Table of Contents

FOREWORD BY THE PRESIDENT OF THE MANAGEMENT BOARD...

COMPANY PROFILE...
ENVIRONMENTAL TARGETS OUTLINED IN THE BUSINESS PLAN OF HEPS MANAGEMENT BOARD...
HEPs ENVIRONMENTAL STRATEGY AND ENVIRONMENTAL PROTECTION SCHEME...
Team for the Coordination and Standardization of Environmental Procedures...
APO usluge zatite okolia d.o.o. /APO-Environmental Services/...
GREEN ENERGY...
Own Production of Green Energy...
Hydroelectric Power Plants...
Cogeneration Plants...
Green Energy Purchasing...
ENERGY EFFICIENCY...
HEP-ESCO d.o.o. ...
District Heating System...
ENVIRONMENTAL PROJECTS...
KEY INDICATORS OF ENVIRONMENTAL IMPACT...
Impact on Air...
Impact on Water...
Waste...
AWARD FOR GENERAL CONTRIBUTION TO ENVIRONMENTAL PROTECTION...
BIODIVERSITY...
HEP AND THE COMMUNITY...
LEGISLATION...
ENVIRONMENTAL COSTS...
ENVIRONMENTAL PLANS...
EXPERT REVIEW OF THE REPORT HEP AND THE ENVIRONMENT 2003 - 2004...
GRAPHIC ATTACHMENTS...
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4
4
5
7
9
10
11
13
13
13
14
15
15
16
17
2
3
The fourth report titled titled HEP and the Environment is a con-
tinuation of past years practice to give a full spectrum report on
Hrvatska Elektroprivredas environmental achievements. This Re-
port, too, gives an overview of accomplishments and the most sig-
C O' .. O '' ,. . C
2004.
HEP Groups organizational and business restructuring within the
framework of the Croatian energy sector reform has marked the
period 2003-2004. Systematic approach to solving a complex
problem of the impact of power plants and facilities on the envi-
ronment has growingly been recognized as a key factor, besides
technology and business performance, in the formulation of en-
ergy policy of every country, including Croatia.
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power plants for electricity generation based on renewable sourc-
es, which placed HEP Proizvodnja /Power Generation/ among
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HEP continued to encourage small private producers to construct
renewable energy sources, promoted the construction of cogen-
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technologies applied in electricity generation, transmission and
distribution.
Apart from energy generation from renewables, HEP Group estab-
lished the company HEP ESCO d.o.o. to promote the development
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Over the period 2003 2004, HEP continued to invest in the re-
placement and reconstruction of combustion systems in thermal
power plants, contributing to further reduction in pollutants emis-
sion to the atmosphere. As a result of such activities, the contribu-
tion from the electricity sector to total emissions in the Republic
of Croatia was relatively low, and the Republic of Croatia falls into
the European countries that have the lowest greenhouse and acid
gas emissions.
The Environmental Cost Accounting Project (RETZOK) is a new
project launched in 2004, which enables all companies within HEP
Group to individually monitor the costs of ordinary operations and
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the company (FIN).
HEP participates in biodiversity preservation projects. In 2004, on
the occasion of the Nature Protection Day, HEP signed a Coop-
eration Agreement with the Nature Protection Directorate of the
Ministry of Culture on the implementation of white stork protection
measures.
Competent institutions have recognized HEPs commitment to
conducting its operations to sustainable development standards.
In June 2003, HEP was presented a national award for general
contribution to environmental protection. Hence, HEP has dem-
onstrated that it is a company that carries out its activities in an
environmentally responsible manner, contributing in this way to
environmental improvement in Croatia..
In the mentioned period the company APO usluge zatite okolia
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of environmental protection. The company carried out numerous
activities, including the development of studies, plans, rulebooks
and estimates for HEP Groups companies and regional organiza-
tions, and completed a number of business tasks for external cli-
ents.
Given the imminent major investment cycle of Hrvatska Elektro-
privreda, it needs emphasising that HEP will apply the best avail-
able environmental technologies in all new plants and facilities to
be built, guaranteeing the compliance with all environmental regu-
lations of the European Union. As Croatia is advancing towards
European integrations, HEP apprehended its future environmental
obligations and worked out an action plan to meet short-term and
long-term objectives, including a pro-active contribution to the
accession negotiations between the Republic of Croatia and the
European Union.
HEP Group will continue to actively promote and communicate fun-
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include the security of supply and the operation on the principles
of sustainable and environmentally acceptable development.
President of the Management Board
Ivan Mravak, M.Sc.
Foreword by the President of the Management Board
4
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HEP Group Actual Organisational Structure
Environmental Targets Outlined in the Business Plan
of HEPs Management Board
HEP d.d.
NE Krko d.o.o.
HEP
Toplinarstvo d.o.o.
(District Heating)
Toplinarstvo
Sisak d.o.o.
(District Heating
Sisak)
HEP Plin d.o.o.
(Gas)
HEP ESCO d.o.o. APO usluge zatite
okolia d.o.o.
(Environmental
Services)
TE Plomin d.o.o.
HEP
Proizvodnja d.o.o.
(Power Generation)
CS
Buko Blato d.o.o.
(Pumping Station)
HEP Operator
prijenosnog
sustava d.o.o.
(TSO)
HEP Operator
distribucijskog
sustava d.o.o.
(DSO)
HEP
Opskrba d.o.o.
(Supply)
Daughter company of HEP-Proizvodnja d.o.o.
