Environmental Report

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133 Iberia & Latin America Division 135 Iberia 136 Portugal 136 Eco-Balance 138 Indicators 142 Spain 142 Eco-Balance 149 Indicators 163 Latin America 164 Argentina 164 Eco-Balance 168 Indicators 175 Brazil 175 Eco-Balance 178 Indicators 185 Chile 185 Eco-Balance 190 Indicators 198 Colombia 198 Eco-Balance 202 Indicators 210 Costa Rica 210 Eco-Balance 213 Indicators 216 Guatemala 216 Eco-Balance 218 Indicators 220 Mexico 220 Eco-Balance 222 Indicators 224 Panama 224 Eco-Balance 226 Indicators 228 Peru 228 Eco-Balance 231 Indicators 237 International Division 239 Bulgaria 239 Eco-Balance 242 Indicators 246 Greece 246 Eco-Balance 247 Indicators 249 North America 249 Eco-Balance 253 Indicators 260 Romania 260 Eco-Balance 262 Indicators 266 Slovakia 266 Eco-Balance 272 Indicators

OCCUPATIONAL HEALTH & SAFETY

284 Protection of workers’ health and improvement of workplace safety

284 Organization

286 Awareness, training & education 287 Expenditure

288 Initiatives 291 Injuries

ENVIRONMENTAL REPORT VERIFICATION

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The Environmental Report 2007 covers the industrial aspects of the activities of electricity generation and electricity & natural gas distribution and marketing that Enel carries out in the world, through all the companies included in its scope of consolidation.

The status data reflect the situation of these companies as of December 31, 2007 or of each of the reported years. The flow data of the companies acquired or sold in the course of the year are only reported to the extent of their relevance to the Group. In line with the proportional or full consolidation method adopted in the Group’s Annual Report/Financial Statements, the data of the fully consolidated companies are reported as 100%, whatever Enel’s holdings in the same companies, whereas the data of the proportionally consolidated companies are reported proportionally to Enel’s holdings. The Report opens with the organizational and operational framework of Enel’s environmental activities. After presenting the 2007 energy and environmental highlights of the overall Group, the Report describes Enel’s position on climate change and reviews the environmental performance of Enel’s Divisions in each country.

The methodology used in the Report is hinged on the principles and guidelines laid down by “Fondazione ENI Enrico Mattei”. For 12 years, these guidelines have been enriched with experience feedback and recommendations from verifiers (Ernst & Young, ERM, IT Group), capitalizing on their international experience. Since last year, reliance has been made on the Global Reporting Initiative (GRI) guidelines, and the Report has been integrated accordingly. For the typical sustainability data required by GRI, for relations with stakeholders, as well as for the 2007 environmental targets, the reader is referred to the Group’s Sustainability Report.

The technical definitions are mostly based on the “Statistical Terminology Employed in the Electricity Supply Industry”, published by UNIPEDE

(International Union of Producers and Distributors of Electrical Energy), which was merged with Eurelectric in June 2001. The formats for presenting both process and governance data are continuously updated, taking into account Enel’s organizational changes and growing internationalization, developments in laws and regulations, as well as experience feedback.

Therefore, the reported data refer to all the assets owned by Enel as of 31 December 2007, except for those related to mining and quarrying in Spain and Russia and gas distribution in Spain, given their poor significance in 2007.

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For additional information about the general contents of the Environmental Report, contact:

Giulio Peruzzi

Enel - Regolamentazione e Ambiente Politiche Ambientali

Viale Regina Margherita, 137 00198 Roma (Italy) Tel. no. +39 068305.7451 [email protected]

Contact persons for the various activities are specified from time to time.

With regard to the Iberia and Latin America Division, Endesa provided its data in a consolidated format (as per its Sustainability Report). These data, which are reported here proportionally to Enel’s stake in the company,

do not include expendables for nuclear and thermal generation (excluding

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thermal generation in Chile) and to electricity distribution in Chile (for the other countries, instead, these data are reported), as no formal system for recording and aggregating this type of data was in place;

do not include waste waters: contrary to the practice adopted so far by Enel, no

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distinction was made between industrial waste waters and open-cycle cooling waters (for these data, the reader is referred to Endesa’s Sustainability Report); do not include data on environmental expenditure, as no formal system for

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environmental accounting (as the one adopted so far by Enel) was in place (for these data, the reader is referred to Endesa’s Sustainability Report); do not include Endesa’s installations in Europe (excluding Spain and Portugal),

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as these installations make part of Enel’s plan of sale of assets to E.ON. However, as Endesa was acquired in October 2007, it accounts for as little as 3/12 of the yearly quantities reported in the Eco-Balance.

Occupational health & safety data are collected at different levels of Enel (companies, Divisions, parent company).

