CDP. Module: Introduction. Page: Introduction. Climate Change 2015 Information Request CC0.1

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CDP

Climate Change 2015 Information Request _{Norsk Hydro}

Module: Introduction

Page: Introduction CC0.1

Introduction

Please give a general description and introduction to your organization.

Hydro is a global supplier of aluminium with activities throughout the value chain, from bauxite extraction to the production of rolled and extruded aluminium products and building systems. Based in Norway, the company employs 13,000 people in more than 50 countries. Rooted in a century of experience in renewable energy production, technology development and progressive partnerships, Hydro is committed to strengthening the viability of the customers and communities we serve. Hydro is a resource rich, fully integrated aluminium company with operations in all major activities along the aluminium industry's value chain. Our operations include one of the world's largest bauxite mines and the world's largest and one of the most cost effective alumina refineries, both located in Brazil. We have primary metal production facilities in Europe, Canada, Australia, Brazil and Qatar. We are a leading worldwide supplier of value-added casthouse products, such as extrusion ingots, sheet ingots and foundry alloys. In 2014, we delivered about 3.3 million metric tons of products to internal and external customers, mainly from casthouses integrated with our primary smelters and from an extensive network of specialized remelt facilities close to customers in Europe and the U.S.

We are an industry leader as a supplier to a range of downstream markets, in particular the packaging, lithographic, building, automotive and transport sectors. We deliver high-quality, energy-saving aluminium products and solutions, and have strong positions in markets that provide opportunities for good financial returns. Through the Sapa joint venture transaction we have transformed our extrusion operations and generate substantial synergies.

With more than 100 years of experience in hydropower, Hydro is the second-largest power producer in Norway, and the largest privately owned producer. We have substantial, self-generated power capacity to support our production of primary metal, and are engaged in a number of initiatives to secure competitive power supplies for our aluminium operations.

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Reporting Year

Please state the start and end date of the year for which you are reporting data.

The current reporting year is the latest/most recent 12-month period for which data is reported. Enter the dates of this year first.

We request data for more than one reporting period for some emission accounting questions. Please provide data for the three years prior to the current reporting year if you have not provided this information before, or if this is the first time you have answered a CDP information request. (This does not apply if you have been offered and selected the option of answering the shorter questionnaire). If you are going to provide additional years of data, please give the dates of those reporting periods here. Work backwards from the most recent reporting year.

Please enter dates in following format: day(DD)/month(MM)/year(YYYY) (i.e. 31/01/2001).

Enter Periods that will be disclosed

Wed 01 Jan 2014 - Wed 31 Dec 2014

CC0.3

Country list configuration

Please select the countries for which you will be supplying data. If you are responding to the Electric Utilities module, this selection will be carried forward to assist you in completing your response.

Select country Australia Brazil Canada France Germany Italy Luxembourg Norway Qatar

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Select country Slovakia

United Kingdom

United States of America Netherlands

Spain

CC0.4

Currency selection

Please select the currency in which you would like to submit your response. All financial information contained in the response should be in this currency. NOK

CC0.6

Modules

As part of the request for information on behalf of investors, electric utilities, companies with electric utility activities or assets, companies in the automobile or auto component manufacture sub-industries, companies in the oil and gas sub-industries, companies in the information technology and telecommunications sectors and companies in the food, beverage and tobacco industry group should complete supplementary questions in addition to the main questionnaire.

If you are in these sector groupings (according to the Global Industry Classification Standard (GICS)), the corresponding sector modules will not appear below but will automatically appear in the navigation bar when you save this page. If you want to query your classification, please email [email protected].

If you have not been presented with a sector module that you consider would be appropriate for your company to answer, please select the module below. If you wish to view the questions first, please see https://www.cdp.net/en-US/Programmes/Pages/More-questionnaires.aspx.

Further Information

Hydro is only able to report on total greenhouse gas emissions from its 50/50 joint venture Sapa (and not disaggregated per country). Total emissions from Sapa are, however, only 3.1 percent of Hydro's total scope 1 emissions and 4.6 percent of total scope 2 emissions.

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Module: Management

Page: CC1. Governance CC1.1

Where is the highest level of direct responsibility for climate change within your organization? Board or individual/sub-set of the Board or other committee appointed by the Board

CC1.1a

Please identify the position of the individual or name of the committee with this responsibility

Executive Vice President and head of Energy and Corporate Climate office and Business Development Arvid Moss. Moss is a member of the Corporate Management Board and reports to the President and CEO.

CC1.2

Do you provide incentives for the management of climate change issues, including the attainment of targets? Yes

CC1.2a

Please provide further details on the incentives provided for the management of climate change issues Who is entitled to benefit

from these incentives? The type of incentives Incentivized performance indicator

Comment

Chief Executive Officer

(CEO) Monetary reward

Other: Increased recycling capacity

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Who is entitled to benefit

from these incentives? The type of incentives Incentivized performance indicator

Comment

Executive officer Monetary reward Emissions reduction target Included in the EVP and Head of Primary Metals' bonus scheme

Management group Monetary reward Emissions reduction target Included in Primary Metals' bonus scheme

All employees Monetary reward Emissions reduction target Included in bonus scheme for relevant employees in Primary Metal

Further Information Page: CC2. Strategy CC2.1

Please select the option that best describes your risk management procedures with regard to climate change risks and opportunities Integrated into multi-disciplinary company wide risk management processes

CC2.1a

Please provide further details on your risk management procedures with regard to climate change risks and opportunities

Frequency of monitoring

To whom are results reported?

