13
4.1.3 Adding perspective: Connectivity across the AFR in relation to
significant judgements, major sources of estimation uncertainty and/or
accounting policies
24. Air Liquide SA, a chemicals company, disclosed its commitments and strategy put in place in
relation to climate objectives in its non-financial statement of its 2022 AFR. Where those
commitments and strategy had or were expected to have in impact on financial information,
Air Liquide included such information inside its financial statements.
EXAMPLE 4 – AIR LIQUIDE SA
Pages 40; 310-311
Non-financial Information
31.4 Transition Risk – Greenhouse Gas Emissions
(…)
Air Liquide’s actions to limit transition risk impacts include:
Scope 2 reduction:
- Related to the 424 large air gas production units or ASUs, (scope
2 emissions) mainly by using renewable electricity: the deployment of
the Group’s actions in the 10 countries with the greatest potential will
significantly reduce scope 2 emissions. Since 2018, Air Liquide has
already signed 13 renewable energy supply contracts
estimated annual quantity of 1.724 GWh/y (in a full year after start-up
of renewable production units). As the ASUs are almost all electrified,
they do not require any specific investment for the transition,
because emission reduction will be managed through renewable
energy purchase.
- Energy costs, including renewable energy costs do not represent
any financial risk as they are 100% passed-
customer according to the terms of the 15 years or more contracts.
Scope 1 reduction:
- Related to the 62 large hydrogen production units or SMRs, (scope
1 emissions), by capturing CO
2
. Air Liquide masters a complete
portfolio of proprietary technologies for capturing CO
2
. Thus, advanced
Cryocap™ CO
2
capture technology equipment has been in industrial
operation since 2015 on a hydrogen production unit in France. The
Group
was recently selected for financing via European
subventions for two carbon capture projects on SMRs. Thus, the
decarbonization of the Group’s 10 largest SMRs will reduce scope
1 emissions by more than 40%. No dismantling of existing SMRs
before the end of the contract is necessary to achieve the Group’s
climate objectives.
- The innovation capacity and technological know-how of Air Liquide’s
teams enable the Group to offer cleaner and more sustainable solutions
to reduce its own emissions and those of its industrial customers. The
Group focuses on technologies for climate solutions and energy
transition. In 2022, Air Liquide had more than 350 patent families on
hydrogen.
The Group’s Innovation expenses amounted to 308
million euros in 2022, including more than 100 million dedicated
to climate.
- The demand for low-carbon industrial gas at a higher price is growing
and makes it possible to remunerate the investment necessary for the
decarbonization of Air Liquide’s assets, in particular for the production
of hydrogen, as well as any additional costs linked to the supply of
renewable electricity.
In addition, financing programs in the form of
subsidies or tax credits are also implemented in Europe and more
recently in the United States in order to support, during a transition
period, the decarbonization of existing industrial assets and new units
of production.
Therefore, there is no indication of impairment for the
related assets.
Assets and Climate Risks
The main Group assets that impact the CO
2
footprint are:
– 424 large Air Gas production Units
, oxygen and nitrogen in
particular, which do not generate direct emissions but require
electricity. The CO
2
emissions linked
accounted for in Scope 2;
– 62 large
hydrogen production units, which consume Natural
Gas and emit CO
2
accounted for in Scope 1.
-
In the Large Industries business, each air gas or hydrogen
production unit is linked to a long-
term customer contract,
lasting 15 to 20 years. Assets are amortized over the duration
of the contract, which limits the risk of impairment.
- Solutions have already been implemented to decarbonize existing
production units:
– for air gases (Scope 2 emissions) mainly by using low-carbon
electricity: the deployment of actions in the 10 countries with the
greatest potential will significantly reduce Scope 2 emissions. Since
2018, Air Liquide has already signed 13 renewable power
purchase agreements for about 460 MW.
more than 95% already electrified, they do not require any specific
investment for the transition;
–
for hydrogen production units or “SMR” (Scope 1 emissions), by
capturing CO
2
. (…)
The Group was recently selected for
financing via European funds for two carbon capture projects
on SMRs. The decarbonization of the Group’s 10 largest SMRs
will reduce Scope 1 emissions by more than 40%. No
dismantling of existing SMRs before the end of the contract is
necessary to achieve the Group climate objectives (…)
-
Energy costs (electricity for air gases and natural gas for
SMRs) and those related to CO
2
emissions (e.g. ETS scheme in
Europe) are re-invoiced 100% to the customer in the frame of a
long-
term contract. The Group also applies this business model to
ESMA emphasis added in Orange