The relevant fact sheets contain the main parameters used by multinationals: indexes, expenditure, personnel, as well as awareness, training & education activities. The formats used for data reporting follow the Group’s organizational evolution. The methodology relies on the GRI guidelines and on the environmental and occupational health & safety parameters used by ILO (International Labor Organization), EUROSTAT and ISTAT (Italian statistical institute), INAIL (Italian workers’ compensation authority) and OSHA (US Occupational Health & Safety Administration).

For numbers and derived indexes, use is made of formulas and methods based on international standards and long established within Enel. With a view to making the process of data collection, processing and reporting homogeneous, the Group issues specific policies and procedures concerning values and indexes.

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Global environmental leadership

Enel has changed a lot in the past few years. The weight of our international operations has progressively grown and, with the acquisition of Endesa in Spain and OGK5 in Russia, it is now comparable to the one of our Italian operations. At the same time, Enel has renewed and intensified its already significant commitment to the environment, extending it to all of its international operations. We intend to more and more vigorously strengthen our global environmental leadership and implement, in all of our markets, the policy that we inaugurated with our first Environmental Report in 1996. This policy, which we have gradually tailored to the changing context of our operations, has now become particularly responsive to global issues.

The Environmental Report has evolved over the years, reaching such a level of analysis and detail as to stand out for extent, completeness and transparency of the reported data.

With the Group’s internationalization, the environmental reporting activity has increasingly been used as a yardstick to compare the environmental performance of our operations and pinpoint areas of potential improvement.

Integration of processes across our operations provides an opportunity to capitalize on our best experiences, leverage synergies and disseminate the best practices by progressively harmonizing our environmental management systems.

Enel aims to mitigate the environmental impact of its activities on all fronts, from the fight against climate change to abatement of polluting emissions, from energy efficiency to waste minimization.

The results of 2007 are very good. As our assets have changed substantially in the past few years, the most meaningful examples of these results concern our Italian operations. With respect to 2003, CO2 emissions from thermal generation dropped by about 25 million tonnes (about 35%), those of sulfur oxides and particulates by about 55% and those of nitrogen oxides by over 40%. Hydrogen sulfide emissions from geothermal activities fell by 34%. In 2007, special waste recovery was close to 85% and cable lines accounted for approximately 70% of the entire distribution grid. Results are outstanding also in other countries. In Bulgaria, where we have been operating since 2003, we made considerable progress in curbing emissions of the main pollutants: sulfur oxides and particulates by over 55% and nitrogen oxides by more than 25% in the past four years.

Enel is a worldwide leader in renewables, with more than 36 billion kWh generated in 2007, i.e. roughly 24% of our overall generation.

Avoided CO2 emissions, thanks to power generation from renewable and nuclear sources (Enel re-entered into the nuclear sector through the acquisition of Slovenské elektrárne and Endesa), may be estimated at approximately 45 million tonnes.

CEO’s message

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These achievements testify our firm commitment to excellence also in environmental governance. We intend to enhance this commitment and extend it to all the new countries where we operate, so as to provide our customers with reasonably-priced and environmentally-sustainable energy. This is a challenge that we face every day and that requires relentless efforts in developing and deploying the best practices and technologies. Against this background lies the struggle against climate change, whose effectiveness calls for a global and intersectoral approach. We will contribute to this struggle, by relying on our international scale and on our expertise in a wide array of technologies.

In Italy and in the world, we will: i) further develop renewables, consolidating our leadership in the sector; ii) expand the use of the best available technologies, such as high-efficiency coal; and iii) experiment innovative technologies, such as CO2 capture and storage for zero-emission power plants, innovative solar thermodynamic systems and power generation from hydrogen. These projects are part of our ambitious “Environment & Innovation” plan. With as many as 7,400 million euro allocated to renewables and innovation in the 2008-2012 period, the plan confirms Enel’s strong commitment to the environment.

We are also working to incorporate a major share of nuclear generation into our portfolio and make the nuclear source safer and safer by developing new-generation nuclear power plants.

Central to our environmental policy is our climate strategy, which is aimed at leveraging our skills in developing and managing the most advanced technologies. The implications of this statement, in terms of efforts and results, are shown in this report.

The success of our environmental policy depends on clear and firm rules and on the commitment of national and local institutions. Enel can contribute by providing decision-makers with any useful experiences for building sound foundations on which to make the best political choices.

We are ready.

The Chief Executive Officer and General Manager

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Enel’s organizational structure, which reflects the Group’s international expansion, consists of the following Divisions: Domestic Generation & Energy Management, Infrastructure & Networks, Engineering & Innovation, Market, Iberia and Latin America and International.

Guidance, coordination, monitoring and support activities are centralized in the parent company (the so-called “Corporate”), whose mission is to leverage the synergies of the Group and optimize the management of activities that sustain its core business.

