Climate change is a truly global issue and is closely connected to the wider issue of the future of energy production. We are making a concerted effort to tackle our contribution to climate change.

Since the industrial revolution, mankind has increasingly emitted CO2 and certain other gases into the atmosphere, principally through the combustion of fossil fuels. These, according to a consensus of climate scientists, are enhancing the natural 'greenhouse effect' and raising the average global temperature. Future projections on current trends indicate that enhanced global warming will have important impacts including rising sea levels, the likelihood of more extreme and unpredictable weather patterns and changes in agriculture and species’ territories.

Concern over potential impacts of enhanced global warming led to the 'World Summit' at Rio de Janeiro in 1992 at which the United Nations Framework Convention of Climate Change (UNFCCC) was agreed.

This was followed by a series of intensive global negotiations in which more than 160 nations took part, culminating in the Kyoto Protocol in 1997. Under this agreement, the developed nations committed themselves to an average reduction of 5.2% from 1990 levels in six greenhouse gases over the period 2008 to 2012.

The European Union has agreed to an overall reduction of 8% within its member states. In practice, this will be achieved through agreed targets per country, with the UK agreeing a reduction target of 12.5%. In addition, the UK Government has a manifesto commitment to reducing UK CO2 emissions by 20% from 1990 levels by 2010.

The issue of climate change and emissions of greenhouse gases is closely connected to the wider issue of the future of energy production. Government policies on the two issues are becoming inextricably linked.

Greenhouse gases

Throughout our business we emit several greenhouse gases. These are discussed below:

Carbon dioxide

(CO2) is the most common greenhouse gas to be released into the atmosphere and is formed as a product of burning fossil fuels. Much of our generation business still uses traditional fossil-fuelled power stations, which means (CO2) emissions are large.

Most transport is powered by fossil fuels, and thus our transport use also emits CO2.

Our office sites use electricity, and this is ultimately from power stations and so accounts for a certain amount of CO2 release. However, it is important not to double account in this case. If electricity generators like Powergen claim responsibility for the CO2 emissions that their power stations generate, this will ultimately be the same CO2 emissions that all other businesses claim to have responsibility for in their process and office electricity use.

However, it is our policy to manage office energy use and aim to minimise it. A major environmental objective of our office environmental management system (EMS) is to minimise our resource use such as energy.

Burning fossil fuels also emits oxides of nitrogen into the atmosphere. One of these, nitrous oxide (N2O) is a greenhouse gas. It is emitted in insignificant amounts compared with CO2, and is only measurable in our generation processes. It is, however, a more potent greenhouse gas than CO2, with approximately 310 times more greenhouse gas potential than CO2 over a time-frame of 100 years.

Natural gas is mostly made up of methane (CH4) which is also a potent greenhouse gas, some 21 times more so than CO2 over 100 years. Our gas-fired stations use large quantities of natural gas as fuel, delivered through high-pressure pipelines. Whilst the pipelines themselves do not leak, necessary maintenance on the lines means some gas has to be vented to atmosphere.

Some of the high voltage switchgear in our distribution networks is surrounded by a gas with certain electrical properties allowing the switchgear to work efficiently and safely. The gas used is sulphur hexafluoride (SF6), a highly potent greenhouse gas, with some 23,900 times more greenhouse gas potential than CO2 over 100 years.

It is used in small quantities, however, and controls on equipment and maintenance are such that emissions are so small as to be negligible.

We are tackling climate change in a number of ways, including:

• Increasing the efficiency of our existing fossil-fuel power stations, or using less carbon-intensive fuels;
• Building new plant, which use renewable sources of energy, that emit little or no greenhouse gases during electricity generation;
• Changing office and transport use patterns that will reduce emissions of GHGs;
• Encouraging and investing in energy efficiency measures for our customers.

Over 99.5% of our greenhouse gas emissions are due to our emissions of CO2. Some of our CO2 emissions during 2002 were:

CO2 emissions during 2002, tonnes

These figures have been calculated using the recommended guidelines from the UK Government Department for Environment, Food and Rural Affairs (DEFRA).

INDICATOR: CO2 Emissions from UK Generation

Reducing greenhouse gas emissions

We are continuing to reduce our emissions of greenhouse gases – principally CO2 – through a range of business initiatives, as described below:

Renewable energy

Our use of renewable methods of generation has increased over the past nine years. Powergen Renewables is one of the UK's leading wind generation businesses. We develop, own and operate wind farms across the UK. We were also the first wind farm business in the world to achieve the international environmental management standard, ISO 14001.

INDICATOR: Growth in UK Renewables Capacity

Since 1999, all our wind generation projects have been developed by Powergen Renewables Ltd., originally formed as a joint venture with Abbot Group plc. We bought out Abbot's share in Powergen Renewables in October 2002.

