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Summary:
After the SASAC called on central SOEs to complete the full coverage of their 2023 ESG reports, 11 power generation companies with mandatory disclosure have published their social responsibility reports. It can be seen that power generation companies dominated by thermal power are also vigorously developing clean energy, and clean energy-related revenue is gradually increasing.
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→This is the 1,121st original article of Global Zero Carbon
After entering 2024, the development of environmental and social corporate governance (ESG) reports of listed companies in mainland China has pressed the acceleration button.
On April 12, under the guidance of the China Securities Regulatory Commission, the three major stock exchanges in Shanghai, Shenzhen and Beijing officially issued the "Guidelines for Sustainability Reporting of Listed Companies (Trial)", which will be implemented from May 1, 2024.
On May 27, the Ministry of Finance issued the "Corporate Sustainability Disclosure Standards - Basic Standards (Draft for Comments)", marking the beginning of the construction of a unified national sustainability disclosure standard system.
At present, sample companies of major market indices such as the SSE 180, STAR 50, SZSE 100 and ChiNext Index, as well as companies listed at home and abroad, are all companies that are subject to mandatory disclosure of ESG reports, and should disclose the 2025 Sustainability Report for the first time in 2026 at the latest.
However, before the issuance of this year's formal guidelines, the SASAC had called on listed companies of central enterprises to strive to achieve full coverage of ESG report disclosure in 2023 two years ago.
According to the China Securities Journal, up to now, more than 95% of listed companies controlled by central enterprises have implemented ESG special disclosures or related disclosures.
This includes both central enterprises (or local state-owned enterprises), SSE 180 and SZSE 100 listed companies, and the first batch of companies to be included in the national carbon market, that is, power generation companies.
According to the statistics of the 21st Century Economic News, there are 11 power generation enterprises that meet these three conditions at the same time, namely Huadian International, Huaneng International, Longyuan Power, Datang Power Generation, Guodian Power, Three Gorges Energy, Shanghai Electric Power, Xintian Green Energy, China Nuclear Power, China General Nuclear Power and Yangtze River Electric Power.
At present, these 11 power generation companies have disclosed their ESG reports for 2023, which can be directly found in the information disclosure section of the Shanghai Stock Exchange and Shenzhen Stock Exchange.
The clean transformation of the power system plays a key role in the energy transition and the greening of electricity consumption in the mainland. Standing at this point in time, it is very necessary to take these 11 companies as samples to review the transformation and progress of the power generation industry.
Today's article will focus on environmental indicators (E), select corresponding key issues, and sort out the ESG construction of power generation enterprises.
01
Carbon emissions are increasing and decreasing
According to the Self-Regulatory Guidelines for Listed Companies (Trial) issued by the three major stock exchanges, one of the key issues in the environmental indicators is "responding to climate change".
The key indicator for measuring climate change is carbon dioxide emissions.
Among the 11 companies, except for Huaneng Power and Shanghai Electric Power, the remaining 9 have disclosed total carbon emission data.
Three of the nine companies that achieved a reduction in CO2 emissions in FY2023 were China Longyuan Power (2.76%), Guodian Power (6.01%) and China General Nuclear Power Corporation. Among them, China General Nuclear Power Corporation will have the largest decrease in carbon emissions in 2023 (10.99%), from 371,200 tons in 2022 to 330,400 tons in 2023.
CGN's main business is nuclear power, which produces only a small amount of greenhouse gas emissions during its production. In 2023, CGN and its major subsidiaries emitted 4,820.85 tonnes of Scope 1 direct greenhouse gases, 325,600 tonnes of Scope 2 emissions in 2023, 371,200 tonnes of Scope 2 emissions in 2022, and Scope 3 emissions are not yet counted.
If you include the emission reductions caused by CGN's use of nuclear power and the purchase of green certificates, the Scope 2 carbon emissions are only 23,800 tons.
According to the disclosed data, there are 4 companies with increased carbon emissions.
Huadian International's cumulative carbon emissions in 2023 totaled 178.914 million tons, an increase of 5.2%, and the unit emission intensity was 0.8 kg/kWh, an increase of 0.1 kg/kWh.
Datang International's total emissions were 197.03 million tons, an increase of 2.64%, and the carbon emission intensity increased by 49 g/kWh.
China's carbon dioxide emissions from nuclear power in 2023 reached 101,600 tons, an increase of 13.01% from 89,900 tons in 2022, mainly due to the increase in the number of overhauls of nuclear power units and the increase in purchased electricity, but the actual value of the comprehensive energy consumption index per 10,000 yuan of industrial output value decreased by 1.9% year-on-year compared with 2022.
Xintian Green Energy's carbon dioxide emissions in 2023 will be 34,900 tons, compared with 20,200 tons in 2022, and the total greenhouse gas emissions per 10,000 yuan of revenue will increase by 0.0063 tons of carbon equivalent per 10,000 yuan, mainly due to the increase in purchased electricity and the increase in the use of diesel and liquefied gas.
Yangtze River Power and Three Gorges Energy are carbon emission estimates starting in 2023, and there is no historical data to compare; Huaneng International said that the carbon emission data in 2023 involves trade secrets and will not be disclosed for the time being, and the company will disclose the relevant data after completing the performance; Shanghai Electric Power did not explain.