Geographical areas considered

How far into the future

are risks considered?

Comment

Annually Board or individual/sub-set of the Board or

All relevant to Hydro, in

particular EU (including > 6 years

In addition to the risk of increasingly demanding legislation, the potential physical impacts of climate change on our facilities and operations is

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Frequency of monitoring

To whom are results reported?

Geographical areas considered

How far into the future are risks considered? Comment committee appointed by the Board

Norway), Brazil, Canada, Australia and Qatar.

highly uncertain. Effects of climate changes may include changes in rainfall patterns, shortages of water or other natural resources, changing sea levels, changing storm patterns and intensities, and changing temperature levels. These effects may adversely impact the cost, production and financial performance of Hydro's operations. Hydro has been an active participant in the development of international frameworks on climate change and greenhouse gas emissions supporting the establishment of a level playing field for global aluminium production. We engage in significant R&D activities focused on reducing energy

consumption and improving electrolysis efficiency including anode consumption which is the main source of CO2 emissions from our smelter operations (ref. Annual Report 2014 page 144).

CC2.1b

Please describe how your risk and opportunity identification processes are applied at both company and asset level

Business risks including climate change legislation, price impact and financial consequences as well as opportunities are mapped and mitigating actions defined in the Hydro group and business areas risk management and strategy processes.

For investment proposals we evaluate the specific risks attached, covering both project and country risks. Sensitivity and scenario analyses are included mapping different risk aspects.

Risk management is a dedicated topic on the board agenda annually. Further, review of climate change risks and opportunities are an integrated part of Hydro's strategy process, all new projects and investments, the annual business planning process and the financial and extra-financial reporting process. Sustainability performance is addressed in every board meeting.(GRI G4-46-47)

CC2.1c

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Business risks are typically ranked according to probability and impact.

Risk management in Hydro is based on the principle that risk and opportunities evaluation is an integral part of all business activities. Consequently, the business areas have the main responsibility for risk management, utilizing established policies and procedures. Their work is coordinated by staff units at the corporate level. The board of directors regularly reviews and evaluates the overall risk management system and environment within Hydro. (Annual Report 2014 page 16-17.)

CC2.1d

Please explain why you do not have a process in place for assessing and managing risks and opportunities from climate change, and whether you plan to introduce such a process in future

Main reason for not having a process Do you plan to introduce a process? Comment

CC2.2

Is climate change integrated into your business strategy? Yes

CC2.2a

Please describe the process of how climate change is integrated into your business strategy and any outcomes of this process

Our climate strategy is an integral part of our overall business strategy, with the overall goal for the company to become carbon neutral by 2020. The strategy has three components:

1. Reducing energy consumption and emissions in production

2. Reducing CO2 emissions and energy consumption through the use of our products 3. Increasing recycling of aluminium

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alumina in 2014 and is among the most energy efficient refineries in the world. On average, our consolidated smelters consumed 13.84 kWh of electricity per kilogram (kg) of primary aluminium produced in 2014, slightly down from13.89 in 2013. Our new HAL4e technology has achieved an energy consumption level of 12.5 kWh per kg aluminium produced under full scale testing and we are targeting levels under 12.kWh per kg at new test cells at our Årdal smelter. This represents potential reductions of about 10-14 percent. The planned pilot plant at Karmøy, Norway will test this technology in industrial full scale.

Greenhouse gas emissions from Hydro’s consolidated activities increased by 6 percent in 2014, compared with 2013. Total emissions from our ownership equity, including indirect emissions from electricity generation, increased by 4 percent in 2014. The rise was mainly due to increased production in our Bauxite & Alumina business area. Specific direct emissions from our alumina refinery Alunorte in Brazil was 0.687 mt CO2 / mt alumina in 2014, slightly down from 0.693 in 2013. The specific emissions from electrolysis increased from 1.59 mt CO2 equivalents (CO2e) per mt primary aluminium in 2013 to 1.63 in 2014. About one third of the increase was caused by changes in the greenhouse gas potential factors of certain gases, while the remaining increase was mostly due to operational issues at the Årdal and Karmøy plants in Norway and Albras in Brazil.

2. We work closely with customers to develop products that save energy and reduce emissions. Examples include lighter transportation and better packaging as well as aluminium façades that lead to lower operating costs and enable buildings to produce as much energy as they consume during operation. Hydro is one of the sponsors of SAVE FOOD, an initiative from the UNFAO. Our specific contribution is packaging, in which aluminium helps to conserve food more effectively. 3. Aluminium can be recycled over and over again without degradation in quality. Aluminium recycling requires 95 percent less energy than primary aluminium production. Hydro is a large remelter and recycler of aluminium. We remelt process scrap from our own production and from other companies. Our expertise in remelting is a good basis for further expansion.

Our ambition is to take a strong position in aluminium recycling. In 2014, we recycled 1.1 million metric tons (mt) of aluminium in 2014 compared to 1.2 million mt in 2013. Of this amount, 111,000 mt was post-consumer scrap, compared with 151,000 mt in 2013. Total volumes in 2013 included volumes recycled in Extruded Products up until end of August. From 1 September Extruded Products became part of the new SAPA joint-venture with Orkla.

