Carbon Disclosure Project

Transcription

1 Carbon Disclosure Project CDP 2013 Investor CDP 2013 Information Request Norsk Hydro Module: Introduction Page: Introduction 0.1 Introduction Please give a general description and introduction to your organization Hydro is a global supplier of aluminium with activities throughout the value chain, from bauxite extraction to the production of rolled and extruded aluminium products and building systems. Based in Norway, the company employs 22,000 people in more than 40 countries. Rooted in a century of experience in renewable energy production, technology development and progressive partnerships, Hydro is committed to strengthening the viability of the customers and communities we serve. Hydro is a resource rich, fully integrated aluminium company with operations in all major activities along the aluminium industry's value chain. Our operations include one of the world's largest bauxite mines and the world's largest and one of the most cost effective alumina refineries, both located in Brazil. We have primary metal production facilities in Europe, Canada, Australia, Brazil and Qatar. We are a leading worldwide supplier of value-added casthouse products, such as extrusion ingots, sheet ingots and foundry alloys. In 2012, we delivered about 3 million metric tons of products to internal and external customers, mainly from casthouses integrated with our primary smelters and from an extensive network of specialized remelt facilities close to customers in Europe and the U.S. We are an industry leader as a supplier to a range of downstream markets, in particular the building, packaging, lithographic, automotive and transport sectors. We deliver high-quality, energy-saving aluminium products and solutions, and have strong positions in markets that provide opportunities for good financial returns. Through the planned joint venture Sapa, we aim to transform our extrusion operations. With more than 100 years of experience in hydropower, Hydro is the second-largest power producer in Norway, and the largest privately owned producer. We have substantial, self-generated power capacity to support our production of primary metal, and are engaged in a number of initiatives to secure competitive power supplies for our aluminium operations and to grow our aluminium business.

2 0.2 Reporting Year Please state the start and end date of the year for which you are reporting data. The current reporting year is the latest/most recent 12-month period for which data is reported. Enter the dates of this year first. We request data for more than one reporting period for some emission accounting questions. Please provide data for the three years prior to the current reporting year if you have not provided this information before, or if this is the first time you have answered a CDP information request. (This does not apply if you have been offered and selected the option of answering the shorter questionnaire). If you are going to provide additional years of data, please give the dates of those reporting periods here. Work backwards from the most recent reporting year. Please enter dates in following format: day(dd)/month(mm)/year(yyyy) (i.e. 31/01/2001). Enter Periods that will be disclosed Sun 01 Jan Mon 31 Dec Country list configuration Please select the countries for which you will be supplying data. This selection will be carried forward to assist you in completing your response Argentina Australia Austria Belgium Brazil Canada Denmark France Germany Italy Select country

3 Select country Luxembourg Malaysia Mexico Norway Poland Qatar Slovakia Spain United Kingdom United States of America Portugal China Netherlands 0.4 Currency selection Please select the currency in which you would like to submit your response. All financial information contained in the response should be in this currency. NOK 0.6 Modules As part of the request for information on behalf of investors, electric utilities, companies with electric utility activities or assets, companies in the automobile or auto component manufacture sectors, companies in the oil and gas industry and companies in the information technology and telecommunications sectors should complete supplementary questions in addition to the main questionnaire. If you are in these sectors (according to the Global Industry Classification Standard (GICS)), the corresponding sector modules will not appear below but will automatically appear in the navigation bar when you save this page. If you want to query your classification, please If you have not been presented with a sector module that you consider would be appropriate for your company to answer, please select the module below. If you wish to view the questions first, please see

4 Module: Management [Investor] Page: 1. Governance 1.1 Where is the highest level of direct responsibility for climate change within your company? Individual/Sub-set of the Board or other committee appointed by the Board 1.1a Please identify the position of the individual or name of the committee with this responsibility Executive Vice President and head of Energy and Corporate Business Development Arvid Moss. Moss is a member of the Corporate Management Board and reports to the President and CEO. 1.2 Do you provide incentives for the management of climate change issues, including the attainment of targets? Yes 1.2a Please complete the table Who is entitled to benefit from these incentives? The type of incentives Incentivized performance indicator Chief Executive Officer (CEO) Monetary reward Reduced energy and anode consumption is a part of Hydro's 300 USD per ton primary aluminium target which is also a part of the CEO's KPI chart.

