government is expected to establish a preferential feed-in tariff for solar by the end of 2009. The solar feed-in tariff is expected to fall between $0.16 and $0.22 per kWh of electricity produced at large-scale solar PV arrays.

• On Nov 29th 2009 China pledged to cut the amount of carbon dioxide produced for each unit of GNP by 40-45 percent by 2020, compared to 2005 levels.12

cHInA


Total installed generation capacity (MW) 18 10,664

Energy mix (as % of total installed capacity)19 Oil (63.7%), Coal (26.3%), Gas (10%)

Total electricity generated 2008 (TW hours)20 38

Electricity consumption per capita (forecast 2009)21 3%

Price of electricity per kWH (USD cents, Nov 09)2211 (domestic HK Island), 15 (commercial HK Island), 11 (average price, Kowloon, N.T)

CO2 intensity of coal-fired elect. generation 23 890 g CO2/kWH

CO2 intensity of elect. generation 24 775 g CO2/kWHCO2 emissions (from all sources, 2008)25 77.7 million metric tonnes

CO2 emissions per capita (from all sources, 2008) 11.09 metric tones

The Hong Kong energy market has been fully privatized and operates as a regulated duopoly. Only two power utility companies generate, transmit and distribute electricity in Hong Kong: China Light & Power and Hong Kong Electric. Electricity prices differ between Hong Kong Island and Kowloon/ New Territories, suggesting that the market is not fully deregulated. Hong Kong Electric and CLP are also seemingly in collusion - each company has a well-defined ‘territory’ in which it operates with no competition. Hong Kong’s two power utility providers are now preparing to open the grid to renewable power from new IPPs, in Hong Kong and Mainland China, and to provide necessary services.

Hong Kong is not a party to the UN Framework Convention on Climate Change. However, it is the Hong Kong Special Administrative Region’s voluntary policy to contribute to international efforts to reduce GHG emissions The Hong Kong SAR government has taken some steps to promote the use of renewable energy, reduce CO2 emissions and increase energy efficiency. These steps are:

• Setting a renewable energy target of 1-2% of total power generation by 2012.

• In July 2009, Hong Kong officials adopted a regulatory system that provides financial incentives for electric utilities to reduce GHG emissions to regulatory limits26. The long-term agreement, called the “Scheme of Control”, between the Hong Kong government and electric generating companies CLP and Hong Kong Electric ties future electricity rate levels to GHG emission reductions.

There is limited potential for alternative energy due to limited land availability. There is, however, considerable potential for solar energy. Other forms of power are likely to be brought in from the Chinese mainland grid over time.

Recent Events:

Hong Kong has made no unilateral attempt to join the Copenhagen conference and has issued no National Communication on Climate Change. Civil society has been actively participating in the discussions on future renewable energy sourcing.

Total installed generation capacity (31-10-0927) 153,694.09 MW

Energy mix (as % of total installed capacity)28 Coal (53%), gas (11%), oil (1%), hydro (23%), nuclear (3%), renewable (9%)

Total amount of electricity generated 2008 (TWH)29 834.3

Electricity demand growth rate3031 average 3.6% for past 30 years, 7.8% from 1981- 2000

Price of electricity per kWH (USD cents) 8 domestic, 18 commercial

CO2 intensity of coal-fired elect. generation 32 1,252 g CO2/kWH

CO2 intensity of elect. generation 33 928 g CO2/kWH

CO2 emissions (from all sources, 2008)34 1,419.4 million metric tones

CO2 emissions per capita (from all sources, 2008) 1.18 tonnes of CO2 per capita

India’s electricity sector is dominated by ‘public sector undertakings’ (PSUs). Major PSUs involved in the generation of electricity include: National Thermal Power Corporation (NTPC), National Hydroelectric Power Corporation (NHPC) and Nuclear Power Corporation of India (NPCI). Besides PSUs, several state-level corporations, such as Maharashtra State Electricity Board (MSEB), are also involved in the generation and intra-state distribution of electricity. The PowerGrid Corporation of India is responsible for the inter-state transmission of electricity and the development of a national grid.

The Indian electricity industry was restructured as a result of the 2003 Electricity Act. This unbundled the vertically integrated electricity supply utilities in the Indian states and set up State Regulatory Commissions (SERCs) to set electricity tariffs. The Indian power utility sector remains strongly regulated.

Under the Electricity Act SERCs had to set ‘Renewable Portfolio Standards’. The alternative energy mix ambitions that were formulated were quite conservative given the current expansion rate. The following announcements have been made:

• 2008: Goal of 10% of primary energy from renewable sources by 201235.

• 2008: ambition to generate 4-5% of electricity from renewable sources by 201236, a physical target of 15,000MW (excluding nuclear and small hydro) by the end of the XI 5-Year Plan (2007-2012). Wind capacity is to total 12,300MW, making India one of the largest markets for operating wind turbines in the world.

• 2008: 15-17% of primary energy is expected to come from renewable/alternative sources by 2025 (5% biofuels; 5% geothermal; 5% biomass, solar, wind, nuclear & hydro; and 2% coal liquefaction)37.

• November 2009: India issued solar power targets, with plans to boost output from near zero to 20GW by 2022. The solar mission also outlines a system of paying households for any surplus power generated from domestic solar panels fed back into the grid.

• India has 16 nuclear power plants although nuclear energy accounts for only 3% of India’s energy consumption (3779MW). An additional seven reactors are under construction with proposals for 24 more, generating 20,000MW of power by 2020.

India has several policies in place which aim to stimulate renewable generation capacity additions:

HonG KonG IndIA


• As of 2008, 10 out of 29 Indian States have implemented quotas for renewable electricity and have introduced preferential tariffs for renewable electricity. Several others have implemented fiscal incentives including an energy buy back, preferential grid connection, and electricity tax exemptions.

• At the federal level there are a number of measures that help drive renewable electricity development, including fiscal incentives such as income tax exemption for 10 years, 80% accelerated depreciation, sales tax exemption and excise duty exemption.

• In June 2008, the Ministry of New and Renewable Energy (MNRE) announced a national generation-based scheme for grid-connected wind power projects under 49 MW, providing an incentive of €0.7 cents per kWh.

The Government of India has an ambitious mission of ‘Power for all by 2012’. This mission would require that India’s installed generation capacity should be at least 200,000 MW by 2012 from the present level of 147,402 MW. Power requirements are expected to double by 2020 to 400,000 MW. Hence, there is great potential for alternative energy.

Wind capacity is already at 7,600 MW, and expected to reach 10,500 MW by 2012. This implies capacity addition of only 600 MW per annum, while the current annual run rate is greater than 1,000 MW. From 2002 to 2007 India planned to construct 3,075 MW of renewable grid connected capacity, but the actual capacity addition exceeded 6,000 MW by 2006 with a large share of this coming from growth in the Indian wind market. Wind is expected to add more than 10,000 MW of additional capacity by 2012.

The potential for wind power generation for grid interaction has been estimated at 45,000 MW38. However, wind turbine manufacturers believe the potential is higher, at 100,000 MW. India’s wind, small hydroelectric and biomass sources have the potential to generate 80,000 MW. India is the eighth largest consumer of hydroelectricity with the potential to produce 150,000 MW of energy.

India nuclear program is large: 17 units in operation (3.8 GWe), 6 under construction, 19 planned or proposed, with 5 additional research reactors. India has achieved independence in its nuclear fuel cycle. Nuclear power currently supplies less than 4% of electricity in India. The units under construction are due for completion by 2010. A further 24 units are planned or proposed, to give 20 GWe by 202039.

Electricity losses in India during transmission and distribution are extremely high and vary from 30% to 45%. Therefore dealing with energy efficiency is vital to the Indian utility sector.

• India’s eleventh 5-Year plan has pledged to increase energy efficiency by 20% by 2016-17 through improving automobile efficiency, expanding public transport, electrification of railways away from diesel and encouraging bio-diesel and coal-to-liquid projects40.

recent Events: Developing countries such as India are hesitant to accept binding targets that would limit their growth in GHG emissions, as they still need to bring millions of people out of poverty. About 56% of India’s 1.1-billion plus population has no access to electricity. “India is making a very strong case for international support for its climate actions, but in the process it is also skirting its unilateral obligations,” said Siddharth Pathak, Greenpeace’s main climate campaigner in India41.

India has joined the BASIC country grouping (Brazil, South Africa and China) which presented a counter-draft that will be presented by China in Denmark. It is the first major India-China accord on international affairs and is likely to impact not just the dimension of the talks on climate change but international diplomacy as a whole. The draft includes a commitment to “national appropriate” but voluntary actions. Most developing countries are not willing to accept the concept of setting a ‘peak’ year for emissions or international MRV on their efforts. 42

India has valid concerns that developed countries will set up trade barriers and resort to protectionism in the name of emissions reductions. They also believe developed nations should fund the reversal of forest degradation. India has not yet supplemented its last national communication on Climate Change, a 292-page report which was submitted in June 2004 by the Ministry of Environment and Forests.


Total installed generation capacity (31-10-0943) 24.3GW

Energy mix (as % of total installed capacity)44 Renewable (32.4%), Hydro (0.5%), Gas (18.60%), Oil (33%), Coal (15.5%)


Electricity demand growth rate (Oct 2009)46 7%

Price of electricity per kWH (USD cents, 2007)47 6.77

CO2 intensity of coal-fired elect. generation 48 980 g CO2/kWHCO2 intensity of elect. generation 49 692 g CO2/kWH

CO2 emissions (from all sources, 2008)50 376.3 million MTCO2 emissions per capita (from all sources, 2008) 1.63 MT

The Government is seeking to unbundle the state-owned electricity utility, PLN, and break it up into several competing limited liability corporations. It is also planning to re-examine the pricing tariff structure. Energy sector reform has long been geared towards increasing the role of private participation in the sector. The 1985 Electricity Act gave the government the right and obligation to supply power, and permitted the establishment of independent power producers. Although regulations promoting the development of renewable energy are in place, only a few renewable power generation assets have been connected to the grid buys its electricity on independently negotiated contracts. The President sets electricity tariffs jointly with the Minister of Mines and Energy.

The ‘National Energy Policy’s Presidential Regulation No.5 /2006’ aims to create a sustainable energy system and reduce Indonesia’s dependence on oil. However Indonesia’s ‘business as usual’ projections for energy demand growth assume that the share of power generated from coal will continue to increase from 37% reaching 66% by 2016. Renewable targets to be achieved by 2025:

• Energy price elasticity should be less than 1;

• The share of oil should be less than 20%, coal to be at least 33%, natural gas at least 30%, 15-17% of primary energy to come from renewable/alternative sources by 2025 (5% biofuels; 5% geothermal; 5% biomass, solar, wind, nuclear & hydro; and 2% coal liquefaction). The total investment needed for this development through 2025 is estimated to be US$13.2 bn.

• The government aims to raise the use of new and renewable energy sources in power generation from the current 0.2% to 4% by 2020.

• Indonesia’s President Susilo Bambang Yudhoyono has promised cuts in CO2 emissions from ‘business as usual’ projections of up to 26% by 2020 and 41% by 2050, with funding and technological support from developed countries.

To support the development of new and renewable energy and to stimulate an increase of energy efficiency the Government has issued legislation51, and developed incentive schemes52, such as:

• The Energy Law (Law No. 30/2007) issued which states that local governments should provide incentives for renewable energy developers.

• Regulations on power purchasing tariff for small capacity (up to 1 MW) as well as medium capacity (more than 1 MW up to 10 MW)53. Based on these regulations, the utility is obliged to buy electricity from developers with

the tariff 60 % of the utility’s production cost if the electricity is connected to the lower voltage grid, and 80 % of the utility’s production cost if connecting to the medium voltage grid.The Biofuel Road Map creates a role for biofuels as a source of energy in the household and commercial sectors, as well as the transport and power sectors. From 2005-2010, the use of biofuels is planned to contribute 2% of total energy mix and it will increase to 3% from 2011-2015, and 5% from 2016-2025. To encourage business activity in biofuels the government has issued Government Regulation No.1/2007 to reduce income taxes on investment activities.

Despite massive potential, power plants using renewable energy sources contribute only a small portion of the country’s total installed power capacity of about 22,000 MW. Indonesia has a huge potential in biomass energy that remains a controversial but promising potential solution. The current installed capacity is 445 MW and the potential of biomass from forestry, agriculture and plantations, is thought to be equivalent to 50,000 MW54. The emissions reduction argument for biofuels production in Indonesia is complex. Unless using existing waste materials from agribusiness, one has to factor in the potential reduction of primary forest cover for conversion to plantations to produce the feedstock.

Current installed capacity of solar PV is estimated at only 0.5 MW and is mostly used for rural electrification, small scale water pumping, and telecommunications. The installed capacity of hydropower (mini and micro) plants is 54 MW.55 The total potential is thought to be around 75,000 MW. The installed capacity of geothermal energy is 800 MW, with total potential of 27,000 MW56.

Nuclear is under consideration in Indonesia with plans for two 1000 MWe units. A decision is likely in 2010, with commercial operation from 2016 onwards. Tenders for the next two units are planned for 2016, for operation from 2023. The government has apparently reserved US$8 billion of spending for four nuclear plants to produce a total of 6 GWe to be in operation by 2025. The current plan is to meet 2% of power demand using nuclear by 201757.

recent Events:

A World Bank study cited Indonesia as the world’s third-largest emitter of greenhouse gases, a title the government has strongly denied, based on the methodology used58. Indonesia is seen as a key player in forthcoming international climate talks in Copenhagen because its greenhouse gas emissions from peat bogs and deforestation are a major contributor to global warming.

Indonesia plans to reduce its GHG emissions by developing more geothermal and waste energy sources, increasing power plant efficiency, reducing illegal logging by 43% and restoring production forests by 35%. It is said to have an internal target of a 20% cut in emissions by 2020, and says it could achieve a 41% reduction if developed nations provide financial assistance59.

Indonesia has not issued a National Communication to UNFCCC since its ambitious and comprehensive 117-page report in 1999 by the State Ministry for the Environment Office.

IndonESIA


Total installed generation capacity (31-10-09)60 23,300 MW

Energy mix (as % of total installed capacity) Coal (34.2%), Oil (0.9%), Diesel (1.4%), Gas (56.6%), Hydro (6.9%)


Electricity demand growth rate (2009)62 -2.6%Price of electricity per kWH (USD cents, Jul 08)63 Average commercial price: 8

CO2 intensity of coal-fired elect. generation 64 972 g CO2/kWHCO2 intensity of elect. generation 65 619 g CO2/kWHCO2 emissions (from all sources, 2008)66 151.8 million metric tonnes

CO2 emissions per capita (from all sources, 2008) 5.46 metric tonnes

The Department of Electricity and Gas Supply acts as the market regulator with the Ministry of Energy, Green Technology and Water, the Energy Commission (Suruhanjaya Tenaga), and the Malaysia Energy Centre (Pusat Tenaga Malaysia) also contributes to policy and tariff direction. Government-linked energy companies Petronas and Tenaga Nasional Berhad are the dominant players. The Malaysian energy policy is based on: 1974 Petroleum Development Act, 1975 National Petroleum Policy, 1980 National Depletion Policy, 1990 Electricity Supply Act, 1993 Gas Supply Acts, 1994 Electricity Regulations, 1997 Gas Supply Regulation and the 2001 Energy Commission Act.

According to the Malaysian Energy Commission, an estimated total investment of RM 30 bn (approx US$8.8 bn) is required to be spent in the electricity supply industry over the next 5 to 10 years. Of this total, 60% will be invested in power generation, while the rest will be split equally among transmission and distribution67.

The Ministry of Energy, Green Technology and Water has identified the following objectives:

• To follow the Fuel Diversification Policy (9th Malaysian Plan), set out in 2006. This has a target of renewable energy providing 5% of electricity generation by 2005 (equal to 500 MW-600 MW of installed capacity) and 10% by 2010.

• The current grid-based ‘small renewable energy programmes’ (SREP) incentivizes the connection of small renewable power generation plants to the national grid.

• To accelerate investments in the palm-oil industry for power generation. Government has launched the Biomass-Based Power Generation and Cogeneration (BioGen) Programme68.

• Achieve 5 MT of GHG abatement in 2012 and 5 MT of GHG abatement in 2020 through the use of renewable energy

The policies have been reinforced by fiscal incentives, such as investment tax allowances69. Other policy instruments and institutional mechanisms are in place to drive the renewable and energy efficiency strategies. Companies enjoy incentives such as pioneer status, import duty and sales tax exemption for equipment used in energy conservation. In addition, preferential loans, grants and other funding structures are in place for renewable energy development. The Malaysia Electricity Supply Industry Trust Account (MESITA) is a social obligation fund contributed to by the major power utilities. Each utility contributes 1% of

their annual revenue to the fund. The proceeds are used to assist government projects and studies on rural electrification, renewable energy and energy efficiency.

Other supporting policies include the Renewable Energy Power Purchase Agreement (REPPA), which is a Malaysian government regulation dealing with power purchases between the power utility TNB and private investors. Under the REPPA, renewable electricity producers are given a license for a period of 21 years from the date of commissioning of the plant. REPPA also allows independent power producers to sell electricity to the grid. Revenues from generating Certified Emissions Reductions under the Clean Development Mechanisms also support the growth of the renewable sector in Malaysia.

There is large potential for biomass power generation in Malaysia due to the waste product of the booming palm oil industry. The country is also considering the construction of a nuclear power generator70. A comprehensive energy policy study, including the potential for nuclear, is due for publication shortly. The state-owned utility TNB is tentatively in favour of nuclear power and in August 2006 the Malaysian Nuclear Licensing Board said that plans for nuclear power after 2020 should be brought forward and two reactors built much sooner.

recent Events:

Minister Chin of the Ministry of Energy, Green Technology and Water said in late 2009 that there would be no independent action from the government to encourage efforts towards an agreement at Copenhagen. 71

The only National Communication on Climate Change was from the Ministry of Science, Technology and the Environment in 2000. This 131-page document, which included a sectoral inventory of GHG emissions, was funded by the Global Environmental Facility (GEF) and the United Nations Development Programme (UNDP).

MALAYSIA


Total installed generation capacity (2008)72 15,936 MW

Energy mix (as % of total installed capacity) Coal 28%, Geothermal 17%, Hydro 14%, Natural gas 32%, Oil 9%


Expected electricity demand growth rate (2008-2013)74 27%

Price of electricity per kWH (USD cents, Oct 2009)75 8

CO2 intensity of coal-fired elect. generation 76 1,008 g CO2/kWH


CO2 emissions (from all sources, 2008)78 73.3 million metric tonnes


The Philippine government has been in the process of restructuring the Philippine power market since serious shortages arose in the early 1990s. The purpose of the restructuring was to provide reliable power to aid economic growth and development. The ‘Republic Act No. 9136’ or the ‘Electric Power Industry Reform Act’ (EPIRA) ushered in the restructuring of the electric power industry and privatization of government interests in generation and transmission with an end in view of having competition in electricity generation and supply.

The independent regulator ‘Energy Regulatory Commission’ (ERC) oversees all these reforms. ERC is active not just in the regulated sectors, but also in the wholesale and retail markets. It delivers regulatory policies to support the State’s policy of promoting “the utilization of new and renewable energy sources in power generation” while ensuring electricity prices are reasonable, reflective of true cost, and free from cross-subsidization and other distortions. Among the powers granted to the ERC is the power to set the rates of the 140 distribution utilities (DUs) operating throughout the country.

Philippines alternative energy mix ambitions and energy efficiency goals:

• 2001: to increase renewable energy capacity by 100% by 2013 and have 9 GW of renewable capacity by 2020.

• 2001: to achieve 20 MT of abatement in 2012 and 30 MT of abatement in 2020

• Under the ‘Renewable Energy Policy Framework’ (2003) the government aimed to develop more than 4,000 MW of additional renewable energy capacity. In fact plans are to source 40% of the country’s primary energy needs from renewable sources between 2003 and 2013 – or a 100% increase in the target of renewable energy capacity from the current production of 4,698 MW to 9,147 MW by 2013. This goal is to be achieved through:

- The installation of an additional 1,200 MW of geothermal capacity by 201379, resulting in an increase of about 60% from the 2002 level of 1,931 MW.