Thus, aluminium represents a growing opportunity in an increasingly carbon-constrained world. Although the current economic situation in some areas reduces the short term opportunities, we believe that aluminium will be a part of the solution in the long term. According to CRU / Global Insight, aluminium has been the fastest growing industrial metal since 2000 and an annual growth in demand of 2-4 percent is expected (outside China). A characteristic of aluminium used in transport (in a lifecycle perspective) is that the energy savings in use more than outweighs the energy needed for its initial production. We see net positive impact on our aluminium business from risks and opportunities arising from regulations and customer preferences due to the climate issue. In particular we believe that low emission buildings represent a great opportunity that we are well placed to develop into a financially sound enterprise.

About two-thirds of the electricity used in our primary aluminium production comes from hydropower, and we are the second-largest hydropower operator in Norway. Our normal production is 10 TWh per year, and in 2014 we produced 10.2 TWh. Our strategy is to secure and expand our hydropower capacity and we are currently upgrading several of our hydropower plants in Norway to secure future production. We are also working to increase production from existing plants through

refurbishments and expansions. Energy for the Qatalum aluminium plant (Hydro share 50 percent. 15 percent of our primary metal production capacity), is based on natural gas.

We support the development of international frameworks on climate change and greenhouse gas emissions and participate actively in organizations such as the World Business Council for Sustainable Development and the International Emissions Trading Association, to provide business solutions to the climate change challenge. In addition, we work through aluminium associations to establish a level playing field for global aluminium production. Hydro also engages actively in initiatives fostering increased recycling and material stewardship, and is a member of the Aluminium Stewardship Initiative.

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Please also see Hydro’s Annual Report 2014, pages 65-67, 82-83 and 88-93.

CC2.2b

Please explain why climate change is not integrated into your business strategy

CC2.2c

Does your company use an internal price of carbon? Yes

CC2.2d

Please provide details and examples of how your company uses an internal price of carbon

Hydro uses the European cost of carbon in our internal calculations as our smelters are part of the EU ETS directive. Carbon cost is an integrated part of all financial considerations, including all relevant investments and operations.

CC2.3

Do you engage in activities that could either directly or indirectly influence public policy on climate change through any of the following? (tick all that apply)

Direct engagement with policy makers Trade associations

Funding research organizations

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On what issues have you been engaging directly with policy makers?

Focus of legislation Corporate

Position Details of engagement Proposed legislative solution

Cap and trade Support Meetings with EU stakeholders More predicitable and efficient

cap and trade Other: Energy and climate

framework conditions Support

Meetings, conferences and panel discussions with policy makers and other relevant stakeholders in Brazil, Norway, Germany and EU.

Competitive and predictable framework conditions

CC2.3b

Are you on the Board of any trade associations or provide funding beyond membership? Yes

CC2.3c

Please enter the details of those trade associations that are likely to take a position on climate change legislation

Trade association Is your position on climate change consistent with theirs?

Please explain the trade association's position How have you, or are you attempting to, influence the position?

European Aluminium

Association Consistent

A restructuring of cap and trade / ETS to take industry concerns more into consideration

Through discussions in committees and meetings in the relevant forums of the organization. Comments to position papers. Hydro is a long-standing member and is instrumental in leading the EAA, its policy agenda and interaction with the authorities. The company has a representative sitting in the Executive Committee of the association and participates in projects and committees as appropriate. Financial contributions are given as ordinary membership fees.

Eurometaux Consistent A restructuring of cap and trade / ETS to take industry concerns more into consideration

Through discussions in committees and meetings in the relevant forums of the organization. Comments to position papers. Hydro has a representative sitting in the Executive

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Trade association Is your position on climate change consistent with theirs?

Please explain the trade association's position How have you, or are you attempting to, influence the position?

Committee of the association and participates in projects and committees as appropriate. Financial contributions are given as ordinary membership fees.

The Federation of Norwegian Industries (Norsk Industri)

Consistent A restructuring of cap and trade / ETS to take industry concerns more into consideration

Through discussions in committees and meetings in the relevant forums of the organization. Comments to position papers. Hydro’s Executive Vice President and Head of Primary Metal, Hilde Merete Aasheim, is chairperson of the board. Hydro participates in projects and committees as appropriate. Financial contributions are given as ordinary membership fees.

The Aluminum

Association Consistent

Through sensible legislation and regulation, the aluminum industry strongly believes that climate change policy must: -Recognize voluntary actions to reduce greenhouse gas emissions (GHG) -Promote energy efficiency and recycling -Protect a vital U.S. manufacturing sector from overly burdensome regulations.

Through discussions in committees and meetings in the relevant forums of the organization. Comments to position papers. Hydro’s Vice President of Primary Metals North America, Matt Aboud, is a board member in the organization. Hydro participates in projects and committees as appropriate. Financial contributions are given through ordinary membership fees.

Confederation of Norwegian Enterprise (NHO)

Consistent NHO's position is currently under development.

Through discussions in committees and meetings in the relevant forums of the organization. Comments to position papers. Hydro’s Executive Vice President and Head of Primary Metal, Hilde Merete Aasheim, is a member of NHO's council. Hydro participates in projects and committees as appropriate. Financial contributions are given as ordinary membership fees.

Wirtschafts Vereinigung

Metalle Consistent

Through discussions in committees and meetings in the relevant forums of the organization. Comments to position papers. Hydro is a regular participant in projects and committees as appropriate. Financial contributions are given through ordinary membership fees

Gesamtverband der

Aluminiumindustrie Consistent

Through discussions in committees and meetings in the relevant forums of the organization. Comments to position papers. Hydro is a regular participant in projects and committees as appropriate. Financial contributions are given through ordinary membership fees.

