Vector : 2024 GHG Inventory Report

Published: 2024-08-26 17:20:06 ET VCT.NZ

GREENHOUSE GAS EMISSIONS INVENTORY REPORT 2024

Summary of

Organisational

Operational

Data collection

GHG emissions

References

emissions

boundaries

and quantification

calculation

reductions

and Appendix

and results

Introduction

This report is for the Vector Limited Group (Vector or the group). The group comprises Vector Limited and its subsidiaries. Vector Limited is NZX listed and 75.1% owned by Entrust, a private community trust. A list of all subsidiaries can be found in appendix 1.

The purpose of this report is to transparently disclose Vector's greenhouse gas ("GHG") emissions: how they are quantified, how Vector is tracking towards its reduction target and steps planned to further reduce GHG emissions.

The inventory covered in this report is a complete and accurate quantification of the amount of GHG emissions that can be attributed to Vector's operations within the declared boundary and scope for the specified reporting period. Any exclusions from reporting are disclosed and justified.

This report has been prepared in accordance with the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard [1] ("GHG Protocol Standard"), the Greenhouse Gas Protocol: Corporate Value Chain (Scope 3) Accounting and Reporting Standard [2] ("GHG Protocol Value Chain Standard"), and other related technical guidance issued under the GHG Protocol Standards.

Statement of intent

Vector reports on its GHG emissions on an annual basis and has been calculating its carbon footprint since 2017. The intended users of this report are all interested stakeholders, including shareholders, investors, regulators, communities, employees, customers and contractors. The GHG inventory has been reasonably assured by KPMG; see appendix 3.

Reporting period covered

This GHG inventory report covers Vector's financial year 1 July 2023 to 30 June 2024 ("FY2024"). A summary of emissions can be found in both Vector's annual report 2024 and climate-related disclosures 2024.

Disclaimer

This report is not earnings guidance or financial advice for investors. Rather, this report provides a summary of Vector's greenhouse gas emissions inventory. The report reflects Vector's current understanding as at 26 August 2024, in respect of the 12 months ended 30 June 2024.

Greenhouse gas emissions calculations use data and methodologies that are developing. Vector acknowledges that the understanding of climate change, and the inputs to assist with this understanding are constantly evolving.

This report contains forward looking statements (including targets and assumptions) that may not evolve as predicted.

Vector (including its directors, officers and employees) do not:

The greenhouse gas emissions data described in this report, and Vector's strategies to achieve our greenhouse gas emissions target, may not eventuate or may be more or less significant than anticipated. There are many factors that could cause Vector's actual results, performance or achievement of climate- related targets to differ materially from that described, including economic and technological viability, climatic, government, consumer, and market factors outside of Vector's control. Vector gives no representation, warranty or assurance that actual outcomes or performance will not materially differ from the forward-looking statements.

To the maximum extent possible under New Zealand law, Vector (including its directors, officers and employees) does not accept and expressly disclaims any liability whatsoever for any direct, indirect or consequential loss or damage occasioned from any use or inability to use the information contained in this report, whether directly or indirectly resulting from inaccuracies, defects, errors, omissions, out of date information or otherwise.

We recommend you seek independent advice before acting or relying on any information in this report. Vector reserves the right to revise statements made in, or its strategy or business activities described in, this report, without notice.

This disclaimer should be read along with other methodologies, assumptions and uncertainties and limitations contained in this report, as well as in Vector's climate-related disclosures for FY2024. All amounts disclosed in this report are estimates and are in NZD unless context otherwise requires.

This report is not an offer document and does not constitute an offer or invitation or investment recommendation to distribute or purchase securities, shares, or other interests. Nothing in this report should be interpreted as capital growth, earnings or any other legal, financial tax or other advice or guidance. For detailed information on our financial performance, please refer to our annual report,available on vector.co.nz/investors/reports.

2 Vector GHG Emissions Inventory Report FY2024

Summary of

Organisational

Operational

Data collection

GHG emissions

References

emissions

boundaries

and quantification

calculation

reductions

and Appendix

and results

Summary of emissions

In FY2024, Vector's greenhouse gas emissions across scopes 1, 2 and 3 amount to 1,530,722 tCO2e. This is a 19% reduction from FY2020, Vector's base year.