Enel SpA

Board of Directors

Chief Executive Officer Chairman Corporate Affairs Domestic Generation & Energy Management Infrastructure & Networks Engineering

& Innovation Market

Iberia and

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Enel regards the care for the environment and the fight against climate change as strategic factors in carrying out and expanding its activities and as key factors in consolidating its leadership in energy markets.

The Group’s environmental policy is based on three fundamental principles and pursues nine strategic targets.

Principles

Protecting the environment and the health & safety of workers.

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Raising environmental and product quality standards.

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Creating value for Enel.

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Strategic targets

Application of international environmental management systems to its entire

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organization.

Optimized integration of installations and buildings into the landscape.

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Mitigation of environmental impacts by applying the best available

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technologies and the best practices in building, operating and decommissioning its installations.

Leadership in renewables.

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Efficient use of energy and water resources, as well as of raw materials.

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Optimized management of waste and effluents.

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Communication of Enel’s environmental performance to the public at large

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and to institutions.

Environmental awareness, training & education of employees.

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Promotion of environmentally-sustainable practices among its suppliers

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and contractors.

The Chief Executive Officer and General Manager

Fulvio Conti

Environmental policy

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Enel’s Regulatory Affairs and Corporate Strategy/Environmental Policies Unit has the mission of identifying Enel’s strategic environmental targets and of ensuring their consistency with the Divisions’ programs and initiatives. The Environmental Policies Unit has, among others, the following specific tasks:

formulating Enel’s environmental, renewables, energy efficiency and climate

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change policies and guidelines;

developing and defending Enel’s positions on environmental legislation,

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incentives to renewables, Emissions Trading Scheme and energy efficiency; identifying indicators, monitoring and controlling Enel’s environmental

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performance in and outside Italy; preparing Enel’s Eco-Balance;

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supporting Enel’s Divisions in and outside Italy in conducting M&As in the

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areas falling under its responsibility.

Furthermore, depending on the specific issues to be covered, each Division has environmental teams and/or specialists at different levels.

Enel’s total human resources dedicated to environmental matters amount to about 320 full-time equivalents in the world and to about 176 full-time equivalents in Italy. These human resources include support personnel at regional and divisional level which provides environmental services to multiple units. In the Generation & Energy Management Division, all the Business Units of the Renewables Business Area and the medium-to-large Business Units of the Thermal Generation Business Area comprise a Safety & Environment/Operation Unit, which deals – among others – with site-specific environmental matters. In the Infrastructure & Networks Division, the Quality, Safety & Environment Unit is in charge of country-wide operational coordination of environmental activities concerning its power and gas grids and the public lighting systems that it owns or operates.

In the Iberia and Latin America Division, Endesa has a central environmental organization (“Dirección de Medio Ambiente y Desarrollo Sostenible”), which coordinates all the regional units involved in the various types of generation. Its total human resources dedicated to environmental matters amount to roughly 135 full-time equivalents (90 full-time equivalents is the proportional weight which may be attributed to the Enel Group). The remaining part of the Division has significant environmental teams, especially in Spain, in the thermal power plants of Viesgo Generación and Eufer and in the electricity distribution activities of Electra de Viesgo Distribución (16 members in total). Moreover, each of Enel Latin America’s hydro and wind power plants has one member of the personnel dedicated to the environment.

The International Division has a Safety & Environment Unit (within its Operations

Environmental organization

Personnel dedicated to environmental activities as of Dec. 31, 2007

(Total full-time equivalents - no.)

■Thermal generation ■Nuclear generation

■Generation from renewables

■Electricity distribution ■Gas distribution ■Support activities 15.9% 0.6% 48.9% 13.6% 21.0%

In the overall Group: 320

In Italy: 176 12.4% 0.5% 40.7% 15.9% 3.1% 27.4%

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& Integration function), which coordinates the environmental activities of the companies falling under its responsibility. Slovenské elektrárne has an environmental team of 18 members. Significant environmental teams are also active in the other companies, especially in the thermal power plant of Enel Maritza East (4 members), in the distribution grids of Enel Electrica Banat and Enel Electrica Dobrogea (6 members in total). Enel North America (ENA) has 4 members of the personnel dedicated to the environment.

The Engineering & Innovation Division has a unit in charge of the “Engineering & Innovation Project”, whose activities are described in the relevant paragraph of the section on “Climate change and Enel’s response”. The total human resources assigned to environmental research are 72, while those engaged in the Engineering & Innovation Project are 7.

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In Enel’s organizational model, the parent company is responsible, among others, for governing the cross-cutting processes of the Group in such a way as to maximize their effectiveness and efficiency. In this framework, environmental governance helps raise the social credibility of Enel and is a measure of the competitiveness and viability of its industrial choices vis-à-vis shareholders, customers and communities. Enel’s environmental governance is currently implemented via reporting, management systems, awareness, training & education schemes and process integration across Enel’s Italian and non-Italian operations and thus transferred to regional units in order to ensure consistent actions and behaviors throughout the Group.

