Eni for 2023 – A Just Transition: Carbon neutrality by 2050

30 2023  A JUST TRANSITION

Carbon neutrality

INTRODUCTION

CARBON NEUTRALITY

OPERATIONAL EXCELLENCE

ALLIANCES FOR DEVELOPMENT

31

SETTING THE SCENE: CHALLENGES AND OPPORTUNITIES

by 2050

Towards Net Zero in 2050

Business Evolution

Economic growth and emissions

Global power sector-related CO2 emissions in 2023 increased by 1.1% (vs. 2022), reaching a new peak of over 37.4 Gt CO2. The link between economic growth and emissions, which has been weakening over the past two years, has benefited from both structural and cyclical factors influencing this trend. Specifically, in 2023, emissions growth was 1.1% vs. worldwide GDP growth of 2.6%.

Source: Eni's elaborazions on IEA data.

8.0%			Annual change in global GDP and CO2 emissions from fuel combustion
6.0%
4.0%
2.0%
0.0%
1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023
-2.0%
-4.0%
-6.0%
		CO2 from fuel combustion				PIL

Climate change impacts, risks, and opportunities

GHG Methodology

and Transparency Just Transition for Eni

Regional dynamics

Contrasting geographical trends in 2023 determined the global dynamics of GDP and emissions changes. In advanced economies, GDP growth of 1.7% was matched by a contraction in emissions of 4.5%. In the rest of the world, emissions continued to grow. The push for renewables, as well as the weak economic environment and mild climate that limited energy consumption growth favored the emission contraction of advanced economies. These effects only partially affected the dynamics of the rest of the world against a more sustained energy consumption growth and the significant presence of sources with a higher emission impact.

Source: Eni's elaborazions on IEA data.

Emission Changes by fuel and by area

(Mt CO2)
COAL	OIL	NATURAL GAS
600

400

200

0

-200

-400

China	United States	Rest of AE
India	European Union	International bunkers*
Indonesia	Japan	World
Rest of EMDE

* Represents the consumption of ships and aircraft on international routes.

Energy mix evolution

The evolution of future emission paths will depend on the speed of change for energy systems on a global scale, taking into account geographical peculiarities, policies supporting the transition, technological evolution, and consumption habits. The International Energy Agency (IEA), among other energy forecasters, outlines three trajectories constructed with different logics, which vary in degree and speed of decarbonization.

Context: progress and challenges of the transition.

Coal

Oil

Natural gas

Other sources

Source: IEA, WEO 2023.

(EJ)	Historical and IEA Outlook of the global energy mix (2015-2050)
800
700
600		20%	20%	26%			40%
	18%	30%
500
				37%
		23%	23%	22%
400	22%				63%
		21%		20%
							84%
300						21%
32%	29%	30%	29%
	28%
200					26%	26%	14%
100	28%	27%	27%	22%	20%	17%	14%	16%	6%
				7%	8%	3%
	2015	2021	2022	STEPS	APS	NZE	STEPS	APS	NZE
					2030			2050

GHG EMISSIONS

32	2023 A JUST TRANSITION

Towards Net Zero in 2050

Why is it important to Eni ?

At Eni, we address the challenges posed by the energy transition with a distinct strategy to progressively reduce the emissions directly and indirectly associated with our business activities. We strive for carbon neutrality by 2050 while contributing to the security and competitiveness of energy supplies to the countries in which we are present. We are convinced that the energy transition can only be successful if it generates the basis for new and profitable forms of business, and this is precisely what we are doing through our technological expertise and the integration of traditional and transition-related businesses.

FRANCESCO GATTEI  CHIEF FINANCIAL OFFICER AT ENI

For more information

POLICY/POSITIONING/OTHER DOCUMENTS

Strategic Plan 2024-2027; Eni's responsible engagement on climate change within business association; Eni's position on biomass; Eni's Code of Ethics; POLICY/POSIZIONAMENTI:Eni for 2023 - Sustainability performance; eni.com; Assessment of industry associations' climate policy positions

INTRODUCTION		CARBON NEUTRALITY		OPERATIONAL EXCELLENCE		ALLIANCES FOR DEVELOPMENT	33

2023 PERFORMANCE AND MAIN DECARBONIZATION TARGETS

RESULTS

TARGETS

delta vs.

GHG EMISSIONS

2023

2024

2025

2030

2035

2040

2050

baseline year

Net carbon footprint Eni (Scope 1+2)a

(MtCO2eq.)

26.1

-30%

(vs. 2018)

UPS -50%

UPS -65%

UPS NET

ENI NET

ZERO

ZERO

Net carbon footprint upstream (Scope 1+2)a

(MtCO2eq.)

8.9

-40%

(vs. 2018)

Net GHG lifecycle emissions (Scope 1+2+3)a	(MtCO2eq.)	398	-21%	-35%	-55%	-80%	NET
ZERO
			(vs. 2018)

Net carbon intensity (Scope 1+2+3)a

(gCO2eq./MJ)

65.6

-4%

-15%

-50%

NET

(vs. 2018)

ZERO

FLARING & METHANE

Upstream routine flaringbc

Mld sM3

1.0

-41%

0

(vs. 2014)

Upstream fugitive methane emissionsb

k t CH4

-95%

-80%

6

reached

(vs. 2014)

2019

b

-86%

0.2%

Upstream methane intensity

%

0.06

(vs. 2014)

well

below

CARBON OFFSET

Carbon offset

(MtCO2eq./y)

5.9d

~15

~20

<25

(including Natural Climate Solutions)

DECARBONIZATION ROADMAP AND ENI'S TARGETS

Eni has embarked on an industrial transformation based on a mix of levers and technologies to achieve Net Zero by 2050, which aligns with the recommendations of international climate objectives defined

on a global scale. To achieve this, Eni pursues a strategy that maximises the value of traditional energy businesses and reduces their emissions while accelerating the development of new high-yield, high- growth activities related to the energy transition. The pathway towards Eni's carbon neutrality by 2050 includes a series of

intermediate objectives that first envisage Net Zero emissions (Scope 1+2) for the Upstream business by 2030 and for the Eni group by 2035, then Net Zero emissions by 2050 for all SCOPE 1, 2, AND 3

associated with Eni's entire value chain, both in absolute and in intensity terms (GHG Metrics).

a) KPI used in Eni Sustainability-linked Financing Framework. Targets are net of Eni's equity stored CO2. b) Includes operated and joint operated assets.

c) Subject to execution of projects in Libya.

d) From this, 2.4 million tons of CO2eq were offset for Plenitude customers, using carbon credits, mainly obtained from Natural Climate Solutions (Eni for 2023 - Sustainability performance).

Focus on

NET GHG LIFECYCLE EMISSIONS (Scope 1+2+3)

	-21%
	-35%
	-55%
2eq.
MtCO	-80%

NET ZERO

2018	2023	2030	2040	2050
(baseline)

International energy scenarios

The Intergovernmental Panel on Climate Change (IPCC), the United Nations organization responsible for providing scientific evidence on climate change, supports implementing plans and actions to limit the global average temperature increase to within 1.5°C in line with the Paris Agreement targets. To this end, the IPCC defines several scenarios; among these, two scenario groups are compatible with the goal of a 1.5°C target assuming two types of overshoot (average global temperatures temporarily exceeding the target before declining again): with no or limited overshoot (Category C1), or a high overshoot (Category C2). These scenarios involve the decarbonization of the energy system through the combined application of several levers, such as the deployment of renewable energy, end-use electrification, use of low and zero carbon fuels and CCS, consumer behavioural change, reduction of land use change (LUC) emissions, and neutralization of residual emissions through carbon removal actions in LUC sector and applying Carbon Capture and Storage to bioenergy (BECCS). The sheer number of scenarios and the wide range of possible solutions highlight the difficulty of identifying unambiguous drivers and paths to Net Zero by 2050. The simultaneous action of numerous variables, including geopolitical developments, technology and policy con- text, and adjustment speed of consumption habits and complex energy systems over the considered time horizon, requires elaborating different scenarios with a diversified mix of solutions and goals. In addition to the IPCC, the International Energy Agency's (IEA) World Energy Outlook, updated annually, is also worth mentioning. The IEA develops three scenarios based on some key assumptions, including population growth (+0.7% average annual growth rate - CAGR - 2022-2050) and economic growth (+2.6% CAGR 2022-2050) on a global scale, constructed according to two different logics: Forecasting and Backcasting (Context: progress and challenges of the transition).

