Sustainable Development
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ORLEN Group Sustainable Development Strategy
- 2-23
Policy commitments
The documents aim to support an ambitious business agenda for the next decade, strengthen our financial performance and build long-term value for all stakeholders. This integrated approach enables us to capture opportunities created by the changing environment and create value in our socially responsible energy transition. Our Sustainable Development Strategy supports delivery of the ambitious goals of the Paris Agreement, UN 2030 Agenda and European Green Deal.
ORLEN 2030 strategy is driven by sustainable development.
In 2021, the Management Board of ORLEN adopted the ORLEN Group Sustainable Development Strategy for 2021–2023, The new Sustainable Development Strategy is built around three ESG pillars: Environmental, Social and Governance.
The Sustainable Development Strategy is one of the cornerstones to the implementation of the ORLEN Group’s 2030 Strategy, which addresses its ESG and CSR goals in more breadth and detail, providing a robust management system for sustainability and opening up green finance opportunities. Building on the experience of successful stakeholder dialogue and ambitious CSR efforts, ORLEN’s renewed approach gives equal weight to social, environmental and governance needs.
The ORLEN Group Sustainable Development Strategy focuses on ESG (Environmental, Social, and Governance) management, as well as six strategic pillars.
E – the Environmental area - focuses on climate, climate risk management and effective implementation of raw material management practices.
S – in the Social area - the focus is on local communities as a point of reference inspiring the Group’s CSR initiatives. In cooperating with our suppliers, we are going to use ORLEN’s influence to promote sustainability principles in value chains. The goal is to extend our responsibility for the entire product life cycle – including the raw materials used, product development, production and use and end-of-life recycling. ORLEN seeks to engage its customers and promote responsible consumption patterns.
G – the Governance area - focuses on developing solutions to facilitate implementation of ESG principles in ORLEN's management systems, appropriate and transparent reporting, ethics and organisational values. The objectives resulting from the sustainability agenda and ESG principles, set down in the ORLEN Group Sustainable Development Strategy and decarbonisation strategy, are incorporated into the MBO system for managers reporting directly to the management boards of ORLEN Group companies. Performance against the objectives affects the salary levels.
ORLEN’s Sustainable Development Strategy gives priority to the achievement of ambitious goals outlined in the Paris Agreement, the 2030 UN Agenda and the European Green Deal. The Group is turning challenges posed by climate change into new opportunities. The actions planned will enable the Group to develop sustainably as a modern, low-carbon and resource-efficient business organisation. Renewable energy sources, electric mobility, recycling, biofuels, hydrogen and a commitment to climate neutrality are the ORLEN Group’s response for mitigating and adapting to global climate change.
Progress in delivery of the Sustainable Development Strategy in 2022
Strategic sustainable development directions and initiatives for 2021–2023
In December 2022, the ORLEN Group appointed a Management Board Representative for Climate and Sustainability a Climate and Sustainability Council. The main tasks of the new body will include analysing energy transition and climate risks and opportunities and raising the standard of communication on environmental matters with investors and the business community. The Council will include the Group’s representatives from the areas of strategy and innovation, finance management, sustainability, environmental protection and risk management. It will be headed ORLEN’s Management Board Member for Strategy and Sustainability. The Council’s tasks will primarily include identifying monitoring climate opportunities and risks. The body will also analyse and report on climate impacts, including their effect on the results and financial position, as well as planned capital expenditure. The Council’s responsibilities will include publishing information on the resilience of the Group’s strategy to various climate scenarios and developing financial and non-financial KPIs for decarbonisation, water consumption and biodiversity. The Council has been appointed first of all as a response to the expectations of investors and the business community regarding ORLEN Group’s environmental reporting standards and as a support for effective delivery of the Group’s carbon neutrality strategy. Formalised oversight of climate and sustainability issues is also key to meeting ESG goals affecting the terms of financing raised by the Group. The appointment of the Council is in line with the reporting guidelines of the Task Force on Climate-Related Disclosure and the Corporate Sustainability Reporting Directive, which will take effect in 2024.
Responsibilities of the Climate and sustainable development
Sustainable development plays an important role in the process of building a multi-utility group and implementing the ambitious agenda under the ORLEN Group's Strategy 2030. The new business strategy is a response to the changes in our environment driven by the global climate crisis. It enhances resilience of our business models to climate change and its consequences across the value chain.
