Environmental and climate responsibility

The climate change risk is viewed by the ORLEN Group as a significant challenge for its companies. At the same time, it is an opportunity for growth, provided that we are able to develop the right business models. The ORLEN Group seeks to address those challenges by creating a comprehensive strategy, which is planned to be communicated at the end of 2020. The change in the functioning of energy systems as a result of new technologies and climate developments is an integral part of our strategic thinking and business risk assessment. The climate change risk is managed on a systematic basis by complementary and highly empowered units, taking into account the market, regulatory, technological and reputational dimensions. The PKN ORLEN Strategy Office has the Department of Sustainable Business Development within its structure, while the division overseen by the Member of the Management Board for Corporate Affairs includes the Environmental Protection Office, as well as the Regulatory Risk Management Department and the Representative Office in Brussels.

As refining and petrochemical production are energy-intensive processes, decarbonisation of electricity and heat consumed is an important measure in reducing carbon dioxide emissions. The ORLEN Group already uses electricity and heat generated by two CCGT units. The unit in Włocławek was the first commercial power unit in Poland fuelled with natural gas. Cogeneration is among the most efficient forms of energy production. The opening price scissors between the price of coal-based energy and the cost of energy generation (from natural gas, cogenerated with heat) support the profitability of the Company’s operations in this segment. There are also plans to construct offshore wind farms in the Baltic Sea (where environmental and wind surveys are currently in progress) and to further expand the ORLEN Group’s presence in the green energy sector. Increasing the share of green energy in the overall mix offers a number of decarbonisation opportunities with respect to fuels and petrochemical products. These include both green hydrogen produced by hydrolysis and its use as an alternative transport fuel, synthetic bio-hydrocarbons produced in the co-hydrogenation process, and synthetic gasoline. An important element of the decarbonisation efforts is optimised use of waste heat at the production plants. The installation of flue gas waste heat recovery equipment at the DRW VI unit at the PKN ORLEN production plant in Płock is one example of solutions implemented towards this objective. The purpose of the project is to recover 17 GJ of heat that was formerly irretrievably dissipated and to use it for heating up combustion air. The resulting reduction in fuel consumption will cut down annual CO₂ emissions by nearly 8,000 tonnes. Another initiative was the construction of steam generators on the hydrocracking unit and the use of waste heat to produce low pressure steam, for which the Company was awarded white certificates and reduced the amount of fuel used in the process.

The long-term development strategy of PKN ORLEN involves, among other things, increased production of alternative fuels. The ORLEN Group seeks to grow the share of non-conventional ways of powering cars by developing its service station network to sell alternative fuels. These activities were undertaken in all countries where ORLEN Group service stations are present. The Group’s range of 39 fast electric vehicle charging stations across Poland and chargers at 18 Benzina stations in the Czech Republic was expanded in 2019 to include two of our German service stations (numbers as at the end of 2019). In addition, 42 service stations located in the Czech Republic sell CNG. In Germany, there are two hydrogen filling stations, and motorists in the Czech Republic will soon be able to fill up their hydrogen-powered vehicles as well.

Under new regulations, local governments will be required to consistently increase the share of zero-emission vehicles in public transport fleets. Once the necessary technical and legislative solutions are in place, hydrogen fuels, which are still mostly in the testing phase in Poland, will be a significant addition to the range of fuels used in heavy transport vehicles, including municipal buses. PKN ORLEN has already signed relevant letters of intent with the Metropolitan Association of Upper Silesia and Dąbrowa Basin, PESA Bydgoszcz and the City of Płock, with similar agreements with local governments soon to follow. By partnering with municipalities to develop zero-emission hydrogen-powered public transport services, the ORLEN Group will ultimately be able to develop effective hydrogen refuelling infrastructure to meet the needs of municipal transport systems and vehicles. Currently, the ORLEN Group’s hydrogen output is close to 45 tonnes per hour, and most of it is used in production processes. The Group has already commenced a project to build a hydrogen purification unit, which will enable its marketing as a fuel for motor vehicles starting from 2021. Therefore, PKN ORLEN is also developing technologies to store, transport and distribute hydrogen fuel.

