SCENARIO APPLIED FOR ASSESSMENT Transition Scenario Announced Pledge scenario NZE emission by 2050 Description A scenariowhich assumes that all climate commitments made by governments and industries around the world as of the end of August 2023, including Nationally Determined Contributions (NDCs) and long-term net zero targets will be met in full and on time. A scenario which sets out a pathway for the global energy sector to achieve net zero CO2 emissions by 2050. It does not rely on emissions reductions from outside the energy sector to achieve its goals. Temperature Alignment 2.6 °C in 2100 1.5 °C in 2100 Source: IEA Source: IEA Physical Scenario RCP 8.5 RCP 2.6 Description • Mean Radiative forcing at earth surface is 8.5 W/m2 • Low effort on the implementation of decarbonization • High intensity & high frequency in extreme weather • Mean Radiative forcing at earth surface is 2.6 W/m2 • High effort on the implementation of decarbonization • Medium intensity & low frequency in extreme weather Temperature Alignment 4.3 C in 2050 1.6 C in 2050 Driver & Impact Metrics used to manage climate-related risks and opportunities Risk rating Energy Resources Energy Generation Energy Technology ST MT LT ST MT LT ST MT LT Carbon Pricing Mechanism Energy Resources and Energy Generation units are carbon-intent businesses. Carbon pricing/carbon tax has been applied at different levels depending on location. It can increase direct costs either through internal management of GHG emissions or offsetting/tax paying the exceed GHG emission from operation. • GHG emission reduction scope 1 and 2 • Increase of non-coal business LM LM LM L L LM L L L Stigmatization Fossil fuel-related business can be affected from negative perceptions and societal attitudes due to high GHG emission. It can lead to decreased support for fossil fuel projects, regulatory challenges, difficulty in obtaining financing, and reputational damage for companies. • GHG emission reduction scope 1 and 2 • Increase of non-coal business H H LM L LM LM L L L 2. IMPACT ON BUSINESS AND STRATEGY Transitional Risks: Transitional risks arise from the shift to a low-carbon economy, impacting various sectors through policy, legal, technological, and market changes. These risks can lead to increased costs for developing low-carbon technologies, reduced value of investments in carbon-heavy industries, and the need for additional regulation and reporting. Note: ST=short-term, MT=medium-term, LT=long-term Risk Opportunity High High Medium to High Medium to High Low to medium Low to medium Low Low Risk topics High-risk item Physical risk • Acute • Chronic Physical risk • Drought • Heat • Heavy Precipitation • Wildfire Transitional opportunity Transitional opportunity • Developing/expanding low-carbon goods and services • Participating in carbon market Transitional risk • Current regulation • Emerging regulation • Technology risk • Legal risk • Market risk • Reputational risk Transitional risk • Carbon Pricing • Stigmatization of sector CLIMATE-RELATED RISKS AND OPPORTUNITIES IDENTIFICATION Banpu employs a risk management strategy that harmonizes acceptable risk thresholds to accomplish business goals and fulfill stakeholder expectations. This approach is consistently implemented across strategic planning, project execution, and day-to-day operations. Utilizing a combination of qualitative and quantitative techniques, the company evaluates the potential impacts of risks. Result of transitional risks and opportunities and physical risks identification can be summarized as follows; Transitional Opportunities: These opportunities lead to cost savings, improved resource efficiency, and access to new markets. Additionally, developing new products and services that address climate change can drive innovation and competitiveness. Building resilience along supply chains further strengthens economic stability. Driver & Impact Metrics used to manage climate-related risks and opportunities Risk rating Energy Resources Energy Generation Energy Technology ST MT LT ST MT LT ST MT LT Developing/Expanding low-carbon goods and services In low-emission goods and services, we develop downstream production, deploy GHG mitigation technologies, and provide decarbonization solutions. In gas operations, we monitor emissions and invest in scalable CCUS projects, expanding our gas portfolio. These efforts drive increased revenue through heightened demand and enhanced production capabilities, advancing our net-zero goals. • Increase of non-coal business MH MH MH H H H LM H H Participation in carbon market Participating in carbon markets helps businesses reduce their carbon footprint and generate revenue. These markets, based on cap-and-trade or carbon pricing, limit emissions per jurisdiction or sector. In China, our lower-than-quota GHG emissions allow us to sell emission allowances within the China ETS, leveraging governmental regulations. • Increase of non-coal business - - - LM LM LM LM MH MH Note: ST=short-term, MT=medium-term, LT=long-term Risk Opportunity High High Medium to High Medium to High Low to medium Low to medium Low Low Climate Change Report 2024 Climate Change Report 2024 20 21 Introduction Governance Strategy Risk Management Metrics & Targets Looking Ahead
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