The developments and trends in the energy market described above make it clear that our current business is under pressure in the long term. To continue to be able to create value for our customers and society, in 2016, we defined two growth paths in our strategy:
- Internationalisation: developing gas activities in growing European gas markets outside our core area of Northwestern Europe
- Sustainable activities: accelerating the energy transition by developing activities in collaboration with partners in the field of sustainable energy and CO2 reduction in our home markets
In 2016, this expansion of our current strategy was approved by our Supervisory Board after consultation with the shareholder. To maintain and further strengthen our leading position as a cross-border gas infrastructure company, we will continue to focus on three strategic pillars:
- Pillar I – Optimal infrastructure: ensuring a safe, reliable, affordable and sustainable gas infrastructure in our core area
- Pillar II – Connecting Europe: contributing to an efficient gas infrastructure and services for a properly functioning European natural gas and LNG market, in which we make a distinction between our core area of Northwestern Europe on the one hand and European activities outside this area (the growth markets) on the other hand
- Pillar III – Energy in transition: accelerating the transition to a CO2-neutral energy supply
Ensuring a safe, reliable, affordable and sustainable gas infrastructure in our core area
Until 2020, the utilisation of the Dutch gas transport network is not expected to change substantially, with the exception of a moderate decline in the export of low-calorific gas (L-gas). After 2025, the decline in the production of L-gas is likely to significantly affect the use of our gas transport network. To promote the efficient use of both our Dutch and our German gas transport networks, we will continue to strengthen our position on international supply and transit routes, as well as our LNG position in the Netherlands and Germany. We are making preparations to ensure that our existing L-gas pipelines can be used for the transport of high-calorific gas (H-gas) after 2025. We are aligning our maintenance strategy with the expected decrease in L-gas and the integration of new import flows, which will change the use of our compressor stations. Market conditions for our non-regulated activities (BBL, EnergyStock, Gate) are also challenging. We will continue to position these participations as separate entities. In addition, we are investigating opportunities for creating new revenue models by introducing new energy data and consultancy services.
Contributing to an efficient gas infrastructure and services for a properly functioning European natural gas and LNG market
The gas markets in Northwestern Europe
We aim to maintain our leading position as a cross-border gas infrastructure company in Northwestern Europe to create maximum value for our shareholder and society. We therefore continue to position our network as the optimum route, through operational efficiency, a liquid hub, sufficient storage and LNG import capacity, and solving bottlenecks. These are essential factors in keeping our network attractive and competitive for existing and new flows, including transit flows, even in a shrinking market.
The gas roundabout in the Netherlands has largely been completed. However, in Germany, one of our key markets, there are still opportunities to further strengthen our position. We do this by collaborating with other network operators (Transmission System Operators or TSOs), by implementing a number of LNG greenfield projects, and by opening up new supply routes.
Outside Northwestern Europe
We aim to expand our activities to the fast-growing Southeastern part of Europe. Here, the market is still growing, partly because gas is used to replace other fossil fuels. As a provider of consultancy services, we export our knowledge and expertise in the field of gas infrastructure to Southeast Europe. In addition, we are investigating opportunities for collaboration with local TSOs in this region. In Southeast Europe, we seek to participate in major pipeline connections and other gas infrastructure.
Accelerating the transition to a CO2-neutral energy supply
Part of our strategy is to accelerate the transition to a CO2-neutral energy supply. We are committed to efficient and sustainable energy consumption. We have a clear vision with regard to ‘system integration and flexibility’, ‘renewable gases’ (biogas, green gas, syngas and hydrogen), ‘heat supply in the built environment’, ‘CO2 transport and storage’, and ‘mobility and transport’ (green gas, LNG, hydrogen). Based on our knowledge, experience and assets, our role is becoming increasingly important. Since 2014, Gasunie New Energy has been working on scaling up innovative, sustainable energy solutions, such as biomass conversion, power-to-gas, heat networks and carbon capture and storage (CCS). In doing so, we do not only consider the technology, but we also explore new ways of collaboration, both within and outside the energy sector. In this way, we make a constructive contribution to accelerating the transition to a CO2-neutral energy system.
Dilemma: CO2-neutral or gas-free?