ORLEN Group as the green transition leader
By the end of this decade, the ORLEN Group will spend PLN 120bn on green projects spanning its oil refining business, petrochemicals, conventional and renewable power generation, and retail operations. In line with our updated strategy, we are pursuing a decarbonisation policy. By the end of 2030, absolute emissions from Refining, Petrochemicals and Upstream are to be reduced by 25%, with a 40% reduction of carbon intensity in Energy.
Management of climate-related issues has become an important goal of our activities. We plan to allocate PLN 70bn to renewable and new energy projects. Pro-environmental activities pursued within the Group include the development of the renewables sector, investment in biogas and biomethane plants, and development of renewable hydrogen production and distribution assets.
ORLEN is upgrading its traditional areas of business to improve the energy efficiency of production, reduce carbon emissions and minimise their environmental impacts. The ORLEN2030 strategy includes the ambitious goal of achieving climate neutrality by 2050, in line with the Paris Agreement.
Development of wind power generation
Offshore wind farm projects are a key component of the ORLEN Group’s transition, set to play a major role in the development of Poland’s energy sector. We have submitted applications for seven new licences to construct offshore wind farms in the Baltic Sea. Once the next stage of the administrative procedure is launched, we will apply for the other four licences up for award in the region. The total capacity that could be developed in the areas covered by the applications is estimated at around 7 GW. Our plans also provide for the ORLEN Group’s involvement in projects carried out in the Baltics. Our companies ORLEN Neptun I and Energa Wytwarzanie have signed a letter of intent to cooperate with Klaipėdos Nafta AB in developing and implementing a strategy to operate and maintain offshore wind farm projects in Lithuania.
As part of the preparation for work on the future construction site of Lithuania’s first offshore wind farm, new investments are being made in equipment to support that work. The ORLEN Group company LOTOS Petrobaltic has equipped Poland’s first vessel with a drilling system for geoengineering seabed surveys at depths of up to 120 metres. The investment will open up more advanced applications in the offshore wind sector and will enable seabed surveys for wind power developments, including the Group’s own and third-party projects.
In connection with the project, Poland’s first installation terminal is being built in Świnoujście, scheduled to be operational in early 2025. The facility, together with a second installation port to be built in Gdańsk, will be able to provide a comprehensive range of services for all wind projects in the Baltic Sea. In addition a new factory of Vestas, the world’s largest manufacturer of wind turbines, will be built in Szczecin. These processes prove that offshore wind farms promise not only to revolutionise the national energy system, but can also provide a major boost to economic development of the whole region. Construction work on the Baltic Power wind farm will begin in 2024 and is expected to be completed in 2026. In July, Baltic Power signed an agreement with Cadeler of Denmark to support the transport and installation of some 76 turbines for offshore wind farm. The company also signed system support agreements for the supply of onshore export cables and the construction of an onshore substation. It also secured all key elements necessary to execute the project, with a supply chain that includes a local content.
Preparations are under way for the construction of the Baltic Power offshore wind farm, a joint project between the ORLEN Group and Northland Power. The farm, with a capacity of up to 1.2 GW, will be located about 23 kilometres off the coastline, near Choczewo and Łeba. It will be able to generate clean energy for more than 1.5 million households.
Investing in solar PV projects
The ORLEN Group has completed a project to construct one of Poland’s largest solar PV farms, located near Wielbark (Province of Olsztyn). The 62 MW solar farm will generate clean energy sufficient to power more than 30 thousand households.
Clean energy from small nuclear sources
ORLEN and its partner Synthos Green Energy are at an advanced stage of preparation for the implementation of the small and micro modular reactor (SMR and MMR) technology. ORLEN has exclusive rights to use GE Hitachi Nuclear Energy’s BWRX-300 in Poland.
Building such a reactor takes only about one-third of the time needed to construct a traditional large-scale nuclear power plant. Also, construction costs per MW are roughly 30% lower compared with conventional nuclear projects. A small nuclear reactor with a capacity of ca. 300 MWe is capable of generating sufficient energy to power a city with a population of about 150,000. The estimated generation costs per MWh of electricity will ultimately be about 30% lower compared with gas-fired generating sources. What is equally important, a single modular reactor of about 300 MWe can reduce emissions by some 0.3 to 2.0 million tonnes of carbon dioxide per year, depending on the type of fuel being replaced (for example, hard coal or lignite).
