Snam S p A : 2020-2024 Strategic plan (Transcript)

2020-2024 Strategic Plan Conference Call

Wednesday, November 25, 2020, 14:00 AM ITA

Investor Relations Snam

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MODERATORS:MARCO ALVERA, CHIEF EXECUTIVE OFFICER ALESSANDRA PASINI, CHIEF FINANCIAL OFFICEROPERATOR:Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Snam 2020-2024 Strategic Plan Presentation.

As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing "*" and "0" on their telephone.

At this time, I would like to turn the conference over to Mr. Marco Alvera, CEO of Snam. Please go ahead, sir.

MARCO ALVERÀ: Thank you. Ladies and gentlemen, good afternoon and welcome to Snam's

2020-2024 Strategic Presentation. I hope that you, your families and your colleagues are well and I look forward to seeing you again in person soon.

The plan we present today is about Snam's exciting journey towards a Net

Zero carbon future. This journey has 3 significant implications. First getting to Net Zero ourselves, we intend to be the first in our sector to do so by 2040.

Secondly, our assets play an essential role to get to Net Zero which means that it extends the long term RAB growth potential. Third, the energy transition businesses that we have built now face exciting growth prospects.

All this makes Snam a market leader in the race to Net Zero.

Our target of Net Zero by 2040 is the most ambitious in the industry so far. Already by 2030 we commit to cutting emissions by half, which means taking out approximately 800,000 tons of CO2 equivalent. Almost half of thisreduction will come from installing new dual fuel gas electric compressor stations, which will also help with the sector coupling. We will also reduce methane emissions by 45% by 2025, compared to 2015 in line with the UNEP framework. ESG remains at the core of our strategy and in the backup you will find our new ESG scorecard, which defines our 22 targets on which you will be kept up-to-date.

Getting to Net Zero is one of the biggest challenges of our generation, and it faces significant hurdles and requires unprecedented investments and across industry co-operation. Countries accounting for 50% of global emissions have set or in the process of setting full decarbonization goals.

China recently announced its ambition to peak CO2 by 2030 and get to Net Carbon Zero by 2060. Meanwhile the U.S. has recently signaled its intention to rejoin the Paris Agreement and set its own Net Zero targets.

Putting together different sources indicates that between a $100 trillion and $150 trillion of investments are required across the value chain. The mobilization of resources will be significant and Snam is ideally positioned to play a key role in this super cycle. Our position in this super cycle is firmly anchored on our mid stream asset, which continue to generate attractive investment opportunities and visible cash flows for the very long term, as they provide flexibility to the energy system and play an essential role in getting to Net Zero.

In addition, we are building positions upstream and downstream of our assets in hydrogen, in bio-methane, production infrastructure and final uses with a focus on mobility. Finally, we have created an energy efficiency platform offering our clients the opportunity to lower their own energy consumption, their energy bills and reducing their environmental footprint.

A Net Zero future places renewables at the core of many of our activities. In this context, it will become increasingly strategic to invest in this space. We are also interested in leveraging our core competences in adjacentsegments such as water. Neither of these opportunities are currently included in the plan that we present today.

We believe that we are well positioned to thrive in this new phase. Thanks to the ground work we have put in place over the last 4 years. There are 6 reasons why Snam will succeed in a Net Zero environment. First, our early commitment to ESG and to Net Zero. Second, the fact that our regulated asset base is future proof and a crucial part of the energy transition. Third, our teams' unparalleled project management and execution capabilities. For

the 14th year in a row, and despite COVID, we will close our investment program this year on time and on budget including a very complex project like TAP where we have assumed the projects leadership among our senior peer group. Fourth, the 4 startups in the energy transition have established themselves as business leaders in each of their segments, and they will generate outstanding growth and value creation. Fifth, our enhanced international footprint and product portfolio which allows us to pursue additional decarbonization initiatives, and finally, we have repositioned

Snam and funded these initiatives maintaining our strict financial discipline.

We have kept a strong balance sheet while paying superior returns to shareholders and growing our overall profitability.

Let's now take a closer look at the market. The green gas revolution, we have been an early advocate of, is finally well under way. As countries think about what Net Zero looks like, the world of green gas for hard to abate sectors, long distance transport and seasonal storage becomes clear, leading to strong policy support. On that basis, the share of green gas in 2050 is expected to be above 25%.

The role of gas infrastructure assets in delivering Net Zero has also become much clearer over the past 12 months. Unprecedented collaboration, technical testing and information sharing among leading TSOs leads to the conclusion that the European grid requires limited retrofit and new built to be hydrogen ready. The unique feature of green gases is that they are not a