Climate Change
The energy industry is currently undergoing the greatest changes in the last few decades. The emphasis on the environment, regulatory changes, technological progress, and customer preferences are guiding the energy sector toward decentralized and environmentally friendly sources and processes. In 2021, the Board of Directors of ČEZ, a. s., approved a commitment to achieve climate neutrality by incorporating the sustainability strategy VISION 2030 into the corporate strategy of CEZ Group. Greenhouse gas emissions are assessed as a material impact requiring a solution within the business model under the double materiality assessment. The interaction of VISION 2030, the business model, and material impacts, risks, and opportunities is described in the chapter Material Impacts, Risks, and Opportunities of the Sustainability Report 2024.
The current business concept of CEZ Group and VISION 2030 respect the decarbonization trend. CEZ Group has been consolidating its core business activities and advances its sustainability ambitions. The fundamental strategic pillar is the transformation of the generation portfolio into a low-emission one and achieving climate neutrality by 2040. The greenhouse gas emission reduction targets for CEZ Group are presented in the form of greenhouse gas emission intensity, including Scope 1 and Scope 2 GHG emissions, in tonnes of carbon dioxide equivalent per megawatt hour of electricity and heat generated (hereinafter referred to as the emission intensity). VISION 2030 is based on the calculation of emission intensity in tCO2e/MWh. The calculation methodology and the scope of emissions included are described in the chapter Greenhouse Gas Emissions of the Sustainability Report 2024.
The most powerful decarbonization tools by 2030 (decarbonization levers) in CEZ Group are the shift away from coal combustion (planned decrease in the emission intensity by approx. 65%) and the installation of new emission-free sources, or transitional sources using natural gas (planned decrease in the emission intensity by approx. 35%). Since 2019, CEZ Group has reduced its installed capacity by 2,446 MW of coal-fired sources (220 MW Ledvice II, 440 MW Prunéřov I, 200 MW Dětmarovice, 79 MW Vítkovice, 1,000 MW Počerady, 500 MW Mělník III, and 7 MW Dvůr Králové heating plant). Other decarbonization tools include Waste-to-energy projects, technological increase in the efficiency of existing power plants, and replacement of vehicle fleets using combustion engines with electric cars. After 2030, other planned actions include a transition from the use of natural gas to emission-free gases (hydrogen, biomethane), and added capacity of nuclear facilities.
All of the above actions take into account developments in technology, markets, legislation, social and environmental issues, including the impacts of climate change in variant scenarios for both existing and projected sites (see the chapter Risks Related to Climate Change of this Report). The contribution of Scope 2 is insignificant. Under Scope 3 and Category 11 – Use of sold products, the most significant action is the reduction of coal mining.
In accordance with the requirements of EC Regulation 2020/1818, CEZ Group is excluded from the EU Paris-aligned Benchmark, as it has more than 1% of operating revenues from the exploration, mining, acquisition, distribution, and refining of lignite.
More information can be found in the Sustainability Report 2024.
CEZ Group fully supports the commitment of the 2015 UN Paris Agreement on Climate Change related to limiting global warming to “well below 2°C” compared to the pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C. CEZ Group commits to reducing emission intensity, expressed in tonnes of CO2e/MWh, by more than 50% by 2030 compared to the reference year 2019 and achieve climate neutrality by 2040. Compared to the reference year 2019, when 0.38 tCO2e/MWh was reported, this means a reduction to below 0.16 tCO2e/MWh in 2030. Scenarios from a 2017 report by the International Energy Agency (IEA) were used to set the targets (for targets up to and including 2030, this concerns the Beyond 2°C Scenario – B2DS). The Chapter Strategy, Business Model, and Value Chain of this Report describes the position of VISION 2030 targets within the value chain and how they relate to the impacts identified in the double materiality assessment. The strategy goal is supported by a set of short-term and long-term decarbonization targets.