34	2023 A JUST TRANSITION

INTRODUCTION		CARBON NEUTRALITY		OPERATIONAL EXCELLENCE		ALLIANCES FOR DEVELOPMENT	35

Case Study

-40%

net Scope

1+2 upstream emissions vs. 2018 thanks to the implemented actions

DECARBONIZATION LEVERS

The implementation of Eni's strategy towards Net Zero consists of various actions that, on the one hand, allow it to decarbonize its own activities (re- ducing Scope 1+2 emissions) and, on the other, contribute to accelerating the decarbonization of the value chain, with particular focus on consumers, through the supply of low and zero carbon products (reducing Scope 3 emis- sions). This strategy is implemented using a mix of different levers and tech- nologies, which are adopted and modulated in a targeted manner and with time horizons that take into account individual solutions' technological and commercial maturity. Simultaneously, this strategy considers market dynamics and the demands of the 'energy tri- lemma' (environmental sustainability, security of supply, and energy equity) while remaining in line with the evolving scientific and regulatory frame- work. Eni's short- to medium-term priority is to reduce Scope 1 and Scope 2 emissions, focusing primarily on the Upstream sector, for which technologically consolidated and economically viable solutions are already

available. On the path to Net Zero Upstream by 2030, emissions that cannot yet be reduced are voluntarily offset through high-quality carbon credits (Eni's Carbon Offset Initiatives). From 2018 to 2023, Eni has implemented actions that have reduced net Scope 1 and 2 Upstream equity emissions by around 40%, with a particular focus on the following areas: projects to reduce methane emissions and routine or process flaring and venting (Eni's commitment to reducing methane emissions and routine flaring), energy efficiency measures, and portfolio ac- tions. Moreover, as a responsible oper- ator, Eni is also implementing actions to reduce Scope 3 emissions through various solutions to reduce the carbon intensity of its products and services, contributing to the overall energy system and economic decarbonization. These actions require a profound strategic and technological transformation of the business. Eni's strategy towards Net Zero for Scope 1+2+3 emissions is supported by an approach that involves the entire value chain, envisaging the Upstream portfolio optimisation and valorisation through progressive decarbonization, combined with the

expansion of the bio, renewable, and circular economy businesses and the supply of new energy solutions and new services. Upstream's hydrocarbon production will see progressive growth of its gas component (including con- densates, from 2024), reaching more than 60% by 2030 and more than 90% after 2040. It will also impact the Midstream gas portfolio (transportation and marketing), which will see increasing integration with equity projects. Concerning Downstream, biofuel development will significantly contribute to the decarbonization of the transport sector and provide an opportunity to convert existing traditional refining capacity. CO2 capture, storage, and utilisation (CCUS) projects will have a complementary function in reducing residual emissions that are difficult to abate with existing technologies. Fi- nally, Offsets, mainly from NATURAL CLIMATE SOLUTIONS, will compensate for residual emissions. The speed of this transformation and the relative contribution of the various business lines will depend on several variables, including market trends, the scientific -technologicalscenario, and relevant regulations.

Carbon Offset Initiatives

CONTEXT: financing GHG emissions reduction and removal projects outside Eni's own value chain can contribute to climate change mitigation as a complement to measures to directly reduce its emissions. In this context, Eni supports the development of projects targeting the generation of voluntary carbon credits to compensate for residual GHG emissions, which cannot otherwise be abated, and monitors the quality and socio-environmental integrity of the Voluntary Carbon Market. By 2050, carbon credits will account for 5% of all the levers used towards the objective of carbon neutrality.

ACTIVITIES: in 2019, Eni initiated its first activities within the context of NATURAL CLIMATE SOLUTIONS5 (NCS), which, according to the IPCC Special Report on Climate Change and Land, foster climate change mitigation while benefiting local communities. NCS regards projects aiming to protect and sustainably manage land and restore natural ecosystems to enable a higher carbon storage capacity and/ or prevent the GHG emissions. Simultaneously, these initiatives protect biodiversity and enhance resilience and the adaptive capacity of environmental systems related to climate change while promoting local sustainable development. The first projects focus on the protection, conservation, and sustainable management of forests, mainly in developing countries. These initiatives are part of the REDD+ framework, defined and promoted by the United Nations (particularly under the UNFCCC). Over time, Eni has built up a solid network of agreements with international developers to monitor the project development and implementation. The objective is to verify their adherence to the REDD+ framework and the application of the highest internationally recognised standards for the certification of carbon reduction (Verified Carbon Standard - VCS), along with socio-environmental results (Climate Community & Biodiversity Standards - CCB). Notably, in 2019, Eni signed a 20-year agreement to support the Luangwa Community Forest Project (LCFP) in Zambia. Through the purchase of the credits generated by this project, Eni ensures a financial flow suitable to bear the project costs and to release so-called conservation fees, which can be used by the 17 chiefdoms, promoting and contributing to the implementation of social projects aimed at the direct benefit of over 200,000 persons. Other ongoing projects include the Lower Zambezi in Zambia, Amigos de Calakmul in Mexico, Ntakata Mountain and Makame in Tanzania, Kulera in Malawi, and Mai Ndombe in the Democratic Republic of Congo. In 2023, Eni compensated 3.5 MtCO2eq. with credits generated by Lower Zambezi, Ntakata Mountain, Kulera, and Mai Ndombe. Furthermore, applying technological solutions is another lever for offsetting residual emissions. Within this framework, in Ivory Coast, Eni has initiated projects that promote the introduction of improved cooking systems (clean cooking) that guarantee a reduction of over 60% in the wood biomass used by households to improve health conditions and the economic situation of families. In addition to the positive impact on health and the environment, the industrial approach, which tends to maximize the local production of improved cookstoves, promotes the development of entrepreneurship and the local economy. Gradually, the Eni programme for Clean Cooking envisages the transition towards increasingly efficient cooking systems (advanced cookstoves), potentially reaching up to zero emissions. Eni's strategy foresees the gradual increase of the component related to CDR projects (Carbon Dioxide Removal), maximizing the contribution towards achieving carbon neutrality.

In 2023, Eni reached a reduction of over 100 Mt-	duction was about 20 MtCO2eq. (-5%) vs. 2022.	leveraging the contribution of LNG commerciali-
CO2eq. (-21%) of Net GHG Lifecycle Emissions	Furthermore, in 2023 potentially avoided emis-	zation and the production of renewable electric-
(Scope 1, 2, and 3) compared to 2018. This re-	sions6 amounted to approximately 12 MtCO	eq,	ity and biofuels.
	2

MAIN DECARBONIZATION LEVERS

2018505

MtCO2eq.

2030	~330
MtCO2eq.

2050	0

CO2

Net Zero

UPSTREAM

MIDSTREAM

DOWNSTREAM

CCUS

OFFSET

Potentially avoided emissions for different sectors

9.1	MtCO2eq. of GHG emissions were potentially avoided through Eni's LNG sales in 2023, assuming that
	gas replaces more emissive fossil fuels (oil, coal) in the power generation phase7.
1.5	MtCO2eq. of GHG emissions were potentially avoided by selling Eni's renewable electricity in 2023,
generation8.
	assuming that it replaced emissions associated with the average electricity mix in the country of
1.7	MtCO2eq. of GHG emissions were potentially avoided by selling Eni's biofuel production in 2023,
considering an emission savings of about 80% compared to the average fossil fuel benchmark9.

5 Natural Climate Solutions are nature-based climate change solutions based on nature's ability to remove and store carbon from the atmosphere (Source: Natural Climate Solutions Alliance, NCSA, 2022).

6 Avoided emissions refer to a 'positive' impact (in terms of potential emissions reduction) on society, comparing the GHG emissions of a reference scenario with an alternative solution with lower GHG emissions (World Business Council for Sustainable Development, WBCSD, 2023).

7 The calculation of the emission savings is based on the gas share used in the power sector in the countries of sale. For all fossil sources analysed (coal, oil, and LNG), only emissions from the electricity generation phase are referred to. Data is based on IEA (Energy Balance 2023, WEO 2023, Emission Factors 2021) and Enerdata reports.