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Other subsidiary companies Subsidiary companies core activities
Parent company
Number of employees and health and safety data are shown in Table 3 and in Figure 4, in the graphic attachment to this Report.
Hrvatska Elektroprivreda (HEP) carries out core activities of elec-
tricity generation, transmission and distribution and the Croatian
power system operation and control. Core businesses of HEP meet
95 percent of electricity demand across the territory of Croatia.
Industrial cogeneration plants and small privately-owned power
plants meet the remaining electricity demand. HEP supplies heat
to the citizens of Zagreb, Osijek and Sisak and distributes natural
gas in the region of East Croatia.
The transmission network (status as at 31 December 2004) is
shown in Figure 1, in the graphic attachment to this Report. Basic
generation data and indicators are presented in Figures 2 and 3
and Tables 1, 2a and 2b.
Hrvatska Elektroprivreda operates as HEP Group, a group consist-
ing of a parent company HEP d.d. and its subsidiaries performing
core activities, ancillary activities and supporting activities.
Environmental protection has been recognized as an important el-
ement in the operation of all companies within HEP Group, not only
in the function of development and strategic planning but also as
a part of regular operation of power facilities. This belief has been
formally outlined in the Business Plan of the Management Board
of Hrvatska Elektroprivreda for the Period 2004-2008 and in Op-
erating Programmes of individual companies. The Business Plan
of HEPs Management Board commits HEP Group to operate on
the principles of cost-effectiveness and transparency to the high-
est environmental standards and to improve public and customer
relations. This Plan endeavours to intensify HEPs social involve-
ment in the reform processes that are underway in the Republic
of Croatia.
5
Audit the status of the existing thermal power plants from the
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Encourage greater use of renewable energy sources and their
construction through public-private partnership (PPP) between
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Introduce a green ECO tariff for electricity by way of Tariff Sys-
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Make a CO
2
emission balance to ensure for HEP satisfactory
sectoral emission quotas, in line with the Kyoto Protocol com-
mitments, that can accommodate planned investments in new
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Accredit HEP Groups plants to the ISO standard of the ISO 9000
series (quality assurance) and ISO 14000 series (environmental
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Implement Environmental Capacity Building Programme for
HEP Groups employees.
This Report will show that the companies within HEP Group have commenced the activities aimed at meeting the majority of the above
objectives.
HEPs Environmental Strategy and Environmental
Protection Scheme
Hrvatska Elektroprivreda is committed to continuously improve its
environmental performance through environmentally conscious
business management. Accordingly, HEPs Environmental Protec-
tion Plan sets out HEPs mid-term development strategy and the
requirements, tasks and responsibilities connected with the imple-
mentation of the Environmental Management System. This System
is a part of an integral management system that includes organi-
zational arrangement, planning activities, responsibilities and pro-
cedures for the development, implementation, realization, control
and upholding of the environmental management policy. In 2003
and 2004, background documents and tools were prepared that
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erative and business units of HEP.
In 2004, in TE-TO Zagreb CHP a pilot-project was launched of Envi-
ronmental Management System implementation to the ISO 14001
standard. The Management Board plans to extend ISO 14001 ac-
creditation to other HEP Groups power plants using this system
as a model.
The environmental policy of Hrvatska Elektroprivreda rests on the
following principles:
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for the period 2004-2008:
Incorporate environmental issues into HEPs development plans
and strategy, and environmental protection criteria into its plan-
ning and decision-making processes.
Use the resources in a rational way, reduce emissions into the air,
water and soil, and reduce the quantity and hazards of waste.
Preserve biological, environmental and other natural wealth of
the environment in the vicinity of HEPs installations by imple-
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cultural and historical heritage.
Install and maintain continuous environmental monitoring sys-
tems at each location where HEPs installations are situated and
publish the monitoring results.
Encourage the use of renewable energy sources and coge-
neration units.
Develop and research on the application of cleaner and more
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distribution.
Cooperate with state administration bodies and local authori-
ties and with institutions and non-governmental organizations
involved in environmental protection
Urge equipment suppliers, consultants, design engineers and
other collaborate companies and business partners of HEP to
develop their own environmental policy on the basis of these
principles.
Educate and train HEPs employees to protect the environ-
ment.
Advocate rational use of energy and energy savings both with
HEPs customers and at the national level.
The environmental policy and strategy at HEP level was prepared in line with HEP business strategy and coordinated in the Development
Department of HEP d.d. Individual companies of HEP Group and their respective operative units are responsible for strategy implementa-
tion.
6
Team for the Coordination and Standardization of Environmental Procedures
The Team for the Coordination and Standardization of Environmen-
tal Procedures has been established to coordinate the activities in
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Team is composed of professionals from particular companies
(HEP-Proizvodnja d.o.o. /Power Generation/, HEP-Operator distri-
bucijskog sustava d.o.o. /Distribution System Operator/, HEP-Op-
erator prijenosnog sustava d.o.o. /Transmission System Operator/,
HEP Toplinarstvo d.o.o. /District Heating/, HEP-Plin d.o.o. /Gas Dis-
tribution/ and APO usluge zatite okolia d.o.o. /Environmental Ser-
vices/) and business units of HEP d.d. (Development Department,
Economic Affairs Division, IT Department) who are responsible for
environmental activities within their respective companies and
business units.
In the previous reporting period the Team played an active role
in implementing the tasks and provisions of the Decision on the
Establishment of the Team. The majority of tasks have been ac-
complished, and it is worth mentioning that internal communica-
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had been set up.