5 Who is entitled to benefit from these incentives? The type of incentives Incentivized performance indicator Executive officer Management group All employees Monetary reward Monetary reward Monetary reward Executive Vice President and head of Primary Metals, Hilde Aasheim, has a KPI on specific CO2 emissions from the electrolysis process as part of her bonus scheme. The KPI is similar as Hydro's overall target, reported in the Annual Report Reduced energy and anode consumption is a part of Hydro's 300 USD per ton primary aluminium target which is also a part of Aasheim's KPI chart. Specific climate gas emissions are included in the KPI chart valid for managers and employees at several of Hydro's aluminium smelters. Reduced energy and anode consumption is a part of the 300 USD / ton primary aluminium reduction program which is valid at all fully-owned smelters. Specific climate gas emissions are included in the KPI chart valid for managers and employees at several of Hydro's aluminium smelters. Page: 2. Strategy 2.1 Please select the option that best describes your risk management procedures with regard to climate change risks and opportunities Integrated into multi-disciplinary company wide risk management processes 2.1a Please provide further details Business risks including climate change are defined from the Hydro group main risk process. Further, long-lists for each business area are defined and discussed. Business risks are typically ranked according to probability and impact. In addition to this different finance cases are estimated using VAR methods and so on. Further, for investment proposals we evaluate the specific risks attached, covering both project and country risks. Sensitivity and scenario analyses are included mapping different risk aspects. Risk mapping is used as input to business planning, strategy processes as well as major projects and transactions.

6 2.2 Is climate change integrated into your business strategy? Yes 2.2a Please describe the process and outcomes We have monitored our impact on the environment for several decades as part of a holistic approach to value creation. Our climate strategy is an integral part of our overall business strategy, including reducing the environmental impact of our production activities as well as taking advantage of business opportunities by enabling our customers to do the same. Some of the measures we pursue include: Using viable energy sources Reducing energy consumption and emissions in production Reducing CO2 emissions and energy consumption through the use of our products Increasing recycling of aluminium Renewable energy is our preferred choice. About two-thirds of the electricity used in our primary aluminium production comes from renewable sources, and we are the second-largest hydropower producer in Norway with a normal production of 9.5 TWh per year. In 2012, we produced 10.3 TWh. The Qatalum aluminium plant, of which we own 50 percent, came into full production in The plant uses natural gas for electricity generation. The International Energy Agency recognizes natural gas as an important energy source that can help reduce global temperature increases. In Brazil and Australia, we use electric power from the grid. The grid in Brazil is mainly supplied by hydropower, while the grid in Australia is mainly supplied by coal power. At Alunorte and Paragominas in Brazil, the main energy sources are fuel oil, coke and diesel. The greenhouse gas emissions from Hydro's current consolidated activities decreased by 2 percent in 2012, compared with The total emissions from our ownership equity - including indirect emissions from electricity generation - decreased by 11 percent. Mainly due to the closure of production at the Kurri Kurri smelter in Australia during 2012, our indirect emissions decreased by 20 percent. These emissions will decrease even further in 2013 as production in the Kurri Kurri smelter is now completely shut down. The restart of primary aluminium capacity in Neuss, Germany early in 2013, will to some degree counteract this effect. Specific direct emissions increased slightly from 1.61 metric tons (mt) CO2 equivalents (CO2e) per mt primary aluminium in 2011 to 1.62 in 2012 following setbacks at Albras and Slovalco. Our long-term target of 1.52 mt CO2e per mt aluminium in 2013 will not be reached. Specific emissions in 2009, when the target was set, were 1.85 mt CO2e per mt aluminium. The 2013 target has been adjusted to 1.58 mt CO2e per mt aluminium, and we will in 2013 develop a new long-term target. Energy efficiency is an important part of Hydro's 300 USD/mt cost improvement program. On average, our fully-owned primary aluminium plants consumed kwh of electricity to produce one kilogram of aluminium in 2012, which was at about the same level as the year before. Our HAL4e technology, which we are testing in full scale, has achieved an energy consumption of 12.5 kwh per kg aluminium. Our new test cells in Årdal, HALsee, are targeting an energy consumption of less than 12 kwh/kg aluminium, see page 36. We work closely with customers to develop products that save energy and reduce emissions. Aluminium façades can lead to lower operating costs and enable buildings to produce as much energy as they consume during operation. Hydro's test center building in Bellenberg, Germany, produced more energy than it consumed in See also page 37 and 39 in Hydro's Annual Report 2012.

7 Lighter cars result in fuel savings and lower emissions on the road, while lighter aluminium products and packaging reduce transport costs and emissions. Excellent barrier properties reduce the cooling needs of food products while improving durability, thus reducing food spoilage. Hydro is one of the sponsors of SAVE FOOD, an initiative from the United Nations' Food and Agriculture Organization. Our specific contribution is packaging, in which aluminium helps to conserve food more effectively so it stays fresh longer with less cooling and is better protected for transport and storage. We are currently upgrading several of our hydropower plants in Norway to secure future stable production. The Rjukan watershed, with a total annual normal production of 3 TWh from five plants in the Måna river, is the largest upgrade with an estimated cost above NOK 800 million. The project is running according to plan and is expected to be completed in We are also working to increase production further from current assets. In 2012, the refurbishment of the power plants Holsbru and Herva and the construction of Vasstøl were completed,and these plants are operating according to plan. We are currently working on new projects, which may start up in We support the development of international frameworks on climate change and greenhouse gas emissions and participate actively in organizations such as the World Business Council for Sustainable Development and the International Emissions Trading Association, to provide business solutions to the climate change challenge. In addition, we work through aluminium associations to establish a level playing field for global aluminium production. Energy efficiency is an important part of Hydro s 300 USD/mt cost-saving program (see page 29 in Hydro's Annual Report 2012: ). Please also refer to Hydro s Annual Report 2012, page 61-64, and , and to our Climate Matters brochure Do you engage in activities that could either directly or indirectly influence policy on climate change through any of the following? (tick all that apply) Direct engagement Trade associations Funding research organizations 2.3a On what issues have you been engaging directly? Focus of legislation Corporate Position Details of engagement Proposed solution Cap and trade Support Meetings with EU stakeholders More predicitible and efficient cap and trade Carbon tax Oppose Meetings with EU stakeholders Prefer cap and trade Energy efficiency Support with minor exceptions Eurometeaux issued a position paper.