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CC2.3d

Do you publicly disclose a list of all the research organizations that you fund? Yes

CC2.3e

Do you fund any research organizations to produce or disseminate public work on climate change? Yes

CC2.3f

Please describe the work and how it aligns with your own strategy on climate change

Hydro funds the Norwegian research organization CICERO (Center for International Climate and Environmental Research) with NOK 250,000 per year. CICERO conducts research on several climate change issues including climate change policy on national, regional and international level. This is relevate to Hydro as it increases our understanding of climate change processes and developments in different policy areas.

To increase our knowledge and to secure a science-based approach within reforestation and biodiversity, we entered in 2013 into a partnership with the University of Oslo, Norway, and its Brazilian partners Museu Paraense Emílio Goeldi, Federal University of Pará and Federal Rural University of the Amazon to create a research program connected to our mining operations. The aim is to strengthen Hydro's ability to preserve the natural biodiversity of the areas where we mine bauxite. Hydro's most important targets in this area are to achieve an area balance of 1:1 in opening of mine compared to reforestation by 2017, and to close the reforestation gap within 2020. We further have a long-term aspiration of No Net Loss of Biodiversity. The project will also include measurement of CO2 emissions from the forest.

CC2.3g

Please provide details of the other engagement activities that you undertake

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What processes do you have in place to ensure that all of your direct and indirect activities that influence policy are consistent with your overall climate change strategy?

Hydro has established policy networks on e.g. climate change (initiated by the Corporate Management Board) which meets regularly. The network is under supervision of the EVP and head of Communication & Public Affairs. Training in public affairs methodology and messages is provided to relevant Hydro employees centrally and locally, also under the supervision of the EVP and head of Communication & Public Affairs.

CC2.3i

Please explain why you do not engage with policy makers

CC2.4

Would your organization's board of directors support an international agreement between governments on climate change, which seeks to limit global temperature rise to under two degree Celsius from pre-industrial levels in line with IPCC scenarios such as RCP2.6?

Yes

CC2.4a

Please describe your board's position on what an effective agreement would mean for your organization and activities that you are undertaking to help deliver this agreement at the 2015 United Nations Climate Change Conference in Paris (COP 21)

Hydro supports a global price on GHG emissions. This may contribute to creating a level playing field globally. This message has been clearly conveyed in different audiences, including to the Norwegian government and the EU.

Please see Hydro's Annual Report 2014 pages 76-77 "Public affairs and lobbying" for additional information:

http://www.hydro.com/en/Investor-relations/Reporting/Annual-report-2014/Download-center/ Please see http://www.hydro.com/en/Our-future/Our-performance/Partnerships/ for more information on all the organizations Hydro supports.

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CC3.1

Did you have an emissions reduction target that was active (ongoing or reached completion) in the reporting year? Intensity target

CC3.1a

Please provide details of your absolute target

ID Scope

% of emissions in

scope

% reduction from

base year Base year

Base year emissions (metric tonnes

CO2e)

Target year Comment

CC3.1b

Please provide details of your intensity target

ID Scope % of emissions in scope % reduction from base year

Metric Base year

Normalized base year emissions

Target year Comment

Int1 Scope 1 45% 13% metric tonnes CO2e per

tonne aluminum 2009 1.85 2015

Module: Risks and Opportunities

Page: CC5. Climate Change Risks CC5.1

Have you identified any inherent climate change risks that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply

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Risks driven by changes in regulation

Risks driven by changes in physical climate parameters

CC5.1a

Please describe your inherent risks that are driven by changes in regulation

Risk driver Description Potential

impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Cap and trade schemes Carbon leakage, where industry is forced to move from areas with strict greenhouse gas regulations and high associated energy costs to areas with less regulations and costs, is a major risk for the European aluminium industry. To establish a global level playing field is thus essential for the European aluminium industry. The introduction of emission trading schemes (ETS) represents a major risk for Hydro as it puts costs on our products that are not put on our competitors’ products

Increased operational cost

>6 years Direct Likely High

Hydro has for many years been an active participant in the global policy framework dialogues. Management time in participation in relevant initiatives.

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Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management in regions without comparable taxes. Smelters that are located in regions with no carbon constraints will then have a major advantage compared to smelters placed inside the ETS. Fair compensatory measures are therefore essential until equal carbon constraints have been adopted globally. Product labelling regulations and standards The EU member states have introduced ambitious recycling targets and other instruments to reduce packaging waste. Hydro takes an active role to further increase the high recycling rates of used aluminium packaging across Europe. Unjustified eco taxes by member states not considering the good recycling performance and excellent sustainability credentials of aluminium packaging Reduced demand for goods/services 3 to 6 years Direct About as likely as not Low-medium Hydro is involved in relevant networks like the food and drink industry`s Sustainable Consumption and Production Round Table to drive the development of appropriate information tools forward and to avoid misleading and unfavourable approaches. Management time in participation in relevant initiatives.

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Risk driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management

have the potential to harm our markets. Simplified ecolabels do not necessarily reflect the environmental impact along the value chain. Carbon footprint messages should take into account the whole life cycle of a product or packaging.