Environmental integration is particularly focused on:

environmental reporting and performance tracking, i.e. it represents a continuous

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monitoring and benchmarking tool for the Group’s operations;

coordinating and harmonizing the application of Enel’s environmental

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policy and management systems in compliance with international standards (ISO and EMAS);

effectively monitoring regulatory developments in the environmental domain

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and developing Enel’s response.

Effective environmental governance also means careful management of financial resources. Although Enel has not an environment-focused accounting system, its environmental expenditure is recorded with an increasing level of refinement and coding, in order to optimize and assess the return on environmental investments. In 2007, the recording and reporting of environmental expenditure was extended to all of Enel’s international operations.

Additionally, the governance process is designed in such a way as to address the inevitable environmental criticalities that occasionally evolve into lawsuits.

Environmental reporting

The reporting system is a key vehicle for constantly monitoring the interactions of Enel’s industrial activities with the environment. The formats for collection of both process and governance data are continuously updated to take into account the evolution of Enel’s organizational configuration, legislation, technologies, growing internationalization and experience feedback.

In 2007, environmental data reporting was extended to the Market Division and to the activities of Enel’s Italian offices. An information system was introduced to facilitate acquisition of the data, check their accuracy and consistency more effectively and more rapidly, trace the responsibilities of the individual units of the Group and benchmark environmental performance at all levels (Unit, type of business, Company, Division).

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In addition to formats for data collection and aggregation, the Environmental Policies Unit provides all the levels of the Group with a number of tools, which contain a large spectrum of indicators (ratios between homogeneous or heterogeneous quantities). These tools make it possible to compare the environmental performance of the individual units, track the evolution of the data of a single unit over time (regardless of variations in its volume of activities), identify environmental performance deviations from average or target values and immediately assess the reliability and consistency of results. Data reporting is an integral part of Enel’s environmental management system and its methodology ensures the utmost homogeneity of the collected data. The reporting system has become an instrument through which many of Enel’s units periodically check their environmental performance vs. targets. In this regard, Enel’s Domestic Infrastructure & Networks Division/Power Grid was the first to automate its environmental reporting system. On a quarterly basis, the system updates a software application called “ambientesicurezza” (environment & safety), which runs on Enel’s intranet (see next paragraph on “Awareness, training & education”). It is worth noting that the historical data of the 2003-2006 period have been reorganized on the basis of Enel’s new configuration.

Environmental management systems

In 2007, Enel further extended the adoption of international standards for certifying its environmental management systems.

More than 82% of the Group’s installed capacity was certified under ISO 14001 as of December 31, 2007; 36.3% of the installed capacity in Europe (62,063 MW) was also registered under EMAS (Eco-Management and Audit Scheme – European Council Regulation 761/01). To know more about the capacity certified in the various countries where Enel operates, the reader is referred to the fact sheets of each Division and related Business Areas.

With regard to electricity generation in Italy, about 89% of the installed capacity (463 out of 598 plants) was ISO 14001-certified as of Dec. 31, 2007 (80% as of Dec. 31, 2006). 191 of these power plants (about 51% of the total installed capacity – 44% as of Dec. 31, 2006) were also EMAS-registered.

The Business Units which are both ISO 14001-certified and EMAS-registered are: i) in the Thermal Generation Business Area, those of Fusina, Genova, La Casella, La Spezia, Leri Cavour, Montalto di Castro, Porto Corsini, Sulcis, Torrevaldaliga Nord and Priolo Gargallo; ii) in the Renewables Business Area, those of Bologna, Bolzano, Sardegna, Sicilia, Napoli and Trento, as well as the hydro generation groups of Cuneo, Montorio, Bussolengo and Vittorio Veneto. The hydro generation group of Feltre (Vittorio Veneto Business Unit) initiated the EMAS registration procedure with the Italian Ecolabel-Ecoaudit Committee.

The sites/organizations which, for the time being, are only ISO 14001-certified are: i) in the Thermal Generation Business Area, the Business Units of Bastardo, Brindisi Sud, Pietrafitta, Porto Tolle, Rossano Calabro, Santa Barbara and Termini Imerese; ii) in the Renewables Business Area, all the geothermal power plants, the Business Units of Domodossola and Sondrio and the hydro generation groups of Cedegolo (Business Unit of Bergamo) and Torino (Business Unit of Cuneo). In 2007, Enel Distribuzione SpA integrated its Environmental Management System and Occupational Health & Safety Management System, obtaining the integrated management system certification under the relevant standards (UNI EN ISO 14001 and OHSAS 18001).