Table 1: GHG inventory by scope and category in tCO2e. FY2024 emissions highlighted in green indicate a reduction since the base year or the year in which emissions were first reported, whereas emissions in red show increases.

EMISSIONS CATEGORY

FY2020

FY2021

FY2022

FY2023

FY2024

Total scopes 1, 2 and 3

1,900,841

1,682,645

1,602,955

1,620,856

1,530,722

Scope 1

24,431

19,991

23,763

20,019

15,545

Natural gas distribution fugitive emissions ‡

18,313

13,507

16,218

13,323

9,379

SF6 leakage ‡

524

1,263

2,081

1,299

924

Other fugitive emissions

141

142

134

141

Stationary combustion

3,558

2,971

3,348

3,183

3,102

Vehicle fleet

1,895

2,108

1,982

2,073

2,075

Scope 2

33,148

34,448

39,486

42,810

26,900

Electricity consumption* (market-based)

643

826

408

220

Electricity consumption (location-based)

815

801

891

1,210

682

Electricity distribution losses

32,505

33,622

39,078

42,590

26,892

Scope 3

1,843,262

1,628,206

1,539,706

1,558,027

1,488,277

Purchased goods and services

Upstream-purchased natural gas

227,569

170,442

136,821

152,290

148,230

Upstream-purchased LPG

46,555

47,609

52,806

58,140

62,529

Fuel used by field service providers

6,475

6,822

6,456

7,235

7,127

Upstream-purchased materials and products

15,266

11,733

13,874

11,783

16,089

Upstream-purchased other goods and services

75,939

71,465

75,080

79,559

78,783

Fuel-andenergy-related activities

1,405

1,312

1,450

1,456

1,406

Upstream transportation

2,717

2,557

3,225

2,891

3,085

Waste generated in operations

174

Business travel

332

103

271

187

Employee commuting and working from home

933

821

Use of sold products

Distributed natural gas AKL - Total

772,265

760,185

711,337

735,048

706,356

Sold natural gas - AKL

151,603

115,578

57,149

66,376

42,475

Shipped natural gas - AKL

55,245

66,265

64,985

Other distributed natural gas - AKL

620,662

644,607

598,943

602,407

598,896

Sold natural gas - non-AKL

562,567

381,871

231,127

223,568

184,162

Shipped natural gas - non-AKL

47,002

183,614

160,293

154,973

Sold LPG

131,385

126,245

122,904

123,542

123,565

Investments

Liquigas

108

105

Bluecurrent

700

771

809

821

703

Biogenic carbon

162

134

150

138

131

Summary of

Organisational

Operational

Data collection

GHG emissions

References

emissions

boundaries

and quantification

calculation

reductions

and Appendix

and results

Glossary of terms

Table 2: Definition and glossary of terms

TERM

DESCRIPTION

AKL

Auckland

Carbon footprint

Vector's greenhouse gas emissions covered by the Kyoto Protocol, calculated in tonnes of carbon dioxide

equivalent (tCO2e)

CO2

Carbon dioxide

CRD

Climate-related disclosures - that comply with Aotearoa New Zealand Climate Standards

DEFRA

Department of Environment, Food and Rural Affairs (UK)

EGF

Vector's electricity distribution, gas distribution and fibre business

Emissions

Greenhouse gas emissions

EPD

Environmental product declaration

Electric vehicle

FSP

Field service provider

Financial year

GHG

Greenhouse gas

For the purposes of this report, GHGs are the seven gases listed in the Kyoto Protocol. These are currently:

carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs),

sulphur hexafluoride (SF6), and nitrogen trifluoride (NF3)

GHG Protocol

The Greenhouse Gas Protocol, a partnership between the World Resources Institute (WRI) and the World Business

Council for Sustainable Development (WBCSD). The GHG Protocol develops standards and guidance, such as the

Corporate Standard and the Corporate Value Chain (scope 3) Standard, both used as guidance for this report

GWP

Global warming potential, a measure of how much energy the emissions of 1 tonne of a greenhouse gas will

absorb over a given period, relative to the emissions of 1 tonne of carbon dioxide (CO2)

GXP

Grid exit point

HVAC

Heating, ventilation, and air conditioning

ICP

Installation control point

IPCC (AR5)