- The installation of up to 2,950 MW of additional hydro capacity to be installed by 2013 on top of the 2002 level of 2,518 MW, reaching a total of 5,468 MW.

- The installation of up to 548 MW from other RE sources by 2013 (417 MW from wind-based power, the remaining 131 MW will be sourced from solar, ocean and biomass80).

• In February 2008, Philippines President Gloria Arroyo announced that the country will phase out incandescent bulbs by 2010, making it the first plan of its kind in Asia. Under the project, 13 million compact fluorescent lamps (CFLs) will be distributed, free of charge, to homes and businesses throughout the Philippines. The project is estimated to save US$100 million in annual fuel costs, and allow the deferment of US$450 million in new power plant construction costs.

• The Renewable Energy Act (Dec 2008) provides fiscal and non-fiscal incentives for renewable energy investors, including tax credits on domestic capital equipment and services, special realty tax rates on equipment and machinery, tax exemption of carbon credits, duty-free importation mechanisms, and income tax holidays, among others81. End users are also offered net-metering and green energy options. The Act covers biomass, solar, wind, geothermal, ocean and hydro.

There is considerable potential for renewable energy generation development in the Philippines. Wind is plentiful, although the situation is complicated by the 25 or so typhoons that arrive each year. One 8 MW project was commissioned in October 2008 bringing total capacity to 33 MW82. Foreign investors, however, are generally reluctant to invest due to constitutional restrictions on land ownership. Under Philippine law, foreign stakes in land ownership is limited to 40%. This equity issue may only be resolved by amending the national constitution.

The Philippines are the world’s second largest producers of geothermal power. The Philippines plan to hold this position through significant investments in this field. To promote wide-scale use of renewable energy and to complement the government’s program on rural electrification, 30 islands have been targeted as locations for hybrid power systems. In addition, 1,500 barangays (small towns) are programmed to be electrified using renewable power systems. The Asian Development Bank promised the Philippines US$2 billion in June 2009 for renewable programs.

The Philippines have one nuclear power reactor completed, however due to litigation concerning bribery and safety deficiencies operations have been aborted. In the context of an overall energy plan for the country the government set up a project to study nuclear energy, to reduce dependence on imported oil and coal in 2007. In 2008 an IAEA mission commissioned by the government concluded that the existing nuclear plant could be refurbished and economically and safely operated for 30 years83.

recent Events:

The Philippines has noted its support for the Copenhagen Accord, and was involved in brokering the agreement. The country is also looking to the Reducing Emissions from Deforestation and Degradation (REDD) program, developed at Copenhagen, to protect forestry areas. The Philippines has not disclosed CO2 abatement goals.

The Philippines Inter-Agency Committee on Climate Change published the first National Communication on Climate Change in 1999 for the UNFCCC with funding provided by the Global Environment Facility (GEF) through the United Nations Development Programme (UNDP). It has not updated this Communication.

PHILIPPInES



Energy mix (as % of total installed capacity) Natural gas 70%, Oil 30%


Electricity demand growth rate (Expected 2009)86 0.5 – 2%

Price of electricity per kWH (USD cents, Oct 2009)87 15.34CO2 intensity of coal-fired elect. generation 88 -


CO2 emissions (from all sources, 2008)90 173.2 million metric tones

CO2 emissions per capita (from all sources, 2008) 37.59 metric tones

Public Utilities Board (PUB) was the sole provider of electricity in Singapore until the 1990s. In 1995, the Government decided to undertake industry reforms. The first step was to have the electricity and gas assets and services in the PUB corporatized under a separate vertically integrated power corporation, Singapore Power. PUB remains as a regulatory body for the electricity industry. An electricity market was subsequently started in 1998, with the generation companies in Singapore Power competing with each other for the dispatch of electricity.

Senoko is a privately owned Singaporean utility with strong ESG performance and CSR Management. It has participated in Singapore’s deregulated electricity retail market since 2001 and is one of the leading energy service providers to contestable customers. It produces an excellent annual Environmental Report, which states that the replacement of its oil-fired generation with state-of-the-art gas-fired combined cycle turbine technology, at a cost of S$600m, reduced its carbon dioxide emission by 2.5 million tons per annum. To date, 95% of its electricity generation comes from clean natural gas-fired generating plants. It reduced nitrogen-based emissions by retrofitting the burners of four older gas turbines at an additional cost of $17m.

In 2000, the Government decided to take further steps to open the electricity sector to competition. This decision led to the separation of the electricity grid from the generation and retail companies, which can operate in the commercial domain. The Energy Market Authority (EMA) was formed in 2001, as the industry regulator and system operator, and facilitates the wholesale electricity market. Since then new generation companies have entered the market. On 1 January 2003, the National Electricity Market of Singapore (NEMS) commenced operation. Generation companies bid every half-hour to sell electricity into the new wholesale electricity market. As a result, prices reflect more closely changes in the supply and demand of electricity. By 2007, about 10,000 accounts, representing about 75% of electricity consumed in Singapore, had been made contestable.

Singapore currently has no renewable energy targets. According to commentators in an article ‘Singapore is Not Ready for Renewable Energy’91 the government is not in favour of stimulating renewable energy generation through subsidies, as David Tan, Deputy Chief Executive of the Energy Market Authority, has said. Without subsidies, the use of renewable energy such as solar energy is still not price competitive. However, Singapore is well placed to provide Photo Voltaic capabilities and serve as exporter for the region. The National Research Foundation has provided $170 million for solar research and there are many grants available to support growth in the sector.

recent Events:

Although there has been much deliberation between Singapore’s Ministers, National Environment Agency and NGOs, a clearly defined strategy is lacking. As one of its climate negotiators commented, it is ‘a small country that lacks alternative energy potential92.’

Senior Minister Professor S Jayakumar, Chairman of the Inter-Ministerial Committee on Climate Change claims that Singapore contributes less than 0.2 per cent of global greenhouse gas emissions. In spite of this, Singapore is committed to reducing carbon emissions growth by 16 per cent below the projected 2020 level. This is, however, only if a global agreement is reached and other countries implement significant targets of their own.93

Singapore has pledged to reduce emissions growth by 16 per cent below the projected 2020 level, provided that other countries announce meaningful emissions cut targets. Prime Minister Lee Hsien Loong noted that ‘if there’s no agreement, we’re not obliged to hit the 16 per cent target. We have a sustainable development blueprint which is a 7 to 11 per cent target.’

‘To reach 16 per cent, we’ll have to take new measures. We have to consider what these will be, and there’ll be regulations. For example, energy efficiency standards may be necessary.’’94

SInGAPorE



Energy mix (as % of total installed capacity) Coal 45%, Hydro 1%, Natural gas 13%, Nuclear 38%, Oil 2%

Total amount of electricity generated 2008 (TWH)96 462.9Electricity demand growth rate (Expected 2009)97 1.5%

Price of electricity per kWH (USD cents, Mar 2009)98 10

CO2 intensity of coal-fired elect. generation 99 902 g CO2/kWH




Privatization of the electricity market in Korea has been slow, primarily due to the political strength of the existing generating companies along with adverse public opinion and union opposition. There is still a plan to reform and privatize the generating capacity and introduce more competition over time but there is also a desire to maintain the financial strength of KEPCO as it competes for projects in overseas markets.

Korea’s Alternative Energy Act was implemented in 1982 and revised in 2002. It constituted the initial framework for the development of renewable energy technologies and energy efficiency. It aimed to secure cost-effective renewable energy by fitting the production strategy to geographical characteristics and through cost effective business modelling. It encouraged the installation of waste-incineration plants to generate heat and power. It also promoted residential solar heaters, small hydropower plants and facilities to use methane gas. In 2008 the South Korean government announced plans to set up the ‘Act on Climate Change’. This act supports industries that voluntarily develop and implement GHG reduction plans through various taxation measures, including a carbon tax. Korea’s goals as stated in the ‘Act on Climate Change’ and other legislation aim to:

• Increase the share of renewable energy generation capacity to 5% by 2012 and 9% by 2030, announced in 2007. As part of this initiative Korea is also considering expanding its nuclear power programme.

• A total of 11% of energy consumption from renewable sources by 2030, announced in 2007.

• Mix bio-diesel, mostly from palm oil, into fuel in increased quantities, from 0.5% in 2007 to 3% in 2012.

• Set up a voluntary ‘emissions trading agency’ and a carbon trading market by 2009.

• Achieve a 2.5 million tonne CO2 reduction by 2012 for large-scale residencies and industrial complexes.

• Absorb as much as 12 million tonnes of CO2 through reforestation efforts.

• Stimulate the use of alternative energy through the ‘Renewable Portfolio Standard’. The Government has signed a Renewable Portfolio Agreement with nine public corporations to increase the use of alternative energy in the industrial sector. The Government has allocated 1.2 trillion won from 2006 to 2008 to lay the groundwork for this plan102.

• Reach average power plant fleet fuel efficiency of 40 mpg by 2015.

• Reduce emissions to 4% below 2005 levels by 2020, equal to 30% below CO2 emissions under a ‘business as usual’ scenario (stated in November 2009).

Different policies are in place to incentivize the development of renewable energy generation assets:

• Feed-in tariffs were adopted for solar PV in 2006. The tariffs distinguish between systems >30 kWp and systems <30 kWp. The result of these tariffs has been a huge growth in solar demand.

• In 2008, 533 billion won was slated for the development of alternative energy, up from 435 billion won in 2007. In order to meet this goal, investment in research and development will be increased to some 210 billion won ($210 million). In January 2009 South Korea announced the launch of its $38.1 billion Green New Deal103. The Green New Deal will focus on pollution control, energy efficiency and clean technologies. Under the plans, $3.32 billion will be spent on clean energy infrastructure technology products and constructing low carbon transportation systems. An additional $6.64 billion would be allocated for research and development of higher efficiency and non-silicon-based solar cells, electric vehicles, highly efficient LEDs, smart metering and rechargeable batteries.

There is considerable potential for renewable energy in South Korea. According to Displaybank, the new “Photo Voltaic Market Creation Plan” announced in 2009 is expected to boost the Korean PV instalment market to increase to 200MW by 2012104.

South Korea has an extensive fleet of reactors: 20 units in operation (17.5 GWe), 3 under construction, 5 planned, also 2 research reactors. It meets 35% of its electricity needs from nuclear power, and this is increasing. The national plan is to expand to 28 nuclear power reactors, including advanced reactor designs, and achieve 60% nuclear supply by 2035. Demand for electricity in South Korea has been increasing strongly105.

recent Events:

South Korea is impressive in its vision of lowering emissions unilaterally. There is a desire to support the UN Secretary-General Ban Ki-moon and to commit to UN backed accords, although an emphasis is made on the difference between emissions targets for developed and developing countries. According to President Lee Myung-bak106, the 2020 target to reduce GHG emissions to 4% below 2005 will be implemented regardless of a Copenhagen agreement. President Lee Myung-bak said the target was in the wider national interest and hoped it will trigger further international efforts towards emissions reductions.107 Korean efforts are strategic; the government is pushing to ready the economy for future carbon trade tariffs and to acquire early market leads in green energy, products and services. There is also a desire to reduce reliance on imported fuels and become more energy secure.

SoutH KorEA



Energy mix (as % of total installed capacity) 109Hydro (15%), Thermal (68%), Coal (29%), Oil (12%), Gas (28%), Nuclear (17%)


Electricity demand growth rate (Mar 2009)111 3.3%

Price of electricity per kWH (US cents, 2007)112 1.44

CO2 intensity of coal-fired elect. generation 113 ND

CO2 intensity of elect. generation 114 ND



The electricity market in Taiwan ruled by a single state-owned integrated utility (Taipower), eight IPPs, and captive power plants. The privatization of the energy market, originally planned in 2001, has been postponed several times116.Taipower’s monopoly status technically ended in 1994. In that year independent power producers (IPPs) were allowed to provide up to 20% of Taiwan’s electricity117. However, Taipower retains a monopoly on electricity transmission and distribution in Taiwan. As a result IPPs are required to sign power purchase agreements with Taipower. After joining the WTO in 2001-2002, foreign firms were permitted 100% ownership of generation companies. Under the framework envisioned Taipower’s generation assets would be split between several firms. According to the Taiwanese Ministry of Economic Affairs’ Bureau of Energy the planned privatization of Taipower is the result of rapidly rising power demand in Taiwan, and Taipower’s inability to build sufficient capacity118.

A total of 98% of energy supply in Taiwan is dependent on imported fuel. Energy security is of significant economic and political concern to the government119. In order to reduce Taiwan’s dependence on foreign energy sources, the Ministry of Economic Affairs’ Bureau of Energy has actively been promoting energy research and investments in renewables since the 1990’s. Currently, Taiwan has only 2,278 MW of renewable energy generation assets, or 5.8% of installed capacity.

Steps taken so far have included:

• August 2008: The government aims to grow the solar power industry to $16 billion by 2012 by introducing a renewable energy law120.

• December 2008: Taiwan to make Taipei its first low-carbon city, with local government hoping to reduce emissions by 20 percent by 2020121.

• April 2009: Taiwan will invest 45 billion New Taiwan dollars (US$1.3 billion) to expand and upgrade the Island’s solar and wind energy industries and help reduce the use of fuel;

• June 2009: The Legislative Yuan (the parliamentary chamber) passed a renewable energy act aimed at promoting the use of renewable energy. The aim was to increase Taiwan’s renewable energy generation capacity by 6,500 MW to 10,000 MW within 20 years122123. The share of renewable energy in the electricity system could reach 8% by 2025. The new law authorizes the government to enhance incentives for the development of renewable energy via a variety of methods, including the acquisition mechanism, incentives for demonstration projects, and the loosening of regulatory restrictions.

• July 2009: The Executive Yuan (the executive branch of the government) approved a proposal consisting of 16 measures to transform Taiwan into a “low carbon” country by 2020. A Sustainable Energy Policy was defined with a goal of improving energy efficiency by more than 2% per annum; to reduce emissions to 2008 levels between 2016 and 2020 and to 2000 levels by 2025. The aim is to achieve 15 MT of abatement in 2012 and 20 MT of abatement in 2020124.

• August 2009: Taiwan’s government announced that it will invest T$45 billion (US$1.4 billion) in the island’s domestic renewable energy sector in an attempt to help the sector grow nearly eight-fold by 2015 thereby increasing industry production value to T$1.158 trillion in 2015 compared to T$160.3 billion in mid-2009125.

In Taiwan renewable energy development receives strong government backing. Strong investment opportunities exist as a result of these incentives.

Nuclear power is an important source of electricity in Taiwan, which has six reactors. The first was built in 1972. There are a further two advanced reactors under construction now. Figures suggest that nuclear provides around 25% of base-load power and 17% of the overall 238 billion kWh generated in 2008. The three nuclear plants comprise four General Electric boiling water reactors and two Westinghouse pressurized water reactors. Construction of the first unit began in 1972. All reactors are operated by the utility Taipower and are expected to be in operation for 40 years.126

recent Events:

For Taiwan, the issue of climate change is an issue of sovereignty. Though it is not a member of the United Nations, and has not Taiwan had hoped to be included as an independent state at the Copenhagen round. Inclusion in climate change discussions would enhance the recognition of the island’s independent status in the international community. Taiwan, not being a member of the United Nations, is party neither to the United Nations Framework Convention on Climate Change (UNFCCC) nor to the Kyoto Protocol. The wording of the UNFCCC excludes Taiwanese participation, although it allowed Switzerland, to formally accede to the convention. Earlier this year, at the World Health Assembly, Taiwan took part as an observer under the name of ‘Chinese Taipei’. That marked the first time in 38 years that it had participated in a meeting hosted by a U.N. agency. It seems, however, that, in Copenhagen, only its civic groups and non-governmental organizations represented it.

Taiwan has said that while not required to, it will follow the guidelines set out by the Copenhagen Accord, although EPA Minister Stephen Shen has noted that this would require carbon emissions to be cut by 80-90 per cent. This would need the Greenhouse Gas Reduction Act to be passed, which has been stalled since 2006.127

tAIWAn


Total installed generation capacity (31-10-09)128 +/- 29,000 MW

Energy mix (as % of total installed capacity) Coal 19%, Hydro 6%, Natural gas 74%, Other 2%


Electricity demand growth rate (2008-2013)130 16.1%

Price of electricity per kWH (USD cents)131 7

CO2 intensity of coal-fired elect. generation132 927 g CO2/kWH


CO2 emissions (from all sources, 2008)134 253 million metric tonnes


The most significant development in the regulation of Thailand’s energy sector is the passage of the Energy Industry Act in December 2007 that endorsed the establishment of the Energy Regulatory Commission (ERC). The ERC was appointed in February 2008. ERC works within the policy framework established by the National Energy Policy Council (NEPC), chaired by the Prime Minister135. A key instrument available to the ERC in fulfilling its mandate is the Power Development Fund. The Fund is to be used as a channel for implementing the subsidy arrangements for, i.e. the promotion of renewable and environmentally friendly energy.

In Thailand, efforts have been made to diversify away from the use of oil and natural gas for power generation by, among others, increasing the use of indigenous renewable energy resources and using fuel energy-efficient technologies for power generation so as to enhance the security of national power supply as well as to reduce environmental impact136. Steps undertaken include:

• May 2001, the government initiated the “pricing subsidy” in the form of energy payment adder for electricity generated by renewable energy for a period of five years at a maximum rate of 0.36 baht/kWh, under a competitive bidding.

• In mid-2002, the government, via the two power distribution utilities i.e. the Provincial Electricity Authority (PEA) and the Metropolitan Electricity Authority (MEA), announced power purchase from VSPPs with capacity supply to the grid <1 MW.

• 4 September 2006, the government, via the National Energy Policy Council (NEPC), approved the increase of capacity purchase from VSPPs from ≤1 MW to ≤10 MW each.

• In 2007 the Ministry of Energy set a target to purchase power from SPPs using renewable energy, totaling 530 MW “Fixed Adder” (230 MW) “Adder Bidding” (300 MW)

• The Thai government targets to have a total installed renewable generation capacity of 3,276 MW by 2011137, equivalent to an increase of 59%. The Power Development Plan aims to have renewable energy providing about 10% of the installed capacity by 2022,

• expected to total more than 51,000 Megawatts. The drive to a clean energy future has strong political backing.

Wind speeds in Thailand are lower than in Europe, on average, but slow motion wind turbines are being considered. Thailand’s geographic conditions seem most appropriate for the development of biomass energy. In 2009 Thailand generates about 1,700 MW from biomass fuel. The Ministry of Energy (MoE) expects that a total of 3,700 MW could be generated using biomass. Tropical weather conditions in Thailand and economic rationale favour biogas generation138.

Thailand has had an operating research reactor since 1977 however Thailand’s nuclear power program has undergone a revival due to a forecasted growth in electricity demand of 7% p.a. for the next twenty years. Capacity requirements in 2016 are expected to reach 48 GWe139. In June 2007 the Energy Minister announced plans to build two nuclear power plants including one US$6bn 4,000 MWe nuclear power plant to be operational in 2020. The Thai government has budgeted funds to 2011 for preparatory work. The International Atomic Energy Agency will cooperate with the Thai government to build the nuclear power plant140. Construction will commence in 2015 and is estimated to take 13 years to complete construction of the nuclear reactors.

recent Events:

Thailand issued its first national communication on Climate Change in 2000 from the International Environmental Affairs Division of the Office of Environmental Policy and Planning (OEPP) at the Ministry of Science, Technology and Environment. There have been no subsequent communications.

In January 2008 the Office of Natural Resources and Environmental Policy and Planning, a division of the Ministry of Natural Resources and Environment released the Strategic Plan on Climate Change 2008-12.

There have been no official government emissions reduction target statements but the ONREPP has been actively developing mitigation and adaptation strategies and ensuring the implementation of CDM across various sectors. By May 2009 the DNA-CDM had apparently approved 66 CDM projects with a total abatement of over 4 MTOE/year. These are mostly small biogas projects. Civil Society has been active on the climate change issue in Thailand.141 The Department of Alternative Energy Development and Efficiency is promoting private investment in R & D of renewable energy sources through tariff promotion, as well as a greater emphasis on conservation and efficiency.142

tHAILAnd


INVESTORS CONCLUSION


International discussions around the impact of the Copenhagen Accord will continue in the weeks after the Copenhagen climate conference in December 2009. Although there were no legally binding agreements on emissions reductions, the developing nations in Asia finally have found a voice in the debate.