Other regulatory drivers

Energy and climate framework conditions in Brazil, Germany, Norway and the EU are critical to Hydro's ability to develop its aluminium portfolio within these markets further. Hydro supports a global climate regime which will create a level playing field and avoid regional differences in framework conditions. Increased operational cost 3 to 6 years Direct About as likely as not High Meetings, conferences and panel discussions with policy makers and other relevant stakeholders in Brazil, Norway, Germany and EU. Increasing the awareness of the role of aluminium in a low carbon economy. Management time in participation in relevant initiatives. CC5.1b

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Risk driver Description Potential impact Timeframe

Direct/

Indirect Likelihood Magnitude

of impact Estimated financial implications Management method Cost of management Change in precipitation pattern Alunorte in Brazil (majority ownership acquired in February 2011) experienced a spillage of stormwater from the bauxite residue (red mud) deposit following extreme precipitation in April 2009. After the overflow of storm water corrective actions were taken, including strengthening the drainage system and improving the surveillance of the water treatment facility.

Other: Flooding risk Up to 1

year Direct

Virtually

certain Low

A total of 5,343 claims were filed for a local small claims court related to the overflow. By the end of 2014, a total of 3,043 cases had been decided by the first level civil court in Barcarena, Pará, all in Alunorte's favour. Change in mean (average) precipitation Although the Amazon is recognized for its abundance of water, we have observed over the last decades that parts of the area have had repeated periods of unusually low

Other: Drought Up to 1

year Direct Likely Low

Our operations are located so that the likelihood of extreme weather events potentially impacting our operations is limited. All major sites and

Management consideration

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Direct/

of impact Estimated financial implications Management method Cost of management or high rainfall. Hydro has significant operations in the Amazon basin. operations have been through local risk assessments where also issues like extreme weather events have been included. Tropical cyclones (hurricanes and typhoons) Our operations are located so that the likelihood of extreme weather events potentially impacting our operations is limited. All major sites and operations have been through local risk assessments where also issues like extreme weather events have been included. Individual plants have been hit by extreme weather like the hurricane Katrina in 2005. In Hydro's current portfolio, very few of consolidated

Reduction/disruption in production capacity

Up to 1

year Direct Likely Low

Management consideration and emergency planning and training.

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Direct/

of impact Estimated financial implications Management method Cost of management operations are exposed to such risk, while a few minority-owned operations can be exposed.

CC5.1c

Please describe your inherent risks that are driven by changes in other climate-related developments

Risk driver Description Potential

impact Timeframe

Direct/

of impact Estimated financial implications Management method Cost of management CC5.1d

Please explain why you do not consider your company to be exposed to inherent risks driven by changes in regulation that have the potential to generate a substantive change in your business operations, revenue or expenditure

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Please explain why you do not consider your company to be exposed to inherent risks driven by physical climate parameters that have the potential to generate a substantive change in your business operations, revenue or expenditure

CC5.1f

Please explain why you do not consider your company to be exposed to inherent risks driven by changes in other climate-related developments that have the potential to generate a substantive change in your business operations, revenue or expenditure

We believe that the risks described above include the most material climate-related risks for Hydro.

Page: CC6. Climate Change Opportunities CC6.1

Have you identified any inherent climate change opportunities that have the potential to generate a substantive change in your business operations, revenue or expenditure? Tick all that apply

Opportunities driven by changes in regulation

Opportunities driven by changes in physical climate parameters Opportunities driven by changes in other climate-related developments

CC6.1a

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Opportunity

driver Description Potential impact Timeframe Direct/Indirect Likelihood

Magnitude of impact Estimated financial implications Management method Cost of management Product efficiency regulations and standards Requirements of energy efficient transportation and buildings, food preservation and safety Increased demand for existing products/services 1 to 3

years Direct Very likely

Medium-high

Financial implications are still difficult to estimate. However, we believe that more energy efficient products can give a competitive advantage towards an increasing percentage of customers. R&D (including cooperation with external institutions), cooperation with customers. Management, sales and R&D representatives cooperating with customers. Fuel/energy taxes and regulations Requirements of energy efficient transportation and buildings, food preservation and safety Increased demand for existing products/services 3 to 6

years Direct Likely

Medium-high

Financial implications are still difficult to estimate. However, we believe such labelling can give a competitive advantage towards certain customers. Participation in e.g. the Aluminium Stewardship Initiative and certain recycling initiatives. Management time in participation in relevant initiatives. Renewable energy regulation Further development of existing hydropower plants partly based on green certificates Investment opportunities Up to 1 year Direct Virtually certain Low-medium Increased normal production of 0.1 TWh corresponding to an annual turnover of Better utilization and upgrade of existing reservoirs and power plants Management development time.

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Opportunity

driver Description Potential impact Timeframe Direct/Indirect Likelihood

Magnitude of impact Estimated financial implications Management method Cost of management about NOK 23 million CC6.1b

Please describe the inherent opportunities that are driven by changes in physical climate parameters

Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Change in mean (average) precipitation In Norway, increased precipitation has already resulted in and may result in further increased water flows to our hydropower reservoirs, thus increasing the power output. In the updated normal production figures (last updated in 2013) the increase from 9.4 to 10 TWh, 0.1 TWh are related to increased precipitation. Increased production capacity Up to 1 year Direct Virtually certain Low Estimated increased income as a consequence of the additional 0,1 TWh is approximately NOK 22-23 mill a year (calculation based on 2014 spot price level).