Intergovernmental Panel on Climate Change (Fifth Assessment Report)

LPG

Liquefied petroleum gas - a mixture of hydrocarbons, consisting primarily of propane and butane. The higher

density - in contrast to natural gas - allows it to to be easily compressed to liquid, and is therefore largely

distributed in bottles

MfE

Ministry for the Environment (New Zealand)

New Zealand

NZU

New Zealand units

NZECS

New Zealand energy certificate scheme

NZ ETS

New Zealand emissions trading scheme

OGMP

Oil and Gas Methane Partnership

SBTi

Science Based Targets initiative

SELMA

Street evaluation laser methane assessment

SF6

Sulphur hexafluoride - a gas used to electrically insulate electrical assets. SF6 has a global warming potential of

23,500 times that of CO2

T&D

Transmission and distribution

tCO2e

Tonnes of carbon dioxide equivalent

TPD

Third-party damages

Vector

Vector Limited Group

WTT

Well-to-tank

4 Vector GHG Emissions Inventory Report FY2024

Summary of

Organisational

Operational

Data collection

GHG emissions

References

emissions

boundaries

and quantification

calculation

reductions

and Appendix

and results

1. Organisational boundaries

Description of Vector

Vector is a New Zealand energy company which runs a portfolio of businesses delivering energy and communication services to more than 624,000 residential and commercial customers across New Zealand.

The operations of the group are electricity and gas distribution, natural gas and LPG sales, telecommunications and new energy solutions. For further information, visit vector.co.nz.

Organisational boundaries

Vector uses the operational control approach, as defined by the GHG Protocol Standard. This approach was chosen as it allows a focus on emissions over which the group has greatest control, and thereby can influence most with emissions reduction measures.

For carbon accounting purposes, emissions are categorised into the business areas as outlined in figure 1. A detailed list of all subsidiaries and shareholdings under Vector and their relevance for carbon accounting can be found in appendix 1.

Treatment of investments

In addition to these business areas, Vector has investments in a number of businesses that complement our network businesses and strengthen our capabilities in the energy services field. This subsection discusses the treatment of emissions generated by those businesses.

For carbon accounting purposes, Vector has set a threshold for equity investments of 20%, unless significant influence can be evidenced.

Liquigas Limited (60.25%)

Liquigas provides tolling, storage and distribution of bulk LPG in New Zealand. It is not considered to be under Vector's operational control, because Vector does not have "full authority to introduce and implement its operating policies at the operation" (definition of operational control according to the GHG Protocol Standard). As a result, Liquigas' scope 1 and 2 emissions are included under Vector's scope 3 - category 15 (investments), with a 60.25% equity share. On 26 July 2024 (after the balance date of this disclosure) Vector entered a conditional agreement to sell the 60.25% shareholding of the Liquigas business. Any future sale of Liquigas will be reflected in future reports as required/appropriate.

Bluecurrent (50%)

Previously fully owned by Vector as Vector Metering, Bluecurrent manages around 2.5 million advanced electricity and gas meters across New Zealand and Australia. Bluecurrent provides high- resolution energy data services to enable new and innovative energy products that give customers large and small the ability to make smarter energy choices. Vector has ceased operational control of Bluecurrent and, via the same method as Liquigas, accounts for a proportional share of Bluecurrent's scope 1 and

2 emissions under scope 3 - category 15. Bluecurrent is jointly owned by QIC and Vector.

mPrest Systems Limited (8.1%)

At the balance date of this disclosure, Vector held an 8.1% shareholding in mPrest Systems (2003) Limited. The mPrest technology allows companies to better monitor, analyse, and control energy networks and connect traditional infrastructure like electricity lines and substations with new technology like solar and battery energy solutions.

On the 22 August 2024 (after the balance date of this disclosure) Vector sold its shares in mPrest.

Vector's shareholding in mPrest is excluded from our analysis.

Treatment of business closures

Vector Powersmart

Vector Powersmart discontinued operations as of 31 December 2023. Because this was an organic business shutdown, as opposed to a sale, the FY2020 base year does not need to be rebased. Further to this, Vector Powersmart's emissions are well below Vector's materiality threshold for re-calculation.

The data captured during the period October 2023 to December 2023 may not be complete due to the business not being operational in January 2024 to conduct adequate quality control. We expect any excluded data to be immaterial and therefore have not conducted quality control of this data from the group level.