Not only is a global treaty that includes mandatory targets for limiting the growth in GHG emissions in emerging markets unworkable at this stage, it seems that the concept of comprehensive national emission trading schemes in which countries force companies to pay for their GHG emissions is currently, and within the short to medium term, unrealistic. Electricity is crucial for economic development and it is not feasible for governments to punish emerging markets utilities for their existing generation capacities.

On the other hand, unexpected measures could be triggered by the current climate change talks. Recently more detailed discussions on the abolition of energy subsidies, which in many countries set wrong incentives and hinder the effectiveness of energy efficiency measures, have taken place. The abolition of subsidized electricity prices would have a significant effect on the power utility sector.

We would therefore recommend investors to closely follow the direction of climate change policies and their interplay with energy policies at a national, and even state level, to be able to judge how power utilities will be affected.


There is a chapter on Environmental Protection and Social Responsibility in the company’s annual report as well as the same information on its website. There is no information on how the management of environmental and social issues is organized. Stakeholders are not mentioned. Some information about philanthropic activities, for example after the Sichuan earthquake, but not in a systematic and structured way

Environmental management Score: 1

No absolute emissions data. Vague comments on its environmental management system, which is not certified. One statement about past climate change management, but no current information.

Climate change management Score: 0One statement on what they have done in the past, but no further information and no emissions data. “We have strived to reduce consumption of coal and emission of greenhouse gas via various measures such as closing-down of small thermal power generation units with high energy consumption, developing large scale and high efficiency environmental friendly generation units, enhancing operation management and technical upgrades.”

Health & Safety management Score: 0Safety is said to be a key objective but there is no information on actual safety management.

Corporate governance Score: 7

Separation of Chairman & CEO: no, percentage of independent board members: 43%, percentage of independent audit committee members: 100%, percentage of independent remuneration committee members: 100%, percentage of independent nomination committee members: the same as remuneration committee, disclosure of executive and board remuneration: yes.

Controversies Gravity: LowNo controversies directly related to China Power Int Dev, but a lot of issues surround its parent company, China Power Investment: For example, CPI was fined by the Ministry of Environmental Protection for emitting excessive amounts of sulphur dioxide in 2007. CPI is active in Burma, building dams and working with the local ministry of electric power. In 2007 CPI was called the world’s 5th largest polluter by Think-tank Center for Global Development.

Community investmentNo community investments disclosed.Note 1: ED stands for environmental damage

Company Name (country) China Power International Dev. Ltd. (Hong Kong)

RIC / ISIN: 2 380.HK / HK2380027329Market Cap US$ 1,297mOwnership structure China Power Investment Group Ltd (56.05%), others (43.95%)Company type IPP

Business Modelengaged in developing, constructing, owning, operating and managing power plants in People’s Republic of China. Plans to invest in transmission and distribution of electricity as well

Asian Utilities Environment and Social Rating 33%Corporate Governance Rating 58%CDP disclosure No response

ESG Summary

China Power International has started to disclose some environmental information. Apparently there have been some improvements in sulphur dioxide, nitrogen oxide and carbon dioxide emissions, but overall information disclosure still leaves a lot of room for improvement. Coal consumption rate was relative high compared to other Chinese utilities in our universe.

Generation type 2009 (MW) 2009 (%)

Gas 110 1%Coal 8,946 81%Biomass 0 0%Oil 0 0%Hydro 1,988 18%Nuclear 0 0%Renewable 0 0%Total 11,045 100%

Generation Mix Plans Disclosed

750MW of additional hydro projects until end 2010, another 250MW hydro until end of 2011. 2’400MW of additional coal capacity planned until end of 2010. Potential of further asset injection from the parent company

CO2 emissions (tonnes) 34,035,697 ED1 cost (m USD) 1,833CO2 intensity (tonnes/ m USD rev.) 24,360 ED impact on 2008 revenue 131%CO2 damage cost (m USD) 1,880 ED impact on 2008 EBITDA 1646%

Operational efficiency metricsIn 2008, net coal consumption rate of China Power was 334.38 grams/kWh, representing a decrease of 9.03 grams/kWh compared with last year. Net/gross generation in 2008: 93.2% Net coal consumption varied between 373 g/kWh for the Shentou I Power Plant and 315 g/kWh for the Pingwei Power Plant II (see AR08 p.24)

Water and waste treatmentIn its 2009 Interim report CPI states that waste water treatment and emission of pollutants met the requirements of relevant policies and the emission of various pollutants was in compliance with national environment protection standards.

Overall CSR reporting & management Score: 1

APPEndIx: COMPANY PROFILES


Company Name (country) China Resources Power Holdings Co. Ltd. (Hong Kong)RIC / ISIN: 2 0836.HK / HK0836012952Market Cap US$ 8,860mOwnership structure China Resources National Corporation owns 64.75%, free float (35.2%)Company type IPP

Business Model

Independent power producer, which invests, develops, operates and manages power plants in China. The Company is engaged in two operating divisions: sales of electricity (inclusive of supply of heat that is generated by thermal power plants) and coal mining.

Reporting 0Asian Utilities Environment and Social Rating 0%Corporate Governance Rating 92%CDP disclosure No response

ESG Summary

China Resources Power discloses virtually no information on environmental and CSR issues. Its generation mix is highly dependent on coal and its coal consumption rate is the highest among the Chinese utilities we looked at. On top of this, the company was involved in number of controversies.


Gas 473 3%Coal 14,810 94%Biomass 0 0%Oil 0 0%Hydro 158 1%Nuclear 0 0%Renewable 315 2%Total 15,755 100%Generation Mix Plans Disclosed plan to expand to 21GW by end of 2010 with 6% from alternative energy

CO2 emissions (tonnes) 99,639,200.00 ED1 cost (m USD) 5,828CO2 intensity (tonnes/ m USD rev.) 28,845 ED impact on 2008 revenue 169%CO2 damage cost (m USD) 3,479 ED impact on 2008 EBITDA 719%

Operational efficiency metrics

The net generation coal consumption rate of the operational power plants increased slightly from 2007’s 338.9g/kWh to 340.5g/kWh in 2008 mainly attributable to the acquisition of 200MW class generation units of Jinzhou Power Plant and Shenhai Thermal Power Plants. No clear trend in the ratio of net / gross generation: In 2007 it was 93.75% / 93.6% for consolidated/all plants, in 2008 93.34% / 93.33%, in H1 2009 is was 93.45% for all its plants.

Water and waste treatmentNo mention of water and waste treatment

Overall CSR reporting & management Score: 0The company states that it is committed to environmentally friendly operations and a satisfying work place, but no further information given.


Little mention of environmental issues. State that all the power plants which were constructed and managed by CR Power have installed flue gas desulphurisation (“FGD”) facilities, but it is not obvious how many of the plants they constructed themselves and what are the plans for plants constructed by somebody else. For the power plants under construction, they started the installation of de-nitration facilities, which is more than the environmental protection requirements set by the PRC Government.

Climate change management Score: 0no mention. No emissions data

Health & Safety management Score: 0No mention of Health & Safety management

Corporate governance Score: 11Separation of Chairman & CEO: yes, percentage of independent board members: 36%, percentage of independent audit committee members: 100%, percentage of independent remuneration committee members: 67%, percentage of independent nomination committee members: 67%, disclosure of executive and board remuneration: yes.

Controversies Gravity: Highsightseeing trips from the California-based company Control Components Inc. China Resources Power Holdings was added to a list of six Chinese entities (Jiangsu Nuclear Power Corp, Guohua Electric Power, China Petroleum Materials and Equipment Corp, PetroChina, Dongfang Electric Corporation and China National Offshore Oil Corporation) allegedly involved in the corruption scandal, according to documents released by the US Department of Justice. According to a recent Greenpeace report, CRP is the most carbon dioxide intensive Chinese power producer with 816.5 g CO2/kWh. In July 2008, the Chinese Ministry of Environmental Protection has stated that China Resources Power Holdings, Guizhou Jinyuan Group and Shanxi International Electricity Group energy projects are not eligible for environmental impact assessments because they failed to add the required sulphur-eliminating facilities prior to the end of 2007. Its parent company is involved in further controversial issues.



Company Name (country) GCL-Poly Energy Holdings Limited (Hong Kong)RIC / ISIN: 2 3800.HK / KYG3774X1088 Market Cap US$ 3,458m

Ownership structure

Zhu (Gong Shan) (CEO & chairman) owns 40.97%. Poly lomited (HK) also substantial owner. Incorporated in the Cayman Islands. GCL Silicon unsuccessfully tried to do an IPO in 2008. GCL Poly and GCL Silicon have the same founder.

Company Type IPP

Business Model

Foreign-owned independent cogeneration plant operator in the People’s Republic of China, engaged in the development, investment, management and operation of cogeneration and power plants, and trading of coal in the People’s Republic of China. In June 2009, it acquired GCL Silicon and thus became China’s largest polysilicon producer and a leading player in the country’s solar industry. Also acquired interest in a coal mining project from its chairman.

Asian Utilities Environment and Social Rating 5%Corporate Governance Rating 67%CDP disclosure no request by CDP

ESG SummaryDisclosure on ESG issues by GCL Poly is almost completely missing and inadequate. The company is trying to position itself as a leading clean energy company after its acquisition of its parent company’s polysilicon business that delivers raw material to the solar industry. Polysilicon production is very energy intensive and uses highly toxic and dangerous, Therefore we would expect the company to focus more on environmental and H&S management.


Gas 360 41.1%Coal 444 51%Biomass 72 8%Oil 0 0%Hydro 0 0%Nuclear 0 0%Renewable 0 0%Total 876 100%Generation Mix Plans Disclosed none

CO2 emissions (tonnes) 4,059,523.00 ED1 cost (m USD) 231CO2 intensity (tonnes/ m USD rev.) 7,578.00 ED impact on 2008 revenue 43%CO2 damage cost (m USD) 142.00 ED impact on 2008 EBITDA 239%

Operational efficiency metricsNot disclosed

Water and waste treatmentNo mention of water and waste treatment.


There is a section on Corporate Citizenship on the GCL-Poly Energy website, but there is almost no CSR related information to be found. No useful information such as data, information on environmental management system, CSR management etc.


All GCL-Poly Energy plants have installed the CEMS (Continuous Emissions Monitoring System) which is required by the PRC Government. Most of GCL´s cogeneration plants use circulating fluidized bed (CFB) boilers, thus substantially lowering emission of sulfur dioxide. Desulphurization equipment has been installed for the few pulverized coal boilers. There is no information on environmental management inspite of the fact that the polysilicon production has a very high toxicity (TCS gas).

Climate change management Score: 0

In its 2 (small) biomass / coal power plants in Baoying and Lianyungang they successfully improved the efficiency of their direct combustion boilers and feeding systems, resulting in the reduction of raw coal consumption by 200,000 ton a year. This led to a decrease in emissions of carbon dioxide by approximately 400,000 ton. No CO2 emission data, no further mention of climate change.

Health & Safety management Score: 1

All power plants have adopted various internal safety policies. The company’s polysilicon facilities comply with all applicable governmental regulations and internal environmental health and safety (EHS) standards. GCL-Poly sponsored a number of training and development programmes for its employees in 2008.


Separation of Chairman & CEO: yes, percentage of independent board members: 33%, percentage of independent audit committee members: 100%, percentage of independent remuneration committee members: 100%, percentage of independent nomination committee members: -, disclosure of executive and board remuneration: partly

Controversies Gravity: LowNo news coverage on controversial issues

Community investmentGCL-Poly has made several donations. Chairman Zhu made a contribution to Nanjing University, it is not known whether this was in his own name or not. These are philantropic investments.Note 1: ED stands for environmental damage


Company Name (country) Hongkong Electric Holdings Limited (Hong Kong)RIC / ISIN: 2 0006.HK / HK0006000050Market Cap US$ 11,569mOwnership structure Cheung Kong Infrastructure (38.7%), other (61.3%)Company type Electricity generation, transmission & distribution

Business ModelInternational business is mainly focused on transmission & distribution, but the company also has interests in generation assets. Vertically integrated in HK

Asian Utilities Environment and Social Rating 65%Corporate Governance Rating 67%CDP disclosure yes

ESG SummaryHongkong Electric’s disclosure on ESG issues is relatively extensive and far above sector average. The company scores as an ESG leader. They publish emissions and safety data. CO2 emissions intensity for its HK operations is significantly higher than the one of its competitor CLP. There is room for improvement on disclosure for non-HK facilities.


Gas 1,745.10 30%Coal 3,955.56 68%Biomass - 0%Oil - 0%Hydro - 0%Nuclear - 0%Renewable 116.34 2%Total 5817 100%Generation Mix Plans Disclosed 100MW offshore wind farm planned


Operational efficiency metricsThermal Efficiency 2008: 35.8%, annual load factor: 53.9 %

Water and waste treatmentLamma Power Station awarded Wastewi$e and Energywi$e Labels in recognition of efforts to reduce waste, save energy and promote wider use of renewable energy.


There is a section on environmental issues on the company’s website. Little data is available, though. There is also a chapter in the AR on the latest environmental developments and on some community investment activities. The company also publishes an annual Social & Environmental Report.


Report CO2 emissions and climate change activities only on HK operation, not internationally. Reporting is extensive. HK Electric has been carrying out energy audits for its customers free of charge in order to promote energy efficiency. HK Eletric established a loan fund to provide interest-subsidized loans to their customers to implement energy saving initiatives. Quarterly emissions data for the Lamma Power Station are available. The Lamma Power Station is ISO 14´001 certified. Claim that most of the fly ash is used in construction. There are no targets and no group wide information. In HK the operations are certified according to OHSAS18001. There is data on the company’s safety performance (injury frequency and severity) which is available only for very few Asian utilities. The data shows little clear trends but varies widely from year to year. They set some environmental targets, most of which are part of their usual operations, though, such as the implementation of its emissions reduction facilities at the Lamma Power Station which is needed to meet regulatory standards.


Report CO2 emissions and climate change activities only on HK operation, not internationally. Reporting is extensive. Some activities top support energy efficiency with customers: for example, starting from 2009, HK Electric has been carrying out energy audits for the customers free of charge in order to promote energy efficiency. Further, they established a loan fund of HK$12.5 million per annum over a five-year period (total HK$ 62.5 million) to provide interest-subsidized loans to their customers to implement energy saving initiatives identified in the energy audits. CO2 emissions intensity is with 0.75 kg CO2 / kWh significantly higher than CLP at 0.54 kg CO2 / kWh for its HK operations. No emissions reduction target set. CO2 emissions for its HK operations are published in the Environmental Report. They show a slightly decreasing trend. They state that they recognise their responsibility to contribute to global efforts to reduce Greenhouse Gas (GHG) emissions by switching to low carbon fuel, promoting energy efficiency and applying renewable energy. They also do environmental education campaigns, which promote private energy saving activities. Are in the process of installing emission reduction equipment at the Lamma power station. The last of the FGD and low nitrogen oxide burner works is expected to be completed in the second quarter of 2010 by which time over 95% of the electricity generated at the Lamma power station will be either generated by gas or by coal fired units fitted with FGD’s and low nitrogen oxide burners.

Health & Safety management Score: 2HKE has established a clear H&S policy and an H&S Board. HKE follows international standards and has received external certification. There is data on the company’s safety performance (injury frequency and severity) which is available only for very few Asian utilities.


Separation of Chairman & CEO: yes, percentage of independent board members: 19%, percentage of independent audit committee members: 75%, percentage of independent remuneration committee members: 67%, percentage of independent nomination committee members: ND, disclosure of executive and board remuneration: yes. 2 of the independent directors have been with the company since 1985. One executive director is 77, all non-execs are 67+ years old.

Controversies Gravity: LowCriticised in the past couple of years for air pollution in HK

Community investment

Various community and educational programmes all related to the field of energy, e.g. ‘Energy Efficiency Education Kit for Secondary Schools’, providing learning and teaching resources on topics of energy efficiency for students and teachers in Hong Kong. These are strategic investments.

Note 1: ED stands for environmental damage


Company Name (country) Datang International Power Generational Co Ltd. (China)RIC / ISIN: 2 0991.HK / CNE1000002Z3Market Cap US$ 12,070m

Ownership structure

Beijing Energy Inv. Holding (11.41%), China Datang Group Corporation (33.61%), Hebei Constr. Investment Company (11.07%), Tianjin Jinneng Investment Company (10.29%), other holders of domestic share (5.48%), Holders of H shares (28.15%).

Company type IPP

Business Model

Datang Power is engaged in the development and operation of power plants, the sale of electricity and thermal power, and the repair and maintenance of power equipment and power-related technical services in the PRC.

Asian Utilities Environment and Social Rating 60%Corporate Governance Rating 67%CDP disclosure No response ESG Summary

Compared to others in the sector, reporting on ESG issues is relatively extensive, including concrete data on emissions. In other aspects disclosure is insufficient, though. For example, the company does not give a split of its generation capacity for example. Datang is a member of the UN Global Compact.

Generation type 2009 H1 (%)Gas

Reporting on fuel mix breakdown is confusing as the company reports only outdated (2006) or ambiguous data, that is fuel breakdown per unit installed and total installed capacity instead of attributable capacity. Main fuel source is coal with probably around 90% of attributable capacity. There are some very small wind power plants and the remaining capacity is hydro plants.

CoalBiomassOilHydroNuclearRenewableTotal 27790.2 MW


The Fujian Ningde Nuclear Power Station, which is owned by Datang, Guangdong Nuclear Power Investment Company Limited and Fujian Coal Industrial (Group) Corporation, commenced construction in February 2008

CO2 emissions (tonnes) 120,510,729.00 ED1 cost (m USD)

5,296.00 CO2 intensity (tonnes/ m USD rev.) 22,289.00 ED impact on 2008 revenue 98%CO2 damage cost (m USD) 4,207.00 ED impact on 2008 EBITDA 353%


unit coal consumption declined from 332.47 to 326.8 g/KWh from H1 08 to H1 09. For 2008, unit coal consumption was approximately 331.46 g/kWh, a decrease of approximately 4.87 g/kWh over the previous year, the consolidated electricity consumption rate of power plants was 6.01%. For 600MW and 300MW units Datang´s consumption is below the national average.

Water and waste treatment

Datang places emphasis on recycling water resources, and treatment of industrial waste water. Datang publishes water and waste treatment data. Datang focused on strengthening the management of water saving in coal-fired power plants and proactively promoted the application of new technologies. As at the end of 2008, eight air-cooling generating units and ten seawater-cooling generating units commenced operation, thereby leading to a decrease of 37.8% in water consumption per unit of power generated. Ten plants realised “zero drainage” of industrial waste water.

Overall CSR reporting & management Score: 1Publish a separate 2008 sustainability report. Some parts contain concrete data, for example on emissions, but mostly written as a marketing brochure. State that they abide by the 10 principles of the UN Global Compact. Global Compact seems to have ‘verified’ the report. Some emissions data is also included in investor presentations.


Datang has nuclear generation assets. GHG emissions data is available. Datang is investing in renewable energy generation assets. Company follows national policy on environmental management. Datang was the first Chinese IPP to have all units equipped with flue gas desulphurization units. The company claims that their emissions of smoke dust, SO2, NOx and waste water are lower than the national average. First power plant with DeNOx facilities in China. All emissions show decreasing trends. Most succesful have been the reductions in SO2 emissions which have declined to 1.16 g/kWh in 2008 from 6.6 g/kWh in 2004. 65.7% of coal ash was used in 2008.


no mention of climate change. No CO2 emissions data. Share of renewable & clean energy in its portfolio has increased rapidly in 2008

Health & Safety management Score: 1Datang strives to provide employees with better working and living conditions. Some information on staff development and training. No information on safety policies in place or days without injuries.

Corporate governance Score: 8Separation of Chairman & CEO: yes, percentage of independent board members: 33%, percentage of independent audit committee members: 33%, percentage of independent remuneration committee members: 60%, percentage of independent nomination committee members: ND, disclosure of executive and board remuneration: yes.