The following results of Teams work can be highlighted as the most prominent:
development of HEPs Environmental Plan, elaboration and ex-
ecution of an Action Plan (short-term and long-term) for the im-
plementation of the Environmental Management System (EMS)
in HEP to the international standard for environmental manage-
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preparation of background documents for the publication of
HEPs regular Environmental Report.
preparation of background documents for the development
and implementation of a central IT system designed to monitor
and report on basic environmental indicators of HEPs facili-
.
introduction of an integral application for environmental cost
monitoring and data processing as a part of HEPs cost monitor-
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Since Team members have expertise and knowledge on the organizational structures of the companies they represent, they facilitate the
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APO usluge zatite okolia d.o.o.
APO usluge zatite okolia d.o.o. /APO-Environmental Services/ is
HEPs subsidiary specialized in environmental services, consulting
and engineering. APO carries out a number of expert activities for
HEP relating to environmental protection, such as: keeping a da-
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tion projects and similar.
In addition to the activities performed within HEP Group, APO is
also engaged in a broad spectrum of environment-related busi-
ness activities: preparation of expert background documents
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7
Hydroelectric Power Plants
Although even now electricity generation by hydroelectric power
plants of Hrvatska Elektroprivreda accounts for more than a half of
total electricity generated, HEP endeavours to increase the share
of renewable energy sources. This will enable the reduction of
greenhouse gas emissions and emissions of other pollutants to
the air and cut back on the use of non-renewable resources, be-
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hydroelectric power plants operate within HEPs system, their total
installed capacity being 2,078 MW.
In the period covered by this Report, all hydroelectric power plants
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from renewables. This ranked HEP Proizvodnja /Power Generation/
among large accredited renewable energy (green energy) produc-
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tion was carried out to the TV standard CMS-Kriterien Erzeugung
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tion procedure for hydroelectric power plants is carried out by a
specialized company that audits the environment and technology
applied, examines energy generation recording system, checks
the ratio of sold to generated energy and reviews business orga-
nization of individual generating facilities. Thanks to green energy
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the-state-of-the-art facilities complying with best international en-
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ity manner and encourage further development and investment in
hydroelectric power plants as the best represented form of green
energy generation in Croatia.
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wards selling electricity in the market. Nearly all countries of the
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continuously increasing number of customers who choose to buy
green energy and in this way express their care for the environment
and encourage electricity generation from renewable sources.
Investments in the reconstruction and replacement of equipment
in hydroelectric power plants continued in 2003 and 2004. The risk
of environmental pollution by turbine oil was reduced and electric-
ity generation capabilities increased. Furthermore, regular removal
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storage reservoirs. Wastewater treatment systems were extended
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ranged next to hydroelectric power plants in the Generation Area
North. This was one of major environmental investments of HEP
Proizvodnja /Power Generation/, Hydro Power Plant Department..
The reclamation of non-hazardous waste disposal site was carried
out in 2004 in the operative unit Dubrovnik HPP. The intake tunnel
was refurbished in operative unit Zavrelje HPP in order to stop wa-
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Cetina River hydraulic oil was replaced with biodegradable oil. The
entire watercourse of the Cetina and
the appertaining reservoir located in
its catchment area was regularly re-
.OC|C . .
The monitoring of hydroelectric pow-
er plants impact on the environment
continued during the period cov-
ered by this Report in accordance
with the Environmental Impact Study
Programme (a 30-years continuous
monitoring).
Green Energy
The term green energy or green electricity relates to electricity
generated from renewable energy sources, i.e. from such natural
resources that are being completely or partly naturally replenished
(hydropower, solar energy, wind energy, biomass, biogas and geo-
thermal energy).
Promotion of the use of renewable energy sources, cogeneration
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generation, transmission and distribution are basic principles of
HEPs environmental policy.
Own Production of Green Energy
regulations with those of the EU and monitoring of EU integration
processes, including the preparation of new and revision of old
regulations and programmes consistent with the EU policy and
rendering professional support in the implementation of the EU
directives.
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APO has elaborated several documents for the Government of the
Republic of Croatia and relevant ministries relating to the Krko
nuclear power plants decommissioning and controlled and safe
disposal of used nuclear fuel, i.e. radioactive waste disposal.
8
The term environmentally friendly energy covers the electricity
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above 70 percent.
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missioned at the TE-TO Zagreb site. Its electrical output is 202 MWe
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the most stringent international environmental standards. Besides
meeting the heat demand of the city of Zagreb (process steam
and heat for heating purposes) the plant increased the security
of operation of the Croatian power system. The installed electrical
equipment, devices and apparatuses and the level of technical de-
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technical solutions that respect relevant Croatian and international
standards and regulations. Automatic measuring instruments were
installed for continuous monitoring of air emissions and adequate
noise abatement measures applied. Appropriate wastewater and
cooling water discharge and treatment systems were constructed.
Green Energy Purchasing
Cogeneration Plants
Seven wind power plants were put in trial operation in late 2004.
The wind park is located on the hill Ravne on the island of Pag.
Total installed capacity of the wind park is 5.95 MW, and its annual
output approximates 15 million kWh of electricity. The contractor
O . O .C ,| .. , .O . .O
HEP entered into a long-term power purchase agreement. HEP will
sell and distribute generated electricity in the market. HEPs ex-
perts were pro-actively involved in the preparation, construction
and commissioning of the wind park.