In 2016, the role of gas and natural gas was a hot topic in the Netherlands – especially the role of gas in the built environment for heating homes and buildings. Municipalities are increasingly expressing the ambition to have ‘gas-free’ heating within the next few decades. However, from discussions with these municipalities, it appears that they aim to become ‘CO2-neutral’. They only use the term ‘gas-free’ to show a sense of urgency. This creates a dilemma, because it makes people think that ‘we’ need to get rid of gas as soon as possible, while various studies have shown that in many places in the Netherlands, the energy supply still needs gas to keep it affordable and reliable. What is more, a CO2-neutral energy supply can also be achieved with gas as part of the mix. In many instances, gas could even speed up the transition to CO2 neutrality. By gas we also mean renewable gas, which will increasingly replace natural gas.
In addition, we argue against making unnecessary investments in new infrastructure if the existing infrastructure, including our gas network, can be put to good use. We do not dispute the ultimate goal – an affordable, reliable and CO2-neutral energy supply – but the path we need to take to achieve it is a matter of debate. For many stakeholders, this path still raises many questions, as knowledge is lacking to oversee the consequences of certain choices. We seek the dialogue with municipalities, ministries, provinces, network operators and other parties to jointly arrive at a good, comprehensive assessment that should help us make the most socially responsible choice.
Natural gas is a project, so it is finite. But we will always need infrastructure – although less for gas and more for heat. To achieve the Paris climate targets, by 2035, at least 90% of the built environment should no longer be reliant on natural gas for heating. When it comes to phasing out natural gas and the transition to sustainable heat, Gasunie’s knowledge and experience are very important. I assume that, in a few years’ time, we can be proud of Gasunie’s pioneering role in phasing out natural gas and building sustainable networks – just as proud as when we built the natural gas network
In 2016, the Executive Board translated our vision and strategy for the medium term into opportunities and consequences for our employees (growth, shrinking and mobility). This was laid down in our ‘Vision 2023’. On the one hand, this horizon is far enough to include the impact of developments in the field of the labour market (tight supply of technical professionals, higher retirement age and digitalisation and robotisation), market conversion, regulation and energy transition, and, on the other hand, close enough to translate these developments for our current organisation and workforce. Vision 2023 translates our current strategy in terms of the impact of using our existing assets, concrete business objectives (international growth and transition) and Operational Excellence objectives.
Due to the aforementioned internal and external changes, jobs will be at risk, in terms of both types of jobs and quantity. In the first instance, our flexible workforce will be affected. These are contracted workers and employees on a temporary contract who are helping us to quickly respond to the changes. However, within a couple of years, the changes will also noticeably affect employees on permanent contracts and the total number of FTEs. Not only will jobs be lost, but due to digitalisation (the use of digital means) and robotisation (the use of artificial intelligence), the jobs themselves will also change drastically. Our employees will therefore be faced with changes, which is why they should continue to develop themselves, also in new areas.
Because transparency towards employees is considered self-evident and important, the Executive Board has shared Vision 2023 with all employees. In doing so, the Executive Board, social partners and the Works Council expressed their confidence that the HR policy laid down for the coming years in consultation with the Works Council and the trade unions will sufficiently enable the current workforce to anticipate the expected job losses and the need to acquire new skills. Everyone involved agrees that the key to solving this dilemma will be to increase the sustainable employability of our employees. A special programme has been set up to support employees in improving their sustainable employability.
We have developed an Operational Excellence programme to structurally improve the effectiveness and efficiency of our processes (productivity improvement). One of the ways in which we aim to achieve this is by applying the LEAN methodology to existing processes and by carrying out Overhead Value Analyses. In this way, we can identify opportunities for efficiency improvement. We are also reconsidering certain points of departure in our organisation. Network optimisation, digitalisation and robotisation will be important benchmarks in achieving our Operational Excellence objectives after 2019. With this programme, we aim to achieve savings of 3% per year up to and including 2019, and further savings of 1.5% per year until 2023. In total, we aim to achieve a cost reduction of 15% during this period.
To achieve Vision 2023, innovation will enable us to carry out our current activities safely and efficiently, while facilitating new activities relating to the successful transition towards a sustainable energy future. Knowledge development and innovative power are important factors here. We recently fine-tuned our innovation policy, setting a clear focus for the coming years, which will enable us to better facilitate the development of innovative ideas. As part of this policy, we established the Gasunie New Energy business unit and the Corporate Business Development department.