8 The representative emission factors used were compiled based on IEA data (Emission Factors 2021).

9 The average emission savings were calculated as the ratio between the emissions associated with the quantities of HVO biofuels sold in 2023 and reported in the sustainability certificates and the value of the fossil fuel reference defined in the RED III directive (equal to 94 gCO2eq./MJ). The calculation does not include the production from the Chalmette biorefinery in Louisiana.

36 2023 A JUST TRANSITION

INTRODUCTION		CARBON NEUTRALITY		OPERATIONAL EXCELLENCE		ALLIANCES FOR DEVELOPMENT	37

CAPITAL ALLOCATION	iture to low and zero carbon projects in
EVOLUTION	the next four-year period, 2024-2027.
A gradual increase in the share of invest-	Unlike the EU Taxonomy regulation, this
ments for developing new energy solu-	expenditure also includes interventions
tions and services to support the transi-	made in JVs, all spending that contrib-
tion will sustain the evolution towards a	utes to emission reduction (e.g., energy
decarbonized product portfolio. Eni plans	efficiency and routine flaring abatement),
to allocate more than 30% of its expend-	and the development of the Plenitude

customer base. In the medium-to-long term, the share of expenditure dedicated to Oil & Gas activities will be gradually reduced, with the progressive phase-out of investments in high carbon intensity activities and products (available in the Consolidated Disclosure of Non-FinancialInformation).

PARTNERSHIPS FOR DECARBONIZATION

Eni has long collaborated and engaged with academia, civil society, institutions, and businesses to foster the energy transition by generating new knowledge, sharing best practices, and leveraging initiatives with stakeholders. Confirming the significant value recognised in decarbonization partnerships, Eni actively contributed to the dialogue with stakeholders, participated in the Oil and Gas Climate Initiative (OGCI),

(OGDC). More than 50 companies have joined the OGDC, of which, for the first time, about 30 signed commitments to achieve Net Zero by 2050 for SCOPE 1and 2 GHG EMISSIONS, achieve near zero methane emissions and zero routine gas flaring by 2030, as well as a commitment to report on reductions achieved. Furthermore, in support of its commitments, Eni has joined the Global Flaring and Methane Reduction (GFMR) Trust Fund, an initiative launched by the World Bank to help governments and

COP28 was an opportunity to present the progress of the 'Pact for the Decarbonization of Air Transport,' an initiative promoted in cooperation with Aeroporti di Roma that brings together representatives of institu- tions, sector stakeholders, trade associa- tions, and the service sector to define a decarbonization roadmap of the air transport sector by 2050. Eni is developing innovative solutions with universities and start-ups, such as magnetic confinement fusion, an energy source that could revolutionise the

SPENDING ON LOW & ZERO CARBON 2024-2027(€ BN)

ELECTRICITY	GHG EMISSIONS	BIOREFINERIES	RETAIL	RESEARCH ON	CIRCULAR
GENERATION	REDUCTION	AND	PORTFOLIO	LOW AND	ECONOMY AND
FROM	(including flaring	BIOFEEDSTOCK	DEVELOPMENT	ZERO CARBON	OTHER
RENEWABLE	down, CCUS, and		(including	ACTIVITIES	INITIATIVES
SOURCES	energy efficiency		E-mobility)		(including recycling,

joined the COP28 presidency in preparation for the Conference of the Parties, and was among the first companies to adhere to the Oil & Gas Decarbonization Charter

operators in developing countries eliminate methane emissions and routine gas flaring by 2030 (Eni's commitment to reducing methane emissions and routine flaring).

energy world forever by ensuring a more sustainable and lower-emissions future (The value of collaboration for new low and zero carbon energy sources).

projects)	bio-chemicals, NCS,
	and Venture
	Capital)

4.9 2.3 1.8 1.5 0.8 1.5 12.8

Focus on

Sustainable finance at Eni

As part of its financial strategy, Eni has issued sustainability-linked financial instruments, i.e., linked to achieving sustainability targets that help promote the energy transition towards a low carbon future by also supporting the achievement of the SDGs, in particular SDG 7 and SDG 13. The instruments are issued following the Sustainability-LinkedFinancing Framework, which details the guidelines for issuing new sustainable financial instruments. In 2023, Eni issued financial instruments linked to achieving sustainability targets related to installed capacity for renewable electricity generation and NET CARBON FOOTPRINTUpstream (Scope 1 e 2).

2023 ISSUED SUSTAINABLE BONDS

	FEBRUARY		MAY		SEPTEMBER		DECEMBER
Corporate sustainability-linked	4-yearsustainability-linked Euro	7-year convertible bonds of €1	A new 5-yearsustainability-linked
bonds aimed at the Italian	Medium Term Note bond worth	billion, the first in the industry	credit line of €3 billion was signed,
retail public, with a 5-year	€750 million.	with a sustainability-linked	in addition to the similar €6 billion
maturity of €2 billion.				structure.	credit line signed in 2022.

Focus on

10 Years of Oil and Gas Climate Initiative (OGCI)	OGCI PROGRESS
		2023 VS. 2017:
CONTEXT: Eni was among the companies that, in 2014, launched the Oil and Gas Climate Initiative (OGCI) to lead the industry in	Upstream methane
responding to climate change and to accelerate action towards a Net Zero emissions future in line with the 2015 Paris Agreement.
emissions
ACTIVITIES: in the ten years since its creation, OGCI has grown to 12 companies that have set collective emissions reduction tar-	-50%
gets, particularly for methane, contributed to the launch and deployment of CO2 capture and storage (CCUS) projects, and increased	Upstream carbon
investment in low carbon technologies and solutions. Among the recent initiatives promoted by OGCI to reduce methane emissions,	intensity
the Aiming for Zero initiative saw around 100 companies commit to the ambition of eliminating methane leakage from their assets	-21%
by 2030. To support other operators in eliminating methane emissions practically, OGCI launched the Satellite Monitoring Program,
a programme for satellite monitoring and technical support to identify and eliminate methane leaks. After the encouraging results	Low carbon
of the 2022-2023 monitoring in Algeria, Kazakhstan, and Egypt (as published in the OGCI report), OGCI has extended the programme	investments
$65 bn
to other Countries and sites.
	Case Study
The value of collaboration for new low and zero carbon
energy sources
CONTEXT: fusion is the energy that dominates the universe; it is the physical principle that illuminates our stars, such as the Sun. In
particular, under appropriate conditions, the fusion process consists of light atoms merging, a reaction that releases enormous en-
ergy. Once brought to an industrial level, it is a revolutionary technology that may guarantee large amounts of zero-emission energy
with a safe, continuous, and virtually unlimited process (International Atomic Energy Agency).
ACTIVITIES: Eni has long and consistently been committed to contributing to progress in the field of magnetic confinement fusion
and is working in synergy with some of the most important international and Italian companies. Notably, since 2018, Eni has invested
in Commonwealth Fusion Systems (CFS), a Massachusetts Institute of Technology spin-out, which is actively collaborating to build
the first industrial-scale plant to feed CO2-neutral fusion electricity into the grid by early 2030s. The CFS roadmap plans to construct
the net energy production pilot plant, to be called SPARC, around the middle of this decade based on the initial results obtained in
2021 following the high-field superconducting magnet testing. This innovative technology will enable the construction of more com-
pact and efficient plants. In March 2023, the collaboration between Eni and CFS was strengthened further by signing a Technology
Cooperation Agreement to accelerate the industrialisation of fusion energy.