Natural Gas Trading

Vector's Natural Gas Trading business has been on a wind-down since FY2020, whereby contracts for natural gas sales were not renewed. This has led to a year-on-year reduction in gas sales- related scope 3 emissions, under category 11 (use of sold products) and category 1 (purchased natural gas). In FY2024, Vector entered into a conditional agreement to sell the remaining contracts of the Natural Gas Trading business as of 1 July 2024, and shut down the business from then on. Because the remaining contracts are to be sold to a third party, for FY2025 reporting Vector will rebase the emissions associated with these sold contracts.

Free public electric vehicle chargers

Since 2016, Vector has provided free public electric vehicle ("EV") charging stations across Auckland to support the uptake of EVs. The electricity costs associated with charging these vehicles are paid for by Vector, and therefore have been included in our scope 2 emissions. In FY2024, Vector sold/de-energised our charging stations. The emissions associated with the electric chargers do not meet Vector's materiality threshold for rebasing

the FY2020 base year.

Summary of

Organisational

Operational

Data collection

GHG emissions

References

emissions

boundaries

and quantification

calculation

reductions

and Appendix

and results

1. Organisational boundaries (continued)

Figure 1: Vector Limited's businesses per organisational boundaries. Vector's Natural Gas Trading business and Vector Powersmart have been discontinued as of 1 July 2024 and 31 December 2023, respectively.

EGF

Vector Ongas

Electricity

distribution

network

Natural gas distribution network

Vector

Fibre

LPG

Owns and operates the electricity network within the wider Auckland region. This consists of more than 19,000 km of electricity lines, delivering power to over 624,000 homes and businesses.

Owns and operates the gas distribution network in the wider Auckland region, supplying gas to over 120,000 installed connection points, through 4,650 km of mains pipelines, distributing around 13 PJ of gas per year.

Designs, builds and maintains data networks in the wider Auckland region.

Distributes and sells LPG to residential, commercial and industrial customers throughout New Zealand, through bottled LPG products and piped LPG networks. On 26 July 2024 (after balance date of this disclosure) Vector entered a conditional agreement to sell the LPG business. Any future sale of the LPG business will be reflected in future reports as required/appropriate.

Vector Limited

Natural

Gas

Trading

HRV

Vector

Powersmart

Vector

Technology

Solutions

Supplies piped natural gas to industrial and commercial businesses in the North Island including customers in the agriculture, horticulture and manufacturing industries. This business has been discontinued as of 1 July 2024.

Provides energy-efficient solutions covering home ventilation, home heating, and water filtration systems, as well as electric vehicle charging.

Vector Powersmart has delivered solar photovoltaic and energy storage systems in New Zealand and the Pacific Islands. This business has been discontinued as of 31 December 2023.

A digital solutions business that takes internally developed products to market.

6 Vector GHG Emissions Inventory Report FY2024

Summary of

Organisational

Operational

Data collection

GHG emissions

References

emissions

boundaries

and quantification

calculation

reductions

and Appendix

and results

2. Operational boundaries

Operational boundaries

The GHG Protocol Standard splits emissions into three categories:

Scope 1 - Emissions Vector directly controls, such as vehicle fleet fuel combustion, diesel backup generators, natural gas fugitive emissions, and SF6 leaks.

Scope 2 - Vector's consumption of purchased electricity, and electricity distribution losses along the network.

Scope 3 - All other indirect value chain emissions, such as customer energy consumption and supply chain emissions.

The GHG Protocol Value Chain Standard splits scope 3 emissions into 15 categories. To gain a more comprehensive understanding of our emissions, in FY2020 Vector commissioned an external review of our carbon accounting methodology. This included a scope 3 screening exercise to identify applicable and material categories and activities across Vector's supply chain. A total of

14 categories were determined as being applicable to Vector (all but category 10 - processing of sold products), of which two were defined as material. The threshold at which a scope 3 category is considered as material is set to 1% of total scope 3 emissions.