Controversies Gravity: Medium

Datang Power was one of the companies involved in a corruption scandal for accepting bribes from US listed Control Components (CCI). Criticised heavily for environmental impacts of planned hydro projects in the Mekong Delta. As most other Chinese IPPs using coal fired power plants the company has been under criticism in the past for high pollution levels from their plants

Community investmentDatang donates to poverty stricken areas and in the event of natural disasters. Datang supports different schools. Investments are philanthropic.Note 1: ED stands for environmental damage


Company Name (country) Huadian Power International Corp. Ltd. (China)RIC / ISIN: 2 1071.HK / CNE1000003D8Market Cap US$ 4,373m

Ownership structure

China Huadian Hong Kong owns 6% of H-shares and 64.51% of A-shares, Shandong International Trust & Investment Corporation owns 17.45% of A-shares. China Huadian Corp owns altogether 50.60% of the company, Shandong International Trust Corporation 13.3%

Company type IPP

Business Model Construction and operation of power plants and businesses related to power generation. Owns interests in coal mines.

Asian Utilities Environment and Social Rating 0%Corporate Governance Rating 50%CDP disclosure No response ESG Summary

There is very little disclosure of environmental and CSR related information and the company scores as an ESG laggard. Its coal consumption rate is relatively low. Huadian is involved in controversial projects such as the Ludila hydropower project, for which the Ministry of Environment has suspended approval.

Generation type H1 2009 (MW) 2009 (%)

Gas 918.40 4%Coal 19,377.61 94%Biomass - 0%Oil - 0%Hydro 168.72 1%Nuclear - 0%Renewable 92.28 0%Total 20,557.00 100%

Generation Mix Plans Disclosed 1283 MW hydro, 545 MW wind, 3800 MW of coal capacity under construction



Operational efficiency metricsOn-grid power sold: 46.57 million MWh, average utilization of coal-fired generating units: 2,320 hours, coal consumption: 326.21 g / MWh, unit fuel cost for power generation RMB 216.13/MWh. Over 90% of its installed capacity is composed of units of 300MW or above.

Water and waste treatmentNo mention of water or waste treatment


No CSR information on the company’s website. Very sparse environmental information in the AR. No indication of how environmental and CSR issues are handled within the company


Environmental information is quite sparse. According to the emission reduction data approved by State environmental protection authorities, the Group’s average emission of sulphur dioxide achieved a year-on-year decrease of 0.69 g/KWh. Unfortunately the company does not disclose absolute SO2 emissions, even though it knows the data. As at the end of 2008, generating units with a total capacity of 19,145MW, representing about 90% of the coal-fired generating units controlled by the Group, were equipped with desulphurisation facilities. There is no further information on environmental management

Climate change management Score: 0No mention of climate change. Coal consumption rate for its coal fired power plants is relatively low (probably due to the fact that most units are large)

Health & Safety management Score: 0Huadian states that production took place without incident at different sites, but fails to mention health and safety management. No emissions data


Separation of Chairman & CEO: yes, percentage of independent board members: 33%, percentage of independent audit committee members: 60%, percentage of independent remuneration committee members: 60%, percentage of independent nomination committee members: ND, disclosure of executive and board remuneration: partly.

Controversies Gravity: High

June 2009, the Ministry of Environmental Protection suspended approval for two hydropower station projects on the Yangtze River over concerns that they would cause the irreversible loss of aquatic diversity. Allegations of serious environmental pollution in the past. In 2007, China Huadian Corporation was put on a blacklist and was to be banned from launching new projects until it had cleaned up its existing facilities in a name and shame approach by the State Environmental Protection Administration.



Company Name (country) Huaneng Power International, Inc. (China)RIC / ISIN: 2 0902.HK / CNE1000006Z4Market Cap US$ 11,846m

Ownership structure

Huaneng International Power Development Corporation owns 42.0% of the company (56% of A shares), China Huaneng Group owns 8.8% of the company (11.7% of A-sahres and 0.7% of H-shares). SOE China Huaneng Group owns a controlling stake in HIPDC.

Company type IPP

Business Model

Investment, planning, operation and management of power plants. Largest Chinese IPP by capacity. HPI’s parent company, Huaneng Group, is the largest central-government-administered state owned IPP with more than 70GW controlled capacity. Bought the Tuas generation facilities in Singapore that have a local market share of around 25%

Asian Utilities Environment and Social Rating 0%Corporate Governance Rating 75%CDP disclosure yes, answered 2008 & 2009 CDP but details are not publicly available

ESG SummaryThere is very little disclosure of environmental and CSR related information. The company scores as an ESG laggard. Huaneng Power International is involved in controversial projects such as the Longkaikou hydropower project, for which the Ministry of Environment has suspended approval.


Gas ND NDCoal ND NDBiomass ND NDOil ND NDHydro ND NDNuclear ND NDRenewable ND NDTotal 39,159 100%Generation Mix Plans Disclosed No Disclosure



Operational efficiency metricsAverage coal consumption rate for power sold (2008): 325.94 g / MWh, internal usage rate: 5.38%.

Water and waste treatmentEvery power plant has waste water treatment facilities for treating waste water coming out from the operating units before it goes into the river or sea

Overall CSR reporting & management Score: 0No information on CSR management. Outdated information available on the website.


In 2008, 86.2% of the coal-fired generating units were equipped with desulphurization facilities. The company claims that it will have completed the installation of desulphurization equipment for all of its facilities be the end of 2009. There is little further information on environmental issues. Reportedly “responsible persons” have been assigned to ensure environmental protection at a plant level.

Climate change management Score: 0No mention of climate change. No emissions data

Health & Safety management Score: 0No mention of health & safety management

Corporate governance Score: 9Separation of Chairman & CEO: yes, percentage of independent board members: 33%, percentage of independent audit committee members: 100%, percentage of independent remuneration committee members: 57%, percentage of independent nomination committee members: 57%, disclosure of executive and board remuneration: yes

Controversies Gravity: HighIn June 2009, the Ministry of Environmental Protection has suspended approval for two hydropower station projects on the Yangtze River over concerns that they would cause the irreversible loss of aquatic diversity, and have negative impacts on communities. The Ludila hydropower project by Huadian Power, and the Longkaikou project by Huaneng Power were allegedly constructed illegally before reviewing potential environmental impacts. But environmental groups including Friends of Nature and the Chengdu Urban Rivers Association have questioned whether construction has really stopped on the dams. Also, in 2009, Huaneng Power has been accused of deviating from the original construction design of one of its biggest coal-fired plants in Inner Mongolia, using water rather than air to cool generators although the supply is under threat in the area. In 2007, Huaneng’s parent company China Huaneng Group was named the world´s largest carbon polluter, which is a consequence of it being the largest Chinese power producer by capacity installed. The parent company has also frequently been criticized by the central government for not meeting environmental standards.



Company Name (country) GVK Power and Infrastructure Ltd. (India)RIC / ISIN: 2 GVKP.BO / INE251H01024Market Cap US$ 1,547m

Ownership structurePromoters (60.94%), foreign institutional investors (17.85%), banks, FI, mutual funds ( 8.24%), others (12.97%)

Company type IPP

Business Model

focus on power generation assets (gas, hydro and thermal), roads, airports, coal mines and oil and gas. Business organized into Energy, Transportation and Urban Infrastructure. Power is expected to be around 70% of FY10 EBITDA

Asian Utilities Environment and Social Rating 0%Corporate Governance Rating 50%CDP disclosure Not requested to disclose ESG SummaryGVK Power does not disclose any environmental information, which is inadequate for a power and infrastructure company and makes it impossible to assess its environmental performance. Its distribution mix is relatively favourable with 100% of gas powered generation capacity and significant hydro expansion planned.


Gas 901.00 100%Coal - 0%Biomass - 0%Oil - 0%Hydro - 0%Nuclear - 0%Renewable - 0%Total 901.00 100%Generation Mix Plans Disclosed 700MW hydro, 540MW coal in 2010

CO2 emissions (tonnes) 466’331 ED1 cost (m USD) 24CO2 intensity (tonnes/ m USD rev.) 3’983 ED impact on 2008 revenue 21%CO2 damage cost (m USD) 16 ED impact on 2008 EBITDA 40%

Operational efficiency metricsNo information.Natural gas projects were idle for a some time due to non-availability of natural gas, but run on high plant-load factors now

Water and waste treatmentNo mention of water or waste treatment

Overall CSR reporting & management Score: 0No CSR related information available at all. GVK states that it has a socially responsible vision, however it provides no information that supports this vision. Has a foundation.

Environmental management Score: 0No mention of Environmental management & climate change management

Climate change management Score: 0No mention and no emissions data disclosed


Corporate governance Score: 6Separation of Chairman & CEO: no, percentage of independent board members: 50%, percentage of independent audit committee members: 100%, percentage of independent remuneration committee members: 100%, percentage of independent nomination committee members: ND, disclosure of executive and board remuneration: partly

Controversies Gravity: LowNo controversial news coverage to our knowledge


GVK makes community investments through the GVK Foundation. Investments are focused on the poor, rural communities living near its plants. The Foundation builds primary schools and community halls and provides drinking water. These investments are strategic.


http://www.hpi.com.cn/ReportFile/2009.SEPTEMBER.2912542116735775449.pdf


Company Name (country) KSK Energy Ventures (India)RIC / ISIN: 2 KSKE.BO / INE143H01015Market Cap US$ 1,591m

Ownership structure KSK Energy Ltd. (55.25%), LB India Holdings Mauritius (8.41%), LB Mauritius (20%), Other (6.35%), Free float (9.99%)

Company type IPP

Business Model Power project development company (power development, operation, maintenance)

Asian Utilities Environment and Social Rating 0%Corporate Governance Rating 67%CDP disclosure Not requested to disclose by CDP

ESG Summary

Today, KSK Energy Ventures has an environmentally relatively favourable generation mix with 40% gas, but this will change for the worse, once its capacity expansion comes through. Clear laggard with regards to international CSR and environmental management.

Generation type 2009 (MW) 2009 (%) 2010 (MW) Gas 57.60 40% 57.60 Coal 86.40 60% 804.40 Biomass - 0% - Oil - 0% - Hydro - 0% - Nuclear - 0% - Renewable - 0% - Total 144.00 100% 862.00

Generation Mix Plans Disclosed under construction: 718MW of coal (540 of which are lignite), under advanced development: 1800MW of coal and 130 hydro. 5400MW of coal planned & 945MW of hydro. Interest in Lignite mining

CO2 emissions (tonnes) 548,185.00 ED1 cost (m USD) 31CO2 intensity (tonnes/ m USD rev.) 9,219.00 ED impact on 2008 revenue 51%CO2 damage cost (m USD) 19.00 ED impact on 2008 EBITDA 58%

Operational efficiency metricsND


Overall CSR reporting & management Score: 0No reporting on any CSR issues. Laggard in terms of international CSR and environmental management

Environmental management Score: 0No emissions data, no information on environmental management or climate change

Climate change management Score: 0No information at all on climate change. No emisisons data given


Corporate governance Score: 8Separation of Chairman & CEO: yes, percentage of independent board members: 40%, percentage of independent audit committee members: 100%, percentage of independent remuneration committee members: 100%, percentage of independent nomination committee members: ND, disclosure of executive and board remuneration: partly

Controversies Gravity: MediumSome local resistance against its Kameng region hydro project, not large-scale.

Community investmentKSK has financed the construction of two temples, a marriage hall, water tanks for a remote community and a medical camp. These investment are philanthropic.Note 1: ED stands for environmental damage


Company Name (country) Lanco Infratec (India)RIC / ISIN: 2 LAIN.BO / INE785C01030Market Cap US$ 2,765m

Ownership structure

73.6% in the hands of the promoter group: Prince Stone Investments, Ltd. Owns 45.1%, Lanco Group, Ltd. 13.25%, LCL Foundation 4.41%, Rao (Bhaskara G) 2.37%, Rajagopal (L) 2.28%, Rao (Madhusudan L) 2.27%, Sridhar (L) 2.27%

Company type IPP

Business Model

Integrated infrastructure company with focus on construction, power, roads and property development. According to recent estimates, power assets are about 45% of company value. Also active in power trading

Asian Utilities Environment and Social Rating 10%Corporate Governance Rating 67%CDP disclosure No request to disclose by CDP

ESG SummaryRelatively clean IPP in the Indian context due to its high reliance on gas for power generation. Mix will become less favourable in the future, when its large expansion in coal fired capacity comes on-stream. Clear laggard with regards to internal CSR and environmental management.

Generation type 08-’09 (MW) 08-’09 (%) Plans (MW) Consider (MW)Gas 488.00 95% 368.00 - Coal - 0% 6,775.00 - Biomass - 0% - - Oil - 0% - - Hydro 10.00 2% 705.00 - Nuclear - 0% - - Renewable 13.00 3% - 250.00 Total 511.00 100% 7,480.00 250.00

Generation Mix Plans Disclosed plans 6775MW of coal, 705MW of hydro and 368MW of gas. 3,913MW are already under construction. Later will also consider 250MW of wind

CO2 emissions (tonnes) 1,962,000.00 ED1 cost (m USD) 104CO2 intensity (tonnes/ m USD rev.) 2,431.00 ED impact on 2008 revenue 13%

CO2 damage cost (m USD) 69.00 ED impact on 2008 EBITDA 53%

Operational efficiency metricsND

Water and waste treatmentNo mention of Water & Waste treatment


UN Global Compact member. Lanco publishes an annual CSR report that is focused on community investments. Lanco has a CSR management team. But no info on company international CSR activities or management

Environmental management Score: 0No information on energy savings in annual report. Only information on environmental and OHSAS certification available. Information on initiatives at its construction activities and emission data is missing. (Lanco’s flagship Kondapalli power plant has ISO 14001:2004 certification for Environmental Management, . Lanco’s Aban power plant has ISO 14001:2004 certifications.)

Climate change management Score: 0Brief mention of climate change in Lanco’s CSR report. No emissions data.


No mention of Health & Safety management, yet Lanco invests in community health programs.Lanco’s flagship Kondapalli power plant has OHSAS 18001:2007 for Occupational Health & Safety, and OHSAS 9001:2000 for Quality Management Systems. Lanco’s Aban power plant hasOHSAS 18001:1999 certifications.


Separation of Chairman & CEO: yes, percentage of independent board members: 50%, percentage of independent audit committee members: 75%, percentage of independent remuneration committee members: 100%, percentage of independent nomination committee members: ND, disclosure of executive and board remuneration: partly.


Lanco Amarkantak Thermal Power Station was criticised for an incident with the World Bank which referred to its coal projects as “clean”. Lanco Infratech is mentioned in a report by International Rivers as being interested in dam projects that destroy the livelihoods of local people in the Himalayas, but no details are given. Overall modest criticism.

Community investmentStrong philanthropic activities via the LIGHT foundation. Report of these activites can be found in the annual CSR report.Note 1: ED stands for environmental damage


Company Name (country) Neyveli Lignite Corporation Limited (India)RIC / ISIN: 2 NELG.BO / INE589A01014Market Cap US$ 5,149m

Ownership structureCentral government (93.56%), institutional investors (4.39%), non-institutional investors (2.05%) holding company KSK Energy Limited owns 55.24%, which in turn is owned by AIM listed KSK Power Venture

Company type GenerationBusiness Model lignite mining and power generationAsian Utilities Environment and Social Rating 0%Corporate Governance Rating 67%CDP disclosure No Response

ESG SummaryFrom an environmental point of view Neyveli Lignite has a very unfavourable generation mix with a 100% lignite coal. It is not expected to improve significantly by its expansion plans. It also runs one of the oldest power plants in the whole country. Its (publicly available) environmental management is grossly inadequate for such a high impact company.


Gas - 0%Coal (ligtnite) 2,490.00 100%Biomass - 0%Oil - 0%Hydro - 0%Nuclear - 0%Renewable - 0%Total 2,490.00 100%


plans another 750MW of lignite coal capacity linked to its mining activities, plus another 3000+MW in planning, partly as JVs. Overall expansion plans are >15`000MW, all lignite or coal with only 2GW hydro and 200MW wind further down on the priority list. In Sept 09, more commitment to renewable was made, plans to commence production of electricity by wind (50MW in an initial stage) by Oct 2010.


Operational efficiency metricsNo disclosure. Ageing machinery is a serious risk. Partly plants are very old, and therefore not only inefficient, but will also have to be replaced at some time soon. Risk of disruption in operations when old machinery fails.

Water and waste treatmentNo mention of water and waste treatment Overall CSR reporting & management Score: 0Only some information on community programs with little relevance to environmental efforts. Neyveli provides no information on how CSR is addressed within the company.


Neyveli Lignite has a very unfavourable generation mix (100% lignite coal). Its power plants are old. Some information on restoration of abandoned mine land, afforestation and greening activities around its mines. Its (publicly available) environmental management is inadequate for such a high impact company. No GHG emissions data or targets. Environmental management is a must for a high impact activity such as open cast mining. It is telling that NLC has carried out a study on trees’ tolerance to air pollution for part of its remediation efforts and that the company itself mentions resistance to costs associated with environmental laws.


Considering delaying the shut-down of its oldest TPS – I generation plant, which is at the end of its life as it has been running for over 40yrs already. From environmental and climate change point of view, fast replacement by an efficient new plant would be the preferable option. No emissions data, targets etc.



Separation of Chairman & CEO: yes, percentage of independent board members: 40%, percentage of independent audit committee members: 100%, percentage of independent remuneration committee members: 100%, percentage of independent nomination committee members: ND, disclosure of executive and board remuneration: partly

Controversies Gravity: MediumSome local resistance against its Kameng region hydro project. In the past, there were serious issues around labor conditions for contract workers. In April 2008, 13,000 contract laborers at the NLC have staged a demonstration to demand the regularization of services as well as housing, medical and transportation provisions and bonuses. Protests of the labour unions against potential disinvestment plans by the central government.


Neyveli actively provides welfare services to the community of Neyveli township, most noteworthy would be Neyveli’s contribution to the education of handicapped children. These investments philantropic.



Company Name (country) NTPC Limited (India)RIC / ISIN: 2 NTPC.BO / INE733E01010Market Cap US$ 36,594m

Ownership structure Government of India (89.5%), FII (3%), domestic institutions & public (7.5%)

Company type Power generation, transmission & distributionBusiness Model Asian Utilities Environment and Social Rating 50%Corporate Governance Rating 33%CDP disclosure No response

ESG Summary

In absolute and relative terms, NTPC is a large polluter. Although expansion plans will tilt the capacity mix a little more towards renewables, it will continue to be heavily dominated by coal. NTPC has implemented a couple of very positive CSR initiatives, but given its high impact we would expect the company to be even more proactive. It scores as a follower in our ESG scoring. NTPC is involved in a number of controversies that is not surprising for a company of its size.


Gas 5,515.92 18%Coal 25,128.08 82%Biomass - 0%Oil - 0%Hydro - 0%Nuclear - 0%Renewable - 0%Total 30,644.00 100%

Generation Mix Plans Disclosed under construction: 11´510MW of coal, 1´920MW of hydro, in addition 4´000MW with JVs. 1´000MW of renewables (ex large hydro) in its business plan

CO2 emissions (tonnes) 190,629,375.00 ED1 cost (m USD) 10,282.00 CO2 intensity (tonnes/ m USD rev.) 19,123.00 ED impact on 2008 revenue 103%CO2 damage cost (m USD) 6,655.00 ED impact on 2008 EBITDA 304%


Operational efficiency metrics: show plant load factor and availability factor of coal based power plants over a 10yr history. Availability is at its highest value at 92.47%. PLF is relatively high, even though slightly lower than 07/08 at 91.14%. It is significantly higher than the Indian average of 77.22%. But one has to consider that high PLF might also be related to better fuel availability for a company of the size and political power of NTPC. Claim that energy conservation parameters like specific oil consumption and auxiliary power consumption have also shown considerable improvement over the years, but do not show any proof. Note that too high PLF is not desirable as time for operation and maintenance is important for efficient operation.


Provision of advanced treatment facilities in its Liquid Waste Treatment Plants (LWTP), installation of recycling systems for ash pond effluent called Ash Water Recirculation System (AWRS) and installation/ operation of closed cycle condenser cooling water systems with higher Cycle of Concentration (COC) are some of the measures implemented in most stations. Ash Utilization is one of the key concerns at NTPC. NTPC has a strong water and waste treatment program.


