CDP. Module: Introduction. Page: Introduction. Climate Change 2015 Information Request CC0.1

Transcription

1 CDP Climate Change 2015 Information Request Norsk Hydro Module: Introduction Page: Introduction CC0.1 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 13,000 people in more than 50 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 2014, we delivered about 3.3 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 packaging, lithographic, building, 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 Sapa joint venture transaction we have transformed our extrusion operations and generate substantial synergies. 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. CC0.2

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 Wed 01 Jan Wed 31 Dec 2014 CC0.3 Country list configuration Please select the countries for which you will be supplying data. If you are responding to the Electric Utilities module, this selection will be carried forward to assist you in completing your response. Australia Brazil Canada France Germany Italy Luxembourg Norway Qatar Select country

3 Select country Slovakia United Kingdom United States of America Netherlands Spain CC0.4 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 CC0.6 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 sub-industries, companies in the oil and gas sub-industries, companies in the information technology and telecommunications sectors and companies in the food, beverage and tobacco industry group should complete supplementary questions in addition to the main questionnaire. If you are in these sector groupings (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 Further Information Hydro is only able to report on total greenhouse gas emissions from its 50/50 joint venture Sapa (and not disaggregated per country). Total emissions from Sapa are, however, only 3.1 percent of Hydro's total scope 1 emissions and 4.6 percent of total scope 2 emissions.

4 Module: Management Page: CC1. Governance CC1.1 Where is the highest level of direct responsibility for climate change within your organization? Board or individual/sub-set of the Board or other committee appointed by the Board CC1.1a Please identify the position of the individual or name of the committee with this responsibility Executive Vice President and head of Energy and Corporate Climate office and Business Development Arvid Moss. Moss is a member of the Corporate Management Board and reports to the President and CEO. CC1.2 Do you provide incentives for the management of climate change issues, including the attainment of targets? Yes CC1.2a Please provide further details on the incentives provided for the management of climate change issues Who is entitled to benefit from these incentives? The type of incentives Incentivized performance indicator Comment Chief Executive Officer (CEO) Monetary reward Other: Increased recycling capacity Included in the President & CEO's bonus scheme

5 Who is entitled to benefit from these incentives? The type of incentives Incentivized performance indicator Comment Executive officer Management group Monetary reward Monetary reward Emissions reduction target Emissions reduction target Included in the EVP and Head of Primary Metals' bonus scheme Included in Primary Metals' bonus scheme All employees Monetary reward Emissions reduction target Included in bonus scheme for relevant employees in Primary Metal Further Information Page: CC2. Strategy CC2.1 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 CC2.1a Please provide further details on your risk management procedures with regard to climate change risks and opportunities Frequency of monitoring To whom are results reported? Geographical areas considered How far into the future are risks considered? Comment Annually Board or individual/subset of the Board or All relevant to Hydro, in particular EU (including > 6 years In addition to the risk of increasingly demanding legislation, the potential physical impacts of climate change on our facilities and operations is

6 Frequency of monitoring To whom are results reported? Geographical areas considered How far into the future are risks considered? Comment committee appointed by the Board Norway), Brazil, Canada, Australia and Qatar. highly uncertain. Effects of climate changes may include changes in rainfall patterns, shortages of water or other natural resources, changing sea levels, changing storm patterns and intensities, and changing temperature levels. These effects may adversely impact the cost, production and financial performance of Hydro's operations. Hydro has been an active participant in the development of international frameworks on climate change and greenhouse gas emissions supporting the establishment of a level playing field for global aluminium production. We engage in significant R&D activities focused on reducing energy consumption and improving electrolysis efficiency including anode consumption which is the main source of CO2 emissions from our smelter operations (ref. Annual Report 2014 page 144). CC2.1b Please describe how your risk and opportunity identification processes are applied at both company and asset level Business risks including climate change legislation, price impact and financial consequences as well as opportunities are mapped and mitigating actions defined in the Hydro group and business areas risk management and strategy processes. 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 management is a dedicated topic on the board agenda annually. Further, review of climate change risks and opportunities are an integrated part of Hydro's strategy process, all new projects and investments, the annual business planning process and the financial and extra-financial reporting process. Sustainability performance is addressed in every board meeting.(gri G ) CC2.1c How do you prioritize the risks and opportunities identified?