In addition to the Pag wind park, the same business relation was
set with two other wind parks - WP Trtar situated in the hinterland
of the town of ibenik (11.90 MW total installed capacity and 32.2
million kWh annual output capability under average wind condi-
tions), and WP Jasenice located in the surroundings of the town of
Obrovac (10.80 MW and approximately 20 million kWh).
As for new renewable sources (which include not only wind power,
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Hrvatska Elektroprivreda entered into an agreement on electric-
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Jakuevac, total output 2 MW, located at the Jakuevac waste dis-
posal site in Zagreb.
Hrvatska Elektroprivreda encourages the implementation of sever-
al pilot projects, especially those applying the technology of elec-
tricity and heat cogeneration with biomass as primary fuel. If such
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gies will also be encouraged (geothermal and solar energy).
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small power plants that generate electricity from renewable sourc-
es, subsidizing electricity generation from such sources in the
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tion price. In this way Hrvatska Elektroprivreda implements its own
environmental policy and shows its commitment to meeting na-
tional environmental priorities, in particular the reduction of green-
house gas emissions in line with the Kyoto Protocol, and the priori-
ties stemming from the national energy strategy and relating to the
promotion of the use of renewable energy sources.
9
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In addition to energy generation from renewables, HEP Group
encourages the development of demand side management and
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reconstruction and rehabilitation of the existing plants and facilities
with an aim to improve engineering designs and rationalize energy
consumption, assuming investment payback from energy savings.
The environmental impact, caused by pollutant emissions and waste
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end-users. Therefore, the same motivations drive environmental
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HEP-ESCO d.o.o.
HEP Group has recognized the need and opportunities to increase
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For that reason the company HEP-ESCO d.o.o. was established
within HEP Group, which started to operate in September 2003.
HEP-ESCO d.o.o. is a company specialized in the preparation, imple-
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Croatia, realized in collaboration with the World Bank, United Na-
tions Global Environmental Facility, the Government of the Republic
of Croatia, Ministry of Finance, Croatian Bank for Reconstruction
and Development (HBOR) and HEP d.d. Total value of the project is
US$ 40 million and its planned duration is six years.
HEP-ESCO d.o.o. prepares a number of projects in different mar-
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the town of Karlovac, in six hospitals and three industrial plants, and
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Street lighting projects for the city of Zagreb and the town of
Novigrad are underway, as well as projects related to heating and
facade joinery improvements in the schools of Karlovac and the
water saving project in the factory Alstom Hrvatska d.o.o. in Karlo-
C + OC ,O,C. g .gC J' .g.
in electricity consumption, fuel oil and water consumption. Annual
reductions in CO
2
, SO
2
, NO
X
and particulates emissions are also
monitored per facility or structure.
One of key tasks of HEP-ESCO d.o.o. is to provide continuous edu-
CO O g, CC, O' ,OCO C .J.-
able development. Throughout the preparation and implementa-
tion of projects the education is carried out through continuous
collaboration with clients local community and owners or users
of respective facilities.
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environmentally responsible energy use for heating purposes.
+' g, . gC C'', O 'OCO 'J' -
ciency is very high and the generation schedule depends on out-
door temperatures and customer demand.
HEP-Toplinarstvo d.o.o. /HEP-District Heating/ applies various mea-
sures to rationalize the use of thermal energy, with an aim to re-
duce energy consumption at end-users and, consequently, reduce
energy generation at the source. In this way the emission of gases
and particulates polluting the atmosphere is reduced. A pilot proj-
ect was launched of a new metering system for individual heat
consumption metering in residential and commercial facilities in
the city of Zagreb, to the European standard EN 834.
A district heating system revitalization project was carried out in
Zagreb and Osijek in collaboration with the World Bank. Within the
scope of the project, HEP-Toplinarstvo d.o.o. has prepared environ-
mental protection plans. Certain parts of district heating systems
are more than 40 years old, worn-out and increasingly exposed
to ruptures, causing higher losses in the heating cycle and higher
maintenance costs.
The project of replacement of the weakest parts of hot-water net-
works in these two towns was prepared in order to improve the
reliability of the system. The project included an adequate environ-
mental protection plan, too.
District Heating System
10
Environmental Projects
In the course of 2003 and 2004, HEP continued to monitor the
operation of all facilities, principally thermal power plants, and their
impact on the environment. All the plants consistently adjusted
their operational practices to relevant legal provisions and effec-
tive environmental regulations.
Environmental activities systematically carried out in individual
plants as a part of regular operating practice include, among other,
wastewater treatment plants maintenance and rehabilitation, emis-
sion monitoring systems, maintenance and adjustment of burners
for correct combustion and other.
In late 2004 and early in 2005 a burner system was replaced on
the main boiler of the Rijeka TPPs boiler house. New low NO
X

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time reduce the quantity of fuel required for plants start-up.
Continuous emission monitoring systems have been installed in all
thermal power plants owned by HEP and connected to the Central
Information System for Emission Monitoring (CISEM) which provides
comprehensive real-time data on SO
2
, NO
X
, CO and particulate
emissions. The basic purpose of this system is to elaborate integral
monthly, annual and if needed daily reports on emission monitor-
ing with an aim to check whether the provisions of the regulation
in force have been met and to calculate emission values required
for reporting purposes, consistent with the reporting requirements
on pollutant emissions to the air (contained in the Environmental
Emission Cadastre /KEO/ Rulebook).
The Environmental Monitoring System enables HEP to measure air
quality in the stations located by EL-TO Zagreb and Plomin TPP
plants, and at the locations not having stationary air quality moni-
toring devices appertaining to the national air quality monitoring
network.
