Respect for the environment is a fundamental value of ENGIE Brasil Energia. Besides the rational consumption of natural resources, the Company adopts the practice of identifying the environmental impacts and aspects arising from its activities, establishing for the purpose monitoring and control programs and initiatives. GRI G4-14

NBR ISO 14001 certification of 14 plants contributes to the continual improvement of the Company’s environmental management. In 2016, Estreito Hydroelectric Plant was awarded certification, joining a group of a further eight hydroelectric plants, two thermoelectrics and one biomass-fired plant. The certified plants together now account for 96.0% of the Company’s installed capacity and are responsible for 96.7% of net energy generation.

The Company sets annual management goals for the environmental aspects and impacts identified as the most critical for all certified units. By the end of 2016, 61.5% of the 109 environmental goals set for the year were achieved while a further 17.4% were pending completion.

Targets are based on specific environmental performance indicators and are continually monitored by the Company. Targets include aspects relating to management of the biodiversity, consumption of natural resources, disposal of waste and greenhouse gas emissions, among others.

All the information and spatial bases compiled in the scope of the project are being processed in a Geographical Information System (SIG). This will facilitate specific consultations on the catchment areas of 26 operations comprising the generator complex.

Biodiversity Matrix Project – Insertion of the operations in the Brazilian biomass GRI G4-EN12, G4-EN13, G4-EN14

The first stage of the project to be concluded in 2017 will ensure the regional biodiversity of each operation is understood, allowing a more precise analysis and the setting of priority actions. ENGIE Brasil Energia will then be able to prepare and execute environmental programs focused on habitats or species of greater importance for conservation, in line with local realities. In addition, the expertise generated by the project will pave the way for the development of strategies in partnership with other companies, environmental protection agencies, teaching and research institutions and other entities, which share an interest in preserving the regions involved.

Key actions

Hydroelectric plants

The construction of a hydroelectric power plant results in the conversion of an aquatic habitat into a lentic environment (reservoirs create a standing water effect). While this process is taking place, changes occur in the physical-chemical characteristics of water resources. This has a direct effect on the aquatic biodiversity, more especially the ichthoyfauna (a wide spectrum of fish species inhabiting a given geographic region). Some species find the new environment conducive to their survival and reproduction, although others are unable to adapt to the new conditions. In order to assess this process over time, ENGIE Brasil Energia has been investing in R&D projects and monitoring the ichthyofauna in the regions of the hydroelectric plants it operates. The Company also promotes the periodic release of fish fries (newly hatched fish) into the reservoirs with a view to restocking them with native species. Em 2016, for example 550 fish of the dorado and the grumatã species were released into the Uruguay River in the catchment area of the Itá and Machadinho hydroelectric power plants.

Another impact arising from the installation of a hydroelectric plant is the loss of habitat resulting from flooding during the reservoir filling process. In the course of this process, ENGIE Brasil Energia recovers and relocates stranded fauna and flora from areas where brush has been cleared to alternative areas in keeping with their original habitat. Once the reservoir is filled, the Company is responsible for the creation of a permanent preservation area and for the restoration of areas degraded by construction.

Complementary to these activities, ENGIE Brasil Energia cultivates, plants and donates native forest seedlings to local communities. In 2016, 340,269 seedlings were planted and donated in regions surrounding the plants.

Thermoelectric plants

During the year, ENGIE Brasil Energia continued construction work at the Pampa Sul TPP in Candiota (RS). In 2015, the Company introduced its Vegetal Germplasm Recovery Subprogram for preserving the regional biome through the recovery of species on the Critically Endangered Species of Flora List in the state of Rio Grande do Sul. A further five environmental programs are now in operation in the region for recovery of fauna, replanting riparian margins, reforestation, monitoring of the ichthyofauna and the control of invasive species of vegetation.

