The core activity of HS Orka is to utilize renewable energy for the production of heat and electricity. When geothermal energy is harnessed, carbon dioxide is released. The main challenge for HS Orka in climate matters is to achieve carbon neutrality by 2040.
In geothermal areas, greenhouse gases are released even if no energy production takes place. Due to uncertainty about this natural emission, its extent has not been considered in the company’s emission accounting. HS Orka takes the initiative in research, in collaboration with other stakeholders, aimed at better understanding the origin and cycle of carbon in geothermal production areas and determining the proportion of natural emissions in the company’s total emissions.
HS Orka’s Climate Goals
Carbon Neutrality by 2040
HS Orka has set a goal of carbon neutrality by 2040 in line with Iceland’s climate commitments. HS Orka’s goal focuses on direct emissions from power plants and their operations, i.e., emissions falling under scope 1 and 2.
Emission Intensity
HS Orka has set a goal that the company’s emission intensity will be a maximum of 26 gCO2e/kWh by 2030. The goal is based on a 40% reduction in emission intensity compared to 2014. The goal covers scope 1 and 2, as well as defined items within scope 3 (see more in the Scope 3 section).
All company-owned vehicles will be powered by electricity or e-fuels by 2030.
By 2035, only renewable energy sources will be used at HS Orka’s project sites.
Carbon Neutrality
HS Orka’s carbon neutrality involves that the greenhouse gas emissions occurring in scope 1 and 2 correspond to the amount of greenhouse gases that are utilized (CCU), sequestered (CCS), or reinjected into the geothermal reservoir.
It is clear that HS Orka’s goal of carbon neutrality by 2040 will not be achieved without projects in the fields of utilization (CCU), sequestration (CCS), or reinjection. Carbon offsetting through the purchase of carbon credits is not currently part of HS Orka’s climate policy, but it is expected that carbon offsetting will be considered for a small portion of emissions (<1% of total emissions) such as the operation of backup power plants and other emissions that are difficult to eliminate by other means.
Scope 3
HS Orka’s goal of carbon neutrality does not cover scope 3. Nevertheless, the company is actively working to reduce greenhouse gas emissions in the supply chain (scope 3) and to better manage those emissions. To date, the company has accounted for emissions from waste, employee air travel, and certain items related to projects, within scope 3. These items are included in the calculations of emission intensity, as per the stated goals.
To achieve success in reducing scope 3 emissions, HS Orka sets clear climate criteria in its supplier policy and follows up with targeted data collection. We aim to accelerate the energy transition among contractors and other suppliers, as well as customers, in line with the company’s climate policy. The planning and design of projects take into account minimizing emissions when it comes to material selection, scope, and origin, as well as emissions in transportation. Since projects generally weigh heavily in scope 3, special emphasis is placed on the energy transition at the project site.
Emission Intensity
Renewable energy development projects are assessed for their impact on the company’s emission intensity. The company works to reduce emission intensity through investments that improve energy efficiency in power production. Furthermore, projects within the framework of the Resource Park involve opportunities to reduce HS Orka’s emission intensity through better utilization of resource streams. The greatest opportunities lie in increased utilization of the heat generated in electricity production.
Role of E-Fuels
Electricity production with renewable energy sources paves the way (enabling factor) for users towards a full energy transition.
E-fuels will play an important role in reducing greenhouse gas emissions. Iceland’s Energy Policy emphasizes the development of hydrogen and e-fuel production to support domestic and international energy transitions. When it comes to carbon dioxide utilization, the overall reduction in fuel emissions must be at least 70% according to European standards (cf. the RNFBO EU regulation).
HS Orka aims for the majority of the company’s CO2 emissions to go into utilization projects (CCU), thereby contributing to a reduction in global greenhouse gas emissions.
Internal Carbon Pricing
HS Orka aims to use internal carbon pricing in decision-making. This involves defined criteria for the market price of carbon dioxide emissions, i.e., the cost per ton of emissions, being factored into financial decisions, from the purchase of operational goods to large development projects.
Climate Risk
HS Orka maps risk factors and scenarios related to climate change and integrates them into the company’s risk model. This includes following the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) to identify and assess the main risk factors due to climate change in terms of scope and impact. The results are used to assess the need for actions within the company to adapt to climate changes.