In 2019, activities were continued to calculate the carbon footprint of our organisation and its products, using tools developed in previous years. Determination of the carbon footprint is voluntary. An organisation’s carbon footprint includes direct emissions, energy indirect emissions and other indirect emissions from use of the marketed products.

Our activities are carried out based on the Integrated Management System, which includes the Quality Management System (ISO 9001: 2015, AQAP 2110), Environmental Management System (ISO 14001:2015), Occupational Health And Safety Management System (PN-N-18001), Information Security Management System (ISO/IEC 27001), Certification System for Biomass and Biofuels ISCC, KZR INiG certification system for the HVO process, Factory Production Control System (ZKP) – for bitumen production, and Food Safety Management System (HACCP) according to Codex Alimentarius. The Company holds certificates of compliance with ISO 9001: 2015, AQAP 2110, ISO 14001:2015, PN-N-18001, ISO/IEC 27001, ISCC and ZKP. Additionally, an Energy Management System based on the requirements of the ISO 50001 standard was implemented and certified in 2019. These systems meet the highest international management standards and support the Company’s day-to-day efforts to ensure professional customer service and maintain top quality, safety, health protection and environmental standards.

The key ORLEN Group companies have Integrated Management Systems in place, which include an Environmental Management System implemented and maintained in accordance with the ISO 14001 standard as their integral part. The Group companies also follow Environmental Management System Policies, providing for an obligation to protect the environment, which includes pollution prevention, and other specific obligations relevant to the operations of individual companies. These policies also include a requirement to comply with the law and other external and internal requirements.

When establishing their procedural frameworks, the companies relied on a risk-based approach and focused on prevention, in the broad sense of the word. The procedures, designed to ensure uniformity of the processes across the ORLEN Group with respect to environmental management and reduction of negative environmental and climate impacts, provide rules to be followed during both normal operations and maintenance shutdowns, as well as in the case of environmental accidents. Each of the ORLEN Group companies has implemented procedures for internal audits of the Environmental Management System. The objective of such audits is to determine the status of compliance with the requirements of ISO 14001 and with any other adopted requirements. If any discrepancies are found, remedial and corrective actions are taken to remove the causes of non-compliance. The management boards of the ORLEN Group companies conduct a periodic assessment, in line with the adopted procedures, of the operation of the Environmental Management System. The assessments are usually undertaken once a year.

All ORLEN Group companies hold the necessary permits required by law to conduct their business. Operations of the Płock production plant are regulated under integrated permits, which cover all units, i.e. the refinery, petrochemical plant, central wastewater treatment facility, CHP plant and CCGT unit. The permits define emission limits which are safe for the environment and human health, and which are subject to monitoring. Emission volumes from 14 of the plant’s emitters are measured on an ongoing basis; measurements from the other emitters are taken periodically. In addition, PKN ORLEN has a modern automated air quality monitoring station, fitted with state-of-the-art instruments. Measurements are automatically uploaded to a database maintained by the Provincial Inspectorate of Environmental Protection (WIOŚ) and published on the Inspectorate’s website.

Integrated permits and sector permits need to be updated on an ongoing basis in order to keep up with the evolving legal environment and business needs. In 2019, in view of amendments to the Waste Act, an application to amend the waste collection permit was prepared. In accordance with the Act on the Trading System for Greenhouse Gas Emission Allowances, documents were submitted to the National Centre for Emissions Balancing and Management with respect to the installations covered by the EU ETS in connection with the free allocation of allowances for the first phase of the fourth trading period, i.e. 2021–2025, and the monitoring methodology plans covering the monitoring of activity levels, to be effective from January 1st 2021, were filed with Marshal’s Office in order to obtain a decision.

In addition, in accordance with the legal requirements, in 2019 applications for amendment of integrated permits for installations covered by BAT Conclusions (the CCGT unit in Płock and the petrochemical installations) were prepared and submitted to the competent authority. The relevant proceedings are still pending.