Some good environmental and CSR information on company website and in AR. 3 level approach to CSR: 1) compliance, 2) philanthropy and image building, 3) innovations & key business strategies. Global Compact member. Some proactive efforts related to resettlement: NTPC has formulated specific guidelines for the welfare of Project Affected Persons (PAP’s). It has also undertaken community development activities in and around the projects. Rehabilitation Action Plans are implemented in most of the projects. Some projects of NTPC were already fully or substantially developed by the time the 1993 R&R Policy was implemented. The company did a re-assessment of the activities in the older projects and carried out a ‘retrofit’ R&R operation to bridge the gaps wherever they had occurred. NTPC has formulated an “Initial Community Development” (ICD) policy to take up community development activities in greenfield/expansion projects. Strong commitment to education.


NTPC has decided to set aside 1% of its distributable profit for research and development including 0.5% for research activities related to ‘clean coal’ and climate change initiatives. An Efficiency Management System (EMS) has been implemented at all stations to focus on periodic performance evaluation, analysis and development of action plans for performance restoration. All NTPC power stations have been certified for ISO 14001 & OHSAS 18001. According to the company environmental parameters are monitored, but no data on emissions is provided.


No emissions data available. NTPC has decided to set aside 1% of its distributable profit for research and development including 0.5% for research activities related to ‘clean coal’ and climate change initiatives. A fossil fuel fired power plant using Super Critical Technology has been approved by UNFCCC for CDM credits. The Center for Power Efficiency and Environmental Protection (CenPEEP), set up with technical assistance of USAID/USDOE, has a mandate to reduce GHG emissions per unit of electricity generated by improving the overall performance of coal-fired power plants. Various state-of-the-art technologies and practices for improvement in efficiency and maintenance have been demonstrated in local conditions and disseminated to power stations through hands-on-training, guidelines and workshops. An Efficiency Management System (EMS) has been implemented at all stations to focus on periodic performance evaluation, analysis and development of action plans for performance restoration. International cooperation for climate change has expanded with signing of an agreement between Ministry of Power, NTPC Ltd. and Japan International Agency for Cooperation (JICA) to undertake a ‘Study on enhancing Efficiency of Operating Thermal Power Plants in NTPC-India’. The new NTPC Energy Technology Research Alliance (NETRA) is envisioned as a state of- the-art centre for research, technology development and scientific services in the domain of electric power. NETRA has filed 12 patent applications for various activities like assessment of high voltage transformers, fly ash based utensil cleaning powder, CO2 capturing Zeolites from flue gas; etc

Health & Safety management Score: 1The company states that it has internal checks to prevent complicity in human rights abuses.


Separation of Chairman & CEO: no, percentage of independent board members: 50%, percentage of independent audit committee members: 80%, percentage of independent remuneration committee members: ND, percentage of independent nomination committee members: ND, disclosure of executive and board remuneration: partly, comments: directors are appointed by the government of India.


Think-tank Center for Global Development issued its list of the world’s worst polluting companies, with China’s state-run Huaneng Power International ranking at number one. The list, which is compiled on the basis of factors including carbon emissions, energy generated, intensity, and usage of fossil, hydro, nuclear and other renewable sources puts India’s NTPC third. NTPC is mentioned by NGO International Rivers as being involved in planning dams in the Himalayas that destroy the livelihood of the local population. In January 2008, three people were killed and others injured when police opened fire on hundreds of local people protesting outside NTPC´s plant in the state of Bihar, India. The protesters were demanding electricity supplies from NTPC following acute power shortages in the state. The state government accused India’s UPA-ruled government of discriminating against non-UPA ruled states in the electricity crisis. In June 2007, NTPC has opposed an Environment Ministry’s proposal about early disposal of fly ash and lesser storage time. The Environment Ministry suggested a time line for the clearing of existing fly ash. Fly ash is a significant water, air, and soil pollutant.


Extensive community development programs around its operating stations. NTPC has formulated specific guidelines for the welfare of Project Affected Persons (PAP’s). It has also undertaken community development activities in and around various projects. NTPC has formulated an “Initial Community Development” (ICD) policy to take up community development activities in greenfield/expansion projects. NTPC’s community investments are strategic.



Company Name (country) Power Grid Corporation of India (India)RIC / ISIN: 2 PGRD.BO / INE752E01010Market Cap US$ 9,421mOwnership structure Government of India (86.36%), other (13.64%)Company type Transmission

Business Model

Monopoly over the inter-state and inter-regional transmission of power across the country. Plus telecom, connectivity, consultancy, and leasing. transmission network of around 71,500 circuit km. Powergrid has been assigned the job of execution of rural electrification in 68 districts covering 87,300 Villages at an estimated cost of about Rs. 9,400 Crore. It has established the infrastructure for electrification of over 22,002 villages in India.


ESG Summary

The company seems to have a solid operational track record. Focusing purely on transmission, Power Grid´s environmental impact is automatically a lot lower than the one of power generating utilities. The company´s is involvement in Burma may be an issue for some responsible investors.

Transmission asset 2009Transmission lines (ckt km) 71600Number of sub-stations 122Generation Mix Plans Disclosed

CO2 emissions (tonnes) 232,957.00 ED1 cost (m USD) 11CO2 intensity (tonnes/ m USD rev.) 184.00 ED impact on 2008 revenue 1%CO2 damage cost (m USD) 8.00 ED impact on 2008 EBITDA 1%


Solid operational track record, maintaining its transmission availability at more than 99%, which is on par with international utilities. Consistently outperforms the efficiency targets the government sets in MoUs. Has been in the highest bracket, i.e. excellent, of the government’s public service rating for a couple of years. Data for system losses is missing



Some CSR information on the company website and in AR. Certified to Social Accountability Standard SA 8000:2001.


Integrated management system: ISO 9001:2000 for quality, ISO 14001:2004 for environment management. Development of power lines has a huge impact on forests, recently forest involvement which was about 6% in 1998 has been brought down to 2%. Power Grid consistently outperforms the efficiency targets the government sets in MoUs. Current principles guiding environmental management are in line with government regulation. Power Grid mentions that it is investing in R&D on Super Grid comprising 1200kV UHVAC, which would be more energy efficient.

Climate change management Score: 0R&D on Super Grid comprising 1200kV UHVAC, which would be more energy efficient. No reference to climate change. No emissions data.

Health & Safety management Score: 1OHSAS 18000:1999 for health and safety management. Environment & Social Policy Statement was revised in 2005. It’s based on the basic principles Avoidance, Minimization and Mitigation. Gives information on employee training and development.

Corporate governance Score: 3Separation of Chairman & CEO: no, percentage of independent board members: 50%, percentage of independent audit committee members: 67%, percentage of independent remuneration committee members: ND, percentage of independent nomination committee members: ND, disclosure of executive and board remuneration: no, ownership structure: The Indian government owns 86.36%, comment: 2 out of 12 are government sent directors.


Significant involvement in Burma: In July 2008 the Export-Import Bank of India signed a line of credit agreement with Myanmar Foreign Trade Bank and the Power Grid Corporation of India Ltd. was to undertake the construction of three transmission projects in Myanmar. In February 2009, Power Grid and state-run Transmission Corporation were criticized for allegedly attempting to erect pylons on community property, without compensating the land owners.


POWERGRID organizes regular health camp and blood donation camp in collaboration with leading medical institutes for free medical check-up of villagers and also provide free medicines. Apart from this women organization of POWERGRID also organizes various welfare camp for the welfare of communities by providing vocational training and distribution of articles like swing machines, cycles etc.



Company Name (country) Reliance Infrastructure Ltd (India)RIC / ISIN: 2 RLIN.BO / INE036A01016Market Cap US$ 4,963m

Ownership structure Reliance ADA (37.45%), institutional public (44.68%), non-institutional public (17.11%), other (0.46%)

Company type Integrated (generation, transmission, distribution, trading)

Business Model

formerly Reliance Energy Limited. The engineering, procurement, construction (EPC) segment does value-added services in construction, erection and commissioning. Other operations include development, operation and maintenance of toll roads, metro rail transit system and real estate projects, including special economic zone.


ESG Summary

Reliance Infrastructure has done some efforts in environmental and h6S management and scores in the mid-range of the sector. It reports on emissions data and has reduced SOx emissions significantly by installing flue gas desulphurization systems. On the negative side, the company does not address climate change as an issue and has high losses in its distribution system.


Gas 433.32 46%Coal 499.26 53%Biomass - 0%Oil - 0%Hydro - 0%Nuclear - 0%Renewable 9.42 1%Total 942.00 100%

Generation Mix Plans Disclosed 100MW gas or naphtha expansion planned at Goa facility, most other expansion in distribution segment and growth in EPC business

CO2 emissions (tonnes) 6036127 ED1 cost (m USD) 10282CO2 intensity (tonnes/ m USD rev.) 19123 ED impact on 2008 revenue 103%CO2 damage cost (m USD) 6655 ED impact on 2008 EBITDA 304%

Operational efficiency metricsAT&C losses for distribution companies: 20.59% at BRPL, 24.02% BYPL, SOx absorption: more than 90%

Water and waste treatmentNo mention of water and waste management

Overall CSR reporting & management Score: 1some CSR info on the websites, but no targets, quantitative data etc.


Reliance has an environmental board committee. Information on environmental management is available on the company website. Yearly publication of CO2 emissions. Flue Gas De-sulphurisation seems to have been introduced in 2008/09. No/little mention of climate change.

Climate change management Score: 0no mention of cliate change. Both the Flue Gas De-sulphurisation units were in service throughout the year with SOx absorption more than 90% as stipulated. Flue Gas De-sulphurisation seems to have been introduced in 2008/09 as SOx levels dropped from 29.4 the year before to 3.92. Further detailed emissions data on p38/39 of AR. There is no reportable accident in more than 17.5 million man hours

Health & Safety management Score: 2Reliance Infrastructure formulated a health and safety policy to confirm its commitment to H&S. No reportable accident in more than 17.5 million man hours.


History of Corporate Governance problems due to controlling family diagreement (the two Ambani brothers) Separation of Chairman & CEO: no, percentage of independent board members: 50%, percentage of independent audit committee members: 100%, percentage of independent remuneration committee members: 100%, percentage of independent nomination committee members: 100%, disclosure of executive and board remuneration: yes.

Controversies Gravity: LowOnly some general criticism on planned hydro projects in India that displace people and destroy local livelihoods.

Community investmentReliance Infrastructure Ltd. has formulated policies for social development. These policies have resulted in both strategic and philantropic investments in its direct community.Note 1: ED stands for environmental damage


Company Name (country) Reliance Power Ltd (India)RIC / ISIN: 2 RPOL.BO / INE614G01033Market Cap US$ 7,379m

Ownership structureReliance ADA Group (47.68%), AAA Project Ventures Pvt. Ltd. (42.23%), other institutional investors (5.58%), other non-institutional investors (9.64%)

Company type IPPBusiness Model development, construction and operation of power projects Asian Utilities Environment and Social Rating 10%Corporate Governance Rating 75%CDP disclosure Not requested to disclose by CDP

ESG Summary

Reliance Power does not yet have any operational power capacity, which makes it difficult to assess its performance in managing environmental and social issues. The company claims to have a pro-active Rehabilitation and Resettlement policy in place, but there is still a petition pending with the High Court amongst others because of claims of no proper public involvement processes.

Generation type FY 2012 (MW)

Gas - Coal 2,160.00 Biomass - Oil - Hydro - Nuclear - Renewable - Total 2,160.00


no capacity operational, yet. If projects are executed according to plan: by FY12 2160MW of domestic coal (100%), by FY 2014 4200MW (36%) gas and 7440MW (64%) coal, by FY2018 3300MW, (10%) hydro, 10280MW (32%) gas, 18580 MW (58%) coal

CO2 emissions (tonnes) 0 ED1 cost (m USD) 0CO2 intensity (tonnes/ m USD rev.) 0 ED impact on 2008 revenue 0CO2 damage cost (m USD) 0 ED impact on 2008 EBITDA 0

Operational efficiency metricsNo metrics available, generation assets or not yet in operration.



Reliance Power does not yet have any operational power capacity, which makes it difficult to assess its performance in managing environmental and social issues. Reliance Power is committed to adopting Rehabilitation & Resettlement (R&R) policies which go beyond the norms set out by the Government and to ensure that they meet the development needs of the local community. Claims to follow a participatory development-oriented approach that strengthens the bond with the local communities.


Applying for CDM credits for part of their projects including Sasan and Krishnapatnam Ultra Mega Power Projects (UMPPs) as the projects will employ supercritical coal technology. Also its hydroelectric power projects under implementation and the gas based generation projects will apply for CDM credits. No emissions data available yet.

Climate change management Score: 0Applying for CDM credits for part of their projects including Sasan and Krishnapatnam Ultra Mega Power Projects (UMPPs) as the projects will employ supercritical coal technology. Also its hydroelectric power projects under implementation and the gas based generation projects will apply for CDM credits. Some sources criticise the eligibility of coal-fired power plants for CDM credits. No emissions data

Health & Safety management Score: 0Safe power generation is one of Reliance power’s missions

Corporate governance Score: 9Separation of Chairman & CEO: yes, percentage of independent board members: 50%, percentage of independent audit committee members: 75%, percentage of independent remuneration committee members: 67%, percentage of independent nomination committee members: 67%, disclosure of executive and board remuneration: ND.


Large-scale development of hydro power in Arunachal Pradesh has been heavily critizised for destroying the livelihoods of local people. Some sources criticise the eligibility of coal-fired power plants for CDM credits. A petition with the High Court is still pending that ask the court to withdraw the Environmental Impact Assessment of Reliance Power´s 1000MW Siyom Hydro Electric Project.


A compensation package for project affected families is being developed with inputs from various key stakeholders, including senior district officials, representatives of local communities and credible outside agencies such as The Energy Research Institute (TERI).



Company Name (country) Tata Power (India)RIC / ISIN: 2 TTPW.BO / INE245A01013Market Cap US$ 6,695m

Ownership structure Tata Group companies (33.12%), Life insurance corp. Of India (11.71%), others (55.17%)


Business Model

power generation, transmission (1200km) and distribution (800´000 customers). Power trading. Strategic interest in Indoneisan coal assets. development & manufacturing of tanks/weapons in its Strategic Electronics Division working for the Indian defence sector.

Asian Utilities Environment and Social Rating 85%Corporate Governance Rating 67%CDP disclosure Yes, but not public

ESG Summary

Tata Power performs relatively well in our ESG scoring. Tata Power has a clear strategy on how to deal with climate change and initiatives to reduce emissions of SO2 and NOx. The company has significantly lowered its losses in its Delhi distribution system. It plans to publish its second sustainability report in 2009. But there is significant room for improvement: Disclosure on GHG emissions would be appreciated. And in spite of its new super-critical coal project’s application for CDM credits, its generation mix will become more CO2 intensive with its significant investment into coal fired generation.


Gas 167.10 6%Coal 1,169.70 42%Biomass - 0%Steam (Industrial) 83.55 3%Oil 724.10 26%Hydro 445.60 16%Nuclear - 0%Renewable 167.10 6%Total 2,785.00 100%

Generation Mix Plans Disclosed 4866MW coal, 30MW wind and 111MW of waste gas under construction



Transmission: 1200 km, distribution: 800,000 customers, generation availability wind: 94-99%, AT & C losses (FY 09): 15.2%, Transmission grid availability: 99.31%. Generation availabilities and plant load factors for the thermal power plants. For its North Delhi distribution subsidiary owned jointly with the Delhi government, the AT & C losses have been reduced from 18.5% at the end of FY08 (53.4% at the time of takeover of the business in July 2002) to around 15.2% at the end of FY09, against the regulatory target of 20.35% at the end of FY09 and 17% at the end of FY11. This has been achieved by measures like energy audits, replacement of old meters with theft-proof electronic meters, automated meter reading, metering of previously unmetered consumers who were earlier charged a flat rate, aggressive enforcement and recovery and awareness drives. Transmission grid availability in Mumbai was 99.31% as against MERC norm of 98%. Powerlinks Transmission Limited, a joint venture with Power Grid Corp of India, that delivers electricity from Bhutan, has 99.73% average availability

Water and waste treatmentTata Power has invested in streamlining water use


Published a sustainability report in 2003 according to GRI guidelines, plan to publish another one in 2009. Tata Power also publishes its Corporate Sustainability Policy, its environmental and health & safety policies. Tata Power has created a Sustainability Council (SC) under the leadership of Mr.Agrawala, Executive Director (ED) of Business Development and Strategy. The whole Tata Group has definitely worked well on their image: In BT´s 2008 survey of corporate leaders in sustainable development, Tata Group ranked by far first with 31% vs Reliance with 13% at the second place


Addresses the issue of climate change in its AR and on the web and has defined a strategy on how to deal with it. Tata Power has invested heavily in pollution control equipment. Tata Power: “will strive to go beyond simple compliance and excel in its environmental performance. Initiatives for voluntary reduction in SO2, SPM, NOx and CO2 emissions are a part of ongoing strategy”. This includes the application of super-critical coal technology, further exploring renewables opportunity, working towards energy efficiency in plants and offices, awareness raising on energy savings in schools. Unfortunately no underlying data is provided. Some of its wind projects are CDM registered. No emissions data yet. No environmental management system in place.

Climate change management Score: 2Addresses the issue in its AR and on the web and has a clear strategy on how to deal with climate change. This includes the application of super-critical coal technology, further exploring renewables opportunity, working towards energy efficiency in plants and offices, awareness raising on energy savings in schools. Some of its wind projects are CDM registered and they are applying for the new super-critical coal project as well. Publicly available data on CO2 emissions would be appreciated. Apparently Tata Power has commissioned Ernst & Young to measure their carbon footprint.

Health & Safety management Score: 1Tata Power has a Health & Safety Policy, but certification of the workplace safety system is missing.

Corporate governance Score: 8Separation of Chairman & CEO: yes, percentage of independent board members: 50%, percentage of independent audit committee members: 67%, percentage of independent remuneration committee members: 33%, percentage of independent nomination committee members: ND, disclosure of executive and board remuneration: yes.


Critisism against the World Bank and Tata Power for promoting Tata´s 4000MW super-critical coal project as ‘clean’. Also, opponents to the project at a local village claim that it will be detrimental to the local environment and affect the livelihoods of about 20,000 villagers.

Community investmentThrough Tata’s Corporate Sustainabiliy Initiatives program many strategic investments have been made in health care, education, clean water and accessibility. Note 1: ED stands for environmental damage


Company Name (country) Torrent Power (India)RIC / ISIN: 2 TOPO.BO / INE813H01021Market Cap US$ 3,083m

Ownership structureTorrent Private Limited (52.78%), Life Insurance Corp. of India (9.56%), Gujarat State Investments (9.92%), Reliance Capital Trustee (3.07%), public (24.67%)


Business Model generation, transmission and distribution. T&D business serves 1.97 million customers in the cities of Ahmedabad, Gandhinagar and Surat


ESG Summarylaggards in our assessment. Its generation capacity is dominated by coal. On the positive side, its T&D losses are among the lowest in the country at only 7.5% for the districts that they own for some time.


Gas 100.00 20%Coal 400.00 80%Biomass - 0%Oil - 0%Hydro - 0%Nuclear - 0%Renewable - 0%Total 500.00 100%

Generation Mix Plans Disclosed 1147.5 MW under implementation, advanced class CCPP based on LNG (eligible for CDM carbon credits). Another 6.875GW in early planning stages: 2GW of coal, 4.875GW of gas


Operational efficiency metricsNumber of T&D customers: 1.97 million, T&D losses: 7.51% (low compared to national average). Torrent Power Limited has one of the lowest T&D losses in the country. Took over the Bhiwandi Distribution Franchise in Dec 2006. Here T&D losses are still significantly higher. PAF and PLF of its 2 generation plants were 93.85% and 91.55%


Overall CSR reporting & management Score: 0Comprehensive information on Torrent’s CSR program available on its webpage. However its CSR program is mainly focused on community investments. Apparently very efficient in disaster management, such as during floods or an earth quake


Environmental initiatives include: installation of 90 m. tall chimneys for better dispersion of flue gases, use of very high efficiency electrostatic precipitators to remove fly ash from gases emitted from chimneys, regular monitoring of pollutants like Sulfur Oxides, Nitrogen Oxides and Stack Pollution Monitoring in flue gases. But no systematic information on environmental performance.