8 2.3b Are you on the Board of any trade associations or provide funding beyond membership? Yes 2.3c Please enter the details of those trade associations that are likely to take a position on climate change legislation Is your position on climate Trade association change consistent with theirs? Please explain the trade association's position How have you, or are you attempting to influence the postion? European Aluminium Association Eurometaux Consistent Consistent A restructuring of cap and trade / ETS to take industry concerns more into consideration A restructuring of cap and trade / ETS to take industry concerns more into consideration Yes, through discussions in committees and meetings with EU stakeholders. Comments to legislation proposals. Yes, through discussions in committees and meetings with EU stakeholders. Comments to legislation proposals. 2.3d Do you publically disclose a list of all the research organizations that you fund? 2.3e Do you fund any research organizations to produce public work on climate change? Yes

9 2.3f Please describe the work and how it aligns with your own strategy on climate change Hydro funds the Norwegian research organization CICERO (Center for International Climate and Environmental Research) with NOK 250,000 per year. CICERO conducts research on several climate change issues including climate change policy on national, regional and international level. This is relevat to Hydro as it increases our understanding of climate change processes and developements in different policy areas 2.3h What processes do you have in place to ensure that all of your direct and indirect activities that influence policy are consistent with your overall climate change strategy? Hydro has established policy networks on e.g. climate change (initiated by the Corporate Management Board) which meet regularly. Further Information See Hydro's Annual Report 2012 page 78: Page: 3. Targets and Initiatives 3.1 Did you have an emissions reduction target that was active (ongoing or reached completion) in the reporting year? Intensity target

10 3.1b Please provide details of your intensity target ID Scope % of emissions in scope % reduction from base year Metric Base year Normalized base year emissions Target year Comment 1 Scope 1 19% 15% metric tonnes CO2e per metric tonne of product Specific emissions from Hydro's electrolysis process (consolidated operations). 3.1c Please also indicate what change in absolute emissions this intensity target reflects ID Direction of change anticipated in absolute Scope 1+2 emissions at target completion? % change anticipated in absolute Scope 1+2 emissions Direction of change anticipated in absolute Scope 3 emissions at target completion? % change anticipated in absolute Scope 3 emissions Comment 1 Decrease 3 No change The reduction equals savings of about tonnes CO2e. Scope 3 emissions are not affected by reductions in scope 1 and 2 emissions.

11 3.1d Please provide details on your progress against this target made in the reporting year ID % complete (time) % complete (emissions) Comment 75% 85% 3.2 Does the use of your goods and/or services directly enable GHG emissions to be avoided by a third party? Yes 3.2a Please provide details (see guidance) Hydro delivers aluminium to the transport, building and packaging markets. In transport, documentation shows that by replacing steel in cars, 1 kg aluminium saves 20 kg of CO2e during the car's life cycle. Aluminium used in buildings enables advanced energy saving systems to be used, thus enabling the construction of energy neutral or even energy positive buildings. Aluminium used in packaging provides excellent barrier properties. This reduces the need for cooling and also increases the lifetime of the products. This reduces food spoilage as well as energy consumption and GHG emissions. Please see Hydro's Annual Report 2012 page and 88-90: Please also see the International Aluminium Institute's web-pages on aluminium in buildings and transport:

12 3.3 Did you have emissions reduction initiatives that were active within the reporting year (this can include those in the planning and implementation phases) Yes 3.3a Please identify the total number of projects at each stage of development, and for those in the implementation stages, the estimated CO2e savings Stage of development Number of projects Total estimated annual CO2e savings in metric tonnes CO2e (only for rows marked *) Under investigation To be implemented* Implementation commenced* Implemented* Not to be implemented