ISO 14001 in power plants as of Dec. 31, 2007 (% of overall in-service capacity) Overall in-service capacity in the Group: 75,146 MW

Overall in-service capacity in Italy: 40,397 MW 5.4% 9.6% 1.4% 83.5% ■Certified

■Certification under way

■Planned certification

■Other

0.1%

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The Management System is applied to the entire organization, consisting of the Headquarters and of 11 Power Grid regional departments (11 Operation Centers, 111 Zones and 6 Material Storage & Handling Sites), with high-, medium- and low-voltage installations (over 1 million km of lines and over 400,000 substations). The Management System permits to continuously monitor & control all the significant environmental and occupational health & safety aspects of design, construction, operation, development and maintenance of power grids.

The system is supported by the “ambientesicurezza” software application, which runs on Enel’s intranet; the application is used to collect and handle process data and to disseminate sector-specific documentation and legislation.

Certified environmental management systems are in place in many of Enel’s non-Italian operations; those which are ISO 14001-certified are:

all the installations and headquarters of Slovenské elektrárne (Slovakia);

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the electricity distribution companies Enel Electrica Banat and Enel Electrica

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Dobrogea (Romania);

more than half of the wind power plants of Enel Unión Fenosa Renovables

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(Spain);

the hydro power plants of Don Pedro and Rio Volcán and the wind power plant

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of Tierras Morenas in Costa Rica;

most of the electricity generation business (about 90%) of Endesa, with power

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plants located in Spain, Portugal, Argentina, Chile, Colombia, Peru and Brazil; the electricity distribution business of Endesa in Spain (Catalonia and Balearic

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islands) and in Latin America (Argentina, Brazil, Chile, Colombia, Peru). Details about the penetration of environmental management systems are given in the sections of the Report describing Enel’s various Divisions.

EMAS in power plants as of Dec. 31, 2007 (% of overall in-service capacity) Overall in-service capacity in Europe: 64,424 MW

Overall in-service capacity in Italy: 40,397 MW 30.9% 25.0% 7.8% 36.3% 0.1% 12.0% 36.5% 51.4% ■Registered

■Registration under way

■Planned registration

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Environmental management of office buildings

In 2007, in accordance with the requirements of the ISO 14001 standard, Enel’s Environmental Policies Unit started a project to extend environmental management systems to office activities. The management system was experimentally applied to a large office building located in Turin (Corso Regina Margherita).

An initial environmental analysis was carried out. The analysis was focused on the environment, on the building, on the applicable environmental legislation and on the organization, assessing the environmental relevance of the related activities. The analysis made it possible to: i) draw up a list of environmentally-relevant aspects to be managed and monitored; ii) assign specific responsibilities; iii) define timescales for environmental improvements; and iv) assess the required investments and their return. Through the internal audit system, the level of implementation of the system and its compliance with the international standard were assessed.

The pilot project (ended in December 2007) indicated that office buildings have significant potential to save: i) energy (electricity, fuels for cooking and heating) by 9-10% (and in part accrue energy efficiency certificates or white certificates); ii) expendables and resources (especially water, by about 4%).

Progressive extension of environmental management systems to other office buildings of the Group in and outside Italy and their certification under the ISO 14001 standard are being evaluated.

Furthermore, Enel undertook internal energy audits of its buildings with a view to maximizing their energy efficiency. As part of this project, Enel is introducing green procurement procedures with a view to identifying classes of environment-friendly goods and services and adopting environmental qualification criteria for its procurement activity by:

including environmental priority criteria in the procurement process and in the assessment of the most >

advantageous offer;

requiring environmental labels as a proof of compliance with environmental requirements; >

requiring suppliers to have environmental management system certifications (e.g. EMAS and ISO 14001) as proof >

of their capability of fulfilling environmental requirements.

To involve suppliers in its green procurement policy, Enel circulated a questionnaire on perception and awareness of environmental issues within companies.

For some procurement contracts, Enel selects contractors and suppliers on the basis of the environmental sustainability of the goods and services that they provide (e.g. purchase of paper for printing bills and for printing and photocopying office documents).

In 2007, Enel awarded green procurement contracts for 225 million euro (34 for information technology, 51 for services, and 140 for distribution); of these contracts, the ones which were formalized amounted to 152 million euro, i.e. about 5% of the yearly total. Considering that the revision of Enel’s specifications began in mid-2007, the potential green procurement contracts which may be awarded every year is equal to approximately 500 million euro.

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The following tables show the environmental performance of the office buildings of Enel located in Italy to which the environmental management system was applied.