Climate change management Score: 0no mention

Health & Safety management Score: 0No mention of Health & safety management


Separation of Chairman & CEO: no, percentage of independent board members: 64%, percentage of independent audit committee members: 100%, percentage of independent remuneration committee members: ND, percentage of independent nomination committee members: ND, disclosure of executive and board remuneration: partly, comment: 1 director by Gov of Gujarat.

Controversies Gravity: LowNone found Community investment

Torrent made several philantropic investments through ‘Sparsh’, its CSR Initiative, it paid for the construction of a public garden in Gujarat, donated money in the aftermath earthquakes, helped in the construction of a hospital. These investments were not strategic.



Company Name (country) Korea Electric Power Corporation (South-Korea)RIC / ISIN: 2 015760.KS / KR7015760002Market Cap US$ 17,639m

Ownership structure Korea Finance Corporation (29.96%), Ministry of Strategy and Finance (21.12%), foreigners (23.79%), others (25.14%)

Company type Power generation, transmission and distribution

Business Model

State-owned power monopoly in Korea that owns, together with its generation subsidiaries, approximately 87.6% of the total electricity generating capacity in Korea (as of end 2008) and 100% of transmission/distribution. The company spun off its power generation division into 6 affiliates (Genco) in 2001. Korea Hydro & Nuclear Power Co., Ltd. is the wholly owned nuclear and hydroelectric power generation subsidiary. KEPCO also wholly own its five non-nuclear generation subsidiaries, Korea South-East Power Co., Ltd, Korea Midland Power Co., Ltd., Korea Western Power Co., Ltd., Korea Southern Power Co., Ltd., and Korea East-West Power Co., Ltd. The Company operates three segments: transmission and distribution, power generation and other.

Asian Utilities Environment and Social Rating 58%Corporate Governance Rating 25%CDP disclosure Yes

ESG Summary

Kepco scores as a leader in environmental issues among the sector, but there are still some open questions regarding their ESG performance. The company reports very detailed on their CO2 emissions. They have a voluntary target to cut the 2000 emission intensity of 0.424 kgCO2/kWh by 30%. But as of 2008, the figure has risen to 0.459 kgCO2/kWh, so it is not clear they will achieve their target in spite of a planned increase in nuclear and renewables capacities. Whilst they have been doing relatively detailed sustainability reporting until 2007, it is not clear if they still follow up with the activities described there. There is more environmental information on the level of its generation companies, but here quality varies widely. The company has some involvement in Burma, which may be a problem for some responsible investors. Corporate Governance is lacking in transparency.


Gas 13,097.60 20%Coal 24,230.56 37%Biomass - 0%Oil 4,584.16 7%Hydro 4,453.18 6.80%Nuclear 18,991.52 29%Renewable 65.49 0.10%Total 65,488.00 100%

Generation Mix Plans Disclosed 6800MW of nuclear power, 2270 MW gas, 805MW hydro, 2853 coal (probably only part of the whole expansion plans)



Operational efficiency metricsT&D losses: 4.01%, distribution automation ratio: 63.5%, CO2 emission intensity: 459 ton-CO2e/GWh

Water and waste treatmentKEPCO has installed comprehensive waste water treatment systems in its plants.


KEPCO provided detailed sustainability reports following GRI guidelines between 2005-2007. In 2005, KEPCO introduced a sustainability management framework that focuses on 4 key areas; economy, environment, society and human resources. The company publishes very detailed information on their CO2 emissions. Have minimized the emission of harmful substances by installing desulphurization facilities and comprehensive waste-water treatment systems in its power stations. Relatively detailed information on environmental management at the level of its generation companies. But quality varies, with some of the Genco´s quite proactive and providing updated data, whilst others seem to have updated the pages in 2004 or 2005 and not since


Kepco produces 27% of Korea´s CO2 emissions. Climate change related targets: Kepco plans to increase the number of nuclear power plants from the current 20 to 28 in 2020 and the portion of power generated from renewable energy sources to 9.96% in 2020. KEPCO plans to bring down the average emission per unit generated to: 0.296 kgCO2/kWh in 2020 (from 0.424 kgCO2/kWh in 2009). In 2005, KEPCO and the GENCOs established the Climate Change Commission to formulate comprehensive measures against climate change. The consultative body focuses on climate change and renewable energy development, which comprises the Climate Change Convention Working Committee and the Renewable Energy Working Committee.


Kepco produces 27% of Korea´s CO2 emissions. At the Copenhagen climate conference it will be decided whether Korea will become an Annex I country. CO2 emission intensity: 459 ton-CO2e/GWh. 5% increase in CO2 emissions vs last year with 4.85 increase in electricity generation. Climate change related targets: Kepco plans to increase the number of nuclear power plants from the current 20 to 28 in 2020 and the portion of power generated from renewable energy sources from 1.26% in 2000 to 9.96% in 2020. Voluntary target: the 2000 emission unit of 0.424 kgCO2/kWh will be brought down to 0.296 0.424 kgCO2/kWh in 2020, cutting the figure by 30%. They are planning a carbon emissions reduction through the expansion of renewable and nuclear energy plants. The amount of power generated from renewable energy sources is expected to go up from 3,196 GWh in 2000 to 47,637 GWh in 2020 while electricity generated from nuclear energy is to increase from 108,964 GWh in 2000 to 249,847 GWh in 2020. KEPCO operates a high efficiency equipment support system for customers to increase energy efficiency and is developing IT-based demand-side management technologies including remote management of building heating/cooling load. It is are establishing one of the world´s first Smart Grid verification complex on Cheju Island for completion in 2013 In 2005, KEPCO and the GENCOs established the Climate Change Commission (Chairman: Executive Vice President, seven members: the management of generation companies and the President of Korea Electric Power Research Institution, Secretary General: Vice President of the Technology and Policy and Planning Department) at the Power Group level to formulate comprehensive and joint measures against climate change. The consultative body focuses on climate change and renewable energy development, which comprises the Climate Change Convention Working Committee and the Renewable Energy Working Committee. The Committees meet at least once every quarter. Very detailed CO2 emissions data. Measures to improve energy efficiency: have distributed high-efficiency equipment and LED lighting devices to consumers while improving transmission and distribution loss rate, implementing an energy portal system for more comprehensive energy management, running an odd-even car restriction system and promoting the BMW (“bicycle, metro and walking) Movement.

Health & Safety management Score: 0No mention of Health & safety management


Separation of Chairman & CEO: no, percentage of independent board members: ND, percentage of independent audit committee members: 0%, percentage of independent remuneration committee members: ND, percentage of independent nomination committee members: ND, disclosure of executive and board remuneration: no


In 2008 there were accusations of corruption at Kepco. Some involvement in Burma: They performed a Power System Development Study in the country. Its partly owned subsidiary KOGAS entered into a gas field development project in the A1/A3 Block of Myanmar’s northwestern sea in November 2001, which is it exploring with a JV now. In mid 2009, concerns were raised about the environmental performance of KEPCOs coal fired power plant in Naga City in the Philippines. For example NGO EcoWaste Coalition is opposing a planned coal ash dump site, which would manage coal combustion waste from the coal power plant in the Philippines, as the NGO is worried about potential toxic releases and possible health and environmental problems.


KEPCO Social Service Teams perform philantropic social work. Through Mecenat KEPCO invests in art projects. KEPCO commits itself to social service activities, which are now referred to as “The Third Management”.



Company Name (country) MMC Corporation Berhad (Malaysia)RIC / ISIN: 2 MMCB.KL / MYL2194OO008Market Cap US$ 2,099m

Ownership structure

Seaport Terminal Johore (51.76%), Permodalan Nasional Berhad (PNB) / Amanah Saham Bumiputera (ASB) 21.52%, Employees Provident Fund Board 7.58%, other (19.14%)

Company type IPP

Business Model

investment holding, construction, mining and mineral exploration. Four segments: transport and logistics, energy and utilities, engineering and construction, and others. Key businesses include the Port of Tanjung Pelepas (Malaysia’s largest container terminal), Johor Port (Malaysia’s leading multi-purpose port), Malakoff (Malaysia’s largest independent power producer + water provider) and Gas Malaysia (Peninsular Malaysia’s sole supplier of natural gas to the non-power sector). MMC has interests in IJM, one of Malaysia’s premier construction companies, and Zelan Construction, a specialist contractor for power plants. More than 1/3 of 2008 profit before tax came from Malakoff, other large contributions by Gas Malaysia and the Johor Port


ESG SummaryDisclosure on ESG issues is insufficient and the company scores among the laggards in our assessment


Gas 1,356.91 53%Coal 1,203.29 47%Biomass - 0%Oil - 0%Hydro - 0%Nuclear - 0%Renewable - 0%Total 2,560.20 100%Generation Mix Plans Disclosed no disclosure


1,022.00 CO2 intensity (tonnes/ m USD rev.) 7,354.00 ED impact on 2008 revenue 41%CO2 damage cost (m USD) 644.00 ED impact on 2008 EBITDA 110%

Operational efficiency metricsNo mention of operational metrics. Malakoff claims to be an efficient operator, but no proof/data is given

Water and waste treatmentMMC operates water desalination and purification plants. However, there is no mention of what is done to the water used during the power generation process.

Overall CSR reporting & management Score: 0Some info on the website on their education and corporate giving programs. Disclosure on ESG issues is insufficient.

Environmental management Score: 0MMC presents itself as an environmentally conscious company, however there is no publicly disclosed information on this. No climate change management activities.

Climate change management Score: 0no emissions data. No reporting and no management system in place.

Health & Safety management Score: 0No mention of Health & Safety management.


Separation of Chairman & CEO: yes, percentage of independent board members: 33%, percentage of independent audit committee members: 100%, percentage of independent remuneration committee members: 33%, percentage of independent nomination committee members: 67%, disclosure of executive and board remuneration: partly, comment: CEO and executives join all but one audit committee meeting. Legal dispute with Tenaga Nasional Berhad on metering.

Controversies Gravity: LowInvolvement in Burma via its power plant engineering subsidiary that has built 2 small hydropower plants in Burma. The projects are completed. Community investmentUnder the New Straits Times’ School Sponsorship Programme MMC aims to promote the study of English. Other investments are philantropic in nature and can be seen as part of MMC’s marketing campaign.Note 1: ED stands for environmental damage


Company Name (country) Sarawak Energy Berhad (Malaysia)RIC / ISIN: 2 SARA.KL / MYL2356OO003Market Cap US$ 1,232m

Ownership structureState Financial Secretary, Sarawak (64.65%), employees provident fund (3.71%), Cimsec nominees (3.55%), Multi-purpose holdigs Berhad (2.99%), other (25.1%)


Business ModelThe Company’s principal activities are as the electric power utility of Sarawak and as an Independent Power Producer (IPP). Also steel fabrication and galvanising, engineering and other related support services.


ESG SummaryDisclosure on ESG issues is insufficient and the company scores among the laggards in our assessment. Sarawak Energy has answered the CDP questionnaire, where the company discloses its CO2 emissions but give relatively little further information. Sarawak Energy is subject to very strong criticism on its hydro expansion plans on Borneo.


Gas 546.10 43%Coal 482.60 38%Biomass - 0%Oil 152.40 12%Hydro 88.90 7%Nuclear - 0%Renewable - 0%Total 1,270.00 100%


Have a target of installed capacity of 6,000MW by 2015 and 10,000 MW by 2020. Have commenced the construction of the 944 MW Murum Hydro Electric Power project. They state in the 2008 AR, that the construction of Limbang hydro dam (195MW) Trusan and Lawas hydro dam (300 MW), Baleh (1400 MW), Metjawah (300 MW) and others will follow suit.

CO2 emissions (tonnes) 4349714 ED1 cost (m USD) 241CO2 intensity (tonnes/ m USD rev.) 11075 ED impact on 2008 revenue 61%CO2 damage cost (m USD) 152 ED impact on 2008 EBITDA 151%

Operational efficiency metricsNo mention of operational metrics.

Water and waste treatmentNo mention of water and waste management.

Overall CSR reporting & management Score: 0Sparse information on community activities available in Annual Report 2008.

Environmental management Score: 1Little information given


The only Malaysian electric utility and one of the few Asian utilities to have answered CDP9, already answered the 2008 questionnaire. Emissions data given for 2007: 3`944`381 t CO2 emissions vs 3,537,286 metric tons CO2 in 2005. We would appreciate it, if for the 2007 data, there was also disclosure on energy generated to be able to compare CO2 intensity. Registering their first CDM project based on CC gas turbines. State that they undertake the following activities to reduce CO2 emissions / increase energy efficiency, but no further concrete information is given: (i) Conversion of Open Cycle to Combined Cycle Power Plant. (ii) Implementing biomass power generation. (iii) Rehabilitation of mini hydro stations and construction of new ones. (iv) Efficiency Improvement for Power Plants. (v) Proposal for Rural Stand-alone Renewable Hybrid Systems. (vi) Incorporate Energy Efficiency for New Office Buildings. (vii) Study the possibility of adopting carbon capture and sequestration technologies. (viii) Study the possibility of utilizing power plant CO2 emissions for algae cultivation to produce biofuel in future. (ix) Adopting fuel cell technologies as cleaner way to generate electricity and efficient use of gas fuel Have one CDM project, where they converted two existing open-cycle gas generating sets in the Bintulu Power Station to one block of combined-cycle power generating plant with a total capacity 330 MW of which 110 MW is new generation. In the 2008 annual report they state that this project is eligible for CDM because it generates electricity without polluting the environment with greenhouse gases, which is not quite correct as it just generates less emissions.

Health & Safety management Score: 0No mention of Health & Safety management.


Separation of Chairman & CEO: yes, percentage of independent board members: 50%, percentage of independent audit committee members: 67%, percentage of independent remuneration committee members: 67%, percentage of independent nomination committee members: some as remuneration committee, disclosure of executive and board remuneration: partly.


heavily criticised for the development of hydro dams: In January 2009, the Malaysian government has given it’s approval for Sarawak Energy and Tenaga Nasional to take over the operation of the controversial Bakun hydroelectricity project and develop the proposed 700 kilometre undersea transmission cable link from eastern Sarawak state on Borneo island to Peninsular Malaysia. The state-owned company Sarawak Hydro is expected to complete construction and commissioning of the dam in 2010. Environmentalists have continued to oppose the project due to the dam’s flooding of “an area the size of Singapore”, the forced relocation of 10,000 people, associated environmental impacts, and concerns about the earthquake-prone nature of the undersea cable’s route. Apparently, Sarawak Energy has a second highly controversial dam project under planning, i.e. the 220MW Tutoh dam, which might partly flood the UNESCO World Heritage-status of Mulu National Park in Sarawak. Opponents, including NGO Bruno Manser Group, have also stated that it will force the relocation of local indigenous groups and affect the native bat population. Sarawk Energy has plans for 11 further hydro plants on Borneo, despite the fact that Bakun dam alone has the capacity to produce significantly more power that consumed today in Sarawak. The hydropower projects scheduled for the 2008 to 2020 period by Sarawak Energy have a power generation capacity of 7000 MW. Sarawak’s energy consumption amounted to 1120 MW in 2005 and is expected to rise to 1550 MW by the year 2010. While the Sarawak government rushes to set up energy-intensive industries, excess production is planned for export to West Malaysia, Brunei and Kalimantan. In contrast to mainland Malaysia, apparently in Borneo, Environmental Impact Assessments do not include the need for public consultation. In Sarawak, power, industrial and palm oil projects have frequently been criticised to be harmful to the environment, intransparent and not respecting the rights of indigenous people.

Community investmentSarawak has organized sports events and launched an English development program, in addition to ongoing community support projects of a philantropic nature.


Note 2: Have also commenced the construction of the 944 MW Murum Hydro Electric Power project. They state in the 2008 AR, that the construction of Limbang hydro dam (195MW) Trusan and Lawas hydro dam (300 MW), Baleh (1400 MW), Metjawah (300 MW) and others will follow.


Company Name (country) Tanjong Public Limited Company (Malaysia)RIC / ISIN: 2 TJPL.KL / GB0008722323Market Cap US$ 1,924m

Ownership structureUsaha Tegas Sdn Berhad (30.9%), Ultimate Corporation Sdn Berhad (7.53%), Marlestone Investment Limited (4.0%), others (5.57%), free float (56%)

Company type Power generation

Business Modelinvestment holding company, engaged in power generation, gaming, leisure and property investment. Power generation contributes around 80% to operating profit

Asian Utilities Environment and Social Rating 33%Corporate Governance Rating 83%CDP disclosure No disclosure

ESG SummaryTanjong Public´s generation mix is relatively favourable with respect to CO2 emissions as it is based to 100% on natural gas. But its disclosure on ESG issues is insufficient and the company scores among the laggards in our assessment.


Gas 3,951.00 100%Coal - 0%Biomass - 0%Oil - 0%Hydro - 0%Nuclear - 0%Renewable - 0%Total 3,951.00 100%


Currently 100% gas (1490 MW in Malaysia, 1365 MW in Egypt, 200 MW of ownership of combined power and desalination project in Abu Dhabi, 375 MW in Egypt, 248+198+36 MW Combined Cycle Gas Turbine (CCGT) in Bangladesh, 36 MW in Pakistan) - busy integrating current acquisitions. No information about longer term plans.

CO2 emissions (tonnes) 4,562,723.00 ED1 cost (m USD) 199.00 CO2 intensity (tonnes/ m USD rev.) 5,424.00 ED impact on 2008 revenue 24%CO2 damage cost (m USD) 159.00 ED impact on 2008 EBITDA 48%

Operational efficiency metricsweighted average availability at 92.8% in 2009 vs 88.4% in 2008

Water and waste treatmentTanjong owns and operates a water desalination plant, but doesn’t refer to its treatment of waste and water.

Overall CSR reporting & management Score: 0Only information on the usual community programs. No mention of CSR in leisure, power and gaming operations


The Group’s power plants in Malaysia, Egypt, the UAE and Bangladesh are ISO 14001 Environmental Management Systems certified. They benchmark themselves against current international best practices. Claim that they roll out fire drills, first aid training, cardiopulmonary resuscitation training, safety and health talks as well as plant evacuation exercises at various properties and that they ensured that equipment and building safety systems were functioning properly and were well maintained. the Group’s power plants in Malaysia, Egypt, the UAE and Bangladesh are ISO 14001 Environmental Management Systems certified

Climate change management Score: 0No information available. No emissions data


The Group’s power plants in Malaysia, Egypt, Abu Dhabi and Bangladesh continue to maintain their OHSAS 18001 Occupational Health and Safety Management System. Committed to implementing stringent Occupational Safety and Health (“OSH”) practices. They benchmark themselves against current international best practices. Claim that they roll out fire drills, first aid training, cardiopulmonary resuscitation training, safety and health talks as well as plant evacuation exercises at various properties and that they ensured that equipment and building safety systems were functioning properly and were well maintained.


Comment: has won awards for good IR and CG, e.g. Finance Asia 2006 No 4 in “Best Corporate Governance”, AsiaMoney 2008 No1 “Best IR in Malaysia” etc. Separation of Chairman & CEO: yes, percentage of independent board members: 60%, percentage of independent audit committee members: 67%, percentage of independent remuneration committee members: 67%, percentage of independent nomination committee members: 67%. Disclosure of executive and board remuneration: partly, ownership structure: Usaha Tegas Sdn Berhad owns/controls 30.9%, Ultimate Corporation Sdn Berhad owns 7.53%, Marlestone Investment Limited 4.0%, 6 others <1%.

Controversies Gravity: LowGaming business potential exclusion criteria. Otherwise nothing found


Some strategic investments in the form of educational scholarship at all leves of schooling. However most of the community investments are philantropic.



Company Name (country) Tenaga Nasional Berhad (Malaysia)RIC / ISIN: 2 TENA.KL / MYL5347OO009Market Cap US$ 10,605m

Ownership structureKhazanah Nasional Berhad (37.8%), Employees provident fund board (13.66%), Amanah Raya Nominees (Tempatan) SDN BHD (9.97%), others (38.57%)

Company type Power generation, transmission & distribution

Business Model

In addition to electricity generation, TNB manages and operates the National Grid, a transmission network that is also interconnected to Thailand and Singapore. The Company’s subsidiaries principal activities include operation of power plant and generation of electricity; investment holding; purchase and supply of fuel and coal for power generation; Generation and supply of various energy sources and provision of related technical services, and research and development, consultancy and other services


ESG SummaryThe company’s disclosure on ESG issues is insufficient and it scores among the laggards in our assessment. System losses in its T&D systems are in the middle of the sector in Asia.