In addition to air quality monitoring, HEP carries out a range of
measurements and testing of groundwater and surface water qual-
ity in the vicinity of its generating facilities. Measures were also
taken to mitigate other environmental impacts, such as noise con-
trol and management of all types of waste.
In the period covered by this Report commercial utilization con-
tinued of coal combustion by-products of Plomin 2 power plant
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OOCO 'JC J'O . CO.C|', CJCC OJ
of waste that needs to be disposed on the Plomin TPP location or
on its reclaimed and expanded slag and ash disposal site. Since
this type of waste represents a useful secondary raw material the
commercial utilization of which has no adverse environmental im-
pact, HEP is preparing background documents to change the legal
status of certain types of industrial wastes.
Safe and environmentally friendly management of waste oils of
categories 1 and 2, produced not only in HEPs plants but also by
other producers, continued in HEPs thermal power plants, consis-
tent with the Croatian laws and international practice. In addition
to standard liquid fuel, HEPs thermal power plants in Rijeka, Sisak,
Osijek and TE-TO Zagreb burn a part of waste motor oils collected
by licensed agencies. The combustion of such oils is carried out in
compliance with the permits issued consistent with the Rulebook
on Waste Types.
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for tank-wagons delivering fuel oil was completed in Sisak TPP, with
the appertaining sewage system for draining of oily wastewater
from the washing process.
The construction of new transmission lines, towers and corridors
. | C C.g', CCJ' CJ O .,CC O-
tal requirements most often resulting from the lack of surface
area required for transmission line corridors or from excessive
'CC C gC 'C. .JOJCg. 'CC, -
| COCO. ,J ...O .,. O | O |'
and often command an increase in overhead line transmission ca-
pacities.
11
Key Indicators of Environmental Impact
Key indicators of environmental impact in the power sector are pollutant emissions to the air and water and solid waste generation. Below
is an overview of key environmental impacts resulting from the operation of HEPs plants and facilities.
Impact on Air
Continuous emission measurement data from the already men-
tioned CISEM system were analysed in order to identify the amount
of emissions released by HEPs thermal power facilities in 2003
and 2004.
' ,. ,. '
2
emission was halved compared to the
emissions in late 1980s and in early 1990s. NO
X
and particulate
emissions were kept at the approximately same level, and CO
2
..O. .gC', C.C C ,. . .J' O -
creased production in the existing power plants and the commis-
sioning of new thermal power plants (Plomin 2 TPP, TE-TO Zagreb
CHP). A positive trend of SO
2
emission results from a business de-
cision to use low-sulphur fuel in thermal power plants: fuel oil in
TE-TO Zagreb CHP and imported coal with a sulphur content below
1 percent in both units of Plomin TPP.
In 2004, electricity generation by HEPs thermal power plants and
facilities decreased by 20 percent compared to 2003. This is a key,
although not the only reason for a corresponding decrease in pol-
lutants emissions to the air.
Emission of SO
2
in 2004 was lower by 39 percent than in the previ-
ous year and even 82 percent lower than in 1990. With relation
to 2003, thermal power plants burnt 51 percent less liquid fuel in
2004 with average sulphur content of 1.23 percent. Although the
sulphur content remained almost at the same level as in the previ-
OJ. , .~ ,C .gC', 'O. CO.J,O O J' O'
resulted in lower SO
2
emissions.
Emission of NO
X
in 2004 was lower by 26 percent than in 2003
(and about 25 percent lower than in 1990), which is consistent with
a drop in electricity generation.
Since the transmission capacity of the majority of older transmis-
.O '. . C,J C OJg O . O. C CCJ'
and somewhere even impossible, the existing corridors gain in val-
ue. Intensive efforts were put recently in perfecting overhead lines
design and construction techniques by applying new technical so-
lutions in the design of transmission lines and their components.
Aesthetic requirements were taken into account in the design
process as well as environmental requirements. The requirements
from the Rulebook on the Protection Against Electric and Magnetic
Fields were particularly respected. In the past two years HEP has,
in cooperation with authorized institutions, conducted a number of
.J. C C'CJ'O. O 'CC' C gC 'C.
the surroundings of its transmission lines, ground cables and sub-
.O. + Cg. .O. .JC 'C. |'O. '
values stipulated in the Rulebook, which are several times more
stringent than the international and EU guidelines. The impact is
also being researched of HV transmission lines on residential and
other buildings constructed on the perimeter or within TL corridors
in order to improve the security of such facilities under extreme
meteorological conditions.
12
About 60 percent lower emission of particulates compared to 2003
C | |JC O .gC', 'O. CO.J,O O J' O' '-
CJ' ..O CJg J' g. CO|J.O .. .gC
.' 'CO.C ,C,O. .''C ''O +'' C',
reduced particulate emission released during coal combustion.
Emission of CO
2
is a true indicator of the quantity and type of fuel
consumed. In 2004, CO
2
emission was by about 21 percent lower
than that in 2003, which fact corresponds to lower electricity gen-
eration in thermal power plants and higher share of natural gas on
account of fuel oil.
Average emissions of the main air pollutants per kilowatt-hour of
electricity delivered to customers in 2004 amounted to: 0.73 g SO
2

0.37 g NO
X
g ,CJ'. C . g
2
(Table 6). Very
'O. .,CC ..O. , |'O.OJ O 'CC, C'C
due to exceptionally favourable hydro-meteorological conditions in
2004, i.e. large contribution of hydroelectric power plants to elec-
tricity generation (7 TWh).