Better utilization and upgrade of existing reservoirs and power plants. Update of inflow estimates and production plans in daily scheduling. CC6.1c

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Please describe the inherent opportunities that are driven by changes in other climate-related developments Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management Changing consumer behaviour Aluminium, with its properties that include lightweight and ease of recycling, represents a growing opportunity in an increasingly carbon-constrained world. Although the current economic situation in some areas reduces the short term opportunities, we believe that aluminium will be a part of the solution in the long term. More and more customers are requesting aluminium that has been produced with lower climate footprint. Still small in number, some of them represent interesting business Increased demand for existing products/services 1 to 3

years Direct Very likely Medium

Financial implications are still difficult to estimate. However, we believe that increasing consumer consciousness about climate change may give a range of aluminium applications a competitive advantage towards an increasing percentage of customers. R&D (including cooperation with external institutions), cooperation with customers. Management, sales and R&D representatives cooperating with customers

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Opportunity driver Description Potential impact Timeframe Direct/ Indirect Likelihood Magnitude of impact Estimated financial implications Management method Cost of management opportunities. Through the Søral acquisition (in Norway) in 2014, Hydro increased its primary aluminium capacity based on hydropower by 92,000 metric tons. CC6.1d

Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in regulation that have the potential to generate a substantive change in your business operations, revenue or expenditure

CC6.1e

Please explain why you do not consider your company to be exposed to inherent opportunities driven by physical climate parameters that have the potential to generate a substantive change in your business operations, revenue or expenditure

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Please explain why you do not consider your company to be exposed to inherent opportunities driven by changes in other climate-related developments that have the potential to generate a substantive change in your business operations, revenue or expenditure

Another example is the increase of 0.6 TWh in Hydro's normal hydropower production since 2011 of which 0.5 TWh were made in 2013. The increase follows 0,2 TWh through acquisitions, 0.2 TWh through upgrade of certain power stations, 0.1 TWh through improved flooding control etc and 0.1 TWh through increased normal precipitation. The increase in normal precipitation alone, accounts for about NOK 23 million annually (2014 price level). In total, Hydro accounted NOK million 380 on investments in increased power production capacity in 2013, including the acquisition of the Vigeland Brug power station. Upgrade of the power plants in Norway continued through 2014.

Module: GHG Emissions Accounting, Energy and Fuel Use, and Trading

Page: CC7. Emissions Methodology CC7.1

Please provide your base year and base year emissions (Scopes 1 and 2)

Scope

Base year Base year emissions (metric tonnes CO2e)

Scope 1

Wed 01 Jan 2014 - Wed 31

Dec 2014 9538340

Scope 2

Wed 01 Jan 2014 - Wed 31

Dec 2014 3493659

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Please give the name of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions

Please select the published methodologies that you use

The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition)

CC7.2a

If you have selected "Other" in CC7.2 please provide details of the standard, protocol or methodology you have used to collect activity data and calculate Scope 1 and Scope 2 emissions

Not applicable

CC7.3

Please give the source for the global warming potentials you have used

Gas Reference

SF6 Other: IPCC Fifth Assessment Report (AR5 - 100 year) Other: Perfluoromethane Other: IPCC Fifth Assessment Report (AR5 - 100 year) Other: Perfluoroethane Other: IPCC Fifth Assessment Report (AR5 - 100 year) Other: N20 Other: IPCC Fifth Assessment Report (AR5 - 100 year) CH4 Other: IPCC Fifth Assessment Report (AR5 - 100 year) CO2 Other: IPCC Fifth Assessment Report (AR5 - 100 year)

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CC7.4

Please give the emissions factors you have applied and their origin; alternatively, please attach an Excel spreadsheet with this data at the bottom of this page

Fuel/Material/Energy Emission Factor Unit Reference

Natural gas 2.75 metric tonnes CO2e per metric tonne

Liquefied Natural Gas (LNG) 3.00 metric tonnes CO2e per metric tonne

Crude oil 3.20 metric tonnes CO2e per metric tonne

Diesel/Gas oil 3.17 metric tonnes CO2e per metric tonne

Lignite 2.40 metric tonnes CO2e per metric tonne

Petroleum coke 3.59 metric tonnes CO2e per metric tonne

Lignite coke 3.20 metric tonnes CO2e per metric tonne

Page: CC8. Emissions Data - (1 Jan 2014 - 31 Dec 2014) CC8.1

Please select the boundary you are using for your Scope 1 and 2 greenhouse gas inventory

Equity share

(35)

Please provide your gross global Scope 1 emissions figures in metric tonnes CO2e

9538340

CC8.3

Please provide your gross global Scope 2 emissions figures in metric tonnes CO2e

3493659

CC8.4

Are there are any sources (e.g. facilities, specific GHGs, activities, geographies, etc.) of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in your disclosure?

Yes

CC8.4a

Please provide details of the sources of Scope 1 and Scope 2 emissions that are within your selected reporting boundary which are not included in your disclosure

Source

Relevance of Scope 1 emissions from this source

Relevance of Scope 2 emissions excluded

from this source

Explain why the source is excluded

Office buildings outside

production sites. Emissions are not relevant

Emissions are not relevant

Insignificant part of total emissions (within total uncertainty range).