Gas 5373.9 45%Coal 4060.28 34%Biomass 0 0%Oil 477.68 4%Hydro 2030.14 17%Nuclear 0 0%Renewable 0 0%Total 11,942.00 100%

Generation Mix Plans Disclosed (current figures are installed capacity, no data on attributable capacity). NO data on expansion plans given

CO2 emissions (tonnes) 30,036,556.00 ED1 cost (m USD) 1,758.00 CO2 intensity (tonnes/ m USD rev.) 3,845.00 ED impact on 2008 revenue 23%CO2 damage cost (m USD) 1,049.00 ED impact on 2008 EBITDA 78%

Operational efficiency metricssystem losses at 18.07% in 08 (vs 17.57& in 2007 and 18.81% in 2006)

Water and waste treatmentMo mention of water and waste treatment


Some information on CSR activities and environmental management on the company’s website and in its annual report. Proud of past achievements on rural electrification especially in remote islands. Focus is on community programs and philanthropy.


Some general information on environmental management, e.g. one plant ISO 14`001 certified, other plants are now implementing ISO 14´001 based EMS. It’s disappointing that, as Malaysia’s largest power producer, the company does not at all address issues such as SO2 emissions, or use of its waste ash in coal fired plants

Climate change management Score: 0no information. No data on emissions

Health & Safety management Score: 1Company wide H&S management system. The H&S management is now being brought to the OHS 18´000 standard. Corporate governance Score: 8

Separation of Chairman & CEO: yes, percentage of independent board members: 56%, percentage of independent audit committee members: 100%, percentage of independent remuneration committee members: 60%, percentage of independent nomination committee members: same are remuneration committee, disclosure of executive and board remuneration: partial


Controversies: high high: repeated criticism for planned coal-fired power plants: In 2009, Malaysian companies Jimah Energy Ventures and Tenaga Nasional have been criticized for the proposed Jimah coal-fired power plant to be located in Port Dickson in Malaysia’s state of Selangor. The NGO Malaysian Nature Society, local residents and tourism developers claimed that the plant would have ecological effects by disturbing marine ecosystems and causing declines in fish populations, add to climate change and pose health risks by emitting pollutants, and affect the eco-tourism potential of the area. Jimah Energy Ventures stated that approval was obtained from the Department of Environment in January 2005. Also, in 2009, locals on Sabah have objected to Tenaga Nasional Bhd’s (TNB) proposed coal-fired power plant, which allegedly contradicts the objectives of The National Green Technology Policy. They are concerned about potential pollution they believe would be caused by the plant. In Jan 2009, The Malaysian government has given it’s approval for Sarawak Energy and Tenaga Nasional to take over the operation of the controversial Bakun hydroelectricity project and develop the proposed 700 kilometer undersea transmission cable link from eastern Sarawak state on Borneo island to Peninsular Malaysia. The state-owned company Sarawak Hidro is expected to complete construction and commissioning of the dam in 2010. Environmentalists have continued to oppose the project due to the dam’s flooding of “an area the size of Singapore”, the forced relocation of 10,000 people, associated environmental impacts, and concerns about the earthquake-prone nature of the submarine cable’s route.

Community investmentTenaga invests heavily in education. The Tenaga Nasional Foundation offered around 900 loans to univeristy students. This investment is strategic.Note 1: ED stands for environmental damage


Company Name (country) YTL Power International Berhad (Malaysia)RIC / ISIN: 2 YTLP.KL / MYL6742OO000Market Cap US$ 4,312m

Ownership structure YTL Corporation Berhad (50.99%), Employees Provident Fund Board (11.39%), other (37.62%)


Business Modelinvestment holding company. The Company is organized into three main business segments: investment holding, power generation, and sales of water and disposal of waste water

Asian Utilities Environment and Social Rating 45%Corporate Governance Rating 83%CDP disclosure No request for disclosure by CDP

ESG SummaryYTL Power International´s ESG performance scores in the mid-range when compared to the sector. Its parent company publishes an annual sustainability report. There is detailed emissions data on some of the company’s plants, but is shows little improvement. Its acquisition of Power Seraya in Singapore has changed its generation mix towards fuel oil, even though the company prefers using its gas fired plants in Singapore.


Gas 2,164.05 45%Coal 384.72 8%Biomass - 0%Oil 2,260.23 47%Hydro - 0%Nuclear - 0%Renewable - 0%Total 4,809.00 100%Generation Mix Plans Disclosed none disclosed, would probably be through acquisitionCO2 emissions (tonnes) 2,327,945.00 ED1 cost (m USD) 4,037.00 CO2 intensity (tonnes/ m USD rev.) 1,723.00 ED impact on 2008 revenue 299%CO2 damage cost (m USD) 81.00 ED impact on 2008 EBITDA 513%

NB The main activity for YTL Power International is selling water and disposing of waste water. There is a significant external cost for water abstraction which makes up 96% of the total direct environmental cost of YTL Power here.

Operational efficiency metricsNo mention of operational metrics.


YTL’s water and waste management program is one of the most comprehensive of all Asian utilities. PowerSeraya has developed and implemented two projects, namely a rainwater recovery system and a modified drainage system with wastewater being reused for cooling purposes. Its desalination plant has also reduced YTL’s reliance on Singapore’s freshwater resources. Power Seraya has used GRI Reporting Guidelines.


YTL Corp. publishes a annual sustainability report. Due to its broad business portfolio, it is difficult to keep track of the power division’s performance and it is unclear if CSR aspects are addressed systematically. However, YTL seems serious about CSR reporting.


Emissions data: yes, NOx, SO2 and PM for its Jawa plant. But little improvement in performance. Malaysian plants follow national and World Bank emission limits. Jawa plant is ISO 14`001 certified and has received a Green Rating by the Indonesian Ministry of Environment under its Environmental Rating Programme. Active efforts to improve operating efficiency in its Jawa power plant. Reuse of fly ash at 76% in 2006, from 2006 onwards use of more than 98% at its Jawa power plant. Malaysian plants follow national and World Bank emission limits. Jawa plant is ISO 14`001 certified and has received a Green Rating by the Indonesian Ministry of Environment under its Environmental Rating Programme


YTL is quite explicit they recognize climate change as a clear risk and want to take measures to prevent it. work on raising awareness on climate change nationally. Acquired a carbon credit consultancy in 2008. Actively pursuing to improve operating efficiency in ist Jawa power plant. Detailed GHG emissions reporting for some parts of its business, e.g. the Wessex Water utility in the UK. Report some emissions data - NOx, SO2 and PM for its Jawa plant. But little improvements shown to date.

Health & Safety management Score: 0YTL invests in its human capital and ensures a work-life balance through its Vibrancy Committee. However it does not report on health and safety management.


Comment: Won awards for good IR and CG, e.g. Finance Asia 2006 No 4 in “Best Corporate Governance”, AsiaMoney 2008 No1 “Best IR in Malaysia” etc. Separation of Chairman & CEO: yes, percentage of independent board members: 60%, percentage of independent audit committee members: 67%, percentage of independent remuneration committee members: 67% Percentage of independent nomination committee members: 67%, disclosure of executive and board remuneration: partial.

Controversies Gravity: LowNo controversies found


YTL supports arts and culture in Malaysia and contributes to promote education. Scholarships are given to talented students to pursue higher education at the Swiss German University located inTangerang in Indonesia.



Company Name (country) Aboitiz Power Corporation (Philippines)RIC / ISIN: 2 AP.PS / PHY0005M1090Market Cap US$ 1,343mOwnership structure Aboitiz Equity Ventures (76%), other (24%)Company type Power generation, transmission & distribution

Business Model Mostly generation with 35% of operating income from distribution


ESG Summary

Aboitiz Power has a very high share of renewables in its generation portfolio, and therefore a relatively low carbon footprint. Regarding its internal ESG performance, the company scored quite low, but one has to consider that it is the smallest company in our universe.


Gas - 0%Coal 75.84 6%Biomass - 0%Oil 151.68 12%Hydro 328.64 26%Nuclear - 0%Renewable (geothermal) 707.84 56%Total 1,264.00 100%

Generation Mix Plans Disclosed 42.5 MW hydro, 64 MW coal, further expansion plans in coal fired plants

CO2 emissions (tonnes) 389,605.00 ED1 cost (m USD) 23CO2 intensity (tonnes/ m USD rev.) 1,481.00 ED impact on 2008 revenue 9%CO2 damage cost (m USD) 14.00 ED impact on 2008 EBITDA 35%

NB The carbon intensity seems high for a company with such a large proportion of power coming from renewables. Trucosts data includes some additional fossil fuel capacity at the Group Subsidiary level - absolute ownership of this additional capacity is unclear wihtout further engagement with the company

Operational efficiency metricsAverage system loss (2 largest systems): 8.7%, average net capacity factor Hydro (H1 09): 35%

Water and waste treatmentMo mention of water and waste treatment


Some reporting and CSR information in shareholder presentation. AP publishes a five page sustainability report together with its AR, but this is mostly focused on philanthropy and the Aboitiz foundation.

Environmental management Score: 0No emissions data. Very little information on environmental management which is disappointing as the company runs old diesel plants and is involved in building a new coal plant.

Climate change management Score: 0no CDP answer, no efficiency data for plants, no targets, no info at all. CDM credits for new hydro plant, stress that the new alternative energies law should be positive for their business

Health & Safety management Score: 0No information on Health & Safety management.


Comment: AsiaMoney 2009 awards as best managed mid-cap in the Philippines, mention code of ethics. Separation of Chairman & CEO: yes, percentage of independent board members: 22%, percentage of independent audit committee members: 33%, percentage of independent remuneration committee members: 33%, percentage of independent nomination committee members: 33%, disclosure of executive and board remuneration: partly, ownership structure: 76% owned by Aboitiz Equity Ventures.

Controversies Gravity: Low

In 2008, Aboitiz Equity Ventures faced opposition against the construction of a new hydro facility, the Tudaya hydro power plant which allegedly threatens the land of an indigenous tribe. Yet, it is claimed that each time the group expresses complaints, the military conducts operations, causing fear. According to the opponents, the plant threatens land and water biodiversity.

Community investmentAP and its subsidiaries donated to or implemented projects ranging from education-related assistance, community infrastructure, livelihood opportunities, rural electrification, to environmental projects for the communities within the areas where the different AP businesses operate.



Company Name (country) Energy Development Corporation (Philippines)RIC / ISIN: 2 EDC.PS / PHY2292S1043Market Cap US$ 1,831m

Ownership structure Red Vulcan Holdings Corporation (60.25%), PCD Nominee Corporation (36.25%)

Company type Generation

Business Model

Energy Development (EDC) Corporation, formerly PNOC Energy Development Corporation, is engaged in the exploration, development and operation of geothermal energy. It is also involved in geothermal drilling and consultancy services. Bought a majority share in a hydro plant by its parent company in 2008

Asian Utilities Environment and Social Rating 55%Corporate Governance Rating 33%CDP disclosure No request from CDP

ESG SummaryAmong the universe of Asian electric utilities, EDC has the highest share of renewables in its portfolio and consequently the lowest carbon footprint among the power generating companies. Its expansion plans also focus on renewable energy only. Regarding its internal ESG performance, the company scores in the mid-range of the sector.


Gas - 0%Coal - 0%Biomass - 0%Oil - 0%Hydro 112.50 9%Nuclear - 0%Renewable (geothermal) 1,198.50 91%Total 1,311.00 100%Generation Mix Plans Disclosed 300MW geothermal, 84MW wind


Operational efficiency metricsNo mention of operational metrics



CSR information on its websites focuses on its philanthropic and community activities. But there is a detailed report on HS&E in its 2008 AR, most of it is descriptive in nature. Have a board committee on CSR to oversee its community activities.


Emissions data: yes, on boron content in water at its project sites and on H2S emissions compared to the legal standard. Not clear if there is a systematic environmental management, but the company is aware of its environmental impact and strives to keep pollution levels low. EDC is aware of its relatively low carbon footprint and plans to offset it by planting trees at its plant sites.

Climate change management Score: 1Knows its relatively low carbon footprint and plans to offset it with tree planting at its plant sites Health & Safety management Score: 2Reports H&S data. EDC has programs to improve employee health and keep absence rates low. EDC trained 329 health workers from 23 local clinics. Corporate governance Score: 4

Separation of Chairman & CEO: yes, percentage of independent board members: 27%, percentage of independent audit committee members: 60%, percentage of independent remuneration committee members: 33%, percentage of independent nomination committee members: same as remuneration committee, disclosure of executive and board remuneration: no.


In 2008, Green Alert activists campaigned against EDC´s proposal to tap additional geothermal power inside Mt Kanlaon Natural Park´s buffer zone in the Philippines. Environmentalists say the project would further deplete the forest cover, cause damage to biodiversity, and aggravate a watershed crisis.

Community investmentEDC’s CSR community programs rests on four pillars of Health Promotion, Educational Support, Livelihood Development and Environmental Enhancement. Some investments are strategic, most are philanthropic.



Company Name (country) Manila Electric (Philippines)RIC / ISIN: 2 MER.PS / PHY5764J1483Market Cap US$ 4,985m

Ownership structure Lopez Group (13.4%), San Miguel Corp (27.0%), Pilipino Telephone Corp (20.0%), PLDT Beneficial Trust Fund (10%), other (70.4%)

Company type Distribution

Business Model mainly electricity distribution to 4.6m customers (+real estate and services)

Asian Utilities Environment and Social Rating 55%Corporate Governance Rating 33%CDP disclosure No request to disclose by CDP

ESG Summary

As a pure distribution company, Manila Electric´s environmental impact is comparatively low. Distribution losses have improved significantly, coming from more than 20% down to 9.5%. They are still above the cap of 8.5% which will come into force in 2010. The company discloses some selected information on its ESG activities and scores in the mid-range of the sector.

Distribution assets 2009

Area covered 9369% of country’s gross domestic product 49%Generation Mix Plans Disclosed


Operational efficiency metricsInterruption Frequency Rate (the average number of times a customer is without power in a year, which also takes into account both forced and pre-arranged interruptions by Meralco) has constantly improved over the years: 6.8 in 2008 vs >30 in the 90s. Cumulative Interruption Time now at 5.77, also its lowest number. current system loss level of 9.28% is one of our best operating results in 2008 and the lowest we have attained thus far in this performance area since 1981. In 1986, after Meralco was returned to the Lopez family, system loss was at a very high level of 21.01%. System loss has been their priority since that time, due to its financial impact to the customers and the Company. It was in 2008 when we were able to achieve for the first time a level below the 9.5% cap that was set in 1999 under the Republic Act 7832. the new cap set by the Energy Regulatory Commission (ERC) starting January 2010 will be 8.5%.Customer satisfaction varies among the years, at 7.3 in 2008 at an slightly above average level. High customer per employee ration of 755


Water preservation campaigns and waste management programs are underway. Meralco has training projects on solid waste management for partner communities. In October 2004, Meralco signed a memorandum of agreement with Bantay Kalikasan in support of the latter’s “Bantay Baterya” project. The project’s objective is to create a sustained public awareness on the health and environmental hazards posed by the indiscriminate disposal and handling of junk batteries.


CSR website focuses mainly on community programs, corporate giving etc., some slightly more business relevant activities such as some electrification projects. CSR activities seen as a tool to help support Meralco’s public image.


Some internal environmental initiatives such as air pollution control of its own vehicles. Meralco is commited to climate change and encouraging efficient use of electricity, e.g. participation in the earth hour. On renewable energies: Meralco supports the Renewable Energy Act of 2008, which was signed into law on December 16, 2008. As of end 2008, 17.8% of its energy supply mix came from renewable energy sources such as hydro, geothermal, and wind. 51.1% of electricity comes from natural gas.


Apparently some commitment on climate change and encouraging efficient use of electricity, e.g. participation in the earth hour. But no meaningful initiatives published. On renewable energies: states that they support the Renewable Energy Act of 2008, which was signed into law on December 16, 2008, and signed in April 2009 a Contract for the Supply of Electricity with Montalban Methane Power Corporation (MMPC), which would enable us to source renewable energy from MMPC. MMPC has a 8.19MW renewable power plant in Rodriguez, Rizal (which does not sound very meaningful). As of end 2008, 17.8% of its energy supply mix came from renewable energy sources such as hydro, geothermal, and wind. 51.1% of electricity comes from natural gas. No emissions data


Meralco recognizes the importance of health & safety management. It has an ongoing commitment to installing safety and environment protection programs aimed at protecting employees, contractors, and the public. Good H&S management


Separation of Chairman & CEO: yes, percentage of independent board members: 27%, percentage of independent audit committee members: 60%, percentage of independent remuneration committee members: 33%, percentage of independent nomination committee members: same as remuneration committee, disclosure of executive and board remuneration: no


In 2008, Green Alert activists campaigned against the EDC´s proposal to tap additional geothermal power inside Mt Kanlaon Natural Park´s buffer zone in the Philippines. Environmentalists say the project would further deplete the forest cover, cause losses to biodiversity, and bring on a watershed crisis.

Community investmentMeralco invests heavily in social projects. These include Christmas gift-giving activities for children, corporate-wide outreach projects, and relief operations. Note 1: ED stands for environmental damage


Company Name (country) Electricity Generating Public Company (Thailand)RIC / ISIN: 2 EGCO.BK / TH0465010005Market Cap US$ 1,236m

Ownership structure Electricity Generation Authority of Thailand (25.41%), OneEnergy Thailand (22.42%), Free float (52.17%)

Company type IPP

Business Model

EGCO Engineering and Service Company Limited is EGCO’s wholly owned subsidiary, which provides operation, maintenance, engineering and construction services to power plants, petrochemical plants, oil refineries and other industries. EGCO holds an indirect 70% stake in Egcom Tara Company Limited (ET), which operates in water business. EGCO also invests in Eastern Water Resource Development and Management Public Company Limited (East Water)

Asian Utilities Environment and Social Rating 75%Corporate Governance Rating 58%CDP disclosure no response

ESG SummaryEGCO ranks among the leader within the sector in our assessment. It reports on emissions and some of the metrics (water use, NOx and SOx emissions) have decreased since 2006. the company has an H&S management committee, does H&S training and reports on safety performance. There is significant room for improvement in addressing climate change.


Gas 2,862.30 71%Coal 832.30 21%Biomass 20.30 0.50%Oil 40.60 1%Hydro - 0%Nuclear - 0%Renewable 284.20 7%Total 4,060.00 100%Generation Mix Plans Disclosed not disclosed


Operational efficiency metricsHeat rate (kJ/kWh) for REGCO (2008): 9107, KEGCO (2008): 9311, EGCO Cogen (2008): 9204, Rol-Et Green (2008): 18564. No clear positive trends visible

Water and waste treatmentData on water use is available for all subsidiaries owned for more than 80% by EGCo. EGCO holds an indirect 70% stake in Egcom Tara Company Limited (ET) which operates in water business via ESCO.

Overall CSR reporting & management Score: 2Reports on various metrics (water use, NOx and SOx emissions), and has achieved reductions since 2006. EGCo publishes an annual sustainability report, has a CSR committee, and information on CSR is included in the Annual Report. Missing: targets & inclusion of non-majority owned subsidiaries.


Emissions, noise and water data available. Data for some of its facilities, i.e. the ones owned 80% and more, data on water, NOx and SOx emissions. NOx emissions have improved slightly from 2006 to 2008. all emissions below the legal thresholds. Also noise data available

Climate change management Score: 0No mention of a climate change strategy.


H&S training, H&S management committee, some safety metrics (accumulated safety hours), REGCO and KEGCO have implemented the Occupational Health and Safety Management System TIS 18001:1999 & OHSAS 18001. egco WON some awards, e.g. the 2008 national safety award for the 9th consecutive year. Info on training hours.