An overview of quoted data is given in Tables 4 through 6, and
in Figures 5 through 11 in the graphical attachments to the Re-
port.
Impact on Water
In 2003 and 2004 HEPs plants operated in conformity with wa-
ter permits and other water management regulations. Wastewater
treatment systems and wastewater drainage systems were or are
being upgraded at several plants.
According to the KEO data, the quantity of water intake for the
needs of HEPs thermal power plants from their own wells and adja-
cent surface water intake structures was 327,252,157 m
3
in 2003,
and 256,336,496 m
3
in 2004. Water intake from public water sup-
ply system ammounted to 190,023 m
3
in 2003 and 170,871 m
3
in
2004.
According to periodical measurements taken in 2003 in several
thermal power plants owned by HEP, the quality of wastewater
met stipulated limit values, with occasional excess values of some
analytical parameters. Similar situation was seen in 2004, although
somewhat improved. The parameters the limit values of which
were most often exceeded were pH, total suspended solids, BOD-5,
COD-Cr and total nitrogen.
Data on the use, treatment and monitoring of wastewater in HEPs
thermal power plants are given in the graphical attachment to the
Report, Tables 7 and 8.
Waste
HEP continued to keep the Process (Industrial) Waste Inventory of
waste generated in the process of electricity generation, transmis-
sion and distribution by HEP and continued the project of waste oil
and lubricants management in HEPs generating plants.
In the past period, a total of 111,292 tons (2003) and 92,067 tons
(2004) of non-hazardous waste and a total of 1,148 tons (2003)
and 939 tons (2004) of hazardous waste was generated in HEPs
power plants and facilities.
Data on the type of industrial waste generated in HEPs power
plants and facilities are given in the graphical attachments to the
Report, Figures 12-14.
Progressive management and phasing-out of PCB-containing equip-
ment continued. In 1993, when the management process of such
equipment was introduced, there were approximately 200 tons of
PCB-containing equipment located in HEPs plants and facilities.
About 105 tons were still around in late 2004 (Figure 15).
13
Award for General Contribution to Environmental Protection
Years-long commitment of HEP to carry out its business opera-
tions in line with sustainable development principles has received
recognition by competent institutions. In June 2003, HEP received
a National Award for General Contribution to Environmental Pro-
tection, a popular ECO-OSCAR. The award gives credit to HEP as
a socially responsible company that by continuous investments
and application of advanced technological solutions encourages
the development and improvement of environmental protection
in the Republic of Croatia. It is also a proof that Hrvatska Elektro-
privreda has joined the European social responsibility campaign.
HEP won this title not only because of exceptional achievements
in the implementation of its environmental policy, but also thanks
to its collaboration with local
communities, consumer organi-
zations and schooling system in
the realization of different edu-
cational projects on rational use
of energy and on environmental
protection. The award was pre-
sented by the Ministry of Envi-
ronment, Physical Planning and
Construction on the occasion
of the World Environmental Pro-
tection Day.
Biodiversity
Hrvatska Elektroprivreda has established intensive collaboration
with non-governmental organisations and state administrative bod-
ies to preserve protected species and in this way contribute to
biodiversity preservation in Croatia.
An example that can be highlighted is HEPs pro-active and years-
long involvement in the preservation of a protected species of
white stork (Ciconia ciconia), which often nests on top of electrical
poles of HEPs distribution system in the continental part of Croatia
and in the river valleys of the Sava and the Drava. In cooperation
with the Ornithological Institute of HAZU (Croatian Academy of Sci-
ences and Arts), HEP installs special platforms on electrical poles
for stork nests and relocates the nests to less dangerous places
.OJ Cgg + . OgC ,Jg O ,,C
,'O. .. CO ''g. O \C OJ, '''
Nests are being relocated by means of a specially designed ring in
other distribution service areas of HEP as well.
To systematically address this issue, on the occasion of the Na-
ture Conservation Day HEP and the Ministry of Culture Nature
Conservation Directorate, signed a Cooperation Agreement on
the implementation of protection measures aimed at protecting
white stork species. Both parties to the agreement have bound
themselves to provide favourable conditions for the nesting of this
bird species.
In 2004, a Cooperation Agreement was prepared for stork popula-
tion monitoring and stork ringing in the area of the Sisak-Moslavina
County. The Ministry of Culture, Nature Park Lonjsko Polje, Orni-
thology Institute of HAZU and HEP signed the Agreement in 1995.
In addition to the bird species protection, HEPs donation to the
ibenik Hawk Centre should be mentioned by which HEP support-
ed the equipping of the central veterinary clinic for birds of prey.
Technical measures continued to be implemented and developed
for the insulation of power facilities in order to protect birds and
other small animals.
In addition to the mentioned proj-
ects, activities are also underway to
,OC . .,C'',
River basin) and bats. HEP has ac-
tively supported local activities of
planting olive trees on the island of
Hvar and on the Istrian Peninsula
within the framework of the nation-
al project Lets Plant Green.
HEP and the Community
HEP continued to implement its policy of collaboration with local
community in the programmes to create and maintain a friendly
environment, and sustained in rendering support to the projects
O |OC .OC' .gCC NJOJ. ,Og. | -
plemented on the local level to improve communal infrastructure.
HEPs employees participate on a regular basis in professional
forums held to inform representatives of environmental organiza-
tions, general public, the media and government representatives
of the activities carried out in HEPs plants to protect the environ-
ment.