During the screening process, emissions were calculated for 11 scope 3 categories, with emissions from the remaining three categories considered to be included in other categories of the inventory (categories 2 and 8) or to be zero (category 12). Prior to FY2023, we chose to externally report only on emissions categories that were material (categories 1 and 11) or where data was deemed robust (categories 3, 4, 6 and 15). With additional work undertaken to more accurately determine emissions from other sources, from FY2023 we also reported on emissions under categories 5 and 7 as well as emissions from all purchased products and services under category 1.

Included in other categories

Category 2 - capital goods: Included in category 1 as it was not possible to separate new infrastructure construction and other assets from maintenance of existing infrastructure.

Category 8 - upstream leased assets: Included in scope 1 and 2, as leased assets are expected to be under Vector's operational control.

Excluded scope 3 categories

Category 9 - downstream transportation and distribution: immaterial.

Category 12 - end-of-life treatment of sold products: expected to be zero.

Category 13 - downstream leased assets: immaterial.

Category 14 - franchises: immaterial.

GHG emissions source inclusions

Table 4 provides an overview of all emissions sources highlighted in Vector's GHG inventory, including their data sources, calculation methods and an assessment of data quality and uncertainty.

For completeness, Vector is reporting on well-to-tank ("WTT") emissions for fuel used by field service providers ("FSPs") under categories 1 and 4 as well as on emissions from gas distributed via Vector's gas network under category 11 (other distributed natural gas).

As some gas sold or shipped by Natural Gas Trading is transported via Vector's gas distribution network, these volumes are subtracted from the overall 'other distributed natural gas' amount to avoid double counting.

Exclusions from GHG inventory

Table 3 shows scope 3 emissions sources that were excluded from reporting (in addition to the excluded categories listed previously) and the reasoning behind this.

Other emissions - biogenic CO2

Vector uses a 5% biodiesel blend in generators used by Vector Fibre and the electricity distribution network. In FY2024, Vector's combustion of biodiesel blend created 131 tonnes of biogenic emissions. This is a reduction of 19% from FY2020.

Table 3: Excluded emissions sources from reporting

EXCLUDED EMISSIONS ACTIVITY

REASONS FOR EXCLUSION

Emissions from FSP fuel use where fuel amount is <1% of overall FSP fuel use (part of category 1 -

Emissions immaterial; data

fuel used by FSPs)

difficult to obtain

Third-party transportation for upstream-purchased materials and products covered under

Emissions immaterial; low

category 1, and distribution services paid by Vector, other than where data on fuel use was

data quality using spend- and

available (part of category 4 - upstream transportation)

distance-based methods

Use of sold HVAC units (part of category 11 - use of sold products)

Likely immaterial; limited data

availability

WTT emissions from natural gas used at the Ongas BottleSwap depot (part of category 3 - fuel-

Emissions immaterial

and energy-related activities)

Emissions from cash expense claims for air travel, hotels, employee travel in public transport and

Emissions immaterial; data

rental cars (part of category 6 - business travel)

difficult to obtain

Summary of

Organisational

Operational

Data collection

GHG emissions

References

emissions

boundaries

and quantification

calculation

reductions

and Appendix

and results

2. Operational boundaries (continued)

Figure 2: Examples of emissions sources across Vector's value chain

Scope 3

Scope 2

Scope 1

Scope 3

INDIRECT

DIRECT

INDIRECT

Upstream

Vector

Downstream

The extraction,

Due to the laws

Some of our assets

Distributed and sold

production and

of physics, some

can leak global

gas is burned by

manufacture of

electricity that

warming gases

consumers for their

materials and

Vector distributes

through damage

everyday activities.

services Vector

is lost along the

or age.

purchases from

way. Generation

around the globe

emissions

create emissions

associated with

at source and

this electricity loss

en route to us.

is included in

Vector's footprint.

Scope 2 emissions

also include

electricity

consumption at

Vector's ofﬁces,

and substations.

Field service crews

We use fuels in

distribute and

vehicles to deliver

install these

goods, and in

materials on

generators to keep

behalf of Vector.

the power going

This requires

during outages.

transportation.

8 Vector GHG Emissions Inventory Report FY2024

Summary of

Organisational

Operational

Data collection

GHG emissions

References

emissions

boundaries

and quantification

calculation

reductions

and Appendix

and results

Table 4: Emissions calculation methods, data quality and sources

REPORTING

EMISSIONS

CALCULATION

DATA

GWP

DATA QUALITY