Climate Change Management
Climate change is a key issue affecting the power and energy sector in such areas as business continuity energy security, operating cost, and stakeholder expectations. Well aware of this, the Company places importance on the management of climate risks and opportunities in both the group level and the project level, to ensure long-term business growth and sustainable value creation.
Management Guidelines
RATCH has devised group-level guidelines for climate change management, focusing on the mitigation of environmental impacts and strengthening of operational continuity through the integration of climate change into the organizational strategy, risk management and governance of subsidiaries. Key guidelines are as follows
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Reduction of emissions from operating and investing activities
- Raising the proportion of renewable and low-carbon energy
- Encouraging subsidiary-managed power plants to enhance their efficiency in order to reduce the demand for energy, water and other resources in the generating process
- Promoting energy conservation and continuous monitoring of energy consumption and greenhouse gas emissions from operations
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Management of greenhouse gas emission intensity and environmental impacts
- Preparing the Group's GHG registry covering Scope 1-3 emissions and calculating carbon footprints based on Thailand Greenhouse Gas Management Organization (Public Organization)'s Carbon Footprint for Organization tool, for the formulation of GHG-reduction strategy and targets, in quantity and intensity terms, firstly for Scope 1-2 emissions
- Upgrading measures to monitor the environmental impacts of power plants in the investment portfolio through the Environmental and Social Management System (ESMS) mechanism
- Encouraging subsidiaries to adopt artificial intelligence in enhancing the power plant operation and maintenance efficiency in a proactive manner
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Strengthening resilience to climate change
- Supporting subsidiaries in assessing potential physical risks from climate change – extreme weather, drought, flooding and wildfire – that may affect the operations and generation activities
- Using the assessment results in designing the operational plan, preventive measures, a response plan and the business continuity plan
- Carrying out the assessment of climate change risks in the project-level environmental impact analysis and designing projects according to the results along with preventive measures The assessment results have been used to outline proactive management measures with clear short to medium-term operational targets (less than 10 years), such as the construction of a supplementary reservoir and connecting of the water network to prevent and mitigate water shortage; the installation of flood barriers and elevation of the operating ground to deal with flooding; etc.
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Integration of climate change issues into investment process
- Considering greenhouse gas emissions and transition risks as part of the project assessment criteria.
- Adopting the Internal Carbon Pricing concept as a tool for the Company Group's analysis and evaluation of investment projects as well as asset management, by considering the hypothetical carbon cost along with technical, economic, and environmental factors to reflect the risks of the transition to a low-carbon economy.
- Driving investments that reduce environmental impacts which are aligned with the Company's strategy to support the energy transition.
Governance of Climate Change Management
| Organizational body | Role and responsibility concerning climate change |
|---|---|
| Board of Directors |
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| Risk Management Committee |
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| Corporate Governance and Sustainability Committee |
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| Investment Committee |
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| Audit Committee |
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| Chief Executive Officer and President |
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| Chief Investment Officer |
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| Chief Operating Officer |
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| Chief Financial Officer |
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| Executive Vice President, Corporate Strategy and Sustainability |
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| Executive Vice President, Legal and Corporate Affairs |
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| Internal Audit Department |
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| The Integrated Sustainability and Greenhouse Gas Management Working Committee |
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Emission reduction strategy
The Company’s emission reduction strategy is set in line with the diversified investment portfolio, as the guidelines for the management of greenhouse gases in a way that the Net Zero Emission Goal is achieved in 2050. The 4 pathways are as follows
Guidelines for the management of greenhouse gases in 2025
1. Renewable energy investment
Focusing on the reduction of GHG emission intensity in Scope 1 and 2 in line with the national transition target or Science Based Targets initiative (SBTi) on path to achieve net zero emission.
2. Investment portfolio management
Focusing on the management of investments, by putting coal-fired power plants in the conventional asset group which plays a lesser role and gas-fired power plants in the transition asset group to support energy stability in the transition to low-carbon energy, and diverting new investment to low-carbon and transition projects in support of the Company’s emission goal.
3. Technology development and application
Focusing on the development and application of technology, taking into account emission-reduction efficiency, production cost, the Company’s investment strategy, and targets under the transition to the low-carbon economy. Conventional assets will apply technology that improves heat rate efficiency, digital technology for proactive operation and maintenance, or technology that allows fuel switch, for example, from coal to biomass or from high-carbon gas to low-carbon gas. In focus is also low-carbon technology that supports business growth and emission reduction in the long term, such as those relating to renewable energy, sustainable aviation fuel, green hydrogen, etc.
4. Carbon management and offsetting
Prioritizing emission reduction, to deal with residual emissions in the transition period in support of the Company's emission reduction goal. The carbon offsets will be exercised to reduce actual emissions under the framework for the consideration of nature-based solutions that benefit both the environment and society; technology-based solutions to remove carbon; and carbon-insetting solutions to reduce emissions within the value chain and limit reliance on offsetting.
Climate Risk Management
Climate change is a factor that will bring significant impacts on the Company’s power and energy businesses. As countries around the world are driving the energy transition with and laws being amended to achieve the net zero emission, Thailand, RATCH’s prime business base, is drafting the Climate Change legislation and relevant environmental regulations with the Nationally-Determined Contribution (NDC) 3.0 target to reduce emissions by 47% by 2035 (compared to 2019 levels) and Net Zero Emission by 2050.