38 2023 A JUST TRANSITION

Business Evolution

INTRODUCTION		CARBON NEUTRALITY		OPERATIONAL EXCELLENCE		ALLIANCES FOR DEVELOPMENT	39

Mixofleversand technologies tosupport decarbonization strategy

BUSINESS

DEVELOPMENT

IN TRANSITION

Eni's decarbonization strategy involves adopting a mix of levers and technologies along its value chain and developing new energy solutions and services. Enilive, Plenitude, CCS, and biochemicals businesses represent a portfolio of business solutions capable of meeting product demand with

• the growth of gas marketing and inte-

gration with equity production;

• the acquisition of a leading position

in the UK and Italy for developing

dedicated CO2 storage hubs to reduce

hard-to-abate emissions, both from its

own operations and to support the de-

carbonization of third parties. Eni aims

to achieve a gross CO2 re-injection ca-

pacity of over 15 MTPA by 2030 and

increase it to around 40 MTPA after

capacity with 3 GW installed in 2023, 4 GW by 2024, over 8 GW by 2027, and over 15 GW by 2030, to reach 60 GW within a customer base growth to more than 20 million in 2050;

• the installation of 19,000 charging
points for electric vehicles in 2023
through Be Charge (Plenitude), estab-
lishing itself as a player in the electric
vehicle	charging services panorama
in Italy	and Europe. Business devel-

THE ROLE OF GAS IN THE TRANSITION

Natural gas is the most suitable traditional source to accompany the energy transition process due to two important factors:

1) The	carbon footprint of gas-fired
power generation is about half that of
coal-fired10 power generation and may
be reduced further through efforts to
limit	emissions related to methane

must be considered in this context. Eni acquired a portfolio of low-emission and cost-competitive assets supporting the Group's strategy. In addition to the significant Nargis 1X gas discovery in Egypt, the Geng North-1 discovery in Indonesia was one of the industry's largest discoveries of the year. The latter, along with the acquisition of Neptune (finalised in January 2024) and Chevron's production and development assets in offshore Indonesia,

ple of the fast-track LNG equity development in Congo, which was approved in December 2022 and led in record time to the first LNG cargo in February 2024, which allowed Eni to secure supplies thanks to its presence across the value chain.

LNG EVOLUTION CONTRACTED VOLUMES

a progressively decreasing emissions intensity. In recent years, the actions implemented by Eni made it possible to reach important milestones, forming the basis for achieving future goals:

• A progressive rebalancing of the up-

stream portfolio in favour of the gas

component is underway, thanks to re-

cent extraordinary transactions (such

as the acquisition of Neptune Energy

and BP's activities in Algeria). They

reflect the commitment to a gas com-

ponent production level (including

condensates) of more than 60% by

2030 and up to 60 MTPA by 2050;

• the development of biorefining

(Enilive) with the start-up of the Chal-

mette plant in the US in 2023, the

agreements to convert the Livorno re-

finery, and the current projects for the

potential plant development in South

Korea and Malaysia. These actions are

instrumental in achieving an 'organic'

refining capacity of over 3 MTPA by

2026 and over 5 MTPA by 2030. Eni

also aims to grow the agribusiness to

account for over 35% of the feedstock

processed in Eni's Italian biorefineries

by 2027;

opment for sustainable mobility pro-
jects to achieve about 24,000 charging
points for electric vehicles by 2024,
40,000 by 2027, about 50,000 by 2030,
and about 160,000 by 2050;
• the transformation and repositioning of
the chemicals business towards spe-
cialised products, such as bio-based
and circular chemicals, which includes
the acquisition of Novamont in 2023;
• research and development activities
for	breakthrough	technologies, such
as	magnetic	confinement fusion,
with the first operational plant expect-
ed by the early 2030s ( Innovation,

leakage and routine flaring;

2) the flexibility of gas-fired power

plants and the short lead times al-

low rapid intervention to balance the

power system.

The combination of low emissions and high flexibility makes natural gas the ideal bridging solution for quickly replacing fossil fuel sources with higher carbon footprints. It is also ideal for supporting the transition to an energy system based on renewables and, in the long-term, entirely new sources such as magnetic confinement fusion. Eni's decision to in-

provide control of significant resources that will be developed in synergy with Eni's existing fields and the Bontang LNG export terminal. Indonesia is expected to become one of the primary growth drivers in Eni's portfolio, transforming the Kutei Basin into a new global gas hub. Moreo- ver, Eni completed the acquisition of BP's business in Algeria, including two gas production concessions, "In Amenas" and "In Salah", operated jointly with Sonatrach and Equinor. The LNG business represents one of the levers for energy security and diversification of Eni's portfolio and will play a growing role in the coming

(MTPA)
		>18 Mt/a
	13.5
	11.2
9.4
2022	2023	2027

Actual

2023 4YPa

2024 4YPa

2030 and more than 90% after 2040;

• the increase of Plenitude's renewable

Digitalization and Cyber Security).

crease its share of natural gas production

years. This strategy includes the exam-

a) 4YP: four-year plan.

10 IEA emissions factors 2021.

MAIN BUSINESS TARGETS

2024

2026

2027

2030

2035

2040

2050

RETAIL CUSTOMER BASE

MLN POD10 a

10

>11

>15

>20

RENEWABLES

GWab

4

>8

>15

>30

60

INSTALLED CAPACITY

EV CHARGING POINTS

ka

24

40

~50

~160

BIOREFINING

MLN TON/Y

>3

>5

CAPACITY

OIL & GAS NATURAL GAS

%C

>60

>90

PRODUCTION

CCS TRANSPORT &

Mton CO2/Yd

>15

~40

~50

~60

STORAGE CAPACITY

before 2030

after 2030

1. Plenitude 100%.
2. KPI used in Eni Sustainability-linked Financing Framework.
3. Since 2024 includes gas condensates.
4. Gross capacity.

40	2023 A JUST TRANSITION

Case Study

INTRODUCTION		CARBON NEUTRALITY		OPERATIONAL EXCELLENCE		ALLIANCES FOR DEVELOPMENT	41

Eni's commitment to reducing methane emissions and routine flaring

CONTEXT: anthropogenic activities (such as the production and distribution of fossil fuels, livestock and agricultural practices, land use, and organic waste decomposition in landfills) are responsible for 60% of global methane emissions; the remaining 40% comes from natural sources (IEA estimates). According to the IEA, reducing methane emissions from the fossil fuel sector is the easiest way to minimise man-made methane emissions. Estimates reported by the United Nations Environmental Programme (UNEP) show that possible reductions of methane emissions from the fossil fuel sector could avoid 0.14°C additional warming, making an essential contribution to limiting global warming to 1.5°C. Methane emissions in the O&G sector may be unintentional, e.g., due to a faulty hermetic device or a leaking valve ('fugitive'), or intentional, usually carried out for safety reasons, due to plant or equipment design (venting - direct release or flaring - release by combustion). Routine flaring is sometimes used when selling gas is impossible.

ACTIVITIES: reducing methane emissions is a key part of Eni's decarbonization strategy, particularly concerning fugitive and routine flaring emissions. Eni has developed various methodologies and technological solutions at its sites to identify, quantify, and ultimately reduce methane emissions. To date, LDAR (Leak Detection and Repair) campaigns cover 99.7% of the assets managed by Eni. Complete coverage is expected by 2024. Eni also carries out LDAR campaigns with OGI (Optical Gas Imaging) cameras. Moreover, in recent years, Eni has devoted increasing efforts to identifying and implementing initiatives to mitigate gas flaring. To date, examples of such projects can be found in Congo, Libya, and Egypt, where major logistical, operational, and market barriers have limited the exploitation of associated gas. In December 2023, Eni was recognised as a Gold Standard Pathway under the Oil & Gas Methane Partnership (OGMP 2.0) programme, as reported in the International Methane Emissions Observatory (IMEO) Report 2023 published by UNEP. This award underlines the effectiveness of Eni's decarbonization strategy in measuring methane emissions with the ultimate goal of reducing and mitigating them. During 2023, Eni conducted an extensive worldwide methane measurement campaign. A dedicated multidisciplinary task force supervised the activities, with significant support and commitment from all Eni geographic areas, joint venture companies, and partners. In line with OGMP's best practices, Eni applied its internal procedures to all methane emission sources. On-site measurement activities involved specific equipment and technology for each emission source category.

CCS PROJECTS

Carbon Capture and Storage (CCS) is a crucial technology for decarbonizing industrial clusters, particularly in hard-to- abate sectors, and thus for the success of the transition itself. Its role is recognised in the decarbonization scenarios developed by the most important international organisations (IPCC, IRENA, IEA) and, more recently, by the European Union in the EU Industrial Carbon Management Strategy, which clarifies the regulatory framework supporting the development of CCUS. For Eni, CCS is a decarbonization lever that represents an opportunity to reduce emissions from its own operations and provide a service to support the decarbonization of third-party industrial activities.