7 Business risks are typically ranked according to probability and impact. Risk management in Hydro is based on the principle that risk and opportunities evaluation is an integral part of all business activities. Consequently, the business areas have the main responsibility for risk management, utilizing established policies and procedures. Their work is coordinated by staff units at the corporate level. The board of directors regularly reviews and evaluates the overall risk management system and environment within Hydro. (Annual Report 2014 page ) CC2.1d Please explain why you do not have a process in place for assessing and managing risks and opportunities from climate change, and whether you plan to introduce such a process in future Main reason for not having a process Do you plan to introduce a process? Comment CC2.2 Is climate change integrated into your business strategy? Yes CC2.2a Please describe the process of how climate change is integrated into your business strategy and any outcomes of this process Our climate strategy is an integral part of our overall business strategy, with the overall goal for the company to become carbon neutral by The strategy has three components: 1. Reducing energy consumption and emissions in production 2. Reducing CO2 emissions and energy consumption through the use of our products 3. Increasing recycling of aluminium 1. Energy efficiency is an important part of Hydro s ongoing efforts to reduce costs and CO2 emissions. Our Alunorte refinery in Brazil consumed 8.51 GJ per mt

8 alumina in 2014 and is among the most energy efficient refineries in the world. On average, our consolidated smelters consumed kwh of electricity per kilogram (kg) of primary aluminium produced in 2014, slightly down from13.89 in Our new HAL4e technology has achieved an energy consumption level of 12.5 kwh per kg aluminium produced under full scale testing and we are targeting levels under 12.kWh per kg at new test cells at our Årdal smelter. This represents potential reductions of about percent. The planned pilot plant at Karmøy, Norway will test this technology in industrial full scale. Greenhouse gas emissions from Hydro s consolidated activities increased by 6 percent in 2014, compared with Total emissions from our ownership equity, including indirect emissions from electricity generation, increased by 4 percent in The rise was mainly due to increased production in our Bauxite & Alumina business area. Specific direct emissions from our alumina refinery Alunorte in Brazil was mt CO2 / mt alumina in 2014, slightly down from in The specific emissions from electrolysis increased from 1.59 mt CO2 equivalents (CO2e) per mt primary aluminium in 2013 to 1.63 in About one third of the increase was caused by changes in the greenhouse gas potential factors of certain gases, while the remaining increase was mostly due to operational issues at the Årdal and Karmøy plants in Norway and Albras in Brazil. 2. We work closely with customers to develop products that save energy and reduce emissions. Examples include lighter transportation and better packaging as well as aluminium façades that lead to lower operating costs and enable buildings to produce as much energy as they consume during operation. Hydro is one of the sponsors of SAVE FOOD, an initiative from the UNFAO. Our specific contribution is packaging, in which aluminium helps to conserve food more effectively. 3. Aluminium can be recycled over and over again without degradation in quality. Aluminium recycling requires 95 percent less energy than primary aluminium production. Hydro is a large remelter and recycler of aluminium. We remelt process scrap from our own production and from other companies. Our expertise in remelting is a good basis for further expansion. Our ambition is to take a strong position in aluminium recycling. In 2014, we recycled 1.1 million metric tons (mt) of aluminium in 2014 compared to 1.2 million mt in Of this amount, 111,000 mt was post-consumer scrap, compared with 151,000 mt in Total volumes in 2013 included volumes recycled in Extruded Products up until end of August. From 1 September Extruded Products became part of the new SAPA joint-venture with Orkla. Thus, aluminium 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 2-4 percent is expected (outside China). 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 production. 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. About two-thirds of the electricity used in our primary aluminium production comes from hydropower, and we are the second-largest hydropower operator in Norway. Our normal production is 10 TWh per year, and in 2014 we produced 10.2 TWh. Our strategy is to secure and expand our hydropower capacity and we are currently upgrading several of our hydropower plants in Norway to secure future production. We are also working to increase production from existing plants through refurbishments and expansions. Energy for the Qatalum aluminium plant (Hydro share 50 percent. 15 percent of our primary metal production capacity), is based on natural gas. 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. Hydro also engages actively in initiatives fostering increased recycling and material stewardship, and is a member of the Aluminium Stewardship Initiative.

