Eneco Sustainability Charter on biomass Rotterdam, March 2014

WITH REGARD TO: Our strategy for the generation and supply of sustainable energy; Captive use of biomass by Eneco for renewable energy production and supply to our customers; Our international trade in biomass and upstream projects; Our activities related to the trade in biomass-derived products such as carbon credits and certificates; CONSIDERING: Our dedication to contribute to a sustainable future and to reduce the emissions of greenhouse gases by our own operations and those of our customers; Our commitment to guarantee sustainable production of biomass in our value chains in order to protect biodiversity and safeguard local socio-economic values, to minimize the production of greenhouse gases and to prevent competition with food; Our sustainability policy on biomass, designed to avoid negative impacts of all operations, projects and purchasing agreements, in place from 2007 onwards; Our agreement with WNF (Worldwide Fund for Nature - the Netherlands) on the Climate Savers Program for the period 2010-2013, stating that Eneco will strive for a 20% share of renewables in the electricity it supplies, with a minimum of 15%, and that the use of biomass for power generation shall comply with Eneco’s sustainability policy; Our Statement of Intent of 26 January, 2011 signed jointly with NEN and the Rotterdam Climate Initiative (RCI) to apply NTA 8080/8081 certification of sustainably produced biomass for energy purposes; Our support for the joint manifesto concerning support for the transition to a BioBased Economy (29 September, 2011);

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Our opinion that sustainably produced biomass should meet measurable and demonstrated sustainability requirements on: 1. 2. 3. 4. 5. 6. 7. 8.

Greenhouse gas emissions; Important carbon stocks; Competition with food and local applications of biomass; Biodiversity; The environment (soil, water, air); Prosperity; Social well-being; Traceability.

Our opinion that biomass residues should in principle be monitored the same way as primary biomass flows. Our opinion that biomass has to be converted basically in the most efficient way by applying the cascade principle and using waste heat. The need to be compliant with international and national regulations and laws with regard to the location, the production, shipment and use of biomass.

ENECO HOLDING NV AND ITS GROUPCOMPANIES HAS CONCLUDED THAT: 

Our sustainability policy including NTA 8080/NTA8081 requirements and extra criteria on the chain of custody of biomass is solid and executable;



Our policy is part of our daily business and internalized within our organization;



Eneco is accountable for its policy;

THEREFORE THIS CHARTER HAS BEEN ADOPTED: Article 1 Definitions a) Biomass is defined as the biodegradable fraction of products, wastes and residues from agriculture (including forestry, cropping and livestock production) and related industries, as well as the biodegradable fraction of industrial and municipal waste in the sense of Article 2, paragraph e of Directive 2009/28/EG (Renewable Energy Directive, RED). b) Biomass residues are considered to be flows of biomass that arise during the production of other (main) products, representing an economic value of less than 10 % of the main product's value, in accordance with NTA 8081. c) A bioliquid is defined as a liquid fuel for energy purposes other than for transport, including electricity and heating and cooling, produced from Biomass as defined in Article 2, paragraph h of Directive 2009/28/EG.

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d) Power Purchase Agreements (PPAs) are agreements with the (indirect) owner of a biomass power plant concerning electricity purchase and the Guarantee of Origin certificates (GoO) for that power. PPAs relate to power plants owned by third parties and plants that are(in)directly and/or partly, the property of Eneco. e) Gas Purchase Agreements (GPAs) are agreements with the (indirect) owner of a biomass plant concerning gas purchase and the Vertogas certificates for that gas. GPAs relate to biogas plants owned by third parties and plants that are(in)directly and/or partly, the property of Eneco. f) Guarantee of Origin (GoO) refers to an electronic document which has the sole function of providing proof to a final customer that a given share or quantity of energy was produced from renewable sources as cited in Article 2, paragraph j) of Directive 2009/28/EC. g) NTA 8080: This Dutch technical agreement (NTA) describes the requirements for sustainably produced biomass for energy applications (power, heat & cold and transportation fuels). Biomass includes solid as well as liquid and gaseous biofuels. h) NTA 8081 describes the certification scheme, which includes the ‘rules' for obtaining certification according to the requirements of NTA 8080. i) The Clean Development Mechanism (CDM) allows a country with an emissionreduction or emission-limitation commitment under the Kyoto Protocol (Annex B Party) to implement an emission-reduction project in developing countries. Such projects can earn saleable certified emission reduction (CER) credits, each equivalent to one tonne of CO2, which can be counted towards meeting Kyoto targets. (CDM, Article 12 of the Kyoto Protocol -IPCC). j) Spot deal: Transaction between Eneco and biomass supplier, which is no part of a long term contract. k) Voluntary (or Verified) Emission Reduction (VER): Verified Emission Reductions are created by projects which have been verified outside the Kyoto Protocol. One VER is equivalent to 1 tonne of CO2-eq, emissions. Through these schemes, industries and individuals voluntarily compensate for their emissions or provide an additional contribution to mitigating climate change. At a minimum, all VERs shall be verified by an independent third-party according to UNFCC. l) Eneco Partner Check: questionnaire for the assessment of potential partners. The scan comprises four categories: general information about the partner’s business, their professional and reputational track record, their impact on the environment and their socio-economic record. m) Eneco Feedstock Tool: biomass review, involving initial assessment against NTA 8080 sustainability criteria and Eneco criteria, providing information on

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sustainability risks. n) Eneco Country Risk Assessment: protocol in which countries are scored with respect to sustainability risks.