Wind farms

The Rational Brush Clearance Plan for the installation of the Santa Mônica Wind Farm Complex, begun in 2014, sets out procedures for reducing the impact on the local flora and fauna. While the Company was authorized to clear brush over a 175.1-hectare area, in practice only 28% of this area was effectively cleared. Clearance of 5.79 hectares of a Permanent Preservation Area (APP) for the installation of the project required specific licenses and the replacement of forestry cover in an area equivalent to twice the size of the area cleared (11.58 hectares), also located in an APP. The entire brush clearance phase at the Complex was run in tandem with the Fauna Rescue and Monitoring Program. Other key initiatives under the Basic Environmental Plan (PBA) of the Santa Mônica Wind Complex are:

• Program for Recovery of Degraded Areas and Control of Erosive Processes;

• Program for Monitoring Water Quality (surface and ground);

• Program for Monitoring Soil Quality;

• Noise and Vibration Level Monitoring Program; and

• Environmental Education Program.

As a practice, ENGIE Brasil Energia compensates for the installation of its operations by supporting the creation and maintenance of Conservation Units in some regions where it carries on its business. Examples of this practice are Parque Estadual Fritz Plaumann in Concórdia (SC) and Parque Natural Municipal Mata do Rio Uruguai Teixeira Soares in Marcelino Ramos (RS), both located in the Itá Hydroelectric Plant’s sphere of influence.

Yet another practice which collaborates with the conservation of biodiversity, is the Program for Planting and Donating of Seedlings. Among the program’s activities are the cultivation and distribution to communities of flora, native to the region in which plant operations are located. In 2016 alone, the Company planted and donated 340,269 seedlings.

Water

ENGIE Brasil Energia continually monitors indicators associated with the withdrawal of water used in its operations. Including all water sources, total volumes withdrawn were 704,355,905.06 m³ in 2016 - a year-on-year reduction of 16.6%.

Among the main contributory factors were lower thermoelectric generation, thus implying reduced water consumption, as well as the employment of closed circuit systems allowing the reuse and recirculation of rainwater to reduce demand from hydraulic sources.

The quality of the water that the Company discharges into water bodies is also tracked on a continual basis through physical-chemical and biochemical analysis. In 2016, the planned discharge of water totaled 696,869,429.47 m³ relating to release from the thermoelectric power plants as well as water pumped through the cooling systems of the hydroelectric plants. In both cases, water is returned to the water bodies with a quality and at a temperature compatible with the standards required by the legislation. GRI G4-EN22

Use of water in thermoelectric plants - 2016 GRI G4-EN8 - Setorial

Engagement GRI - DMA Sectoral -Water

ENGIE Brasil Energia is a member of eight Hydrographic Basin Committees - part of its contribution to the conservation of water resources - and the forum through which it discusses the sustainable use of water by society jointly with other public and private institutions. The Company has a seat on the State Water Resources Councils for the states of Santa Catarina and Paraná with the same objectives.

In the areas of influence of the hydroelectric plants, multiple reservoir usage is also considered under the umbrella of conservation as a whole. This is disciplined by the Environmental Plan for Conservation and Use of the Riparian Margins of Artificial Reservoirs (Pacuera), a legally constituted instrument for minimizing the negative impacts of operations in the regions surrounding the power plants.

On a different front, and jointly with communities adjacent to some plants, ENGIE Brasil Energia runs the Headwaters Conservation Program, designed to maintain the quality and quantity of water in the areas influenced by its operations. The Program also has the dual purpose of raising the local population’s awareness of the importance of the matter. In 2016 alone, 391 springs were either recuperated or protected, adding to the other 967 conserved since the inception of the Program -- the large proportion of these in the regions of the Salto Osório and Salto Santiago hydroelectric plants in the state of Paraná.

Fuels

ENGIE Brasil Energia’s Climate Change Policy incorporates measures for reducing the consumption of fossil fuels, among these the preferential use of flex-fueled vehicles, the contracting of collective transportation services for employees at the majority of plants and the frequent use of conference calls and video conferencing in order to avoid physical travel.