CSR focus areas and multi-year plan
Our focus areas in the field of CSR are directly derived from, and form an integral part of, our strategy. We also include insights from our materiality analysis (see Materiality) in determining our priorities. Good performance in the areas of safety, security of supply and care for our employees forms the basis. Our employees’ behaviour determines the base of support for and effectiveness of our activities, our licence to operate. In addition, we periodically determine new focus areas in which we wish to accelerate developments. Over the past few years, these special focus areas were energy transition, footprint reduction/sustainable procurement and Strategic Environs Management (SEM). In the past two years, we familiarised the organisation with SEM, and it has now been adopted by the organisation as a whole. In 2016, we reassessed our CSR policy. The special focus areas for the coming years will be footprint reduction, energy transition, sustainable mobility and socially responsible procurement. We have defined concrete KPIs for Safety, Good Employment Practices, Security of Supply, Sustainable Mobility and Energy Transition (see Connectivity matrix).
We aim to reduce the emission of greenhouse gases by restricting and preventing methane emissions, as well as optimising the use of energy and efficient combustion. Through our footprint reduction programme, we contribute to the government objectives with regard to CO2 reduction (a climate-neutral energy supply by 2050) and sustainable energy (16% by 2023). We aim to be a leader in this regard within the international gas infrastructure sector.
Together with a number of European network operators, we aim to have realised a CO2-neutral gas supply by 2050, a goal that has been laid down in the Green Gas Initiative. On this journey, in our own business operations, we aim to have reduced our direct CO2 emissions by 20% in 2020 (compared to 1990), which is 93 kilotonnes CO2 equivalent*. By 2030, we aim to have reduced our CO2 emissions by 40% compared to emissions recorded in 1990**.
* This exclusively concerns Scope 1 of the Greenhouse Gas (GHG) protocol (see Results Environment & Local Community)
** Calculated over all scopes (1, 2 and 3) of the GHG protocol
Gas is an energy carrier that is developing into a renewable type of energy through the production of green gas, syngas and hydrogen. The first steps in the transition towards a sustainable energy supply are challenging for a number of reasons, such as financing, the state of technological developments, and the way in which various chains need to be connected in order to arrive at a conclusive sustainable business case. Where possible, we strive to take these steps in collaboration with other parties, both inside and outside our chain. We do this within the legal frameworks in our role as network operator. In this way, we aim to maximise our chances of success. Regarding the energy transition, we focus on the following areas: renewable gas, hybrid solutions for heat provision, system integration and small-scale LNG.
Socially responsible procurement
In the coming years, we aim to intensify our efforts in the field of socially responsible procurement. Our point of departure in this regard is to make our operations as budget neutral as possible. A concrete objective for 2017 is that, of the electricity we procure, 40% will be green electricity. This will eventually be 100%. In 2016, we laid the foundations for our socially responsible procurement policy, the concrete details of which will be worked out in 2017. It is our ambition that our efforts will take us to a level that is comparable to that of our peers.
We encourage our employees to limit the number of kilometres they travel for their work as much as possible. This includes working from home. Part of the vehicle fleet that we use for maintenance activities runs on green gas. We have charging stations for electric vehicles at our site, and public transport connections to our headquarters have been improved. In addition, we make Dutch Railway business cards and bicycles available to our employees for work-related travel. Several of our offices have facilities for video conferencing, which also reduces the number of kilometres travelled.
Good employment practices
Once every two years, we measure our performance in the field of good employment practices by means of an employee survey, sickness absence figures, and appointments in the context of the Participation Act.
As a public-interest organisation, we aim for the highest possible transparency in all our operations. Transparency with regard to our performance is imperative to us. We therefore aim to be as transparent as possible in our annual report. The Transparency Benchmark of the Dutch Ministry of Economic Affairs offers a good measurement tools in this respect. For the coming years, we have therefore again included ambitious objectives with regard to this reporting benchmark. We aim to achieve approximately 185 points and to finish at least in the Top 30 of all participants. Although the Transparency Benchmark does not cover all aspects of reporting, transparency is also the basis of our reporting in the wider sense of the word.
We elaborate on our activities and results in the fields of energy transition, transparency, footprint reduction and our employees in the section ‘Our results’. Socially responsible procurement and sustainable mobility are not regarded as material by our stakeholders (see Materiality). These topics are therefore discussed more briefly in the annex.