(36)

CC8.5

Please estimate the level of uncertainty of the total gross global Scope 1 and 2 emissions figures that you have supplied and specify the sources of uncertainty in your data gathering, handling and calculations

Scope

Uncertainty range Main sources of

uncertainty Please expand on the uncertainty in your data

Scope 1

Less than or equal to 2%

Data Gaps Metering/ Measurement Constraints

Data gaps from some minor sites might occur. Also some minor metering/measuring constraints might occur. However, all Hydro sites are required to report their data into a Corporate reporting tool. Corporate requirements also exist for metering/measuring

Scope 2

More than 5% but less than or equal to 10%

Data Gaps Other: Published emission factors

Some data gaps from minor sites might occur. Uncertainties in emission factors for the calculation of scope 2 emissions might also represent minor uncertainties

CC8.6

Please indicate the verification/assurance status that applies to your reported Scope 1 emissions

Third party verification or assurance complete

CC8.6a

(37)

Type of verification or

assurance Attach the statement Page/section

reference Relevant standard Proportion of reported Scope 1 emissions verified (%)

Limited assurance https://www.cdp.net/sites/2015/97/13397/Climate Change 2015/Shared

Documents/Attachments/CC8.6a/01_annual_report_2014.pdf 117-118 ISAE3000 100 Limited assurance https://www.cdp.net/sites/2015/97/13397/Climate Change 2015/Shared

Documents/Attachments/CC8.6a/KPMG statement.pdf 1-2 ISAE3000 100

CC8.6b

Please provide further details of the regulatory regime to which you are complying that specifies the use of Continuous Emissions Monitoring Systems (CEMS)

Regulation % of emissions covered by the system Compliance period Evidence of submission

CC8.7

Please indicate the verification/assurance status that applies to your reported Scope 2 emissions

Third party verification or assurance complete

CC8.7a

(38)

Type of verification or

assurance Attach the statement

Page/Section reference Relevant standard Proportion of reported Scope 2 emissions verified (%)

Limited assurance https://www.cdp.net/sites/2015/97/13397/Climate Change 2015/Shared

Documents/Attachments/CC8.7a/01_annual_report_2014.pdf 117-118 ISAE3000 100 Limited assurance https://www.cdp.net/sites/2015/97/13397/Climate Change 2015/Shared

Documents/Attachments/CC8.7a/KPMG statement.pdf 1-2 ISAE3000 100

CC8.8

Please identify if any data points have been verified as part of the third party verification work undertaken, other than the verification of emissions figures reported in CC8.6, CC8.7 and CC14.2

Additional data points verified Comment

Year on year change in emissions (Scope 1 and 2) Same as reported in CC8.7a Year on year emissions intensity figure Same as reported in CC8.7a Progress against emission reduction target Same as reported in CC8.7a Emissions reduction activities Same as reported in CC8.7a

CC8.9

Are carbon dioxide emissions from biologically sequestered carbon relevant to your organization? No

(39)

Please provide the emissions from biologically sequestered carbon relevant to your organization in metric tonnes CO2

All greenhouse gas emissions reported in Hydro's response to the CDP were also part of the scope for our independent auditor KPMG's limited assurance of Viability performance in Hydro's Annual Report 2014. Please see page 117-118: http://www.hydro.com/en/Investor-relations/Reporting/Annual-report-2014/ Page: CC9. Scope 1 Emissions Breakdown - (1 Jan 2014 - 31 Dec 2014)

CC9.1

Do you have Scope 1 emissions sources in more than one country?

Yes

CC9.1a

Please break down your total gross global Scope 1 emissions by country/region

Country/Region Scope 1 metric tonnes CO2e

Australia 150224 Brazil 4013990 Canada 252091 France 10081 Germany 590200 Italy 27940

(40)

Country/Region Scope 1 metric tonnes CO2e Luxembourg 20756 Norway 1596283 Slovakia 174512 Spain 15247 United Kingdom 9466

United States of America 40770

Qatar 2309818

Netherlands 73602

Western Europe 253574

CC9.2

Please indicate which other Scope 1 emissions breakdowns you are able to provide (tick all that apply)

By business division By GHG type

CC9.2a

Please break down your total gross global Scope 1 emissions by business division

Business division Scope 1 emissions (metric tonnes CO2e)

Bauxite & Alumina 3607243 Metal production 5346271

(41)

Other Activities 584825

CC9.2b

Please break down your total gross global Scope 1 emissions by facility

Facility Scope 1 emissions (metric tonnes CO2e)

Latitude Longitude

CC9.2c

Please break down your total gross global Scope 1 emissions by GHG type

GHG type Scope 1 emissions (metric tonnes CO2e)

CO2 9258217

Other: N20 134

CH4 52

PFCs 279936

(42)

Please break down your total gross global Scope 1 emissions by activity

Activity Scope 1 emissions (metric tonnes CO2e)

CC9.2e

Please break down your total gross global Scope 1 emissions by legal structure

Legal structure Scope 1 emissions (metric tonnes CO2e)

Hydro`s joint venture Sapa is included under Scope 1 emissions under CC 9.1a as "Western Europe" since most of SAPAs activities take place in several European countries. Hydro's share of these emissions was at 253 574 tons CO2e in 2014, which accounts for 3.3 percent of Hydro's total scope 1 emissions. In CC9.2a Sapa is included as "other activities".

Page: CC10. Scope 2 Emissions Breakdown - (1 Jan 2014 - 31 Dec 2014) CC10.1

Do you have Scope 2 emissions sources in more than one country?