SBTi Validation
In September 2023, validation of the near-term targets for 2033 and the long-term targets for 2040 in accordance with the SBTi Sectoral Decarbonization Approach (SDA) methodology and the Net Zero by 2050 (NZ2050) scenario from the International Energy Agency, which are consistent with the 1.5°C Scenario of the Paris Agreement, was completed. The SBTi targets are defined in part differently, in terms of the scope of the facilities included, compared to the targets defined in the VISION 2030, which includes currently operating facilities, while the SBTi methodology requires that the calculation is performed each year on an identical group of facilities as in the baseline year 2019.
The near-term targets of CEZ Group include a commitment to reduce Scope 1 and 2 GHG emissions by 83% per MWh by 2033 from a 2019 base year. CEZ Group is also committed to reducing the absolute Scope 3 GHG emissions from use of sold products (Category 11) by 58.8% within the same timeframe.
The long-term targets of CEZ Group include a commitment to reduce Scope 1 and 2 GHG emissions by 97.3% per MWh by 2040 from a 2019 base year. CEZ Group is also committed to reducing absolute Scope 3 GHG emissions from use of sold products (Category 11) by 90% within the same timeframe.
Action plans and actions are adopted and monitored on a quarterly basis to meet the set strategic targets to reduce the impacts and risks related to climate change and to adapt the strategy and operation of generating facilities to actual and expected climate changes.
CEZ Group is preparing for the gradual phase-out and related closure or transformation of its coal-fired generating facilities, which will bring about numerous social impacts. CEZ Group publicly commits to providing reassignment, reskilling, retraining, or compensation to all employees affected by coal phase–out. Specific implemented and planned actions are listed in the chapter Own Workforce of the Sustainability Report 2024. The divestment of two Polish coal-fired power plants is also a significant change in the decarbonization process. The entire transaction was closed and the sale of the companies was completed on February 6, 2025. The OPEX and CAPEX amounts required to continue implementing decarbonization actions and initiate other actions are in line with CEZ Group’s investment plan. The material sustainability risks disclosed in the chapter Double Materiality Assessment of the Sustainability Report 2024 do not require any additional actions beyond those stated in order to achieve the decarbonization targets as of the date of the Sustainability Report 2024.
CEZ Group reports its GHG emissions using the methodology of Greenhouse Gas Protocol: Corporate Accounting and Reporting Standard and 2006 IPCC Guidelines for National Greenhouse Gas Inventories (GHG Protocol). Emissions are divided into groups Scope 1, representing direct emissions associated with the activities of CEZ Group, Scope 2, including indirect emissions associated with the purchase of electricity, heat, process steam, or cooling for own consumption, and Scope 3, which includes indirect emissions not produced by CEZ Group, but by its contractual partners. In Scope 3, emissions are thus related to the supply chain, delivery of goods and services, or purchase of products, services, or waste by contractual partners. We report Scope 1 and Scope 2 emissions in full, whereas in Scope 3 only categories relevant to CEZ Group.
In 2021, sustainability strategy targets were set, and the year 2019 was set as base year to maintain trend tracking. The methodology for calculating greenhouse gas emissions for 2024 is identical to the methodology used in 2023. According to the requirements of the European Sustainability Reporting Standards (ESRS), the value of total greenhouse gas emissions is now reported as the sum of direct and indirect emissions.
CEZ Group is a major energy corporation with a highly variable portfolio of greenhouse gas emission sources in companies operating in multiple countries. CEZ Group exercises operational management only over its fully consolidated subsidiaries. Their greenhouse gas emissions are included in the calculation of direct and indirect emissions. In CEZ Group, greenhouse gas emissions are measured (CO2, CH4, and N2O emissions) or determined by balance calculation. Greenhouse gases other than CO2 are equivalent to the amount of CO2 recalculated using GWP (global warming potential) coefficients. In CEZ Group, monitoring and measurement of greenhouse gas emissions is carried out in accordance with the Kyoto Protocol (CO2, CH4, N2O, HFC, PFC, SF6). NF3 (also included in the Kyoto Protocol) is not used in CEZ Group.