Biomethane as a green alternative to natural gas
At the beginning of 2022, ORLEN was the first company in Poland to import from RWE Supply & Trading certified biomethane, a renewable substitute for natural gas, as part of a pilot project. Having similar quality characteristics, such biomethane is produced from organic waste, thus reducing the usage of fossil fuels. It is produced in a process of purifying biogas, mainly by removing carbon dioxide as well as sulfur and nitrogen compounds. It can be used as fuel for the production of biohydrogen and has applications in transport or – when mixed with natural gas – can be delivered by pipeline to end consumers of traditional gas fuel. It is also possible to store it in gas storage facilities.
The ORLEN Group’s biomethane capabilities are mainly being built through ORLEN Południe. The company has already acquired three agricultural biogas plants that will convert agricultural substrates, waste and processing industry residues into environmentally friendly biomethane, which may find application in industry or in the energy sector. ORLEN Południe, jointly with PGNiG, will establish a special purpose vehicle to invest in the development of a network of modern biomethane production plants. The Office of Competition and Consumer Protection has given its clearance for the establishment of the SPV.
ORLEN has also signed an agreement for the development of the biogas and biomethane sector with the Ministry of Climate and Environment, a Government Representative for Renewable Energy, the Ministry of Agriculture and Rural Development, the Ministry of State Assets, the Ministry of Education and Science, the Ministry of Development and Technology, as well as representatives of investors, trade organisations, scientific institutions, etc.
ORLEN as a future leader of hydrogen economy in Europe
Involvement in projects to develop alternative fuels is another element of the strategy, aligned with ORLEN’s goal to achieve carbon neutrality by 2050. By 2030, the Company will spend PLN 7.4bn on low- and zero-carbon hydrogen projects based on renewable energy sources and municipal waste conversion technology. The ORLEN Group Hydrogen Strategy will be implemented in four key areas: mobility, refining and petrochemicals, research and development, and industry and energy. As a result, ten hydrogen hubs will be developed by the end of the decade, with motorists in Poland, the Czech Republic and Slovakia provided with access to a network of over 100 hydrogen refuelling stations. The projects will support the ORLEN Group’s transformation into a carbon-neutral multi-utility group.
Hydrogen Valley
In the pursuit of its hydrogen strategy, ORLEN has signed an agreement with 37 entities, representing the worlds of business, science and finance, to establish the Mazovian Hydrogen Valley. Collaboration on the project aims to create a centre for research, development, improvement and education seeking to harness the economic opportunities of hydrogen. It will encompass the production, storage and use of zero- and low-carbon hydrogen in transport, power generation, utility services and agriculture, among other applications. The Mazovian Hydrogen Valley will function based on four pillars. The main pillar is building a hydrogen value chain in the region of Mazovia, as exemplified by the first hydrogen projects planned by ORLEN, including hydrogen hubs in Płock and Ostrołęka, a prototype hydrogen-powered locomotive and hydrogen refuelling stations. The other pillars will involve implementing research and development projects, putting in place systemic solutions to train specialised personnel, and engaging in activities to support regulatory processes. According to Poland’s Hydrogen Strategy, at least five hydrogen valleys will be established throughout the country to develop technologies based on this fuel.
E-mobility
As at the end of 2022, the ORLEN Group had a network of 470 electric vehicle charging stations in Poland. Currently, the charging stations available on the Polish market are predominantly based on low-power alternating current (AC) systems, but we are seeking to gain an advantage by expanding a range of direct current (DC) charging infrastructure. Nearly 140 fast charging stations with a power output between 50 and 150 kW and 2 with a power output up to 50 kW are currently in operation within our Polish station network. Chargers deployed at ORLEN service stations are equipped with DC connectors (CHAdeMO, CCS) and AC Type 2 connectors, accommodating almost all types of electric vehicles available globally.
In Germany and the Czech Republic, there are 86 fast charging stations with a power output ranging from 50 to 150 kW and 8 with a normal power output up to 50 kW.
To implement our electric mobility plans, in 2022 we issued a request for proposals to commission a feasibility study for multiple-point electric vehicle charging stations. The tender is open to all companies meeting the formal requirements. In the coming months, we will also explore the market for a range of services including engineering consultancy, construction works and delivery of equipment. Planned procurement of such services is in line with the strategy, aiming to strengthen the ORLEN Group’s position in the sector of Polish operators of public EV charging stations.