Risk and opportunity management process
Risk and opportunity management methods and tools are tailored in accordance with the business context of a power and energy holding company. Various tools have been adopted to identify, assess and manage risks and opportunities in economic, social, environmental, technological and governance aspects, to ensure a holistic management approach and support sustainable strategic decision-making. They are summarized as follows
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Risk & Opportunity Identification
Analysis of external factors from climate change within the business context and external environment, using Scenario Analysis to identify Transition Risks such as carbon tax policies, and Physical Risks covering all scopes of operations, alongside the identification of Climate-related Opportunities for expanding the clean energy portfolio
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Assessment & Prioritization
In assessing and prioritizing risks and opportunities, the Company considers the severity, likelihood and magnitude of impacts, taking into account both qualitative factors and quantitative thresholds, to evaluate impacts on strategy, finance and operations. The significance of climate-related risks is also compared against other organizational risks to prioritize management actions.
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Risk and Opportunity Response
The Company defines response measures in alignment with its Risk Appetite, integrating climate risk management plans into corporate strategy and target-setting — such as investment in low-carbon innovation and energy efficiency improvement — to transform challenges into opportunities for sustainable growth.
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Monitoring, Review and Reporting
The Company has regularly monitored Key Risk Indicators (KRIs) and progress against targets on a continuous basis, with results reported to Management, the Risk Management Committee, the Audit Committee and the Board of Directors on a quarterly basis, to ensure that the management process remains current and responsive to changing circumstances.
Climate Risk Management and Adaptation Plan
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Assessment of physical risks
RATCH applies two climate scenarios in analyzing the physical risks of its controlled businesses in Thailand, Australia, Vietnam, and Indonesia, based on the severity of climate impacts. These scenarios include RCP2.6 (low impact scenario), under which the average global temperature is projected to increase by approximately 1.6°C by 2050, and RCP8.5 (high impact scenario) under which the average global temperature could rise by approximately 4.3°C by 2050. The analysis focuses on the short-, medium-, and long-term impacts of key climate-related risks, including drought, flooding and extreme weather events.
Impact forecast
Assessment results
Response measures
Drought
Impact period:Short to medium term
Water shortage or limited water resources, leading to insufficient water supply for power generating activities which affects the Group's production and main source of revenue
The proportion of the maximum number of consecutive dry days in Australia shows the greatest increasing trend under the RCP 2.6 scenario, reaching 8% in both 2030 and 2050, with a similar trend observed under the RCP 8.5 scenario.
- Invest in supplementary water sources and draw an emergency water-supply plan.
- Increase proportion of power generation from renewable sources such as wind and solar power to reduce water demand and mitigate the impact of drought in the long term (from 2030 onwards).
- Ensure efficient water use in the production process by utilizing alternative water sources, improving the cooling system, and adjusting production plans to cope with long-term drought condition.
- Study 100-year rainfall statistics to assess risks for Environment Impact Assessment (EIA) preparation and project site selection.
Flooding
Impact period:Short to medium term
Damage to critical and high-value assets and machinery, causing impacts on production and transmission system.
Maximum number of heavy rainfall days in Thailand, Vietnam and Indonesia are projected to increase the most under RCP 8.5 Scenario by 2050.
- Construct rainfall retention ponds and drainage system to store rainfall, manage flooding during the rainy season, and to prepare for potential drought in the future.
- Connect to the rainfall- monitoring network.
- Study rainfall records, including 100-year historical statistics and rainfall forecasts, to assess risks and potential impacts for ElA preparation and project site selection.
Extreme weather
Impact period:Long term
- Damage to infrastructure, machinery and equipment and injury due to falling objects
- Damage to the transmission grid from lightning and damage to infrastructure from hail storms.
Extreme weather conditions, particularly wind speed in Thailand, Vietnam and Indonesia are projected to increase the most under RCP 8.5 Scenario by 2050.
Address the risks in accordance with relevant laws and mitigation measures specified in EIA.
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Assessment of transition risks
RATCH assesses transition risks of climate change that concern changes in regulatory landscape, technology, consumer behaviors, and stakeholder expectation, which may cause significant impacts on the operational strategies and financial position. The assessment is conducted under 3 scenarios in line with universal practices: State Policy Scenario, Sustainable Development Scenario (SDS) and Net Zero Emission Scenario (NZE), considering the impacts on operations, operating cost, investment, and competitiveness. The results are used in the planning of enterprise strategies and risk management. The impacts may be observed in the short term (0–5 years), medium term (5–10 years), and long term (10 years or more).
Type of risk:
Changes in regulatory landscape
Risk issue:
Enforcement of carbon tax
Time of impact:
Short term (no longer than 5 years)
Impact description
- Operating cost rising in line with emissions from business activities
- Rising cost in the supply chain which boosts the cost of raw materials and services
Risk mitigation measures
- Invest in low-carbon technology/carbon storage for fossil-fuel power plants to reduce/eliminate greenhouse gases.
- Acquire renewable power plants or fossil fuel plants that are equipped with carbon capture storage technology.
- Phase out investment in coal-fired power plants.
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Assessment of climate-related opportunities
Climate change also creates business opportunities. These include increased investment in renewable energy, the development of hydrogen-blended fuels, battery storage systems, and low-carbon energy businesses. All will generate value added and raise competitiveness in the medium to long term. In this regard, RATCH defines the short term (as a period lasting up to 5 years) in line with budget planning, the medium term (as a period from 5 to 10 years) in line with the strategic and investment plans, and the long term (as a period longer than 10 years) in line with the business plan and sustainability goals which include the net zero emissions target by 2050.