Inter RAO

Inter RAO has improved since the last assessment by setting a target to reduce scope 1 intensity emissions by 7% by 2030 compared to 2019. However, the target is not aligned with its 1.5°C pathway, which requires the company to decrease its emissions intensity by 5% annually. The time frame of the target is well before the retirement age of most of its fossil fuel generating assets. Additionally, any emission target should include short-term intermediary targets at gaps of no more than 5 years to incentivise management to take action and long-term targets to enable strategic consideration of the lifetime emissions of new generation assets.

Inter RAO has not signalled any intention to reduce fossil fuel electricity generation. Due to modernisation and decommissioning of old inefficient coal plants, the company reduced its absolute scope 1 emissions by about 30% since 2015. However, its future scope 1 and 2 emissions intensity is projected to nearly follow a business-as-usual pathway. The company is taking almost no action to reduce its scope 1 and 2 emissions intensity between 2021 and 2025 and does not disclose any financial information related to low-carbon portfolio development. The company is expected to develop a plan to phase out coal and publish its planned investments in low-carbon generation for the next 5 years.

Inter RAO does not publicly disclose its investments in low-low carbon innovation. The company is focusing its research and development (R&D) efforts on improving efficiency and reliability of its thermal assets. The company, which electricity generation portfolio is dominated by coal and gas, is expected to develop new technologies and invest in carbon capture and storage (CCS) and hydrogen research projects. Electric utility companies should be investing at least 5% of capital expenditure (CapEx) in low-carbon technologies.

Inter RAO’s attitude towards climate policies is controversial. The company is involved in the development of the national legislation and pursues the alignment of the national legislation with European Union Emissions Trading System (EU ETS). At the same time, the company is reportedly seeking ways to minimise its exposure to carbon tax and is participating in “the EU’s Carbon Border Mechanism Tax discussions”. The mechanism would counteract EU Carbon tax by putting a carbon price on imports of certain goods from outside the EU. Inter RAO can increase the credibility of its climate rhetoric by defining a clear position on climate change.

Inter RAO commits to reduce its scope 1 emissions intensity by 7% by 2030 compared to 2019, however, the target is not aligned with the company’s 1.5°C pathway. The target trajectory almost follows a business-as-usual trend.

Inter RAO does not have a low-carbon transition plan. Its emission reduction target seems to be achieved mostly by improving efficiency and modernization of the existing facilities. The company plans to increase renewables capacity, however, no details such as capacity or timescale were disclosed.

At present, Inter RAO is actively modernising and increasing capacity of its thermal assets. Climate-related risks have been identified for the first time in 2020, though financial impact of these risks has not been evaluated.

Only 1.5% of Inter RAO’s total capacity is low carbon, the rest of its generation is based on gas and coal. In 2018-2020, a new coal plant and three gas-fired power stations have been commissioned in Kaliningrad region.

There is little indication that Inter RAO is seriously planning for the low-carbon transition. A reduction in emissions intensity was mainly achieved by efficiency improvements. Long-term decarbonisation requires the company to invest in low-carbon generation and innovation.