9 Please also see Hydro s Annual Report 2014, pages 65-67, and CC2.2b Please explain why climate change is not integrated into your business strategy CC2.2c Does your company use an internal price of carbon? Yes CC2.2d Please provide details and examples of how your company uses an internal price of carbon Hydro uses the European cost of carbon in our internal calculations as our smelters are part of the EU ETS directive. Carbon cost is an integrated part of all financial considerations, including all relevant investments and operations. CC2.3 Do you engage in activities that could either directly or indirectly influence public policy on climate change through any of the following? (tick all that apply) Direct engagement with policy makers Trade associations Funding research organizations CC2.3a

10 On what issues have you been engaging directly with policy makers? Focus of legislation Corporate Position Details of engagement Proposed legislative solution Cap and trade Support Meetings with EU stakeholders Other: Energy and climate framework conditions Support Meetings, conferences and panel discussions with policy makers and other relevant stakeholders in Brazil, Norway, Germany and EU. More predicitable and efficient cap and trade Competitive and predictable framework conditions CC2.3b Are you on the Board of any trade associations or provide funding beyond membership? Yes CC2.3c Please enter the details of those trade associations that are likely to take a position on climate change legislation Trade association Is your position on climate change consistent with theirs? Please explain the trade association's position How have you, or are you attempting to, influence the position? 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 Through discussions in committees and meetings in the relevant forums of the organization. Comments to position papers. Hydro is a long-standing member and is instrumental in leading the EAA, its policy agenda and interaction with the authorities. The company has a representative sitting in the Executive Committee of the association and participates in projects and committees as appropriate. Financial contributions are given as ordinary membership fees. Through discussions in committees and meetings in the relevant forums of the organization. Comments to position papers. Hydro has a representative sitting in the Executive

11 Trade association Is your position on climate change consistent with theirs? Please explain the trade association's position How have you, or are you attempting to, influence the position? The Federation of Norwegian Industries (Norsk Industri) The Aluminum Association Confederation of Norwegian Enterprise (NHO) Wirtschafts Vereinigung Metalle Gesamtverband der Aluminiumindustrie Consistent Consistent Consistent Consistent Consistent A restructuring of cap and trade / ETS to take industry concerns more into consideration Through sensible legislation and regulation, the aluminum industry strongly believes that climate change policy must: -Recognize voluntary actions to reduce greenhouse gas emissions (GHG) -Promote energy efficiency and recycling -Protect a vital U.S. manufacturing sector from overly burdensome regulations. NHO's position is currently under development. 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 Committee of the association and participates in projects and committees as appropriate. Financial contributions are given as ordinary membership fees. Through discussions in committees and meetings in the relevant forums of the organization. Comments to position papers. Hydro s Executive Vice President and Head of Primary Metal, Hilde Merete Aasheim, is chairperson of the board. Hydro participates in projects and committees as appropriate. Financial contributions are given as ordinary membership fees. Through discussions in committees and meetings in the relevant forums of the organization. Comments to position papers. Hydro s Vice President of Primary Metals North America, Matt Aboud, is a board member in the organization. Hydro participates in projects and committees as appropriate. Financial contributions are given through ordinary membership fees. Through discussions in committees and meetings in the relevant forums of the organization. Comments to position papers. Hydro s Executive Vice President and Head of Primary Metal, Hilde Merete Aasheim, is a member of NHO's council. Hydro participates in projects and committees as appropriate. Financial contributions are given as ordinary membership fees. Through discussions in committees and meetings in the relevant forums of the organization. Comments to position papers. Hydro is a regular participant in projects and committees as appropriate. Financial contributions are given through ordinary membership fees Through discussions in committees and meetings in the relevant forums of the organization. Comments to position papers. Hydro is a regular participant in projects and committees as appropriate. Financial contributions are given through ordinary membership fees.