Our investments in hydrogen in the future are expected to cover the marine, aviation and rail fuel sectors. We have already signed a strategic cooperation agreement with PESA Bydgoszcz to develop a comprehensive offering for public rail transport. Under the agreement, ORLEN will provide hydrogen fuel and refuelling infrastructure for PESA-manufactured shunting locomotives and passenger trains. The cooperation will facilitate development of a carbon-neutral commercial offering for public transport organisers and operators of logistics centres, transshipment terminals and ports.
Circular economy investments
We are always on the lookout for innovative solutions that can strengthen the competitive position of our business with a positive impact on the environment. For instance, as a pioneer in Poland, we are implementing the innovative ‘Blue Bridge’ project, designed to enable a 25% reduction in the amount of water abstracted from the Vistula River to support industrial processes of our production plant in Płock. Together with our partner Wodociągi Płockie, the local water utility company, we signed a letter of intent with the State Water Management Agency PGW Wody Polskie providing for the construction of a recycling system for wastewater streams coming from the municipal treatment plant for reuse by ORLEN. The project, which is in line with the circular economy concept, will be put into operation in 2025.
Upgrades to reduce air pollutant emissions
The ORLEN Group’s green transition is also based on low-carbon refining and petrochemical production. In March 2022, the construction of a new unit commenced on the premises of the production plant in Płock, which will enable further reduction of sulfur compound emissions into the atmosphere. The value of the project, which is consistent with the objectives of the ORLEN2030 strategy, is estimated at about PLN 346m. The construction of the TGTU III unit will make it possible to reduce pollutant emissions: gas entering the atmosphere from the unit will ultimately have about half the current sulfur dioxide content. At the level of the entire production plant in Płock, the project will bring about a reduction in sulfur dioxide emissions by more than 20%. The unit is scheduled for commissioning in the middle of 2024. Petrochemical recycling to help replace crude oil.
ORLEN Unipetrol’s Czech plant in Litvínov has obtained certification enabling petrochemical production using hydrogenated vegetable oils (HVO). HVOs are a recycled bio-based material that can partly replace crude oil as feedstock for the production of biocomponents for fuels and monomers and polymers. HVO can be produced from such raw materials as the widely available used cooking oils from the hospitality industry, until recently treated as waste. Tests carried out at the ORLEN Unipetrol plant in Litvínov confirmed that products obtained using HVO have the same properties as materials made entirely from conventional inputs. Produced in the Czech Republic, bio-circular polypropylene is a plastic widely applied in the construction, automotive and packaging industries, which will be used for further testing and research.
Aviation fuel from used cooking oils
In parallel with the launch of HVO processing in the Czech Republic, we are developing an innovative technology for hydrogenation of used cooking oils at our refinery in Płock. An HVO unit will be built at the plant by 2024, with hydrogenation technology for rapeseed oil, used cooking oil (UCO) or their mixtures introduced on an industrial scale. The end product will be used as an additive to diesel oil or JET aviation fuel. In line with the ORLEN2030 strategy, we are implementing a number of biofuel, biomaterial and recycling projects aligned with circular economy goals.
The hydrotreated vegetable oil plant currently under construction in Płock will enable ORLEN to offer a low-carbon sustainable aviation fuel (SAF) to airlines starting from 2025. The innovative product will offer a reduction of up to 80% in carbon emissions over the lifecycle of the fuel compared to traditional jet fuel, and is suitable for jet engines used in aircraft today.
ORLEN and PLL LOT have signed an agreement on cooperation in implementing pro-environmental solutions helping to meet the requirements of the EU’s Fit for 55 package.
ORLEN betting on innovative bio-based products
We have launched Poland’s first pilot plant for the production of organic lactic acid using microorganisms. It is a bioproduct that is steadily growing in demand around the world. The PLN 10m project is sited at ORLEN Południe’s refinery. The annual output of 5 thousand tonnes would cover more than half of domestic demand for the bioproduct, which has a broad range of modern industrial applications, including in the chemical, food production (as an acidulant, preservative and agent improving the texture and volume of baked products), cosmetic and pharmaceutical industries.
The organic lactic acid can also be used to make materials serving as an alternative to plastic. Polylactic acid (PLA) made from lactic acid is an input in the manufacture of biodegradable packaging and other products. PLA is applied in construction, engineering, optics and automotive industries. Due to its properties, including transparency, it is also used to make PV solar cells. The green project implemented by ORLEN Południe will mark another big step on the way to transform the company into a state-of-the-art biorefinery.