13 3.3b For those initiatives implemented in the reporting year, please provide details in the table below Activity type Description of activity Estimated annual CO2e savings (metric tonnes CO2e) Annual monetary savings (unit currency - as specified in Q0.4) Investment required (unit currency - as specified in Q0.4) Payback period Energy efficiency: Processes The example above is related to R&D efforts to improve the operations of Hydro's Norwegian smelters since 2009, summing up to about 80 million NOK over the period (20 million NOK per year). These smelters represent about half of our consolidated smelter capacity. Improved operational capabilities are also transferred to Hydro's fullyand part-owned smelters outside Norway, but are not included in the figures above. Total annual CO2 savings include reduced emissions due to reduced anode effect, reduced electricity consumption and reduced anode consumption. The current average anode effect in Hydro's Norwegian smelters is approaching 0. Further reductions in CO2 emissions will thus mainly come from lower specific anode consumption. The annual CO2 savings in Norway from reduced anode effects from 2009 to 2012 is about metric tonnes. The reduced electricity consumption has not resulted in significant CO2 reductions, as the vast majority of electricity consumed in Norway is from hydropower. The reduced anode consumption from 2009 to 2012 has resulted in annual CO2 savings of metric tonnes. The reduced anode consumption has in itself resulted in a cost saving of about 60 million NOK due to reduced purchase. The reduced electricity consumption has resulted in 40 million NOK cost savings, whilst the reduced CO2eemissions from reduced anode consumption and reduced anode effects has resulted in a cost saving of 20 million NOK (anticipating a CO2 quota price of 10 Euro/ton). Payback period is not calculated as the investments may also include R&D activities before 2009 and there might be additional costs at each site related to the implementation

14 3.3c What methods do you use to drive investment in emissions reduction activities? Method Comment Compliance with regulatory requirements/standards Dedicated budget for energy efficiency Dedicated budget for low carbon product R&D Dedicated budget for other emissions reduction activities Partnering with governments on technology development From 2013 the aluminium industry is part of the EU/ETS quota system. The aluminium industry will be allocated free quotas for direct emissions according to a benchmark of 1,514 ton CO2e/ton aluminium. EU has also decided to open for compensation for the CO2 element in the power price for the aluminium industry. The compensation will be given based on a benchmark for energy efficiency (kwh/kg aluminium). The benchmark has been set to MWh/ton primary aluminium AC. Number of quotas will according to the existing ETS diretive be annually reduced by 1.74 percent which also mean that our free quotas will be reduced accordingly. Our Australian activities will also be affected by the introduction of a CO2 regime in Australia. Most of our R&D budget related to primary metal production is dedicated to energy efficiency. R&D activities within recycling have also overall energy efficiency as the ultimate consequence. Most of our product development supports products that can help the customers to reduce their GHG emissions. Examples are lighter vehicles, buildings with reduced energy consumption and packaging that efficiently protects food and reduces the need for cooling. Recycling of metal is another way of producing high quality metal with only 5 percent of the energy required to produce primary metal. Development and testing of technology to facilitate carbon capturing from aluminium smelters. We have an extensive programme, particularly in Norway and Germany. Please see Hydro's Annual Report 2012 page 90. In March 2013, Hydro announced that it is studying the potential for testing next-generation electrolysis technology at a pilot plant with annual production capacity of about 70,000 metric tons at Karmøy in Norway. A prerequisite for such pilot is extensive cooperation with Enova. Enova is owned by the Norwegian Ministry of Petroleum and Energy and has as its goal to promote environmentally friendly alternatives in energy consumption and energy production in Norway. See

15 Page: 4. Communication 4.1 Have you published information about your company s response to climate change and GHG emissions performance for this reporting year in places other than in your CDP response? If so, please attach the publication(s) Publication Page/Section reference Attach the document In mainstream financial reports (complete) 2, 7, 18-19, 61-64, 86-91, 99, CDP 2013/Shared Documents/Attachments/Investor-4.1-C3-IdentifytAttachment/Investor-4.1- PublishedInformation1/Hydro_annual_report_2012.pdf Module: Risks and Opportunities [Investor] Page: 5. Climate Change Risks 5.1 Have you identified any climate change risks (current or future) that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply Risks driven by changes in regulation Risks driven by changes in physical climate parameters