In 2016, energy consumption from non-renewable sources declined 30% compared with 2015 with significant reductions in the use of gas (GLP) and fuel oil as well as coal given lower dispatch from the thermoelectric plants during the year. These reductions are reflected in total energy consumed by the Company over the years: 62,295,876.81 GJ, a volume 25.8% less than reported in 2015. GRI G4-EN6

Waste GRI G4-EN23

ENGIE Brasil Energia has as a guiding principle: to ensure the suitable and final disposal of waste at all its units. The Company requires that the companies engaged to collect and dispose waste comply with the prevailing environmental legislation, more especially Law 12.305 of 2010, which regulates the National Solid Waste Policy.

In comparison with 2015, the total volume of Company waste in 2016 reported a decline of 5%, a reflection of reduced energy output from the thermoelectric plants. This in turn was the result of lower ash volumes from the burning of fossil fuels as well as initiatives designed to continually improve this indicator through targets to reduce waste at all plants as well as head office.

Emissions

As stated in ENGIE’s Policy on Climate Change, from time to time, the Company prepares a Greenhouse Gas Emissions Inventory (GHG)¹, the focus being on the continual improvement in its actions and mitigation and adaptation strategies. Audited by an external independent party, the Inventory is designed to record and quantify emissions based on the concepts and guidelines of the Brazilian GHG Protocol Program. The consolidation of inventory data considers the two approaches used by the Program: operational control and corporate participation².

The document uses 2010 as its base year, the first year the Company published its GHG Emissions Inventory, gases considered being CO2, CH4, N2O, HFCs PFCs, SF6 and NF3 6.

In the year 2016, the operational control approach registred a reduction of 1,304,409.5 in emissions (scope 1, 2 and 3), exclusivelly due to reduction of coal consuption at thermoelectric plants - less requested to generation in 2016, as a consequence of improvement at hydrologic scenario in the country. G4-EN19

1 ENGIE Brasil Energia’s GHG Emissions Inventory in 2016 was audited by SGS, representing the independent external auditing party.
2 The operational control approach includes 100% of all emissions from the plants and companies over which the Company has operational control, irrespective of corporate stake. Conversely, the corporate participation approach considers emissions from operations of plants according to the Company’s percentage holding in each entity.

Below, please find the principal results of the Inventory, available in full from the Company’s website.

Direct emissions

In scope 1, ENGIE Brasil Energia reported total direct emissions of 4,801,366.33 tCO₂e using the operational control approach and 4,801,287.37 tCO₂e according to the corporate participation method. Compared with 2015, there was an approximate decline of 20%, reflecting lower dispatch from the thermal plants and consequently reducing consumption of coal and natural gas. Worthy of note in this context is that the coal-fired thermoelectric plants account for 97% of all the Company’s direct emissions.

The emissions from biomass (scope 1) were 1,055,548.47 tCO₂ for operational control, and 968,328.92 tCO₂ for corporate participation. G4-EN15

Indirect emissions

Acquisition and consumption of energy

ENGIE’s total scope 2 emissions in 2016 were 10,231.74 tCO2e using the operational control method and 10,938.15 tCO₂e according to the corporate participation approach. In volume terms, these totals represented a year-on-year decline of approximately 45%. The variation is principally due to lower energy consumed from the grid together with a decline in the average emissions factor of the National Interconnected System (SIN) - a 34.4% decrease over 2015, due to an improvement in the hydrological situation nationwide and as a result, lesser demand for generation at the thermal plants. G4 EN-16

Other sources

In relation to scope 3 -- covering indirect emissions due to transportation of raw materials, employee commuting, business travel and waste generated in the operations - the Company recorded 27,930.83 tCO₂e using the operational control approach and 28,192.34 tCO2e for the corporate participation method. Compared to the result for 2015, scope 3 emissions fell by approximately 14% in 2016. Lower consumption of diesel oil in transportation activities is among the factors contributing to this reduction.

The emissions from biomass (scope 3) were 2,333.79 tCO₂ for operational control, and 2,224.85 tCO₂ for corporate participation. G4-EN17

Total environmental protection expenditures and investments by type GRI G4-EN31 ¹

1 Investments made between January and October 2016, except research and development values and environmental education programs, which consider the period from January to December 2016.
2 Item classified as Operating Costs (Opex), so that the remaining value of the category was R$ 18,917,727.41.