One hundred and sixty-seven water-law permits were obtained altogether for PKN ORLEN service stations and fuel terminals.

For description of our environmental policies, see the Non-Financial Statement of the ORLEN Group and PKN ORLEN S.A. for 2019.

Most of the environmental projects carried out in 2019 involved adaptation of plant and process units to new environmental requirements and standards defined in the EU regulations (LVOC BAT Conclusions). Those efforts included both administrative work to have the terms of the integrated permits for the Group’s plants amended, as well as preparation of capex projects related to the production plant and equipment. Key initiatives carried out in 2019 included the start of deployment of the LDAR system for petrochemical facilities and analyses to develop an odour monitoring and management plan. With respect to refining facilities, the first verification measurements were carried out as part of the LDAR system maintenance, confirming high leak tightness of the facilities. Further BAT Conclusions for waste incineration plants were published in late 2019. As the ORLEN Group operates such plants, the BAT requirements will be analysed and adaptive measures will be taken if needed.

The Act on Biofuel Components and Liquid Biofuels imposes the requirement to achieve the National Indicative Target (NIT), i.e. to ensure the required minimum share of biocomponents in the total volume of liquid fuels and biofuels, both sold on the market and used for own needs. The Group meets the National Indicative Target by introducing appropriate amounts of biocomponents into fuels or liquid biofuels derived from biodegradable liquid materials – fossil fuel substitutes. Only biofuels certified for compliance with the sustainability criteria may be used for the implementation of the NIT. The purpose of the NIT is to promote the use of energy from renewable sources in the transport sector and thus to reduce its greenhouse gas emissions. PKN ORLEN has met the required quota ever since 2008. In 2019, biocomponents accounted for 5.6% of the energy content of fuels marketed by PKN ORLEN in Poland, which means that the share of renewable energy represented 5.6% of the total energy content of transport fuels sold by PKN ORLEN. The Company has in place a precise internal order regarding the NIT.

In addition, PKN ORLEN and other ORLEN Group companies are subject to the EU regulation establishing the greenhouse gas emission allowance trading scheme (the EU ETS Directive) that forms part of the EU climate and energy package. Directive 2003/87/EC of the European Parliament and of the Council established a scheme for greenhouse gas emission allowance trading within the Community to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner. In October 2014, the European Council made a commitment to reduce the European Union’s overall greenhouse gas emissions by at least 40% below the 1990 levels by 2030. It was agreed that all sectors of the economy should contribute to achieving the emissions reduction target and that it should be met in the most cost-effective manner through the EU ETS.

The changes to regulations agreed on in recent years, designed to address the issue of oversupply of CO₂ emission allowances on the market, are having an impact on the ORLEN Group’s installations. Since the publication of the MSR surplus indicator and the revision of the EU ETS regulations, auction volumes have been significantly reduced. Following an increase in the prices of CO₂ emission allowances in Europe, proceeds from auction sales of greenhouse gas emission allowances purchased by Member States rose and can be used for specific projects related to climate protection and the energy sector.

For information on the environmental risks and relevant mitigation measures, see ‘Risk management’  and ‘Regulatory environment’ .

In 2019, ORLEN Group companies paid environmental fees for air emissions, water withdrawal, discharge of effluents to water and soil, and storage of waste in own landfills in a timely manner. Therefore, there were no additional payments resulting from failure to correctly calculate the fees or to meet the payment deadline. The amounts to be paid were calculated based on the type and quantity of water abstracted from the environment and the type and quantity of air emissions and effluents discharged to water. It is those environmental impacts that had the largest share in the fee amounts paid by ORLEN Group companies. Fees for the storage of waste in own landfills represented a small fraction of the total.

An over 2%  year-on-year decrease in the total amount of environmental fees was reported in 2019, driven chiefly by lower fees for the discharge of effluents by the Czech company Spolana, which in 2019 did not incur any fees for the discharge of inorganic nitrogen in wastewater. As required by the Czech water law, the nitrogen load did not exceed the limit specified in the statute.

Moreover, ANWIL reduced storage of waste in its own landfills.

Environmental fees at ORLEN Group companies