16 5.1a Please describe your risks driven by changes in regulation ID Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Carbon taxes Carbon leakage Increased operational cost Current Direct Likely High 5.1b Please describe (i) the potential financial implications of the risk before taking action; (ii) the methods you are using to manage this risk and (iii) the costs associated with these actions Hydro recognises that the risk of long-term climate change requires action now to reduce global greenhouse gas emissions. To meet the climate change challenge in a cost efficient way it is essential for governments to develop equitable, global policy frameworks that utilise the markets and ensure long-term predictability. Hydro has for many years been an active participant in the global policy framework dialogues. Hydro participates in the climate working groups of international and national business organisations and trade associations e.g. the World Business Council for Sustainable Development (WBCSD), the European Round Table for Industrialists (ERT), the International Council on Mining and Metals (ICMM), the International Emissions Trading Association (IETA), the International Aluminium Institute (IAI), the European Aluminium Association (EAA), the Australian Industry s Greenhouse gas Network (AIGN) and the Australian Aluminium Council (AAC). To follow the regulatory development with regards to aluminium products, we also participate in different working groups in EAA and IAI. The reasoning behind our participation is to follow the regulatory developments closely and to influence the development in the right direction. The introduction of a carbon cost increases the cost base for aluminium smelters. Smelters in the EU are affected by the EU/ETS both directly and indirectly. Direct costs are associated with buying allowances for emissions that are above the EU set benchmark for direct emissions from aluminium smelters. The aluminium industry was included in the EU/ETS from January As the aluminium industry is power intensive the CO2 effects on the power price also affects the industry. The transfer of CO2 cost in the power market varies from different markets in the EU area. Hydro has smelters in Norway, Germany and Slovakia. As aluminium is priced internationally these extra costs cannot be transferred to the price. The consequence is reduced competitiveness for the European aluminium industry and a risk of carbon leakage. To establish a global level playing field is thus essential for the European aluminium industry. Hydro has for many years been an active participant in the global policy framework dialogues. The introduction of emission trading schemes (ETS) represents a major risk for Hydro as it puts costs on our products that are not put on our competitors products in regions without comparable taxes. Smelters that are located in regions with no carbon constraints will then have a major advantage compared to smelters placed inside the ETS. Fair compensatory measures are therefore essential until equal carbon constraints have been adopted globally. EU has calculated the CO2 price effects on the power price for different countries and has allowed national governments to compensate for some

17 of this cost. The rules for compensation does not allow the full cost to be compensated and most of the states have not yet decided to compensate. Norway and Germany have decided to introduce compensation when relevant. The transfer price is set by the EU (see attachment). At a carbon price of 10 EURO/t CO2 the power price increase is 6,7 Euro/MWh in Norway, 7,6 Euro/MWh in Gremany and 10,6 Euro/MWh in Slovakia. The EU member states have introduced ambitious recycling targets and other instruments to reduce packaging waste. Hydro takes an active role to further increase the high recycling rates of used aluminium packaging across Europe. Unjustified eco taxes by member states not considering the good recycling performance and excellent sustainability credentials of aluminium packaging have the potential to harm our markets. Simplified ecolabels do not necessarily reflect the environmental impact along the value chain. Carbon footprint messages should take into account the whole life cycle of a product or packaging. Hydro is involved in relevant networks like the food and drink industry`s Sustainable Consumption and Production Round Table to drive the development of appropriate information tools forward and to avoid misleading and unfavourable approaches. Future growth of primary aluminium production capacity is expected to take place in regions where local energy potentials (hydropower, gas, coal) exceed local needs for general consumption. Key requirements for investments in new capacity are long term competitive power supply and a predictable regulatory framework that allows the management of the climate risk. Hydro will not enter into new projects triggering construction of coal-fired power plants without the possibility of carbon capture and storage. In 2012 Hydro closed down the production at its Kurri Kurri smelter in Australia which was based on electricity from coal. 5.1c Please describe your risks that are driven by change in physical climate parameters ID Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Change in precipitation pattern Change in mean (average) precipitation Tropical cyclones (hurricanes and typhoons) Please see 5.1d Please see 5.1d Please see 5.1d Other: Flooding risk Current Direct Virtually certain Low Other: Flooding risk >10 years Direct Likely Low Reduction/disruption in production capacity Current Direct Likely Low

18 5.1d Please describe (i) the potential financial implications of the risk before taking action; (ii) the methods you are using to manage this risk; and (iii) the costs associated with these actions Hydro identifies physical risks as a part of the environmental and social impact assessment performed in front of major projects (like Qatalum). In addition, identification of physical risks is a part of the continuous risk assessments performed at site level. Some of our sites might be affected by drought, and a few of our minor sites are placed in areas where water use restrictions have been introduced during drought. So far this has not affected the site operations considerably. Although the Amazon is recognized for its abundance of water, we have observed over the last decades that parts of the area have had repeated periods of unusually low or high rainfall. In 2012 we initiated a study to evaluate the water balance of Alunorte and the planned CAP alumina refinery following an expansion of the Paragominas mine and construction of CAP. Today, Alunorte gets an important part of its water through the bauxite slurry that is transported from Paragominas through a pipeline. Our operations are located so that the likelihood of extreme weather events potentially impacting our operations is limited. All major sites and operations have been through local risk assessments where also issues like extreme weather events have been included. Individual plants have been hit by extreme weather like the hurricane Katrina in Alunorte in Brazil (majority ownership acquired in February 2011) experienced a spillage of stormwater from the bauxite residue (red mud) deposit following extreme precipitation in April The dikes have been enforced to prevent reoccurences. After the overflow of storm water from the bauxite residue deposits at Alunorte in 2009, corrective actions were taken, including strengthening the drainage system and improving the surveillance of the water treatment facility. There are legal issues pending following the incident. In the second quarter of 2012, a total of 5,343 claims were filed for a local small claims court related to the overflow. Only 37 of the claims had been served to Alunorte by the end of 2012, and it is not clear when the remaining claims will be served or hearings will take place. In 2012, a stakeholder analysis was carried out comprising for instance stakeholders impacted by Hydro's operations in Barcarena, Alunorte and Albras. Following the analysis a stakeholder dialogue and engagement plan was established as we see that openness, transparency and dialogue is of paramount importance. Even though local damages can be considerable, none of these have had significant impact on Hydro's total operations. 5.1i Please explain why you do not consider your company to be exposed to risks driven by changes in other climate-related developments that have the potential to generate a substantive change in your business operations, revenue or expenditure We consider that the main risks are related to legal and physical conditions.