Thanks to its portfolio of depleted gas fields and its technical and commercial know-how, Eni has developed a distinctive approach that, in addition to its role as an operator of transport and storage services, enables it to support emit- ters' CCS value chain activities through integrated project management that optimises the decarbonization of industrial hubs. Eni has acquired a leading position, particularly in the UK and Italy, and is expanding its business in North Africa, the Netherlands, and the North Sea. The total gross storage capacity at 100% estimated to date is about 3 billion tonnes, with a target of reaching

• gross annual CO2 re-injection capacity of more than 15 MTPA before 2030, in- creasing to about 40 MTPA after 2030

before exceeding 60 MTPA after 2050. Last October, Hynet became the first CCS project in the UK for which the authorities signed off the general principles ("Head of Terms") of the CO2 Transport and Storage business model. Eni expects to approve the Transport and Storage project in 2024, as the plans to capture the CO2 produced by emitters (to be stored in Hynet) are approved. Moreover, for the Ravenna CCS project, Phase 1 will start in 2024, while Phase 2 is scheduled in 2027, with an annual storage capacity reaching 4 MTPA by 2030. Future expansions will increase the storage capacity to 16 MTPA. As with other transition-related business- es, CCS also lends itself to development according to Eni's satellite model.

3 bln

tonnes, total gross storage capacity at 100%

UPSTREAM METHANE EMISSIONS (SCOPE 1) AND METHANE INTENSITY*
		0.43%										0.50
emissionsabsoluteTotal			0.34%					56	54	50		intensityemission%
200	199		0.28%
	179								0.30
			151	0.19%
				0.16%
					0.10%
					115	104	0.09%	0.09%	0.08%
	100					0.06%	0.10
						65
										39
4
KtCH	0											0
	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023
				Total methane emissions	UPS Fugitives		UPS Methane Intensity

• The indicator is calculated as the ratio of the direct upstream methane emissions (from natural gas and oil production) to the sold natural gas production of the upstream operated/cooperated assets.

COLLABORATIONS: a crucial part of Eni's methane strategy is collaborating with other industry players and international organisations to seek a common, concrete commitment to controlling methane emissions in the oil and gas value chain. In addition to OGMP 2.0, Eni was also a founding member of the Oil and Gas Climate Initiative (OGCI) and the Methane Guiding Principles (MGP) and actively participates in industry associations, such as IPIECA and IOGP. These collaborations have helped define the extent of the problem with increasing precision, develop monitoring methodologies, reporting and verification tools for methane emissions, and promote the dissemination of new technologies for monitoring and reducing emissions. Moreover, Eni's recent membership of the GFMR Trust Fund demonstrates its willingness to support low-income producing Countries and small operators in implementing national policies and emission reduction projects, contributing not only financially but also providing the necessary technical support. Eni's contribution has been articulated over several fronts. On the one hand, participating in awareness-raising actions aimed at other sector players and the producing Countries' governments to stimulate the adoption of advanced management practices. On the other hand, participating in the implementation of national strategies and regulations in line with declared international commitments. For Eni, it is essential to work with governments and organisations such as UNEP/IMEO to define policies and regulations at the regional level. In this context, Eni contributed its testimony to the UNEP/IMEO capacity building courses for governments and officials of National Oil Companies (NOCs) organised in producing countries like Ivory Coast, Libya, and Mozambique. Lastly, Eni has established collaboration agreements with some NOCs, making its methane management experience available. In particular, Eni is working with Sonatrach and EGAS in Algeria and Egypt to identify opportunities to reduce greenhouse gas emissions, focusing on methane and energy efficiency. Similar initiatives exist in Libya, the United Arab Emirates and Indonesia.

CCS PROJECTS

TRUDVANG I VÅR ENERGI

HYNET ENI OPERATOR	SNS AREA 1-5-7ENI OPERATOR

L10 ENI OPERATOR

RAVENNA ENI OPERATOR

BACTON ENI OPERATOR

EGYPT LIBYA

AUSTRALIA

HARD-TO-ABATE		UPSTREAM

42 2023 A JUST TRANSITION

Interview

INTRODUCTION		CARBON NEUTRALITY		OPERATIONAL EXCELLENCE		ALLIANCES FOR DEVELOPMENT	43

The role of CCUS in the energy transition

NEW BUSINESSES FOR TRANSITION

Plenitude

a diversified portfolio, complemented by selective asset and project acquisitions and strategic national and international partnerships, which will enable the pro-

structure, with about 19,000 charging points distributed throughout Italy, aiming at a total of 40,000 units by the end of 2027, about 50,000 by 2030, and rising

DAVID WHITEHOUSE

An established industry leader with 30 years of experience, David has been a longstanding champion of OEUK, the leading industry association for the UK's integrated offshore energy sector. He is respected

Why is CCUS important for a low-emission future Which key sectors/stakeholders will benefit?

The role Carbon Capture, utilization, and Storage (CCUS) has to play in supporting UK Net Zero emissions by 2050 is significant

- there is no credible Net Zero scenario that does not include a

role for CCUS. Many industries, such as cement, steel, and lime,

will continue to produce process emissions, a natural biprod-

uct of the production of these materials. These industries will

be pivotal in ensuring the UK has the supply chain capabilities

to manufacture and install the renewable energy infrastructure

UK is increasingly competing on a global stage to secure and attract offshore energy investment, talented people and skills and critical resources and infrastructure to create our low carbon integrated energy future. It is so important that we create a competitive business and operating environment for project developers and supply chain companies to invest in. Our world- class supply chain and offshore energy workforce are two assets that we must harness. Their skills and expertise will be vital in delivering a successful energy transition, fuelled by the domestic production of energy. A regulated asset-based (RAB) mechanism is an economic regulation tool typically used in the UK for monopoly infrastructure assets such as water, gas, and

Plenitude, Eni's Benefit Corporation (Soci- età Benefit), integrating renewables, customer energy solutions, and an extensive electric vehicle (EV) charging network, is developing its renewable projects pipeline and has reached its target of more than 3 GW of installed capacity in 2023. Plenitude will achieve its objectives in this area through the organic development of

gressive increase of Plenitude's installed renewable capacity to more than 15 GW by 2030 and to reach 60 GW by 2050. In an evolving mobility sector, which envisages a constant increase in the number of electric vehicles in circulation in Italy and Europe, Plenitude has one of the largest and most widespread networks of public electric vehicle charging infra-

to 160,000 by 2050. Finally, integrating retail activities (the number of customers is expected to exceed 20 million by 2050), renewable energy, and electric mobility provides significant synergies from an operational perspective and ensures diversification and financial resilience. For more information, see the Plenitude sustainability and impact report.

across the sector for his strategic and hands-on leadership in the North Sea and around the world, including the USA, the Netherlands, and the Philippines. His passion for energy, engineering, and innovation is built on a PhD in Theoretical Chemistry from Cambridge University and a first-class degree

in Chemistry from the University of Manchester. He is currently studying for a Master's degree

in Renewable Energy at Aberdeen University.

that will be key to unlocking a low carbon economy fuelled by

homegrown energy. CCUS provides a solution to abating these

emissions. It not only has a role to play in decarbonising our do-

mestic heavy industries but also as a solution to the growing is-

sue of intermittency in power generation. Last year roughly 30%

of our electricity was generated by gas power plants, providing a

stable source of electricity to millions. Maintaining a consistent

source of power will be vital as we increase our reliance on re-

newable electricity. CCUS offers a means of decarbonising the

power generated by gas power plants. Finally, it is key to note

that even in the most aggressive Net Zero scenarios, there will

likely be a small portion of emissions that have not been abat-

ed by 2050; such emissions will need to be offset by negative

emissions technologies such as Direct Air Capture (DACs). Oil

and gas companies such as ENI have an opportunity to diversify

and grow in a new industry/area of the North Sea. Many current

carbon storage licence holders have a legacy of oil and gas pro-

duction in the North Sea.

What enabling policies can incentivize CCUS,

and what are the barriers? What does it mean to be

a Regulated asset-based mechanism?