Data on the impact of HEPs plants and facilities on the environ-
ment are systematically collected and processed and published in
HEPs Annual Report, special biannual Environmental Report and
14
its web page (www.hep.hr). Such data are also presented on nu-
merous gatherings and special meetings with journalists.
In marking the World Environmental Protection Day in 2003, HEP,
as one of the main water users in Croatia, organized the second
gathering The Economy for the Environment titled Water for Life.
Croatias leading businessmen, attendants to the gathering, con-
C CO O O'', .,O.|' J. O
water and its conservation and protection.
Hrvatska Elektroprivreda pays special attention to raising environ-
mental awareness of young people through the collaboration with
the schooling system. Since 1988 HEP has been involved in the
Eco-School Project which had been implemented by the Foun-
dation for Environmental Education in Europe (FEEE) established
within the European Council. The objective of the project is to
promote education in environmental protection and sustainable
development. Emphasis is put on the environmental education of
decision-makers of all ages, from the primary care of the environ-
ment to the establishment of a sustainable development training
programme.
HEP also provides scholarship and supports young people, high
.COO' C J., .JC. gg 'C. ' .~
for the tenth time, HEP presented rewards to students who had
achieved best results in national mathematics and physics con-
.. \ , ,.O O .C. 'C , O ''. ,'.
was organized for students and their mentors, with special empha-
sis put on environmental aspects.
In addition to raising environmental awareness of general public,
especially young people, HEP permanently educates its own em-
ployees on the importance of environmental protection. In 2004,
workshops were organized in cooperation with the Croatian Toxi-
cology Institute for HEPs employees carrying out the tasks in the
'C O O' ,OCO .O CO COC . C-
ous and harmful substances during their regular work.
Hrvatska Elektroprivreda is an active participant in the negotiations
held within the Framework Convention on Climate Change and the
Kyoto Protocol on the status of Croatia and its best initial position.
HEP also takes a pro-active part in international initiatives for the
protection of environment (Energy Wisdom Programme).
Legislation
Environmental standards and regulations have large impact on the
operation and development of the power system and, consequent-
ly, on the manner of running a power industry. HEPs experts have
participated in the preparation of new laws and secondary legis-
lation passed in the course of 2003 and 2004, by giving expert
opinions and suggestions, with an aim to harmonize national en-
vironmental regulations with the EU legislation. This concerns acts
that are especially important for HEPs operations, such as: Envi-
O' 'OCO /C \. /C / 'OCO /C 'J'|OO|
O 'OCO /g. 'CC C gC ''C. 'gJ'O
O | g. OC OC. C 'C C
Benchmarks for Determination of the Emission Charge for Sulphur
Oxides, in the Form of Sulphur Dioxide, and Nitric Oxides, in the
'O O NC OC 'gJ'O O | g. OC O-
C. C 'C C bC|. O O
of Charges for Burdening the Environment with Waste and Draft
Regulation on CO
2
Emission Charges.
' .~ ',J|'C O O |C OC' | CCC
country. Therefore, Croatia has to adopt the EU guidelines into na-
O' 'g.'O + '.. 'C O O CC |,
the Republic of Croatia have to be approximated to the European
legislation in order for the Republic of Croatia to be integrated
in the internal European electricity market. As a transitional step
towards such integration the initiative was launched to create a
regionally integrated market of the South-Eastern Europe, the En-
ergy Community. The Stabilization and Association Agreement was
.gC . .|'.g O . COCJ' 'O.
between the Republic of Croatia and the European Union.
The cooperation of the Republic of Croatia and the EU in the en-
ergy sector will be based on the principles of market economy and
the European Energy Charter Treaty, and will progress towards full
integration of the European energy markets. The cooperation will
entail the formulation and planning of energy policy, including the
upgrade of infrastructure and re-establishment of regionally impor-
tant electrical connections with neighbouring countries. In addition
to management and training for the energy sector, the coopera-
tion will include the activities of importance for this Report, such
. ,OOO O g, .g. g, CC, C .|'.
and the study on environmental impact of energy generation and
consumption.
To mitigate negative consequences of Croatias joining the EU on
HEP Groups business operations, it was necessary to identify future
obligations on time, as well as possible problems in the implemen-
O O .JC O|'gO. C O C JJ CO. '' .
therefore, in 2004 started to elaborate a study on the implementa-
tion of the EU environmental legislation regarding the operation of
,O. ,'. C C'. C C . ., . CCO
15
Environmental Costs
As of 1 January 2004, the registering, monitoring and reporting
started on HEP Groups expenditures for environmental protection
(environment-related investments and costs of ordinary operation)
in accordance with a new project called Environmental Cost Ac-
counting Project the RETZOK Project.
N. COOC C C' C O . ,O,C CC O ',-
sis of the state and quality of individual environmental components
O .C ''. O,O ,C ' .~ . .O|.O,.
were held for the employees involved in project implementation,
and similar workshops continued in 2005.
Total environmental expenditures of Hrvatska Elektroprivreda in
the past period amounted to HRK 79 million in 2003, and HRK
'o ''O .~ = ~ '' O , . C
the preceding years are estimates made on the basis of available
data from HEPs departments, and data for the year 2004 were
obtained from the RETZOK system.
An overview of data on HEP Groups environmental expenditures is
given in Figures 16 through 18 in the graphical attachments.