12 CC2.3d Do you publicly disclose a list of all the research organizations that you fund? Yes CC2.3e Do you fund any research organizations to produce or disseminate public work on climate change? Yes CC2.3f 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 relevate to Hydro as it increases our understanding of climate change processes and developments in different policy areas. To increase our knowledge and to secure a science-based approach within reforestation and biodiversity, we entered in 2013 into a partnership with the University of Oslo, Norway, and its Brazilian partners Museu Paraense Emílio Goeldi, Federal University of Pará and Federal Rural University of the Amazon to create a research program connected to our mining operations. The aim is to strengthen Hydro's ability to preserve the natural biodiversity of the areas where we mine bauxite. Hydro's most important targets in this area are to achieve an area balance of 1:1 in opening of mine compared to reforestation by 2017, and to close the reforestation gap within We further have a long-term aspiration of No Net Loss of Biodiversity. The project will also include measurement of CO2 emissions from the forest. CC2.3g Please provide details of the other engagement activities that you undertake CC2.3h

13 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 meets regularly. The network is under supervision of the EVP and head of Communication & Public Affairs. Training in public affairs methodology and messages is provided to relevant Hydro employees centrally and locally, also under the supervision of the EVP and head of Communication & Public Affairs. CC2.3i Please explain why you do not engage with policy makers CC2.4 Would your organization's board of directors support an international agreement between governments on climate change, which seeks to limit global temperature rise to under two degree Celsius from pre-industrial levels in line with IPCC scenarios such as RCP2.6? Yes CC2.4a Please describe your board's position on what an effective agreement would mean for your organization and activities that you are undertaking to help deliver this agreement at the 2015 United Nations Climate Change Conference in Paris (COP 21) Hydro supports a global price on GHG emissions. This may contribute to creating a level playing field globally. This message has been clearly conveyed in different audiences, including to the Norwegian government and the EU. Further Information Please see Hydro's Annual Report 2014 pages "Public affairs and lobbying" for additional information: Please see for more information on all the organizations Hydro supports. Page: CC3. Targets and Initiatives

14 CC3.1 Did you have an emissions reduction target that was active (ongoing or reached completion) in the reporting year? Intensity target CC3.1a Please provide details of your absolute target ID Scope % of emissions in scope % reduction from base year Base year Base year emissions (metric tonnes CO2e) Target year Comment CC3.1b 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 Int1 Scope 1 45% 13% metric tonnes CO2e per tonne aluminum See also Annual Report page 66 CC3.1c Please also indicate what change in absolute emissions this intensity target reflects

15 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 Int1 Decrease 5 No change 0 CC3.1d For all of your targets, please provide details on the progress made in the reporting year ID % complete (time) % complete (emissions) Comment Int1 83% 92% CC3.1e Please explain (i) why you do not have a target; and (ii) forecast how your emissions will change over the next five years CC3.2 Does the use of your goods and/or services directly enable GHG emissions to be avoided by a third party? Yes CC3.2a