The UK government has stated its intent to heavily invest in the energy transition through the development of four industrial CCUS clusters while dedicating funding to emitters, storage sites, manufacturing services, and beyond. In 2023, the UK announced £20bn in support of the early development of 4 domestic CCUS clusters (HyNet, East Coast Cluster, Viking CCS, and Acorn CCS), including the £1bn CCUS Infrastructure Fund. In December 2023, the UK's CCUS Vision was announced, outlining the Country's plan to develop the CCUS sector into

• self-sustainingindustry from 2035 onwards. The UK govern- ment has taken great strides in developing effective policies to support the emergence of a domestic CCUS industry. The

electricity networks. In the case of CCUS, the company developing the infrastructure will receive a licence from the NSTA, which grants it the right to charge a regulated price to users in exchange for the provision of infrastructure (T&S networks, storage sites, etc.).

What will Eni's role be in developing the UK's CCUS? What are the future challenges and opportunities in this space?

Eni's opportunities lie in the development of carbon stores and technologies associated with drilling, pipeline installation, and Measurement, Monitoring, and Verification (MMV). OEUK estimates that roughly 84% of the domestic UK CCS market is targetable by the existing oil and gas supply chain. Roughly 45% is made up of activities related to offshore storage and targetable by Eni through its involvement in the UK's cluster projects. A significant challenge/opportunity for the UKCS and ENI is unlocking cross-border transportation of CO2. The reward for doing so could be substantial, given the size of the UK's potential carbon storage capacity. At present, several barriers stand in the way of CO2 imports to the UK. These challenges include the need for mutual recognition of UK and EU ETS systems, non-alignment of transportation, lack of existing infrastructure, liability of CO2 leakage, and storage standards. Finally, the declining UK ETS price remains a challenge for the development of self-sustaining CCUS projects in the UK. Currently, the levelized cost of CO2 capture is likely to lie between £40-100 per tonne, depending on the industry and size of the capture plant. This cost lies significantly above the current UK ETS price, <£40 per tonne, and does not include the additional cost of transporting and storing CO2. Ensuring an effective and targeted approach to the free allocation of carbon credits and stability in oil and gas prices will be key to maintaining an ETS price that works in favour of the development of CCUS projects in the UK.

Focus on

Capacity growth from renewable sources

CONTEXT: Plenitude's growth trend confirms a path of internationalisation initiated in previous years, mainly in the US and Spain.

ACTIVITIES: in 2023, Plenitude strengthened its renewable business through organic project development in Italy, Kazakhstan, and Spain, as well as acquisitions in the United States and Spain. The latter aligns with Plenitude's strategy to exploit all synergies in the Countries where it is already present with its retail business. Furthermore, 2023 saw the addition of a new technology to Plenitude's portfolio: offshore wind. This expansion coincides with its debut in the UK, strengthening its European presence. 32% of installed capacity is located in Italy (vs. 38% in 2022) and 68% abroad (vs. 62% in 2022).

	INSTALLED CAPACITY AS OF DECEMBER 31, 2023* (3 GW)
COUNTRY	PHOTOVOLTAIC	WIND	TOTAL
ITALY	242 MW	712 MW	954 MW
USA	1.246 MW	15 MW	1261 MW
SPAIN	196 MW	246 MW	442 MW
KAZAKHSTAN	50 MW	96 MW	146 MW
FRANCE	115 MW	-	115 MW
AUSTRALIA	64 MW	-	64 MW
UNITED KINGDOM	-	11 MW	11 MW

* Data includes storage capacity.

Plenitude's Wind Farm in Olivadi (Catanzaro province) has a total capacity of 4 MW.

44 2023 A JUST TRANSITION

INTRODUCTION		CARBON NEUTRALITY		OPERATIONAL EXCELLENCE		ALLIANCES FOR DEVELOPMENT	45

Climate change impacts, risks, and opportunities

Enilive

Enilive, Eni's mobility transformation company, is one of the leading companies in the global biorefining sector, distinguished by having developed a proprietary technology. It is characterised by a vertically integrated business model along the entire supply chain, including advanced agrifeedstock11 production, and decades of operational experience. Enilive forecasts a biorefining capacity of over 3 MTPA by 2026 and over 5 MTPA by 2030. Enilive recently approved the bio-conversion project for the Livorno refinery (the third project, following Venice and

Gela), while a fourth project in Italy is under study. Moreover, two additional studies are underway for biorefineries in South Korea and Malaysia with the Final Investment Decision (FID) expected in 2024. Sustainable Aviation Fuel (SAF) capacity of over 1 MTPA

• twice previously defined target - is expected to be reached by 2026, with a potential to be doubled by 203012. The supply of feedstock from Eni's supply chain will reach over 700,000 tonnes by 2027, corresponding to more than 35% of the feedstock processed in Eni's Ital-
  ian biorefineries (New businesses in the territories).

BIOREFINING CAPACITY

(MPTA)>5

>3

1,65

SAF Optionality

2023 2026 2030

In line with previous years, climate change is the most significant material theme in the double materiality analysis (Material Topics for Eni). From the viewpoint of the consulted stakehold- ers, the GHG emissions produced by Eni as on outcome of its activities or associated with its value chain result in a negative impact on climate change due to their contribution to the global phenomenon13. Additionally, the company's potential climate-related risks are analysed, as- sessed, and managed by considering the aspects identified in the TCFD recommendations. These refer both to energy transition risks (market sce- nario, regulatory and technological development, reputation issues) and physical risk (acute and chronic) through an integrated transversal approach that involves all the responsible functions as well as business lines. The risks of implement-

ing planned strategic actions to mitigate climate change are also considered. Commitments to achieving carbon neutrality and possible changes in consumer preferences could lead to a structural decrease in demand for hydrocarbons in the medium- to long-term and an increase in Oil & Gas sector operating costs. Uncertainties about demand trends and the feasibility/viability of decarbonization technologies make long-term investment decisions risky. The growing focus of the public debate on climate change and the increasingly stringent scrutiny by various stakeholders could lead to difficulties in accessing the capital market and call into question Oil & Gas companies' license to operate. To minimise the risks associated with climate change while also seizing opportunities, Eni is implementing a long-term strategy aimed at transforming its

business model to achieve carbon neutrality by 2050 through a series of targets, levers, and actions defined and adjusted considering the energy trilemma (environmental sustainability, security of supply, and affordability). Regarding physical risk, Eni has adopted a structured risk management process for identifying and analysing assets exposed to potential prospective changes in natural events (acute and chronic) in the medium- and long-term. This analysis envisages different climate scenarios, consistent with different emissions scenarios and short (5/10 years), medium (10/20 years), and long-term (20/30 years) periods. Assets still at risk after mitigation actions are analysed in more detail as part of the ASSET INTEGRITYprocess. The table below summarises the main risks and opportunities identified by Eni related to climate change.

Case Study

Biomass sustainability

CONTEXT: to ensure sustainable management of the BIOMASSsupply chain, Eni follows general principles and criteria that meet sustainability standards for selecting suppliers by defining specific clauses in BIOMASSprocurement contracts. In addition, in October 2022, Eni ceased the procurement of palm oil.

ACTIVITIES: 100% of the BIOMASSused in Italy's biorefineries is certified under voluntary EU or Italian certification schemes. These certifications ensure that raw materials do not come from areas with a high level of biodiversity and carbon stock, such as forests, that have been converted to agricultural use.

In 2023, more than 95% of the raw materials for the Venice and Gela biorefineries were classified as waste and residues, UCOs (Used Cooking Oils), soap slurry, animal fats and other processing wastes such as POME (Palm Oil Mill Effluent) and PFAD (Palm fatty acid distillate - certified as processing residue as it does not represent the primary purpose of the production process and does not contribute to the demand for palm oil).