Article 2 Goal The goal of this Sustainability Charter on biomass is to lay down sustainability criteria for the use and trade of biomass by Eneco or enterprises owned by Eneco and to make our sustainability policy on biomass transparent and public.

Article 3 Scope a) The supply chain of the following activities is within the scope of this charter: i) ii)

iii) iv)

Production and use of biomass for our own energy production installations; International trade and upstream projects in biomass for both energy production and other applications, such as raw materials and transport fuel; Power Purchase Agreements (PPA) and Greengas Purchase Agreements (GPA); Biomass-related Traded Carbon Credits (TCC) or credits used for our own offset purposes.

b) The principles of this charter shall apply according to the nature of activities and risks involved for sustainability. The following provisions set out when a particular principle is to be applied for a given activity.

PRINCIPLES Article 4 Chain of custody a) This article applies to the activities cited in Article 3, paragraph a sub i, ii and iv. b) This article is not applicable to biomass spot deals with third parties. Sustainability of biomass traded in spot deals shall be evaluated by Eneco using the Feedstock Tool. c) When installations are utilized for our own energy a minimum threshold of 70% reduction of greenhouse gases compared with the emission of the acknowledged Dutch mixture of electricity in 2008 is mandatory (maximum greenhouse gas emission of 174 kg CO2/GJe). d) In the case of TCCs (i.c. CDM or VERs) traded by Eneco, the required carbon savings shall be calculated according to verified UNFCC methodologies.

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e) If Life Cycle Assessment (LCA) shows that a particular type of biomass can be used for high-end applications in products, this use shall be given preference over use in energy applications. In the case of combined heat and power generation this is only acceptable if it can be demonstrated that a continuous and substantial net environmental improvement occurs (minimum 50% greenhouse gas reduction. Possible market disturbances will be monitored. f) The origin of the applied biomass shall be traceable throughout the entire supply chain, using the mass balance system. g) Where economically feasible, waste heat from Eneco bio-energy installations shall be recovered and used.

Article 5 Criteria for biomass (including bioliquids) a) This article applies to the activities of Article 3. b) Production and use of biomass shall comply with the NTA 8080/8081 criteria concerning biodiversity, environment, prosperity and well-being. The Eneco Feedstock Tool will be used for this purpose. c) Use of palm oil, food and protein-rich biomass in case it replaces feed is not permitted. d) Paragraph b applies in principle to all residues, with exceptions only permitted if three criteria are met: i) Use of the residue leads to a significant environmental benefit; ii) The residue did not originate in illegal activities; iii) Use of the residue does not contribute significantly to the business case for the supplier’s production of the main product.

Article 6 Certification a) In principle, the production and use of biomass deriving from the activities cited in Article 3, paragraph a) i) and ii) shall be certified according to NTA 8081 or other scheme deemed equivalent by the NTA 8080 Committee of Experts. b) The Power Purchase Agreements cited in Article 3, paragraph a) iii) shall make use of Guarantees of Origin as proof. c) The biomass-related credits cited in Article 3, paragraph a) iv) shall make use of renowned and widely accepted certification schemes (f.i. Gold Standard). d) This article is not applicable to biomass spot deals with third parties. Sustainability of biomass traded in spot deals shall be evaluated by Eneco using the Feedstock Tool and the Eneco Partner Check.

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Article 7 Check origin and risk profile a) For all activities, an Eneco Country Risk Assessment shall be conducted to evaluate sustainability and safety; b) For all activities, an Eneco Partner Check shall be conducted to evaluate integrity and sustainability performance; c) For all activities cited in Article 3, paragraph a) ii) and iv), an Eneco project risk assessment shall be undertaken to evaluate the transparency, proportionality and commitment of (local) stakeholders and Non-Governmental Organizations. Article 8 Documentation For every activity and project, all judgments and decisions on application of the principles of this Eneco Sustainability Charter on biomass shall be recorded and stored. Eneco executives shall issue an annual ‘in control statement’ on use of the Eneco Sustainability Charter on biomass, as they do in the case of other compliancy issues. In principle, certification and execution of a Life Cycle Assessment (LCA) for Chain of Custody (CoC) shall be conducted by a third, independent, reputable party.

MISCELLANEOUS Article 9 Applicability on (minority) shareholdings in enterprises This Charter is applicable for all enterprises of which Eneco can determine the policy based a required majority in voting rights on the policy of such enterprise, provided the changing of the policy is not in violation of any law or governmental regulation. In case Eneco does not hold the required majority in voting rights on the enterprise policy or in case changing the policy would be in violation of a law or governmental regulation, Eneco will strive to incorporate the Articles of this Charter to the fullest extent possible.

Article 10 Elaboration The principles of the Eneco Sustainability Charter on biomass are elaborated in the Annex to this Charter. Article 11 Sustainability Officer a)

To ensure compliance with this Sustainability Charter on biomass, Eneco has appointed a Sustainability Officer at the corporate level.

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b)

The Sustainability Officer is independent and advises the management of Eneco on issues relating to compliance with this Charter and the Annex.

c)

In order to satisfactorily perform his advisory task, the Sustainability Officer shall be duly informed about relevant business activities at an early stage.

Article 12 Hardship clause All principles in this Sustainability Charter on biomass shall be applied according to the principles of proportionality. In the event that it is not possible to comply with articles in this Charter the Board of Management of Eneco Holding N.V. may decide to deviate from these articles. In this event Eneco will publicly state its dilemma and explain why it has chosen not to comply with the sustainability charter in this specific case. --------------------------------

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