Direct greenhouse gas emissions (Scope 1) originate from the combustion of fossil fuels for electricity and heat generation (CO2, CH4, and N2O) and backup energy sources (diesel generators), from fuels for work machines and vehicles owned or operated by CEZ Group (CO2), from fugitive emissions from coal mining (CH4), from landfills (CH4), from the transport of natural gas (CH4), from biomass combustion (CH4 and N2O), and in small amounts from HFC, PFC, and SF6 gas leaks and from refrigeration and air conditioning equipment and from electrical switching equipment. Scope 1 greenhouse gas emissions are currently the most significant for the energy sector. Their importance will, however, decrease in the future with the transition to low-emission and emission-free energy sources.
Under the Scope 2 indirect emissions category, indirect emissions from purchased and simultaneously consumed energy are reported according to location-based and market-based methods in countries where energy consumption cannot be covered by own generation.
Other indirect emissions (Scope 3) represent indirect greenhouse gas emissions in the supply-demand chain (upstream and downstream emissions) that arise as a result of CEZ Group’s activities but are not included in Scope 1 and Scope 2 emissions. The GHG Protocol divides indirect greenhouse gas emissions into 15 categories. Eight Scope 3 categories are not included in this Report due to their negligible values (their share in total Scope 3 emissions is below 1%) or because CEZ Group does not operate the given activity. These are the following categories: upstream transportation and distribution, waste generated in operations, business travel, employee commuting, upstream leased assets, downstream leased assets, end-of-life treatment of sold products, and franchises. In 2023, a review of all fifteen categories was carried out, of which those that contribute at least one percent to total Scope 3 emissions were identified as material. In the long term, emissions from purchased goods and services are reported regardless of this limit. The materiality of individual Scope 3 categories is reviewed every three years, or when there is a significant change in CEZ Group’s consolidated group or value chain that indicates a possible change in their value.
In 2024, the GHG intensity – emission intensity value (see definition in the chapter Transition Plan of the Sustainability Report 2024) was achieved at the 2023 level, with an overall reduction in electricity and heat generation compared to 2023. The reduction in the emission intensity was at 1%.
CEZ Group newly publishes the indicator Greenhouse gas emissions intensity per net revenues as required by the ESRS. The indicator is defined as the share of total greenhouse gas emissions in tonnes of CO2e and the book value of net revenues according to the IFRS. CEZ Group’s net revenues are equal to the value of the item “Total revenues and other operating income” in the Consolidated Statement of Income for the Year Ended December 31, 2024, operating revenues.
The installed capacity of CEZ Group power plants and heating plants, broken down by type of generating facility and country, is listed in the chapter Overview of Generating Facilities and Balance of Electricity, Heat and Natural Gas of CEZ Group in the AFR. The chapter also contains figures on electricity generation by energy source in individual countries. Installed capacity and energy generation from renewable energy sources are listed separately.
The most significant item in total energy consumption is the energy chemically bound in fuels used to generate electricity, district heating, cooling, and process steam. In addition, the total energy consumption includes own consumption of elektricity for electricity generation, consumption of electricity for heat supply for heating purposes, consumption of electricity for other purposes (maintenance, buildings, lighting, etc.), own consumption and losses of process heat, and own consumption of district heating (heating, hot water, etc.).
More information can be found in the Sustainability Report 2024.
CEZ Group operates significant combustion sources falling under the European Emissions Trading System (EU ETS), an EU climate policy instrument aimed at reducing and limiting the production of greenhouse gas emissions. Within this trading system, CEZ Group purchases EUA allowances and settles them with the EU registry annually in the volume of CO2 emissions produced. CEZ Group applies the emission allowance price and the forward EUA price (EEX) as part of its business plan when planning operations and investment activities related to the generation of greenhouse gas emissions. From the perspective of the internal carbon price, CEZ Group applies a “shadow price” in business decisions, which is the application of the emission allowance price and the forward EUA price (EEX). The price of allowances is an operating expense for the operation of each energy source, and changes in the price of this expense affect investment decisions and annual operating plans for existing locations. The shadow price is not reported separately in the financial statements. Purchased emission allowances consumed in the reporting period are included in the costs. The Group’s profit or loss also includes other transactions related to emission allowances, as described in Note 2.12 of the Notes to the Consolidated Financial Statements as at December 31, 2024.