Yes

(43)

Please break down your total gross global Scope 2 emissions and energy consumption by country/region

Country/Region Scope 2 metric tonnes CO2e Purchased and consumed electricity, heat, steam or cooling

(MWh)

Purchased and consumed low carbon electricity, heat, steam or cooling accounted for in CC8.3

(MWh) Australia 858873 Brazil 352607 Canada 279035 France 613 Germany 1282422 Italy 23223 Luxembourg 2530 Norway 69069 Slovakia 290373 Spain 2069 United Kingdom 2223 United States of America 9321

Netherlands 6664

Qatar 70787

Western Europe 243630

CC10.2

Please indicate which other Scope 2 emissions breakdowns you are able to provide (tick all that apply)

By business division

(44)

Please break down your total gross global Scope 2 emissions by business division

Bauxite & Alumina 310412 Metal Production 2768060 Other Activites 415187

CC10.2b

Please break down your total gross global Scope 2 emissions by facility

Facility Scope 2 emissions (metric tonnes CO2e)

CC10.2c

Please break down your total gross global Scope 2 emissions by activity

Activity Scope 2 emissions (metric tonnes CO2e)

(45)

Please break down your total gross global Scope 2 emissions by legal structure

Legal structure Scope 2 emissions (metric tonnes CO2e)

Hydro`s joint venture Sapa is included under Scope 2 emissions under CC 10.1a as "Western Europe" since most of Sapa's activities take place in several

European countries. Hydro's share of these emissions was 243 630 tons CO2e in 2014, which represents 4.6 percent of Hydro's total scope 2 emissions. In CC10.2 Sapa is included as "other activites"

Page: CC11. Energy CC11.1

What percentage of your total operational spend in the reporting year was on energy?

CC11.2

Please state how much fuel, electricity, heat, steam, and cooling in MWh your organization has purchased and consumed during the reporting year

Energy type MWh Fuel 21489891 Electricity 25510108 Heat Steam Cooling

(46)

CC11.3

Please complete the table by breaking down the total "Fuel" figure entered above by fuel type

Fuels MWh

Other: Coal 4869981

Petroleum coke 4991966

Natural gas 1813878

Liquefied Natural Gas (LNG) 447108

Crude oil 8188286

Other: Unspecified 1178669

CC11.4

Please provide details of the electricity, heat, steam or cooling amounts that were accounted at a low carbon emission factor in the Scope 2 figure reported in CC8.3

Basis for applying a low carbon emission

factor

MWh associated with low carbon electricity, heat, steam or cooling

Comment

Tracking instruments,

Guarantees of Origin 10200000

Hydro's hydropower production in Norway was 10.2 TWh in 2014, of which all have been certified by Guarantees of Origin. This electricity was consumed by Hydro's own operations in addition to the purchased electricity in question C11.2.

Page: CC12. Emissions Performance CC12.1

(47)

How do your gross global emissions (Scope 1 and 2 combined) for the reporting year compare to the previous year? Increased

CC12.1a

Please identify the reasons for any change in your gross global emissions (Scope 1 and 2 combined) and for each of them specify how your emissions compare to the previous year

Reason Emissions value (percentage)

Direction of

change Comment

Emissions reduction activities

Divestment 0 No change No significant divestments (related to GHG emissions) in 2014.

Acquisitions 0 No change

The acquisition of 50 percent of Søral (now Hydro Husnes) aluminium plant in Norway will not have consequences in the GHG accounts till 2015. Apart from Søral, there were no significant

acquisitions (related to GHG emissions) in 2014. Mergers

Change in output 3.6 Increase

The increase from 2014 to 2013 was (13.3 million CO2e -12.58 million CO2e)*100/12.58 million CO2e = 3.6 % The main reasons for the increase is that alumina production increased by 10 % and primary liquid aluminium prodution increased by 1,5%.

Change in methodology Change in boundary Change in physical operating conditions Unidentified Other CC12.2

(48)

Intensity figure Metric numerator Metric denominator % change from previous year Direction of change from previous year

Reason for change

metric tonnes CO2e

unit total

revenue N/A

Intensity measurements combining financial and environmental data do in our opinion not give a robust indicator as fluctuations in the economic situation can have larger impact than the actual environmental improvements. The global financial situation during the financial crisis is a good illustration on this.

CC12.3

Please describe your gross global combined Scope 1 and 2 emissions for the reporting year in metric tonnes CO2e per full time equivalent (FTE) employee Intensity figure Metric numerator Metric denominator % change from previous year Direction of change from previous year

metric tonnes CO2e

FTE

employee N/A

Intensity measurements combining headcount and environmental data do in our opinion not give a robust indicator. Production of primary aluminium is energy intensive, but rather low on labour intensity. The situation is the opposite in aluminium extrusion. Thus, organisational and structural changes can have larger impact than the actual environmental improvements.

CC12.4

(49)

Intensity figure Metric numerator Metric denominator % change from previous year Direction of change from previous year

1.63 metric tonnes CO2e

metric tonne of

product 0 No change

The indicator measures CO2e emissions from primary production. The result (based on comparable GHG emission factors) was the same in 2014 as in 2013.

Page: CC13. Emissions Trading CC13.1

Do you participate in any emissions trading schemes? Yes

CC13.1a

Please complete the following table for each of the emission trading schemes in which you participate

Scheme name Period for which data is

supplied Allowances allocated Allowances purchased

Verified emissions in metric tonnes CO2e Details of ownership European Union ETS

Wed 01 Jan 2014 - Wed 31 Dec

2014 2345000 26000 2396000 Facilities we own and