For the first time in history, the need for environmental protection and concern for our planet have become key drivers of the energy transition. How our world will be fuelled and which energy source will play a dominant role in the future mix will be determined not only by viable technologies and economics, as was previously the case, but also by environmental considerations. The technologies and energy sources leading the energy transition will fit in with the broad sustainable development trend and ensure that the population’s energy demand is met, while mitigating the environmental impacts and remaining economically viable.
With a view to achieving carbon neutrality by 2050, the ORLEN Group is going to focus on the following goals:
Expansion of the renewable energy asset base
Our ORLEN2030 Strategy sets the goal of building more than 9 GW installed renewable energy capacities. The ORLEN Group intends to meet this target by constructing the Baltic Power offshore wind farm with a capacity of up to 1.2 GW (planned to be completed in 2026) and developing further wind power projects in Poland and abroad with a mission to achieve the status of offshore leader inthe Baltic Sea region, as well as by investing in onshore wind power, solar photovoltaics and hydropower, both domestically and in other markets.
Implementation of decarbonisation projects
Over the next 10 years, we plan to complete a number of projects to improve energy efficiency and reduce CO2e emissions from its refining, petrochemical and upstream assets. The new projects will use the best and most carbon-efficient technologies, and will include measures to bring down methane emissions from flaring and venting. Another important element will be the development of carbon capture, utilisation and storage (CCUS) technologies.
Development of low-carbon biofuels
The ORLEN Group is continuing biofuel production projects, which are aligned with our strategic objectives and designed to achieve carbon neutrality by 2050. By 2030, we plan to increase our biofuel output ten times, to 3 million tonnes, and produce 1 bcm of biogas. In 2022, further work was also underway in the area of biogas and biomethane. The Group currently operates 3 biogas plants.
We are strengthening our position as a regional leader in alternative fuels by implementing a number of significant investment projects related to the manufacturing of biofuels such as HVO, co-HVO, UCOME, lignocellulose bioethanol and bio-methane.
Implementation decisions have been obtained for the key BIO projects i.e. HVO, UCOME, and lignocellulose bioethanol. Furthermore, a number of projects are being carried out under the ORLEN Południe’s strategy until 2025 with a view to transforming the plant into a biorefinery. A 2G bioethanol project at the Jedlicze refinery will be the first of its kind in Poland and the second one in Europe. The plant will have an annual capacity of 25 thousand tonnes of bioethanol ORLEN Południe has also signed a contract for the construction of a UCO FAME plant in Trzebinia, which will convert used cooking oils and animal fats into 30 thousand tonnes of 2G esters and 7 thousand tonnes of technical grade glycerine annually.
Development of electric vehicle charging infrastructure
By leveraging the synergies with the Energa Group, the ORLEN Group seeks to expand its alternative fuel infrastructure and plans to operate more than 10 thousand EV charging points by 2030.
Development in other alternative fuels:
We will pursue comprehensive development of our production and distribution infrastructure and will promote growth of the hydrogen and alternative fuels market, especially in urban, long-distance and railway transport.
By 2030, the ORLEN Group aims to produce 130 kt of renewable hydrogen. With a view to building our position as a hydrogen economy leader in Central and Eastern Europe, in 2021 we developed Hydrogen Strategy 2030 and defined its specific objectives. In accordance with the Hydrogen Strategy, by 2030 we intend to install approximately 0.5 GW of new hydrogen production capacity using renewable energy sources and municipal waste conversion.
To that end, we will build a total of ten hydrogen hubs, mainly in Poland, but also in the Czech Republic.
The hubs will produce some 60 kt of low- and zero-carbon hydrogen per year. By using carbon storage and utilisation technology (CCS/CCU) the ORLEN Group will be able to lower the carbon intensity of a further 120 kt of hydrogen produced by its facilities in Płock. As a result of those projects, after 2030 almost half of the hydrogen used by the ORLEN Group should come from zero- or low-carbon sources.
Circular economy
The ORLEN Group will also invest in recycling and related circular economy activities, with a goal of reaching plastics recycling capacity of 0.3–0.4 million tonnes by 2030.
Green financing and corporate governance
We aim to become a regular issuer of green bonds and a leader of sustainable development, using corporate mechanisms to promote and achieve ESG (Environmental, Social and Governance) objectives.
For more information see Section „Environment and Climate”
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ORLEN Group 2022 Integrated Report
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