16 Please provide details of how the use of your goods and/or services directly enable GHG emissions to be avoided by a third party Hydro delivers aluminium to the transport, building and packaging markets. In transport, documentation shows that by replacing steel in cars, 1 kg aluminium saves kg of CO2e during the car's life cycle. Every fourth car produced in Asia outside China now contains aluminium from Hydro. Also in Europe, we are increasing the capacity for producing automotive parts to accommodate a rapidly growing market for aluminium in cars. With a novel laser-cutting facility at Hydro's site in Dormagen, Germany, we enable carmakers to construct much larger and more complex body parts from one single sheet of aluminium, taking yet another step forward in the growing market for automotive lightweighting with aluminium. Hydro received first place of the ÖKO-GLOBE Award presented by the University of Duisburg in Germany - in the award category of raw materials, materials and procedure optimization. The award targets innovations that help reduce the environmental impact of mobility. Hydro also delivers aluminium to other car parts, thus contributing to lower weight and lower emissions. In addition to saving emissions in the use phase, aluminium products can also be recycled by using only 5% of the energy used for primary aluminium production. This saves 95% of the GHG emissions compared to primary aluminium. Hydro has an ambition to increase recycling of postconsumer and contaminated aluminium by Aluminium used in buildings enables advanced energy saving systems to be used, thus enabling the construction of energy neutral or even energy positive buildings. Through the Norwegian Powerhouse alliance, Hydro and its 50/50 JV Sapa has contributed to the first rehabilitation of an office building to become energy-positive - a building that produces more energy than it consumes during its lifecycle. The building is situated nearby Oslo in Norway and was opened in April After renovating, the ambition is that the buildings' energy needs will be covered by its own production. This includes solar panels that can produce electricity for use on the site or for delivery to the power grid. The solar panels can each year supply more than 200,000 kwh, or 41 kwh/m2. Together with energy wells, insulation, sun shading etc., the ambition is that the building will produce more energy than it consumes. The rehabilitation potential of buildings is huge. In Norway alone, the total energy consumption of office buildings is 5-6 TWh, or the consumption of about 300,000 homes. Buildings account for about 40 percent of the world's total energy consumption. For more information, please see and 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 2014 page and 82-83: Please also see the International Aluminium Institute's web-pages on aluminium in buildings and transport: CC3.3

17 Did you have emissions reduction initiatives that were active within the reporting year (this can include those in the planning and/or implementation phases) Yes CC3.3a 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 CC3.3b For those initiatives implemented in the reporting year, please provide details in the table below

18 Activity type Description of activity Estimated annual CO2e savings (metric tonnes CO2e) Scope Voluntary/ Mandatory Annual monetary savings (unit currency - as specified in CC0.4) Investment required (unit currency - as specified in CC0.4) Payback period Estimated lifetime of the initiative Comment Energy efficiency: Processes Product design Broad specter of activities to improve energy effeciency in the processes. An important part of the USD 300 program in Hydro's Primary Metal business area (successfully completed in 2013) was to reduce specific energy consumption. Aluminium can save significant amounts of energy and GHG emissions in the use phase The improvement in energy consumption related to the four Norwegian wholly-owned smelters (Sunndal, Årdal, Høyanger and Karmøy). A yearly EBIT improvement of 30 MNOK from 2009 till 2014 has been estimated. Lighter cars result in fuel savings and lower emissions on the road. Aluminium façades can lead to lower operating costs and enable buildings to produce as much energy as they consume during operation. Products and packaging in aluminium reduce transport costs and emissions. Aluminium packaging also provides excellent barrier properties which helps to conserve food more effectively reducing the need for cooling and reducing food spoilage. CC3.3c

19 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 has been allocated free quotas for direct emissions according to a benchmark of 1,514 ton CO2e/ton aluminium. Number of quotas will according to the existing ETS directive be annually reduced by 1.74 percent which also mean that our free quotas will be reduced accordingly. EU has also decided to open for compensation for the CO2 element in the power price for the aluminium industry. The compensation might be given by member states based on a benchmark for energy efficiency (kwh/kg aluminium). The benchmark has been set to MWh/ton primary aluminium AC. The compensation will be reduced from 85 % to 70 % by Most of our R&D budget related to primary metal production is dedicated to energy efficiency. Our R&D expences increased by 28 percent in 2014, partly due to increased R&D related to the Karmøy Pilot in Norway. 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 2014 page 83. Our next generation technology, HAL4e, has been tested in a limited number of full-scale production cells delivering an energy consumption of 12.5 kwh/kg. A 75,000 metric tons pilot plant with the aim of full-scale industrial testing of this proprietary technology is planned at Karmøy, Norway supported by a contribution of NOK 1.5 billion from 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 and CC3.3d If you do not have any emissions reduction initiatives, please explain why not