At the end of 2002 we had 17 operational wind farms, with a total capacity of almost 135 MW. The portfolio includes the UK's first off-shore wind farm, a 4 MW development at Blyth on the Northumberland coast, which was commissioned in December 2000.

We were recently granted consent to build a 76 MW offshore wind farm at Scroby Sands off the coast of Great Yarmouth in Norfolk. Once commissioned, the project will generate enough electricity to supply 52,000 homes.

The latest addition to the Renewables portfolio is Bowbeat, a 31.2 MW windfarm near Peebles in the Scottish Borders. This wind farm was commissioned in September 2002 and generates enough electricity annually to supply 22,500 homes.

We also sign medium-and long-term contracts with renewable generation projects to buy electricity and, therefore, underpin these projects which contribute to renewable energy supply for the UK.

Combined heat and power

We have been a leader in large-scale combined heat and power (CHP) plant for industrial customers requiring large amounts of power and heat, usually in the form of steam.

CHP, or cogeneration, is the simultaneous production of usable heat and electricity in the same plant. The generation site is specifically designed for the customer. This means that steam and electricity production can be tailored to meet the customer's needs, and thus each site is unique.

In existing coal-fired power stations, only around 38% of the energy produced can be used to generate electricity, while the rest is lost as heat. Combined Cycle Gas Turbine (CCGT) plants improve on this and give an efficiency of 50-60%, but the location of CHP plants close to the customer means that waste heat can be utilised by the customer in the form of steam. This can give CHP plants an overall fuel utilisation efficiency of up to 80%, significantly reducing emissions of greenhouse gases.

Energy efficiency

Possibly the most significant contribution we can make to reducing our greenhouse gas emissions is to simply use less energy.

By increasing the efficiency of our existing fossil-fuel power stations, or using less carbon-intensive fuels, we can reduce the amount of emissions per unit of electricity produced. Examples of this are the trials we have undertaken to burn a mixture of coal and biomass.

Our office sites use electricity, and this originates from power stations and so accounts for a certain amount of CO2 release. As a producer of electricity and promoter of energy efficiency we consider it good practice to manage office energy use, and aim to minimise it. A major environmental objective of our office environmental management system (EMS) is to minimise resource use – including energy.

Energy efficiency is also a very effective way of helping households who cannot afford to heat their homes adequately. Our work in this area is explained fully within the Marketplace Section of this Report.

Our Energy Efficiency Team creates, develops and project manages initiatives to allow all our residential customers to play their part in reducing the energy they use. These initiatives are marketed direct to customers or via partners such as local authorities, retailers and charities. The measures we promote are varied and cover many ways of saving energy in the home. We also work directly with registered social landlords to improve the efficiency of their housing stock helping them to meet the UK Government Department of Transport, Local Government and the Regions (DTLR)'s (now Office of the Deputy Prime Minister – ODPM's) Decent homes standard. We like to play an active, not passive, role in the partnerships we develop and we believe we have the skills within the team to achieve that. Some of our team are trained National Home Energy Rating (NHER) assessors and have the ability to quantify the benefits of the insulation measures carried out in the form of a stock profile. Working in the new build sector we help developers meet building regulations by providing energy efficiency Standard assessment procedure (SAP) ratings. We also offer NHER training for all levels of assessment and have the ability to pressure test housing to determine the energy loss through ventilation within a dwelling.

The installation of physical measures is not the only way of saving energy. Our energy efficiency advice line for both residential and business sectors offers a free service to educate and, in many cases, change behaviours in the way our customers use energy. In the residential market we have been active with low-income customers, whom we consider would benefit greatly from such advice, as well as offering a reactive service for other customers and non-customers alike. We also offer home visits for customers who need extra support and have made over 4,000 such visits during 2002 as well as attending over 20 local events across the East Midlands talking to consumers about their energy use. We set up our business advice line in 2002 which offers customers the opportunity to talk to specialist engineers about reducing energy bills and understanding what grant support may be available from programmes such as Action Energy and initiatives from the Carbon Trust . Current awareness of this service is low, and we intend to increase our promotion of it to customers to increase its use.

Our energy efficiency programme is designed to deliver the Energy Efficiency Commitment (EEC) which commenced in April 2002 and runs to March 2005. This programme is approximately five times the size of the previous EESoP (Energy Efficiency Standards of Performance) III programme, and requires suppliers to make substantial investments in the delivery of a lifetime energy saving target of 62 TWh across the sector. Half of these savings are targeted at consumers who are in receipt of a means-tested benefit or tax credit.

Transport initiatives

Our staff need to travel between sites to carry out their work. Most transport is powered by fossil fuels, and so also emits CO2.

We are working to change transport use patterns that will reduce emissions of GHGs.