REAL ESTATE MANAGEMENT - ITALY: ECO-BALANCE

2007

CO2 emissions Total t 63,935

Total from combustion t 63,284

Gas-oil t 59,220

Gasoline t 792

Natural gas t 3,271

Emissions from (indirect) electricity consumption t 651

Electricity consumption Total MWh 123,704

Water consumption Total thousand m3 _1,317

Drinking water thousand m3 _1,317

Heating fuel consumption Total toe 2,281

Gas-oil thousand liters 1,065

toe 902

Natural gas thousand m3 _1,673

toe 1,380

Vehicle fleet

Service vehicles Number no. 14,585

Consumption Total toe 15,187

toe 14,960

Gasoline thousand liters 288

toe 227

Distance covered km 246,859,397

Special vehicles Number no. 2,177

toe 1,994

Gasoline thousand liters 2.72

toe 2.14

Vehicles for multiple purposes Number no. 1,030

toe 1,152

Gasoline thousand liters 49

toe 39

Purchase of materials and resources Printing paper A4 equiv. 279,232,500

Municipal solid waste tax Total thousand euro 1,643

Gross surface area Total thousand m2 _1,542

Volumes Total thousand m3 _4,626

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REAL ESTATE MANAGEMENT - ITALY: INDICATORS

2007

CO2 emissions

Emissions per employee From combustion t/employee 13.7

From electricity consumption t/employee 0.1

Total t/employee 13.8

Electricity consumption per employee (kWh/employee) 26,741

Water consumption per employee Drinking water m3_/employee ₂₅

Consumption of heating fuel

per employee toe/employee 0.04

Specific consumption of heating fuel toe/m3 _0.5

Vehicle fleet - service vehicles Efficiency (average per km) km/toe 16,255

Unit consumption (per vehicle) toe/vehicle 1

Unit distance covered (per vehicle) km/vehicle 16,926

Vehicle fleet - special vehicles Efficiency (average per km) km/toe 11,861

Unit consumption (per vehicle) toe/vehicle 0.9

Vehicle fleet - vehicles for multiple

purposes Efficiency (average per km) km/toe 20,459

Unit consumption (per vehicle) toe/vehicle 1.2

Purchase of materials and resources Paper consumption per employee A4 equiv. 5,261 Production of waste (municipal and

similar) - separately collected

Municipal solid waste tax Per employee €_/employee ₃₁

Per unit of surface area €_/m2 _1,066

Surface areas Per employee m2_/employee ₂₉

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Awareness, training & education

Environmental awareness, training & education initiatives are core elements of the yearly plan for improving the skills and know-how of Enel’s human resources. In this Report, training & education activities are mentioned with reference to the recipient Units, whatever the organizational entity that proposed or manages them. The reported data also concern support personnel, i.e. the personnel that renders services to multiple Units, even if such units are involved in the same industrial business activity. Indeed, the environmental responsibilities of an intellectual nature that this personnel fulfills are assumed to provide support to industrial operations only.

In 2007, Enel developed education modules for its environment-dedicated personnel: in the overall Group, approximately 77,621 man-hours of courses were delivered; in Italy, the figure was almost twice the one of 2006, i.e. over 35,000 man-hours. Training & education efforts in 2007 were concentrated where certified environmental management systems are in place.

In Slovakia and in all the countries where Endesa operates, training & education activities (focused on maintaining the ISO 14001 certifications of environmental management systems) were extended to the personnel of contractors and suppliers.

In Romania, Enel Electrica Banat and Enel Electrica Dobrogea delivered a total

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of over 14,756 man-hours of courses.

In Bulgaria, the Maritza power plant devoted 144 man-hours to environmental

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training & education.

In the Iberian peninsula, Endesa delivered about 2,865 man-hours of courses

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(calculated from October 2007). The remaining Spanish companies delivered 1,525 man-hours. In particular, Enel Unión Fenosa Renovables organized interesting training & education modules on bird fauna for the personnel of its wind facilities.

In Latin America, Endesa delivered about 3,816 man-hours of courses and ELA

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about 965.

In Slovakia, Slovenské elektrárne delivered 84,000 man-hours of courses.

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Enel also relies on communication for disseminating knowledge of its initiatives internally and externally.

Within the Domestic Infrastructure & Networks Division, Power Grid uses a software application (“ambientesicurezza”) running on Enel’s intranet for gathering and handling process data, distributing sector-specific documents, regulations and legislation and publishing a quarterly environmental report for internal use. Enel’s website (www.enel.it) features a comprehensive section dedicated to the environment (“Enel for the Environment”), which includes the “Energy & Ecology” channel, an “Environment” mini-website and a monthly publication (“EnergyViews”).