20 Further Information Hydro has a multitude of emission reduction initiatives, but we do not consolidate them on the format requested in CC3.3a. Page: CC4. Communication CC4.1 Have you published information about your organization 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 Status Page/Section reference Attach the document In mainstream financial reports but have not used the CDSB Framework In voluntary communications Complete Complete The whole document The whole document Change 2015/Shared Documents/Attachments/CC4.1/01_annual_report_2014_ pdf Change 2015/Shared Documents/Attachments/CC4.1/Global Reporting Initiative (GRI) index[1].pdf Further Information Module: Risks and Opportunities Page: CC5. Climate Change Risks CC5.1 Have you identified any inherent climate change risks that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply

21 Risks driven by changes in regulation Risks driven by changes in physical climate parameters CC5.1a Please describe your inherent risks that are driven by changes in regulation Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Cap and trade schemes Carbon leakage, where industry is forced to move from areas with strict greenhouse gas regulations and high associated energy costs to areas with less regulations and costs, is a major risk for the European aluminium industry. To establish a global level playing field is thus essential for the European aluminium industry. 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 Increased operational cost >6 years Direct Likely High Hydro has for many years been an active participant in the global policy framework dialogues. Management time in participation in relevant initiatives.

22 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Product labelling regulations and standards 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. 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 Reduced demand for goods/services 3 to 6 years Direct About as likely as not Lowmedium 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. Management time in participation in relevant initiatives.

23 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Other regulatory drivers 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. Energy and climate framework conditions in Brazil, Germany, Norway and the EU are critical to Hydro's ability to develop its aluminium portfolio within these markets further. Hydro supports a global climate regime which will create a level playing field and avoid regional differences in framework conditions. Increased operational cost 3 to 6 years Direct About as likely as not High Meetings, conferences and panel discussions with policy makers and other relevant stakeholders in Brazil, Norway, Germany and EU. Increasing the awareness of the role of aluminium in a low carbon economy. Management time in participation in relevant initiatives. CC5.1b Please describe your inherent risks that are driven by change in physical climate parameters

24 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Change in precipitation pattern Change in mean (average) precipitation 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 After the overflow of storm water corrective actions were taken, including strengthening the drainage system and improving the surveillance of the water treatment facility. 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 Other: Flooding risk Other: Drought Up to 1 year Up to 1 year Direct Virtually certain Low Direct Likely Low Our operations are located so that the likelihood of extreme weather events potentially impacting our operations is limited. All major sites and A total of 5,343 claims were filed for a local small claims court related to the overflow. By the end of 2014, a total of 3,043 cases had been decided by the first level civil court in Barcarena, Pará, all in Alunorte's favour. Management consideration

25 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Tropical cyclones (hurricanes and typhoons) or high rainfall. Hydro has significant operations in the Amazon basin. 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 In Hydro's current portfolio, very few of consolidated Reduction/disruption in production capacity Up to 1 year Direct Likely Low operations have been through local risk assessments where also issues like extreme weather events have been included. Management consideration and emergency planning and training.

26 Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management operations are exposed to such risk, while a few minority-owned operations can be exposed. CC5.1c Please describe your inherent risks that are driven by changes in other climate-related developments Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management CC5.1d Please explain why you do not consider your company to be exposed to inherent risks driven by changes in regulation that have the potential to generate a substantive change in your business operations, revenue or expenditure CC5.1e

27 Please explain why you do not consider your company to be exposed to inherent risks driven by physical climate parameters that have the potential to generate a substantive change in your business operations, revenue or expenditure CC5.1f Please explain why you do not consider your company to be exposed to inherent 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 believe that the risks described above include the most material climate-related risks for Hydro. Further Information Page: CC6. Climate Change Opportunities CC6.1 Have you identified any inherent climate change opportunities 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 CC6.1a Please describe your inherent opportunities that are driven by changes in regulation

28 Opportunity driver Description Potential impact Timeframe Direct/Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Product efficiency regulations and standards Fuel/energy taxes and regulations Renewable energy regulation 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 Investment opportunities 1 to 3 years 3 to 6 years Up to 1 year Direct Direct Direct Very likely Likely Virtually certain Mediumhigh Mediumhigh Lowmedium Financial implications are still difficult to estimate. However, we believe that more energy efficient products can give a competitive advantage towards an increasing percentage of customers. Financial implications are still difficult to estimate. However, we believe such labelling can give a competitive advantage towards certain customers. Increased normal production of 0.1 TWh corresponding to an annual turnover of R&D (including cooperation with external institutions), cooperation with customers. Participation in e.g. the Aluminium Stewardship Initiative and certain recycling initiatives. Better utilization and upgrade of existing reservoirs and power plants Management, sales and R&D representatives cooperating with customers. Management time in participation in relevant initiatives. Management development time.