Maximum environmental expenditures in previous years were
CJC ''' ,,O gJ . '' ~ ''O +
investments in thermal power plants accounted for the major por-
tion of these. Upon the completion of key activities (the construc-
tion of the majority of Plomin 2 TPP facilities and systems, which
required large investments in environmental protection) total ex-
,CJ. .gC', '' ,. O O''O. ...
and also 2003-2004 (Figure 16).
The costs of ordinary operations, amounting to HRK 64 million in
2003, had the highest share in total environmental expenditures.
In 2004, they increased to HRK 83.9 million (primarily due to pay-
O . Cg. O O C g, CC,
'JC O' .. O. .gC .
those relating to air and climate protection, amounting to HRK 3.6
million. Such investments were primarily earmarked for monitoring
and reduction of air emissions from thermal power plants (Figure
18). The expenditures of HEP Prijenos /HEP-Transmission/ should
also be mentioned, relating to nature, biodiversity and landscape
protection (mainly horticultural arrangement of transmission line
corridors), amounting to approximately HRK 8.5 million.
Environmental Plans
Consistent with basic objectives stated in the Business Plan of
HEPs Management Board 2004-2008, the corporate concern of
Hrvatska Elektroprivreda is to continue the activities contributing
to environmental improvement and companys environmental per-
formance. The majority of such activities have been described in
this Report. HEP will also pay special attention to a number of
other important projects, such as: the furtherance and develop-
ment of the Environmental Cost Accounting Project (the RETZOK
Project), continuation of activities aimed at greenhouse gas emis-
sion reduction consistent with the Kyoto Protocol and progressive
preparation for entering into the CO
2
emission trading market of
the European Union.
Investments will continue into the existing generation, transmission
and distribution plants and facilities to mitigate their impact on
the environment. The imminent large investment cycle linked with
CO.JCO O gg C,C. .'' | O .,C' .g-
cance. Replacement units will be built on the existing sites and will
meet environmental standards of the European Union.
HEP Groups Action Plan was prepared on the basis of the EU
and national legislation, technical guidelines, parameters, refer-
ence plants, the analysis of HEP Groups existing capacities and
the assessment of required upgrades. The Plan was elaborated
in the context of requisite harmonization (adjustment) of national
'g.'O 'C O O' ,OCO . | -
vironmental legislation. The Plan is focused on achieving priority
objectives (by 1 January 2008), as well as long-term objectives, It
provides recommendations for HEP Groups companies and de-
partments, gives an estimate of required adjustment costs (invest-
ment, operation and maintenance costs), and recommends further
actions in the context of the accession negotiations between the
Republic of Croatia and the European Union.
As a leading company in the Croatian electricity market, HEP will
continue to carry out its activities on the principles of sustainable
development. HEP will coordinate its business development with
consumer expectations, state administrative bodies and local self-
management bodies, civil institutions and non-governmental orga-
nizations involved in environmental protection and other segments
of the society.
The formulation and implementation of all projects and activities
mentioned in this Report, along with development of HEPs own
reporting system on sustainable development in line with Global
Reporting Initiative guidelines, will enable HEP to implement in
practice crucial and undisputable elements of its future Sustain-
able Development Strategy of HEP Group the strategy that should
| CO,C CJg O OC O ,. g
Board.
16
Based on the request of the HEP, Croatian Cleaner Production Centre has reviewed the report HEP
and Environment 2003/2004, further: Report Croatian Cleaner Production Centre (Cro-CPC) is a
OgO' OO,O .JO . gO' O ,OOO O C' ,OCJCO COC,
sustainable development and proactive approach in environmental protection.
Based on the Cro-CPC experience, among which the Project Development of the Corporate Social
Responsibility in Croatia is of particular relevance, and based on the knowledge in using the Respon-
sible Entrepreneurship Achievement Programme REAP, tool for the assessment and documentation
of company performance and improvements related to the Triple Bottom Line (Productivity, social
domain and environment), we have performed the expert review of the above mentioned report. Ad-
ditionally, the guidelines of the Global Reporting Initiative were also considered.
\ CC ',O . Cg C COg '' ' C COCg -
vironmental protection and sustainable development activities in HEP. All together, 14 chapters, 20
gJ. C o |'. Cg '' '' C. 'C O O' ,OCO .J.|'
C'O, g, CC, C O' ,C ',O C'', .,J'. O-
tal protection issues, as well as public information and publication of environmental data are integral
part of HEP business Strategy. The Report, together with other available materials, reviewed by the
Cro-CPC indicates that system of collection environmental data within the company is formed (CISEM,
+ . .O .,C. |.C O J'', C C OJg OCO ..
That system has shown to be inadequately accurate and reliable.
Based on above stated, for future reporting period, we are recommending the following activities:
1. Introduction of unique information system for environment as a whole
2. Continuation with Cleaner Production projects in other industrial facilities
'OCJCO O O' g ',. C CCO CCOCg '' ~ '' ''
facilities
~ 'C'J.O O .J.|', '. , C, |J... C'O,g .J.|' C'O,
policy and strategy of HEP, together with periodical reporting
Further work on establishment of communication channels with all stakeholders by using all available
communication schemes and means is recommended.
The scope and form of the Report is easily understandable and approachable for the public, and it is
developed taking into account the established reporting standards. The Report is complete, clearly
understandable, reliable and authentic.
For Cro-CPC
Goran Romac, B.Sc.
EXPERT REVIEW OF THE REPORT
HEP AND THE ENVIRONMENT 2003/2004
60Ih 6LLhL
F0006I0h 6LhL