The “Energy & Ecology” channel provides information about Enel’s environmental and energy policies and represents a source of documentation and debate on the energy sector at national, EU and international level. The channel is centered on political, economic and industrial issues, ecology and environmental impacts of production activities. In addition to its “Energy” and “Ecology” sections (with articles on topical issues), the homepage of this channel offers a rich menu of news and book reviews, as well as a calendar of conferences, a glossary and a newsletter, and provides access to:

“Atlas” (interactive tool): environmental and energy data of all countries of the

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world;

“Enel’s Documents”: Enel’s Environmental Reports of the past few years, EMAS

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Environmental Declarations and Environmental Product Declarations;

Environmental training & education in 2007

(Total man-hours - no.) In the overall Group: 67,492

0.2% 65.0% 14.2% 5.8% 11.8% ■Thermal generation ■ Nuclear generation

■ Generation from renewables

■ Electricity distribution

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> “Key Documents”: reasoned selection of documents and data on energy and the environment, produced by institutional entities.

In December 2007, through its “Environment” mini-website, Enel launched its “Environment & Innovation Project” in support of sustainable development. Each section of the Project gives access to a number of drill-down search pages with links to other areas of Enel’s portal and to external sites.

The “EnergyViews” monthly publication proposes facts and opinions on topical energy issues.

In 2007, the three channels of the “Enel for the Environment” section of the website recorded a monthly average of about 18,664 visitors; as a whole, they were visited more than 725,786 times and “page views” were 1,840,806.

Financial resources

In 2005, Enel started recording the environmental expenditure of its Italian operations according to a new classification system. The system, which is based on the criteria adopted by Eurostat and Istat (the latter being the Italian statistical institute), is described in detail in the Environmental Report 2005. In 2007, the process was progressively extended to Enel’s international operations. Under Istat’s criteria, “environmental protection expenditure” is defined as the costs incurred for preventing and mitigating environmental pollution and degradation and for restoring the quality of the environment, whatever the origin of such costs (legislation, agreements with local governments, corporate decisions, etc.). It excludes expenditure incurred for minimizing the use of natural resources, as well as for activities that, albeit environmentally beneficial, primarily satisfy other requirements, such as health & safety in workplaces. The term “expenditure” has always an algebraic sense, as it may also refer to revenues, such as those which may accrue from waste delivery to disposal operators.

The Domestic Generation & Energy Management Division developed a procedure for recording environmental costs. This is a structured methodology which relates environmental quantities to economic quantities, as general accounting and cost accounting systems are inadequate to fully accommodate the new criteria. The need thus arose to standardize the individual items of costs and revenues of an environmental nature and to adapt some parts of the Cost Accounting System in order to fit these economic quantities within the related chart of accounts. With the step-by-step introduction of the green procurement procedure, additional activities were conducted with a view to:

identifying additional classes of expenditure;

>

coding these classes in accounting information systems;

>

adopting standard procedures for recording environmental expenditure within

>

all the companies of the Group (as done within the Generation & Energy Management Division).

In 2007, the financial resources allocated to environmental protection in the overall Group (as identified in the “Methodological note” section of the Report) were as follows:

159 million euro of investments;

>

349 million euro of current expenditure.

>

Environmental investments in existing installations (68% of the total) are distributed as follows: electricity distribution 28%; combined heat & power generation 3%; and electricity generation 69%.

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The financial resources allocated to environmental protection in Italy are as follows:

153 million euro of investments (119 million euro in 2006);

>

279 million euro of current expenditure (560 million euro in 2006); the decline

>

is due to the sharp drop in the utilization of fuel oil.

Environmental investments in existing installations (67% of the total) are distributed as follows: electricity distribution 28% (with an increase of investments for dehalogenation of PCB-contaminated equipment) and electricity generation 72%. Among the latter investments:

continuing of improvements to SO

> 2 and NOX emission abatement systems

in the Brindisi Sud power plant;

upgrading of the emission monitoring system in the Fusina power plant and

>

renovation of the one of the Porto Marghera power plant;

accessory works in the Fusina power plant after installation of desulfurizers

>

and flue gas denitrification systems on its units 1 and 2 and improvement of the efficiency of the same systems on its units 3 and 4;

improvements to desulfurizers and flue gas denitrification systems in the

>

La Spezia power plant;

reshaping of mined surfaces and restoration of the original flora and fauna in

>

the disused brown-coal mine site of Pietrafitta (as specified by the Decree of the Ministry of Industry, Trade and Handicraft authorizing the construction of the new Pietrafitta power plant);

as part of rehabilitation of contaminated sites in areas designated as

>

of “national interest” by Law 426/98: rehabilitation of the Augusta power plant; characterization and planning of rehabilitation work in the Fusina, Porto Marghera, La Spezia and Mercure power plant sites; environmental characterization of the Brindisi, Sulcis, Priolo Gargallo and Livorno sites; hydrographic restoration in the former brown-coal mine site of Santa Barbara; removal of asbestos-containing materials from the Bari, Rossano Calabro, Fusina and Torrevaldaliga Nord power plants;

in hydro power plants, installation or upgrading of systems for de-oiling drain

>

collection tanks; adoption of noise-abatement systems; removal of asbestos-containing materials; improvements to civil engineering structures so as to ensure the minimum in-stream flow; construction of fish ladders; stabilization of soil and structures in landslip-prone areas (including trails);

in geothermal activities, continuing of works for installation of mercury and

>

hydrogen sulfide emission abatement systems and for removal of asbestos from steam pipelines; increased investments in geothermal aqueducts, noise abatement and environmental restoration.