29 Opportunity driver Description Potential impact Timeframe Direct/Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management about NOK 23 million CC6.1b Please describe the inherent opportunities that are driven by changes in physical climate parameters Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Change in mean (average) precipitation In Norway, increased precipitation has already resulted in and may result in further increased water flows to our hydropower reservoirs, thus increasing the power output. In the updated normal production figures (last updated in 2013) the increase from 9.4 to 10 TWh, 0.1 TWh are related to increased precipitation. Increased production capacity Up to 1 year Direct Virtually certain Low Estimated increased income as a consequence of the additional 0,1 TWh is approximately NOK mill a year (calculation based on 2014 spot price level). Better utilization and upgrade of existing reservoirs and power plants. Update of inflow estimates and production plans in daily scheduling. CC6.1c

30 Please describe the inherent opportunities that are driven by changes in other climate-related developments Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Changing consumer behaviour Aluminium, with its properties that include lightweight and ease of recycling, represents a growing opportunity in an increasingly carbonconstrained 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. More and more customers are requesting aluminium that has been produced with lower climate footprint. Still small in number, some of them represent interesting business Increased demand for existing products/services 1 to 3 years Direct Very likely Medium Financial implications are still difficult to estimate. However, we believe that increasing consumer consciousness about climate change may give a range of aluminium applications a competitive advantage towards an increasing percentage of customers. R&D (including cooperation with external institutions), cooperation with customers. Management, sales and R&D representatives cooperating with customers

31 Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management opportunities. Through the Søral acquisition (in Norway) in 2014, Hydro increased its primary aluminium capacity based on hydropower by 92,000 metric tons. CC6.1d Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in regulation that have the potential to generate a substantive change in your business operations, revenue or expenditure CC6.1e Please explain why you do not consider your company to be exposed to inherent opportunities driven by physical climate parameters that have the potential to generate a substantive change in your business operations, revenue or expenditure CC6.1f

32 Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in other climate-related developments that have the potential to generate a substantive change in your business operations, revenue or expenditure Further Information Another example is the increase of 0.6 TWh in Hydro's normal hydropower production since 2011 of which 0.5 TWh were made in The increase follows 0,2 TWh through acquisitions, 0.2 TWh through upgrade of certain power stations, 0.1 TWh through improved flooding control etc and 0.1 TWh through increased normal precipitation. The increase in normal precipitation alone, accounts for about NOK 23 million annually (2014 price level). In total, Hydro accounted NOK million 380 on investments in increased power production capacity in 2013, including the acquisition of the Vigeland Brug power station. Upgrade of the power plants in Norway continued through Module: GHG Emissions Accounting, Energy and Fuel Use, and Trading Page: CC7. Emissions Methodology CC7.1 Please provide your base year and base year emissions (Scopes 1 and 2) Scope Base year Base year emissions (metric tonnes CO2e) Scope 1 Scope 2 Wed 01 Jan Wed 31 Dec Wed 01 Jan Wed 31 Dec CC7.2

33 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) CC7.2a If you have selected "Other" in CC7.2 please provide details of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions Not applicable CC7.3 Please give the source for the global warming potentials you have used Gas Reference SF6 Other: Perfluoromethane Other: Perfluoroethane Other: N20 CH4 CO2 Other: IPCC Fifth Assessment Report (AR5-100 year) Other: IPCC Fifth Assessment Report (AR5-100 year) Other: IPCC Fifth Assessment Report (AR5-100 year) Other: IPCC Fifth Assessment Report (AR5-100 year) Other: IPCC Fifth Assessment Report (AR5-100 year) Other: IPCC Fifth Assessment Report (AR5-100 year)