Groupe Renault - 2020 Universal Registration Document

162 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2020 Find out more at group.renault.com 02 OUR ENVIRONMENTAL COMMITMENT GROUPE RENAULT: A COMPANY THAT ACTS RESPONSIBLY The strategy and organization described above enabled the Group to achieve its CAFE targets for passenger cars and light commercial vehicles in 2020 (1) . The risk, in the event of non-compliance with the European objective of a CAFE per manufacturer of 95g of CO 2 /km in 2020, would have been a financial penalty of €95 per gram and per vehicle, i.e. an overall amount of some €110 million per gram of overrun (based on PC sales volumes in 2020). Outside Europe, the Group is also subject to similar regulatory constraints. In total, around 70% of the Group’s sales worldwide are thus subject to CAFE-type regulations. Beyond the Europe stake, for which the levers are presented above, the Group’s environmental midterm plan is based on three strategic axes: the development of the electrification of vehicles (100% electric, P hybrid and plug-in hybrid vehicles) and services provided by batteries to the energy sector (second life and smart charging) to enable reductions in greenhouse gas emissions while promoting the growth of renewable energy; the development of the circular economy that meets the need to P preserve natural resources and contributes to reducing the energy consumption (and, therefore, indirect greenhouse gas emissions) used in the extraction of raw materials and production of goods; lastly, the development of new electric and shared mobility P services. The Group uses an internal carbon pricing mechanism to drive the reduction in its CO 2 emissions. This internal carbon price depends on the scope considered: for vehicle projects , the definition of the carbon price notably P includes regulations on emissions in use such as CAFE and CO 2 related taxation. For example, the carbon price taken into account to make decisions on technical carbon reduction solutions in vehicle projects in Europe is around €450/metric ton. This value takes into account, among other factors, regulatory issues and tax frameworks attached to each market. for industrial installations , it takes into account multiple factors P such as expected changes in the energy market and CO 2 emissions quotas: over half of the Group’s direct emissions are concerned by the EU-ETS quota exchange system, for which the average price in 2020 was around €25/t CO 2 . For further details on the management of EU-ETS quotas, refer to the section “Manufacturing”, below. example comparative LCAs of batteries, powertrain technologies (electric, plug-in hybrid, hydrogen, LPG, NGV, biogas) or the assessment of the environmental benefits related to the circular economy. The prevailing logic in these assessments is that only vehicles or services offering mobility with the lowest possible carbon footprint will be successful in the marketplace, or be favored by regulations or taxation. Moreover, in the Company’s internal process, life cycle assessments (LCA) or carbon assessments are carried out regularly to assess and decide between different strategic options (for example, which mobility service model has the most positive impact on areas such as cities?) or different technological options, by model or region, for Climate scenarios To prepare its decarbonization trajectory, the Group used external benchmark data, notably the Energy Technology Perspectives of the International Energy Agency (B2DS "Beyond 2°C" scenario) and the World Automotive Powertrain Outlook developed by the specialist company, BIPE. The Group’s 2030 targets for reducing direct and indirect emissions related to the consumption of energy required for production (scopes 1 and 2) and the target for reducing emissions related to vehicle use (scope 3 "well to wheel") were officially approved by the Science-Based Targets (SBT (2) ) initiative in March 2019: Groupe Renault committed to reducing scope 1 & 2 emissions by 60% per car produced by 2030 from a 2012 base-year, and to reduce scope 3 well-to-wheel emissions by 41% per vehicle kilometer by 2030 from a 2010 base year. The Group’s ongoing efforts to reduce its emissions have resulted in a revision of this “well-to-wheel” Scope 3 emissions reduction target, which is now set at 45% for 2030 compared with 2010. This decarbonization trajectory is the Company’s reference climate scenario , and is consistent with the Paris COP21 target of keeping global warming below 2°C. This reference scenario is one of the elements of the strategy deployed across all of its activities (industrial facilities and product and service development). However, numerous uncertainties remain as to the future results of the efforts deployed to fight against climate change. The Group has therefore built three alternative climate scenarios in order to test the robustness of its strategy against a wide range of possible futures in the years to 2050, with intermediate points in 2030 and 2040. This work builds on the forward-looking analyses that the Group conducts continuously, covering a wide range of variables that may impact the Company’s business model, including: decarbonization of energy production, public policies (regulations, taxation, regulation of road traffic, notably in cities), availability and speed of adoption of technologies, changes in the expectations of users, territories and other stakeholders, and accessibility and cost of resources. An analysis of the risks and opportunities associated with these different scenarios will be published in April 2021, in the form of a Climate Report . These results will be consolidated and formalized by the European Commission in the coming months. (1) The SBT initiative arose from a partnership between CDP, the United Nations Global Compact program, the WRI (World Resources Institute) (2) and WWF (World Wildlife Foundation). The aim is to verify the consistency between greenhouse gas emission reduction targets set by companies and the data from scientific research on climate. Groupe Renault was the first company in the automotive sector to obtain the validation of its decarbonization targets through the SBT initiative.