19 Further Information Documentation to question 5.1b is attached below. Page: 6. Climate Change Opportunities 6.1 Have you identified any climate change opportunities (current or future) that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply Opportunities driven by changes in regulation Opportunities driven by changes in physical climate parameters Opportunities driven by changes in other climate-related developments 6.1a Please describe your opportunities that are driven by changes in regulation ID Opportunity driver Description Potential impact Timeframe Direct/Indirect Likelihood Magnitude of impact Product efficiency regulations and standards Product labeling regulations and standards Fuel/energy taxes and regulations Requirements of energy efficient transportation and buildings, food preservation and safety Requirements of energy efficient transportation and buildings, food preservation and safety Further development of existing hydropower plants partly based on green certificates Increased demand for existing products/services Increased demand for existing products/services Premium price opportunities 1-5 years Direct Very likely Medium-high 6-10 years Direct Likely Medium-high 1-5 years

20 6.1b Please describe (i) the potential financial implications of the opportunity; (ii) the methods you are using to manage this opportunity and (iii) the costs associated with these actions Please see Hydro's Annual Report 2012 page 62 and 86-91: 6.1c Please describe the opportunities that are driven by changes in physical climate parameters ID Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Change in mean (average) precipitation Other physical climate opportunities In Norway, increased precipitation may result in increased water flows to our hydropower reservoirs, thus increasing the power output. Changing weather patterns with increased sun intensity in some areas and increased precipitation in other areas represent opportunities for Hydro. In sun rich areas, the market for solar solutions and energy efficient buildings may increase. Increased production capacity Increased demand for existing products/services >10 years Direct Unknown >10 years Direct Unknown Lowmedium Lowmedium 6.1d Please describe (i) the potential financial implications of the opportunity; (ii) the methods you are using to manage this opportunity and (iii) the costs associated with these actions Changing weather patterns with increased sun intensity in some areas and increased precipitation in other areas represent opportunities for Hydro. In sun rich areas, the market for solar solutions and energy efficient buildings may increase. In Norway, increased precipitation may result in increased water flows to our hydropower reservoirs, thus increasing the power output.

21 Hydro produces large volumes of frames and support structures for solar installations and is involved in all main solar technology areas: Photovoltaics, converting sunlight directly into electricity Solar thermal installations, which use sunlight to heat water Concentrated solar power, focusing sunlight using mirrors and producing high-temperature heat and steam for power production The aluminium volumes we have supplied to these segments have followed the general development in the market. 6.1e Please describe the opportunities that are driven by changes in other climate-related developments ID Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Changing consumer behaviour Aluminium, with its properties that include lightweight and ease of recycling, represents a growing opportunity in an increasingly carbon-constrained world. Although the current economic situation in some areas reduces the short term opportunities, we believe that aluminium will be a part of the solution in the long term. Increased demand for existing products/services 6-10 years Direct Very likely Medium 6.1f Please describe (i) the potential financial implications of the opportunity; (ii) the methods you are using to manage this opportunity; (iii) the costs associated with these actions Aluminium, with its properties that include lightweight and ease of recycling, represents a growing opportunity in an increasingly carbon-constrained world. Although the current economic situation in some areas reduces the short term opportunities, we believe that aluminium will be a part of the solution in the long term. According to CRU / Global Insight, aluminium has been the fastest growing industrial metal since 2000 and an annual growth in demand of 4-6 percent is expected. A characteristic of aluminium used in transport (in a lifecycle perspective) is that the energy savings in use more than outweighs the energy needed for its initial

22 production. We also see significant growth potential and financial upside in renewable energy production and the solar industry including solar cell constructions. We see net positive impact on our aluminium business from risks and opportunities arising from regulations and customer preferences due to the climate issue. In particular we believe that low emission buildings represent a great opportunity that we are well placed to develop into a financially sound enterprise. Module: GHG Emissions Accounting, Energy and Fuel Use, and Trading [Investor] Page: 7. Emissions Methodology 7.1 Please provide your base year and base year emissions (Scopes 1 and 2) Base year Scope 1 Base year emissions (metric tonnes CO2e) Scope 2 Base year emissions (metric tonnes CO2e) Sun 01 Jan Mon 31 Dec Please give the name of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions Please select the published methodologies that you use The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition)