LOW CARBON SCENARIO

REGULATORY

AND LEGAL ISSUES

TECHNOLOGICAL

DEVELOPMENTS

REPUTATION

ACUTE AND CHRONIC PHYSICAL

CLIMATE RISKS

• Uncertainty about market development for new products
• Changing consumer preferences (e.g. decline of global demand for hydrocarbons)
• Loss of earnings and cash flow
• Stranded asset risk
• Impacts on shareholders' returns
• Introduction of new climate disclosure requirements
• Uncertainty about evolving regulatory frameworks with potential impacts on long-term strategy
• Proceedings on climate change and greenwashing
• Profitability and specific risks of transition technologies
• Delays in technology development and technology supply chain needed to meet decarbonization targets
• Failure to address technologies that are important for the energy transition
• Changing consumer preferences
• Deterioration of the sector's image in the face of accusations of greenwashing
• Deterioration of industry/company appeal for talent attraction & retention
• Impact on share price
• Lower attractiveness of the sector to investors/financiers and potential disinvestment risk
• Possible effects on the operability and security of Eni's assets

Versalis

Versalis is committed to achieving carbon neutrality in 2050 by promoting chemicals from renewable sources, identifying alternative feedstocks, and continuously developing solutions in the circularity area. Versalis' transformation cannot be separated from innovation. Eni also pursues research and development of new and existing technologies in part-

nerships with important players within the value chain. In 2023, to accelerate the strategy in the direction of chemistry from renewable sources, Versalis finalised the acquisition of Novamont, a leader in the production of bioplastics and the development of biochemicals and bioproducts (Circular Economy). Moreover, Versalis's commitment to the transition is part of a decarbonization

plan - in line with Eni's strategy - with emissions reduction targets for the short, medium and long-term, supported by specific levers and a solid dedicated governance structure. The interim targets envisage a reduction in Scope 1 and 2 emissions compared to the 2018 base year of 15% by 2025 and 30% by 2035. For more information, see the Versalis Sustainability Report.

RESOURCE EFFICIENCY & ENERGY SOURCES

PRODUCTS AND SERVICES

MARKETS

RESILIENCE

CLIMATE OPPORTUNITIES

• Energy efficiency and emission reduction measures with the adoption of Best Available Technology
• Cost reduction through efficient water resource and waste management
• Using sustainable raw materials for biorefineries and chemistry
• Development of renewables and low carbon energy, CCS, and biochemistry/circular economy
• Development of new products and services through R&D and open innovation (e.g., magnetic fusion)
• Partnerships for the development of technological solutions to cut emissions
• Access to financing through sustainable finance instruments
• Access to new capital through the satellite model
• Design of climate change resilient assets through scenario studies and processes for monitoring physical risks

11 Regenerative agriculture projects that do not compete with either food production or forest resources, coordinating the cultivation of non-food plants on degraded land and promoting the introduction of second-harvest crops.

12 With the SAF, Eni contributes to the decarbonization of air transport thanks to its Taranto and Livorno production facilities. In 2024, biojet production will be launched in Gela and Venice to achieve 0.2 million tonnes of production capacity by 2026.

13 Note that, as illustrated in Eni's appearance and response in the litigation brought by Greenpeace, Recommon, and 12 private citizens against Eni, the Ministry of Economy and Finance and Cassa Depositi e Prestiti (pg 98): "[...] Climate change is a global phenomenon that is characterized by peculiar features such as (a) multi-factoriality determined by the sum of a large number of anthropogenic factors and natural causes and (b) inter-temporality resulting from the fact that greenhouse gas emissions, produced at a given historical moment, result in effects on climate that can become relevant over long periods, partly because of the accumulation effects with other factors mentioned above. In this view, the mentioned temporal distance between the release of greenhouse gases and the rise in temperatures does not make it ascertainable (nor proven in the actual case) that there is a consequentiality between certain greenhouse gas emissions from an operator at a specific time in history and the increase Earth's temperatures in a specific subsequent period [...]." For further discussion, please refer to the Technical and Scientific Report by Prof. Eng. Daniele Bocchiola of the Politecnico di Milano.

46 2023 A JUST TRANSITION

INTRODUCTION		CARBON NEUTRALITY		OPERATIONAL EXCELLENCE		ALLIANCES FOR DEVELOPMENT	47

GHG Methodology and Transparency

STRATEGY RESILIENCE TO LOW CARBON SCENARIOS

Eni regularly assesses the potential impact of the energy transition on the com- pany's strategy and business through a series of tools. Oil & Gas cash-generating units (CGUs) recoverability is one of the most critical accounting estimates for preparing Eni's consolidated financial statements. This analysis depends on the relative weight of the sector's invested capital in total consolidated assets. Future expected cash flows associated with the use of Oil & Gas assets are based on management's judgement and subjective evaluation about highly uncertain matters like: future hydrocarbon prices, assets' useful lives, projection of future operating and capital expenditures (including CO2 emission costs relating to different geographies where legal obligations are present), the volumes of ul-

technologies (in place or foreseeable) and provides a holistic and consistent framework for the economic and energy variables of interest. These forecasts incorporate management's best estimate of the various energy market fundamentals while considering the changing market environment and challenges related to the energy transition. The value in use (VIU) of the oil & gas CGUs under the management's scenario assumptions displayed a headroom (difference between VIU and book values) of approximately 80% of the assets' carrying. The headroom discounts expected expenses associated with the purchase of carbon credits as part of the company's strategy to decarbonize its oil & gas operations through carbon credits generated by natural and technological-based solutions. Considering the judgmental nature of the assumptions underlying the estimate of the VIU, management has stress-tested

WACCs applied to each Country of opera- tions; (iii) the projections of hydrocarbon prices and CO2 costs of the decarbonization scenario Net Zero Emissions 2050 (NZE 2050) elaborated by IEA (World Energy Outlook 2023). These sensitivities do not consider possible actions to mitigate a changed price environment, such as rescheduling and/or cancellation of planned development activities, contract renegotiations, cost efficiencies, or actions to accelerate the payback period. Sensitivity was not applied to the Chemicals and Gas Power Generation business lines considering the immateriality of the residual book values of property, plant, and equipment (€581 million and €766 million, respectively) and economic-technical lives. At the same time, no impact can be associated with the refineries, considering that their book values are zero (Note 14 of the Consolidated Financial Statements of the Annual Report 2023).

SCOPE 1, 2, AND 3

• OPERATING AND
  EQUITY REPORTING

Eni reports its GHG emissions (Statement on GHG accounting and reporting - year 2023) in line with leading international standards and industry best practices14. Specifically, Scope 1 and 2 emissions are accounted for both with operational con-

NET GHG LIFECYCLE EMISSIONS AND NET CARBON INTENSITY - LIFECYCLE REPORTING

From 2020, Eni has added a value chain methodology16 to its usual reporting approach that allows for an integrated accounting of GHG emissions (Scope

trol approach (100% of emissions from assets over which Eni has operational control) and equity share approach (for assets operated by Eni and third parties). Eni adopts the operational control approach extensively, encompassing 100% of GHG emissions from assets with operational control and jointly controlled companies. Scope 3 emissions are reported according

1+2+3) related to the lifecycle of energy products17 sold by Eni (from a Well- to-Wheel perspective) net of carbon offsets. The energy product volumes and emissions generated along the entire value chain are quantified on an equity basis and applied to an extended boundary, which includes both own

to the categories defined in the GHG Protocol standard/IPIECA industry guidelines15. The most relevant component for the Oil

• Gas segment comprises emissions related to the final consumption of prod- ucts sold (so-called Category 11). The ac- counting is performed on an equity share based on the prevailing business segment
  (upstream hydrocarbon production sold).

production and volumes purchased from third parties. Eni has adopted this approach to define its medium to long- term decarbonization targets, both in terms of absolute emissions, NET

GHG LIFECYCLE EMISSIONS, and in

terms of intensity, NET CARBON IN-

TENSITY.

timately recoverable reserves, and costs of decommissioning Oil & Gas assets at the end of their useful lives.

In particular, hydrocarbon prices are forecasted as part of Eni's scenario, which considers macroeconomic and industry projections, policies, regulations, and

its base case by applying the following sensitivity analyses to the base case assumptions underlying the oil & gas CGUs values-in-use: (i) a -10% haircut to hydrocarbon prices for all the years of the cash flow projections; (ii) a one-percentage point increase in the risk-adjusted

The results of those sensitivity tests expressed in terms of the percentage ratio of the cumulated headroom for the Oil

• Gas CGUs to their corresponding book values under each scenario and potential pre-tax income statement impacts are provided below:

PRODUCTION

TRANSPORT

TRANSFORMATION

DISTRIBUTION

END USE

Eni

Value in use of the O&G CGUs

Possible

Assumption at 2050

Headroom vs. Carrying amounts

impairments

in real terms USD 2022

Tax-deductible

Non tax-deductible

€ billion

Brent

European

Cost of CO2

CO2 charges

CO2 charges

price

gas price

CO

costs projections

Scenario Eni

77%

-

48

$/bbl

6.2

$/mmBTU

2in the EU/ETS

+ projections of forestry

costs

CO

costs projections

10% haircut of Eni's

56%

-

(1.0)

2in the EU/ETS

prices assumptions

+ projections of forestry

costs

CO

costs projections

Eni's scenario

67%

-

(0.2)

2in the EU/ETS

with +1%

+ projections of forestry

increase in WAAC

costs

IEA NZE 2050

28%

23%

(3.2)-(4.3)

25

$/bbl

4.1

$/mmBTU

$250-180 per tonne

scenario

of CO a

2

a) Range of values depending on advanced or emerging economies with or without Net Zero commitments. For low-income economies a lower cost is expected.