Separation of Chairman & CEO: yes, percentage of independent board members: 29%, percentage of independent audit committee members: 100%, percentage of independent remuneration committee members: 60%, percentage of independent nomination committee members: same as remuneration committee, disclosure of executive and board remuneration: partly


EGCO has a holding in a 200 MW coal-fired project, the Kamanga Power Plant. The local council unanimously voted against it in June 2009 due to concerns about impacts on the environment and human health. The council is seeking to have its environmental compliance certificate cancelled. Criticism on involvement in large dam project in Laos. Involved in Sudan and listed as High Offender in 2007.

Community investmentThe group supports, initiates and develops various projects that involve education, career, health and environmental care for a better quality of life in communities where EGCo is active.Note 1: ED stands for environmental damage


Company Name (country) Glow Energy Public Company Limited (Thailand)RIC / ISIN: 2 GLOW.BK / TH0834010009Market Cap US$ 1,365m

Ownership structureGDF Suez Energy Thailand (44.11%), SUEZ-Tractebel Energy Holdings Cooperatieve U.A (25%), State Street Bank and Trust Company for London (3.8%), Nortrust Nominees Ltd (3.57%), other (23.52%)

Company type IPP and cogeneration

Business Model

Glow Energy Public Company Limited is a Thailand-based company engaged in the generation and distribution of electricity, steam and water for industrial use. The Company operates an Independent Power Producer (IPP) business and cogeneration facilities. Its core business is the generation and supply of electricity to Electricity Generating Authority of Thailand (EGAT) and the generation and supply of electricity and steam, with clarified and demineralised water as secondary products, to industrial customers. Steam was 12.5% of revenues in 08

Asian Utilities Environment and Social Rating 38%Corporate Governance Rating 50%

CDP disclosure answered CDP, but within the answer of parent company GDF Suez

ESG SummaryThe company scores in the mid-range compared to the sector. It is owned to almost 70% by GDF Suez.


Gas 1,403.53 78%Coal 298.82 17%Biomass - 0%Oil - 0%Hydro 108.66 6%Nuclear - 0%Renewable - 0%Total 1,811.00 100%Generation Mix Plans Disclosed 115 MW cogen coal, 382 MW cogen gas, 660 MW IPP coal


Operational efficiency metricsUnplanned outage at Cogen (H1 09): 4.81%, unplanned outage IPP (H1 09): 2.39%

Water and waste treatmentGlow has a water quality management team. The management team focuses on wastewater treatment, seawater quality and marine ecology.

Overall CSR reporting & management Score: 1Information on Glow’s CSR program is available, in detail, on the company website. Similar information but with some general descriptions of environmental and H&S achievements in its AR.


No emissions data. Some CO2 emissions data provided by GDF Suez. However, there is no indication that climate change considerations play a role for GDF in managing Glow Energy. Plants are ISO 14`001 certified. General information on technologies employed to minimize emissions is given. Website has some information on environmental management. ISO 14`001 certification of its plants. General information on technologies employed to minimize emissions.


Some CO2 emissions data provided by GDF Suez, butthere is no indication that climate change considerations play a role for GDF in managing Glow Energy in Thailand.


Glow has a H&S management team. Glow established and follows a set of rules called ‘Corporate Health and Safety Policies and Procedures’. In 2008, Glow included safety targets as criteria determining the variable bonus of its employees. Training programs are conducted to help employees and contractors. No data on injuries or certification. Website has some information on H&S management.


Separation of Chairman & CEO: yes, percentage of independent board members: 25%, percentage of independent audit committee members: 100%, percentage of independent remuneration committee members: 33%, percentage of independent nomination committee members: same as remuneration, disclosure of executive and board remuneration: partly.

Controversies Gravity: MediumIn October 2008, local residents and organisations staged protests at several locations in Bangkok to challenge the construction of four power plants in their regions. The protesters claimed that the coal- or gas-fired plants, which would sell electricity to state-owned utility EGAT, would cause air and water pollution to more than 2,000 farmers and affect the environment of agricultural areas. The plants were: Bang Kla proposed by Gulf Electric and J-Power, Gheco-One proposed by Glow Energy and Hemaraj, Khao Hin Son proposed by CMS and Kaset Rungruang Peudphol, and Nongsang proposed by Gulf Electric and J-Power.

Community investmentGlow is concerned about developing the quality of life of people in the communities where it conducts business. Glow lays a focus on educational and cultural activities. These investments are strategic. Note 1: ED stands for environmental damage


Company Name (country) Ratchaburi Electricity Generating Hldg (Thailand)RIC / ISIN: 2 RATC.BK / TH0637010008Market Cap US$ 1,516m

Ownership structure

Electricity Generating Authority Of Thailand (EGAT) (45%), Banpu Public Company (14.99%), Nortrust Nominees (5.19%), Social Security Office (4.93%), State Street Bank and Trust (4.88%),Others (25.01)


Business Model investment company engaged in holding power generating businesses. Thailand`s largest IPP.


ESG SummaryRatchaburi´s ESG performance scores in the midrange of the sector. They report on emissions data, seem to have comprehensive H&S management in place and have specific policies addressing stakeholders.


Gas 3,651.48 84%Coal - 0%Biomass - 0%Oil 1,529.60 16%Hydro - 0%Nuclear - 0%Renewable - 0%Total 4,347.00 100%


153.75 MW hydro plant in Laos under construction. Under development: 751 MW of lignite coal plant for which they also own a share in a lignite coal mine, and 247.5MW of hydro in Laos, and 118MW of wind in Thailand

CO2 emissions (tonnes) 11,690,141.00 ED1 cost (m USD) 489CO2 intensity (tonnes/ m USD rev.) 9,560.00 ED impact on 2008 revenue 40%CO2 damage cost (m USD) 408.00 ED impact on 2008 EBITDA 158% Operational efficiency metricsNo mention of operational efficiency metrics


The Company started a feasibility study for using plants in treating waste water. Ratchaburi aims to reduce waste water released into the Bang Pa canal, and aims to recycle more water. To reduce consumption of water from public resource Ratchaburi started the Cooling Water Reuse Project. Ratchaburi has a water project called “Community’s Participation in Khlong Bang Pa’s Water Quality Improvement, and Pollution Reduction”. The project is aimed at creating awareness on water resource development.


Some efforts towards CSR management. Since 2007, have specific policy for each group of stakeholders including the Shareholders Policy, Employees Policy, and Social and Environment Policy. In 2009, the Company plans to prepare a policy on other stakeholder groups: creditors and partners (including business partners, suppliers and subcontractors). Has answered the CDP since 2006, as one of only a few Asian utilities.

Environmental management Score: 1Emissions data available in the frame of the Carbon Disclosure Project report (SO2, and NOx emissions). Have achieved some, though small, improvements in energy efficiency.

Climate change management Score: 1One of the few Asian utilities to respond to CDP since 2006. The company is aware of their CO2 emissions. In the frame of the Carbon Disclosure Project they report plant specific data on SO2, and NOx emissions. Have achieved some, even though small, improvements in energy efficiency, but have reported the same achievements for the past 3 years already. These are: - Improved Gas Turbine performance with 0.4%. by changing high efficient compressor for 6 unit - Improved 0.3% performance of 2 units of thermal plant by install on line performance optimizer software - Promoted to reduce electric power consumption 8% or 100 tones of CO2e from year 2005


Ratchaburi’s ‘Committee on Workplace Health and Safety’ runs a succesful H&S program. In November 2008, the Ratchaburi Power Plant celebrated a new milestone as it achieved 2,500,000-hour-man safety with no accident. However it doesn’t have a international certification.


Separation of Chairman & CEO: yes, percentage of independent board members: 33%, percentage of independent audit committee members: 100%, percentage of independent remuneration committee members: 0%, percentage of independent nomination committee members: ND, disclosure of executive and board remuneration: partly

Controversies Gravity: MediumCriticised for involvement in controversial dam construction in Laos

Community investmentRatchaburi’s “Love the Forest and the Community” project promotes human-forest harmonious living. Many tree planting initiatives. Ratchaburi feels strongly committed to the communities surrounding the Company’s premises and invests in those communities. Investments are strategic.Note 1: ED stands for environmental damage


1 WBCSD, 2006, Powering a Sustainable Future, available at http://www.wbcsd.org/plugins/DocSearch/details.asp?type=DocDet&ObjectId=MjEyMjc2 World Nuclear Organisation, November 2009, Used Fuel Management3 Source: China Market report, (2009), Analysis and Forecast of China Power Industry 2008-20094 Source: China Market report, (2009), Analysis and Forecast of China Power Industry 2008-20095 Source: China View (2009), China raises price of electricity for non-residential use6 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights7 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights8 Note: China’s power sector is responsible for an estimated 26% of CO2 of total GHG emissions, according to IEA.w 9 Source: BP Statistical Review of World Energy June 2009, BP research10 Note: China’s power sector is responsible for an estimated 26% of CO2 of total GHG emissions, according to IEA.11 Source: DB Climate Change Advisors (2009), Global Climate Change Policy Tracker: An Investor’s Assessment, Detailed Analysis of Targets by Region and Country12 Source: China Daily, November 27th 200913 Source: Reuters 2009, China’s wind-power boom to outpace nuclear by 202014 Source: Renewable energy magazine. 2009-08-26, Spain no longer leading the way in PV solar energy15 Source: DB Climate Change Advisors (2009), Global Climate Change Policy Tracker: An Investor’s Assessment, Detailed Analysis of Targets by Region and Country16 Source: DB Climate Change Advisors (2009), Global Climate Change Policy Tracker: An Investor’s Assessment, Detailed Analysis of Targets by Region and Country 17 Source: Widrow Wilson International Center for scholars, Northeast Asia on the Path to Copenhagen , Jennifer Morgan18 Source: Hong Kong Power Report Q3 2009, Business Monitor International, July 200919 Source: Hong Kong Power Report Q3 2009, Business Monitor International, July 200920 Source: BP Statistical Review of World Energy June 2009, BP research21 Source: Hong Kong Power Report Q3 2009, Business Monitor International, July 200922 Source:: CLP website tariff presentation, Hongkong Electric website tariff table23 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights24 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights25 Source: BP Statistical Review of World Energy June 2009, BP research26 Source: Sustainability and carbon management (2009), Chinese Companies Turn to U.S. Technology to Support GHG Reduction Goals27 Source: Central Electricity Authority of India (2009), http://cea.nic.in/28 Source: Central Electricity Authority of India (2009), http://cea.nic.in/29 Source: BP Statistical Review of World Energy June 2009, BP research30 Source: World Coal Institute (2009) A comprehensive Overview of Coal www.worldcoal.org 31 Anil Kakodkar, Atomic Energy Commission, India, 2005 32 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights33 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights34 Source: BP Statistical Review of World Energy June 2009, BP research35 Source: DB Climate Change Advisors (2009), Global Climate Change Policy Tracker: An Investor’s Assessment, Detailed Analysis of Targets by Region and Country36 Source: DB Climate Change Advisors (2009), Global Climate Change Policy Tracker: An Investor’s Assessment, Detailed Analysis of Targets by Region and Country37 Source: DB Climate Change Advisors (2009), Global Climate Change Policy Tracker: An Investor’s Assessment, Detailed Analysis of Targets by Region and Country38 Note: This assumes sites having wind power density greater than 250W/sq m at 50m hub-height with 3% land availability in potential areas for setting up wind farms at 12ha/MW.39 Source: World Nuclear Association (2008), Asia’s Nuclear Energy Growth 40 Source: India’s Energy Security, Chietigj Bajpaee41 Source: Reuters (2009), India ties solar plans to global climate support 42 Source: Times of India (28 November 2009), Copenhagen conference: India, China plan joint exit43 Source:,Renewable Energy and Energy Efficiency Partnership (2002), Policy DB Details: Indonesia44 Source: Advanced Research Institute, Virginia Polytechnic Inst & State University (September

SourcES15, 2009), Electricity in Indonesia Universal Coverage and Fuel issues45 Source: BP Statistical Review of World Energy June 2009, BP research46 Source: Agence Française de Développement (2009) AFD pledges 230 million euros to development at its 1 October 2009 Board of Directors Meeting47 Source: Asia Times (2008), Joel Adriano, Power politics in the Philippines 48 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights49 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights50 Source: BP Statistical Review of World Energy June 2009, BP research51 Note: Presidential Decree No 30/2007, Law No 15/1985, Government Regulation No 26/2006, and Ministerial Regulation No 002/220652 Source: DB Climate Change Advisors (2009), Global Climate Change Policy Tracker: An Investor’s Assessment, Detailed Analysis of Targets by Region and Country53 Note: Ministerial Decree No.1122.K/30/MEM/200254 Source: United States Department of Commerce (2006), Anasia Silviati, Indonesia: Renewable Energy Market 55 Source:,Renewable Energy and Energy Efficiency Partnership (2002), Policy DB Details: Indonesia56 Source:,Renewable Energy and Energy Efficiency Partnership (2002), Policy DB Details: Indonesia57 Source: The World Nuclear Association (August 2008), Asia’s Nuclear Energy Growth 58 Source: Reuters (2009), Indonesia rejects “world’s third-largest emitter” tag 59 Source: Reuters (2009) Indonesia CO2 pledge to help climate talks-greens 60 Source: Energy Information administration (September 2009), Country Analysis Briefs: Malaysia61 Source: BP Statistical Review of World Energy June 2009, BP research62 Source: Reuters (2009), UPDATE 1-Malaysia’s Tenaga says power demand to grow in 2010 63 Source: The Energy Conservation Centre, Japan, Energy Prices64 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights65 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights66 Source: BP Statistical Review of World Energy June 2009, BP research67 Source: Spire Research and Consulting, Malaysia’s Drive to build a Renewable Energy industry,68 Source: 3nd Seminar on Harmonized Policy Instruments for the Promotion of Renewable Energy and Energy Efficiency in the ASEAN Member Countries, November 2005 69 Note: Malaysia’s Ministry of Energy, Green Technology and Water70 Source: World Nuclear Association (August 2008), Asia’s Nuclear Energy Growth 71 Source: Ministry of Energy, Green Technology and Water Website , Oct 21st 200972 Source: Energy Information Administration website (2009), International Energy Statistics73 Source: BP Statistical Review of World Energy June 2009, BP research74 Source: Business Monitor International (2009) Philippines Power Report Q4 200975 Source: WorldNews (2009), Meralco cuts power rates by P0.11 per kWh 76 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights77 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights78 Source: BP Statistical Review of World Energy June 2009, BP research79 Source: Global Energy Network Institute (GENI), McClatchy-Tribune Regional News - Euan Paulo C. Anonuevo - The Manila Times (December 17, 2008), Renewable energy law comes into force80 Source: Philippines department of energy (2009), Empowering the nation through renewable energy 81 Source: Global Energy Network Institute (GENI), McClatchy-Tribune Regional News - Euan Paulo C. Anonuevo - The Manila Times (December 17, 2008), Renewable energy law comes into force 82 Source: Merritt Partners (2008), VS Pérez,, Status of Renewable Energy Policy in the Philippines,83 Source: World Nuclear Association (August 2008), Asia’s Nuclear Energy Growth 84 Source: Energy Information Administration website (2009), International Energy Statistics85 Source: BP Statistical Review of World Energy June 2009, BP research86 Source: The Business Times (November 18, 2009), Ronnie Lim, Power to rise from the east with new station 87 Source: Asian Power (October 7, 2009), Singapore 4th quarter electricity tariff up by 12.71%88 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights89 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights90 Source: BP Statistical Review of World Energy June 2009, BP research


91 Source: AsiaIsGreen.com (July 18, 2009), Singapore is Not Ready for Renewable Energy92 Source: PRLog Free Press Release, (September 8, 2009), Financial Solutions: Singapore also waiting on Copenhagen conference93 Source: December 2, 2009, Singapore to reduce emissions growth by 16% below projected 2020 level, http://english.sina.com/world/2009/1202/290012.html , 94 Source: http://asia.news.yahoo.com/cna/20091219/tap-886-copenhagen-accord-useful-climate-231650b.html 95 Source: Energy Information Administration website (2009), International Energy Statistics96 Source: BP Statistical Review of World Energy June 2009, BP research97 Source: Business Monitor International (2009), South Korea Power Report Q4 200998 Source: Taiwan news,(2009) Taiwan’s electricity retail prices among world’s lowest: Taipower99 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights100 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights101 Source: BP Statistical Review of World Energy June 2009, BP research102 Source: Jeong Hyeon-ji, Korea’s renewable energy market strives for growth, July 2008.103 Source: DB Climate Change Advisors (2009), Global Climate Change Policy Tracker: An Investor’s Assessment, Detailed Analysis of Targets by Region and Country104 Source Global Solar Technology (October 8, 2009) Korea PV market expected to reach 200MW by 2012.105 Source: World Nuclear Assocication (August 2008), Asia’s Nuclear Energy Growth106 Source: South Korea announces ambitious mid-term emissions targets (November 17, 2009) 107 Source: Associated Press (November 17th 2009), Jae-Soon Chang, South Korea sets greenhouse gas reduction target108 Source: Ministry of Economic Affairs’ Bureau of Energy website, Liberalization of Power Market in Taiwan, 109 Source: Ministry of Economic Affairs’ Bureau of Energy website, Liberalization of Power Market in Taiwan, 110 Source: BP Statistical Review of World Energy June 2009, BP research111 Source: World Nuclear Association (June 2009), Nuclear Power in Taiwan112 Source: Taiwan news,(2009) Taiwan’s electricity retail prices among world’s lowest: Taipower113 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights114 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights115 Source: BP Statistical Review of World Energy (June 2009), BP research116 Source: Ministry of Economic Affairs’ Bureau of Energy website, Liberalization of Power Market in Taiwan, 117 Source: Energy Information Administration (August 2005), Taiwan 118 Source: Ministry of Economic Affairs’ Bureau of Energy website, Liberalization of Power Market in Taiwan 119 Source: Taiwan Institute of Economic Research (March 2008), New Strategic Initiative for Taiwan’s Energy Supply under Global New Energy Circumstances 120 Source: Global Climate Change Regulation Policy Developments: July 2008 - February 2009121 Source: Global Climate Change Regulation Policy Developments: July 2008 - February 2009122 Source: W.T.Tsai, Current status and development policies on renewable energy technology research in Taiwan 123 Source: Council for Economic Planning and development 124 Source: DB Climate Change Advisors (2009), Global Climate Change Policy Tracker: An Investor’s Assessment, Detailed Analysis of Targets by Region and Country125 Source: Reuters (2009), Taiwan to invest $1.4 bln in renewable energy 126 Source: World Nuclear Association (June 2009), Nuclear Power in Taiwan127 http://www.taipeitimes.com/News/taiwan/archives/2009/12/20/2003461408128 Source: Thailand Energy Regulatory Developments 2009, http://74.125.153.132/search?q=cache:CCRjz2o7tisJ:www.erc.or.th/Doc/thailand.pdf+Thailand+Energy+Regulatory+Developments+2009&cd=1&hl=en&ct=clnk129 Source: BP Statistical Review of World Energy June 2009, BP research130 Source: Business Monitor International (2009), Thailand Power Report Q4 2009 131 Source: ERC (2009), Thailand Energy Regulatory Developments 2009 132 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights133 Source: IEA (2009), CO2 Emissions from Fuel Combustion 2009 - Highlights134 Source: BP Statistical Review of World Energy June 2009, BP research

135 Source: ERC (2009), Thailand Energy Regulatory Developments 2009 136 Source: Energy Regulatory Commission of Thailand (November 11, 2009), Dr. Pallapa Ruangrong, Thailand’s approach to promoting clean energy in the electrical sector137 Source: Thailand’s Energy Conservation Program, Renewable Energy Development Program 2008-2011.138 Source: Renewable Energy Industry Club Federation of Thai Industries, Chairman Phichai Tinsuntisook, Looking into ‘Renewable Energy’ Businesses in Thailand as an Opportunity against the Globalization Situation ,.139 Source: World Nuclear Association (2009), Asia’s Nuclear Energy Growth 140 Source: The Irrawaddy (July 2007), IAEA to Cooperate with Thailand’s Nuclear Power Plan141 Source: Thailand Greenhouse Gas Management Organisation www.tgo.or.th 142 Source: http://www.greenpeace.org/seasia/en/campaigns/climate-change/features/dawn-of-energy-revolution


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