23 7.2a If you have selected "Other", please provide details below 7.3 Please give the source for the global warming potentials you have used Gas Reference SF6 Other: Perfluoromethane Other: Perfluoroethane Other: N20 CH4 CO2 IPCC Fourth Assessment Report (AR4-100 year) IPCC Fourth Assessment Report (AR4-100 year) IPCC Fourth Assessment Report (AR4-100 year) IPCC Fourth Assessment Report (AR4-100 year) IPCC Fourth Assessment Report (AR4-100 year) IPCC Fourth Assessment Report (AR4-100 year) 7.4 Please give the emissions factors you have applied and their origin; alternatively, please attach an Excel spreadsheet with this data Fuel/Material/Energy Emission Factor Unit Reference Natural gas 2.75 metric tonnes CO2e per metric tonne Liquefied Natural Gas (LNG) 3.00 metric tonnes CO2e per metric tonne Crude oil 3.20 metric tonnes CO2e per metric tonne Diesel/Gas oil 3.17 metric tonnes CO2e per metric tonne Lignite 2.40 metric tonnes CO2e per metric tonne

24 Fuel/Material/Energy Emission Factor Unit Reference Petroleum coke 3.59 metric tonnes CO2e per metric tonne Lignite coke 3.20 metric tonnes CO2 per metric tonne Page: 8. Emissions Data - (1 Jan Dec 2012) 8.1 Please select the boundary you are using for your Scope 1 and 2 greenhouse gas inventory Equity share 8.2 Please provide your gross global Scope 1 emissions figures in metric tonnes CO2e Please provide your gross global Scope 2 emissions figures in metric tonnes CO2e

25 8.4 Are there are any sources (e.g. facilities, specific GHGs, activities, geographies, etc.) of Scope 1 and Scope 2 emissions which are not included in your disclosure? Yes 8.4a Please complete the table Source Scope Explain why the source is excluded Office buildings outside production sites Scope 2 Insignificant part of total emissions (within total uncertainty range). 8.5 Please estimate the level of uncertainty of the total gross global Scope 1 and 2 emissions figures that you have supplied and specify the sources of uncertainty in your data gathering, handling and calculations Scope 1 emissions: Uncertainty range Scope 1 emissions: Main sources of uncertainty Scope 1 emissions: Please expand on the uncertainty in your data Scope 2 emissions: Uncertainty range Scope 2 emissions: Main sources of uncertainty Scope 2 emissions: Please expand on the uncertainty in your data Less than or equal to 2% Data Gaps Metering/ Measurement Constraints Data gaps from some minor sites might occur. Also some minor metering/measuring constraints might occur. However, all Hydro sites are required to report their data into a Corporate reporting tool. Corporate requirements also exist for metering/measuring. More than 5% but less than or equal to 10% Data Gaps Other: Published emission factors Some data gaps from minor sites might occur. Uncertainties in emission factors for the calculation of scope 2 emissions might also represent minor uncertainties.

26 8.6 Please indicate the verification/assurance status that applies to your Scope 1 emissions Third party verification or assurance complete 8.6a Please indicate the proportion of your Scope 1 emissions that are verified/assured More than 90% but less than or equal to 100% 8.6b Please provide further details of the verification/assurance undertaken, and attach the relevant statements Type of verification or assurance Relevant standard Attach the document Moderate assurance Limited assurance AA1000AS ISAE CDP 2013/Shared Documents/Attachments/Investor- 8.6b-C3-RelevantStatement/Investor-8.6b-VerificationDetails1/CDP Letter_Hydro_Final 2012.pdf CDP 2013/Shared Documents/Attachments/Investor- 8.6b-C3-RelevantStatement/Investor-8.6b-VerificationDetails2/CDP Letter_Hydro_Final 2012.pdf

27 8.7 Please indicate the verification/assurance status that applies to your Scope 2 emissions Third party verification or assurance complete 8.7a Please indicate the proportion of your Scope 2 emissions that are verified/assured More than 90% but less than or equal to 100% 8.7b Please provide further details of the verification/assurance undertaken, and attach the relevant statements Type of verification or assurance Relevant standard Attach the document Moderate assurance Limited assurance AA1000AS ISAE CDP 2013/Shared Documents/Attachments/Investor- 8.7b-C3-RelevantStatement/Investor-8.7b-VerificationDetailsS21/CDP Letter_Hydro_Final 2012.pdf CDP 2013/Shared Documents/Attachments/Investor- 8.7b-C3-RelevantStatement/Investor-8.7b-VerificationDetailsS22/CDP Letter_Hydro_Final 2012.pdf

28 8.8 Are carbon dioxide emissions from biologically sequestered carbon relevant to your organization? No Further Information External assurance is made by KPMG as part of our annual reporting process, please see Hydro's Annual Report 2012 page 94: Page: 9. Scope 1 Emissions Breakdown - (1 Jan Dec 2012) 9.1 Do you have Scope 1 emissions sources in more than one country? Yes