Five of the 11 companies are mainly engaged in clean energy power generation.
These include Xintianlv Energy, which covers wind power and photovoltaics, Three Gorges Energy, which covers wind, solar and hydropower, China Nuclear Power, which covers wind, solar and nuclear power, Yangtze River Power, which mainly focuses on hydropower, and China General Nuclear Power Corporation, which mainly focuses on nuclear power. The carbon emissions of these companies are all below 100 tons.
02
Revenue related to new energy power generation increased
Power generation companies, mainly thermal power, are also vigorously developing clean energy.
Huaneng International and Datang Power Generation accounted for 31.24% and 37.75% of the installed capacity of low-carbon and clean energy, respectively. Guodian Power's installed capacity of clean energy reached 31.05%, and the proportion of clean energy power generation was 17.2%. Shanghai Electric Power's clean energy generation ratio reached 30.6%.
Longyuan Power is special, with its business covering thermal power generation and the proportion of green power reaching 86%, and there are only two thermal power plants. In 2023, renewable energy holdings accounted for 94.73% of the installed capacity, renewable energy generation accounted for 86.46%, and renewable energy power generation is equivalent to a reduction of 54,800,900 tons of carbon dioxide.
Specifically, according to the statistics of the 21st Century Economic News, there are 7 enterprises involved in photovoltaic power generation business.
Three Gorges Energy will lead the way in terms of photovoltaic power generation in 2023, reaching 153.54 kWh, and it is also the company with the highest cumulative installed photovoltaic capacity.
The largest increase in photovoltaic power generation in the development of Guodian Power, with a year-on-year increase of 155.74%; Due to the increase in new energy power generation, Guodian Power's power generation structure has become cleaner, and carbon emissions have even decreased by 6.01% while power generation has increased.
Source: 21 Finance
There are a total of 8 enterprises involved in the wind power business, and Longyuan Power will take the lead with 61.353 billion kWh of power generation in 2023.
China's nuclear power generation capacity is growing rapidly, with a year-on-year increase of 66.78% in 2023 to 10.904 billion kWh.
Source: 21 Finance
The development of new energy business brings about an increase in profitability.
Among the 8 companies whose business covers wind power and photovoltaic power generation, 7 companies will have a year-on-year increase in wind power and photovoltaic revenue in 2023; As the sales of natural gas accounted for the main revenue of Xintian Green Energy, the revenue of wind power and photovoltaic power generation decreased by 1.61% year-on-year.
The development of clean energy also presents significant opportunities for companies with a focus on nuclear and hydropower.
Yangtze Power's business revenue in 2023, which is dominated by hydropower, increased by 12.39% year-on-year. In 2023, the clean electricity produced by Yangtze Power is equivalent to replacing 83.07 million tons of standard coal and reducing carbon dioxide emissions by 227 million tons.
Due to the clean nature of hydropower, Yangtze Power's carbon emissions in 2023 will be 35,500 tons, of which Scope 1 mainly comes from the use of gasoline in the company's vehicles, and the use of diesel and natural gas in logistics services. Scope 2 comes from the amount of electricity purchased from the company's office buildings.
According to CGN, by the end of 2023, the company managed 27 nuclear power units in operation with an installed capacity of 30,568 MW, one more than last year, and four new nuclear power units under construction. The company's net profit in 2023 increased by 7.64% year-on-year.
In 2023, the on-grid electricity of nuclear power will reach 214 million kWh, and the on-grid electricity of nuclear power is equivalent to about 64.67 million tons of standard coal consumption and about 176.46 million tons of carbon dioxide emission reduction.
For power generation companies, increasing the installed capacity of clean energy and developing renewable energy power generation business will be an inevitable way to reduce carbon emissions.
03
Questions & Suggestions
In collecting ESG reports, the author found that different companies have different names for the report, some call it "social responsibility report", some call it "sustainability report", and some call it "environmental, social and governance report". In addition to the inconsistent names of the reports, the degree to which companies disclose key indicators is also different.
Of course, every business is unique, and this is where the flexibility of ESG standards lies. However, this difference can also cause confusion to investors to a certain extent, and at the same time affect the horizontal comparison between companies.
The 2023 ESG report also saw the progress of many companies. Although some companies released ESG reports in 2022, they did not disclose key indicators, and this year they have added the relevant tables.
However, there are some companies that have limited disclosure of individual key indicators and do not provide any explanations.
The Ministry of Finance's Corporate Sustainability Disclosure Standards – Basic Standards, issued in May this year, stipulate that companies must explain undisclosed data in order to meet the requirements.
Nowadays, the increase in the disclosure rate of ESG reports is a reflection of the progress of the industry; With the maturity of national disclosure standards, improving the disclosure content will be the next challenge for enterprises.
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Resources:
[1]https://static.sse.com.cn/disclosure/listedinfo/announcement/c/new/2024-03-28/600027_20240328_CEVD.pdf
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Disclaimer:
This article is for academic communication and dissemination only and does not constitute investment advice