THIRD

PARTIES

Eni's Upstream volumes - included in boundary.

Eni's Mid-downstream volumes purchased from third parties - included in boundary.

14 For example, the WBCSD/WRI GHG Protocol Initiative, a Corporate Accounting and Reporting Standard, and IPIECA/API/IOGP Petroleum industry guideline for reporting 2011 greenhouse gas emissions. 15 Scope 3 emission categories are calculated and reported in the Eni For 2023 - Sustainability performance document, highlighting each category's methodology and reporting boundary.

16 The methodology was developed with the collaboration of independent experts and is being progressively improved to reflect the latest developments in emissions reporting standards.

17 The scope does not include the contribution from the Chemicals sector.

48 2023 A JUST TRANSITION

Case Study

INTRODUCTION		CARBON NEUTRALITY		OPERATIONAL EXCELLENCE		ALLIANCES FOR DEVELOPMENT	49

Resilience of emissions intensity targets

CONTEXT: in a context where there is no single standard for defining and reporting indicators associated with emission targets, companies adopt approaches that differ in terms of scope and decarbonization levers.

ACTIVITIES: to assess the resilience of the emissions intensity indicator (Net Carbon Intensity18), Eni compared its trajectory with what would result from applying the net volume accounting method19, with and without emissions removed from the atmosphere through CCS solutions (provided by Eni as a service for third parties). Pronounced reductions in Net Carbon Intensity are observed when the methodological approach is varied.

NET CARBON INTENSITY ENI: SENSITIVITY ON BOUNDARY

gCO2eq./MJ								Eni's Lifecycle
80
							Methodology
	Target:					Net Volume Accounting
60	-15%					Net Volume Accounting
							+CCS to third parties
								contribution
				Target:
40				-50%

20
				Net Zero
				to 2050
0
2018	2030	2040	2050

Eni's medium- and long-term targets only consider the application of CCS to its own assets, excluding this service's contribution to third parties.

TRANSPARENCY

IN DISCLOSURE AND ADVOCACY

Eni supports the definition of best practices for comprehensive and effective climate change disclosure. The company promotes the need to standardise the methods used for GHG emissions reporting to make Oil & Gas sector performance and decarbonisation targets comparable. In addition, Eni has an ongoing monitoring exercise on the development of soft and hard law related to climate issues, aimed at assessing the resilience of its instruments and their possible adapta- tion. In this regard, Eni pays particular attention to the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises as of June 2023, the Corporate Sustain-

ability Due Diligence Directive (CS3D proposal). This exercise may lead to an integration of corporate climate tools and disclosure. Transparency in reporting related to climate change, together with the strategy implemented by the company, has allowed major ESG ratings and climate benchmarks to rate Eni positively (Eni's recognitions). In terms of its partnerships and advocacy activities, Eni engages with policymakers directly and indirectly via trade associations. Through its experience as an international energy company, Eni contributes to defining strategies and regulations that accelerate the transition to Net Zero. Eni clearly and transparently expresses and shares its position on climate change and related climate strategy issues. Eni recognises the value of active participation in the

the energy transition. Furthermore, in 2024, Eni will publish the third edition of the report assessing the alignment of Eni's position with that of the business associations in which the company participates on climate advocacy issues. This assessment was extended to 45 associations, of which 39 were aligned with Eni's positions, and 6 were partially aligned. Eni engages proactively to steer the positions of each association, par- ticularly, those whose positions diverge from Eni's climate Advocacy Principles towards a positive climate vision. Final- ly, Eni publishes a list of key advocacy initiatives related to climate change. The issues mentioned in this chapter were also examined in the climate litigation brought by Greenpeace, Recommon, and 12 private citizens against Eni, the Minis-

NET SCOPE 1+2+3 GHG	emissions from the use of sold products	The latter also includes energy products
EMISSIONS - A NEW	(Cat. 11 - calculated on the basis of equity	purchased from third parties (e.g. nat-
INDICATOR	production of upstream hydrocarbons).	ural gas produced by third parties and
From this reporting cycle, Eni introduced	The comparison between the Net Scope	sold by Eni). The reconciliation of these
the indicator Net Scope 1+2+3 GHG Emis-	1+2+3 GHG Emissions and the NET LI-	indicators20 is deemed appropriate to

ability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS), and the Corporate Sustain-

work of business associations to develop and share best practices and develop advocacy positions aimed at promoting

try of Economy and Finance, and Cassa Depositi e Prestiti Eni. The relevant documentation is available at eni.com.

sions, which considers equity assets and

FECYCLE GHG EMISSIONSshows a

provide a representation consistent with

is not associated with any corporate tar-

difference of almost double (200 vs. 398

the methodologies commonly used in the

gets. The indicator is calculated as the

MtCO2eq.),

mostly related to the larger

Oil & Gas industry and to ensure greater

sum of net Scope 1, 2, and Scope 3 GHG

scope used in the life cycle methodology.

comparability.

RECONCILIATION OF LIFECYCLE AND GHG PROTOCOL INDICATORS

+268.5 Mton

2018

+202.7 Mton

2023

Scope 3 Midstream, other

Scope 3 Midstream, other

businesses of the value chain*

businesses of the value chain*

Net GHG

505

398

Lifecycle

Mton

Mton

Emissions

CO2eq.

CO2eq.

-3.5 Mton

-4.8 Mton

Chemicals (incl.)

Chemicals (incl) & some

offsets (excl)

Net GHG

240

200

Emissions

Mton

Mton

Scope 1+2+3

CO2eq.

CO2eq.

* Net of company exchanges.

18 The indicator is calculated as the ratio of Net GHG Lifecycle Emissions to the energy content of energy products sold by Eni. It includes the contribution of CCS to Eni's own assets and excludes the contribution of CCS from services to third parties.

19 According to the net volume accounting method, for each fossil product (oil or gas), only the volumes prevailing between the production or sales stages are considered (IPIECA, Estimating petroleum industry value chain (Scope 3) greenhouse gas emissions - 2016). To date, it is a commonly used method in the industry for calculating the lifecycle carbon intensity for fossil fuel energy products.

20 The two indicators can be reconciled by adding the Scope 3 emission components of mid-downstream businesses (excluding carbon credits used to offset these emissions) to Net GHG Emissions and subtracting the Scope 1 and 2 emission contribution from the Chemicals sector.

ENI'S PRINCIPLES IN CLIMATE ADVOCACY

1	Paris Agreement: Eni supports the objectives of the Paris Agreement and the policies that pursue sustainability, energy security,
and the protection of industrial competitiveness on the path to Net Zero by 2050.
Role of gas: Eni recognises the role of natural gas in the energy transition and supports the implementation of specific regulations	2
to reduce methane emissions and routine flaring.

• Carbon pricing: Eni supports the implementation of credible and cost-efficient carbon pricing mechanisms.

Energy efficiency and low carbon technologies: Eni promotes actions and policies to support energy efficiency and technologies	4
necessary for decarbonization, such as renewables, CCS, Carbon Dioxide Removal, and hydrogen.
5	Sustainable Mobility: Eni supports implementing complementary solutions for the decarbonization of transportation,
such as biofuels and electric mobility, and policies based on a technology-neutral approach that promotes the most
	mature and cost-efficient technologies.
Role of Carbon Credits: Eni supports the development of enabling policies for investments in Nature and Technology-Based	6
Solutions and use of carbon credits to offset residual hard-to-abate emissions.
7	Transparency and Disclosure: Eni supports the development of best practices for transparently disclosing climate actions and
climate advocacy.