29 9.1a Please complete the table below Country/Region Scope 1 metric tonnes CO2e Argentina 1421 Australia Austria 337 Belgium 2245 Brazil Canada Denmark 1447 France Germany Italy Luxembourg Malaysia 5345 Mexico 880 Norway Poland 2027 Portugal 37 Slovakia Spain 3433 United Kingdom United States of America Qatar Netherlands 74276

30 9.2 Please indicate which other Scope 1 emissions breakdowns you are able to provide (tick all that apply) By business division By GHG type 9.2a Please break down your total gross global Scope 1 emissions by business division Business division Scope 1 emissions (metric tonnes CO2e) Aluminium smelters Bauxite & Alumina Other activities

31 9.2c Please break down your total gross global Scope 1 emissions by GHG type GHG type Scope 1 emissions (metric tonnes CO2e) CO Other: N CH4 94 PFCs Page: 10. Scope 2 Emissions Breakdown - (1 Jan Dec 2012) 10.1 Do you have Scope 2 emissions sources in more than one country? Yes

32 10.1a Please complete the table below Country/Region Scope 2 metric tonnes CO2e Purchased and consumed electricity, heat, steam or cooling (MWh) Purchased and consumed low carbon electricity, heat, steam or cooling (MWh) Argentina Australia Austria Belgium Brazil Canada China Denmark France Germany Italy Luxembourg Malaysia Mexico Norway Poland Portugal Slovakia Spain United Kingdom United States of America Netherlands Qatar

33 10.2 Please indicate which other Scope 2 emissions breakdowns you are able to provide (tick all that apply) By business division 10.2a Please break down your total gross global Scope 2 emissions by business division Business division Scope 2 emissions (metric tonnes CO2e) Aluminium smelters Other activities Further Information CO2 emissions from power generation at Hydro's 50 percent owned smelter Qatalum in Qatar are included in scope 1 emissions, while other CO2 emissions from electricity production are included in scope 2 emissions. Page: 11. Energy 11.1 What percentage of your total operational spend in the reporting year was on energy?

34 11.2 Please state how much fuel, electricity, heat, steam, and cooling in MWh your organization has purchased and consumed during the reporting year Energy type MWh Fuel Electricity Heat Steam Cooling 11.3 Please complete the table by breaking down the total "Fuel" figure entered above by fuel type Fuels MWh Charcoal Petroleum coke Natural gas Liquefied Natural Gas (LNG) Diesel/Gas oil

35 11.4 Please provide details of the electricity, heat, steam or cooling amounts that were accounted at a low carbon emission factor Basis for applying a low carbon emission factor Tracking instruments, Guarantees of Origin MWh associated with low carbon electricity, heat, steam or cooling Comments Hydro's hydropower production in Norway was 10.3 TWh in 2012, of which all have been certified by Guarantees of Origin. Page: 12. Emissions Performance 12.1 How do your absolute emissions (Scope 1 and 2 combined) for the reporting year compare to the previous year? Decreased

36 12.1a Please complete the table Reason Emissions value (percentage) Direction of change Comment Emissions reduction activities 11 Decrease Divestment Acquisitions Mergers Change in output Change in methodology Change in boundary Change in physical operating conditions Unidentified Other Process efficiency improvements in our plants as well as closure of the production at the Kurri Kurri smelter in Australia Please describe your gross combined Scope 1 and 2 emissions for the reporting year in metric tonnes CO2e per unit currency total revenue Intensity figure Metric numerator Metric denominator % change from previous year Direction of change from previous year Reason for change metric tonnes CO2e unit total revenue

37 12.3 Please describe your gross combined Scope 1 and 2 emissions for the reporting year in metric tonnes CO2e per full time equivalent (FTE) employee Intensity figure Metric numerator Metric denominator % change from previous year Direction of change from previous year Reason for change metric tonnes CO2e FTE employee 12.4 Please provide an additional intensity (normalized) metric that is appropriate to your business operations Intensity figure Metric numerator Metric denominator % change from previous year Direction of change from previous year Reason for change 1.62 metric tonnes CO2e metric tonne of product 0.6 Increase Intensity metric valid to all consolidated smelters. The increase followed setbacks at the Albras and Slovalco smelters. Target for 2013 is 1.58 or 2.5 percent reduction from Page: 13. Emissions Trading 13.1 Do you participate in any emissions trading schemes? No, but we anticipate doing so in the next 2 years

38 13.1b What is your strategy for complying with the schemes in which you participate or anticipate participating? Aluminium production is within the scope EU ETS from Product benchmarks are defined for aluminium smelting and anode production. Hydro's strategy is to be within or close to product benchmark by For all sites to be included in the EU ETS, hydro has applied for free allowances according to national applicant processes. For any gaps to product benchmark/free allowances, hydro will buy quotas or credits. At present, we participate in the EU ETS with a few boilers. The emissions from these boilers are insignificant in the total picture Has your company originated any project-based carbon credits or purchased any within the reporting period? Yes