In Slovakia, in 2007, over 5 million euro were invested in environmental projects; the projects involved drainage of the gypsum suspension coming from units 1 and 2 of the Nováky (B) power plant and installation of biological and oily waste water treatment systems in the Nováky power plant.

The investments that the Technical Research Area (belonging to the Engineering & Innovation Division from December 2007) made in research & development for environmental protection amount to over 14 million euro.

Electricity distribution accounts for as much as 98% of environmental investments in new installations (in the overall Group, 32% of the total; in Italy, 33% of the total). These investments mainly concern the construction of more environmentally sustainable power lines (new or replacements). Considering that Enel, also for financial reasons, relies on well-established standard construction practices, only the following cost items are regarded as environmental investments:

Overall environmental investments in 2007

(Total by environmental protection activity - million euro)

In the overall Group: 158.6

8.6% 0.1% 9.0% 33.7% 24.1% 0.9% 4.9% 2.1% 16.6%

■ Air and climate protection

■ Waste water management

■Waste management

■Soil, groundwater and surface water conservation and remediation

■Noise and vibration abatement

■Biodiversity and landscape conservation

■ Protection from radiation

■ Research & development for environmental protection

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> extra costs for the use of (underground and overhead) cables in place of bare conductors in medium-voltage lines in low-populated areas;

extra costs for the use of underground cables in place of overhead cables

>

in low-voltage lines in the above areas;

extra costs for the use of underground cables in place of bare conductors in

>

high-voltage lines, whatever their location.

Electricity generation accounts for the largest proportion (95%) of Enel’s current environmental expenditure in 2007. 58% of this expenditure (203.4 million euro) is due to extra costs of fuels, i.e. costs incurred for using low-sulfur fuels in order to comply with environmental regulations, instead of using the originally planned fuels. These extra costs are computed by determining the difference between the cost of low- and very low-sulfur fuel oil or of natural gas and the cost of a corresponding quantity of medium-sulfur fuel oil, in each fuel-oil or fuel-oil/ natural gas power plant. These costs radically dropped in 2007, as the utilization of fuel oil in Italian installations decreased by more than 50% (in Italy, from 3,637 kt in 2006 to 1,773 kt in 2007; in the overall Group, from 3,690 kt to 2,157 kt). In 2007, the Infrastructure & Networks Division saw an increase in its operating costs for environmental training & education and for environmental remediation (mainly due to thefts of copper windings, causing dielectric oil spills over the soil). The remaining items of current expenditure cover environmental protection activities that are conducted directly or outsourced: operation and maintenance of environment-related equipment and systems, waste disposal, installation and operation of environmental management systems, personnel of Enel and of contractors involved in these activities, environmental training & education, etc. They also include the costs of environment-dedicated support personnel, i.e. the personnel that provides services to multiple units, even if they are engaged in the same industrial business activity. Indeed, the intellectual tasks that this personnel performs in the environmental field are supposed to give support to industrial operations only.

In 2007, within the Generation & Energy Management Division, the taxes with an “environmental tax base” were as follows:

taxes on sulfur dioxide (SO

> 2) and nitrogen oxide (NOX) emissions – 4.5 million euro;

geothermal kWh contributions – 10.2 million euro;

>

coal consumption tax component of the carbon tax – 2.5 million euro.

> Current environmental expenditure

in 2007, excluding extra fuel costs (Total by business activity - million euro) In the overall Group: 145.5

In Italy: 75.7 3.6% 15.5% 0.1% 80.8% ■ Electricity generation ■ Electricity distribution ■ Gas distribution ■Support activities 1.9% 8.5% _89.6%

Current environmental expenditure in 2007, excluding extra fuel costs (Total by environmental protection activity - million euro)

In the overall Group: 145.5

In Italy: 75.7 16.8% 1.2% 0.2% 0.1% 16.9% 29.2% 2.8% 32.8% 12.8% 9.5% 0.1% 1.0% 22.6% 0.1% 6.8% 26.9% 20.2%

■ Air and climate protection

■ Waste water management

■Waste management

■Soil, groundwater and surface water conservation and remediation

■Noise and vibration abatement

■Biodiversity and landscape conservation

■ Protection from radiation

■ Research & development for environmental protection

■ Other environmental protection activities

Current environmental expenditure per kWh net generated in the overall Group (comparison between the different types of electricity generation - thousandths of euro)

Thermal generation simple and combined

heat & power (including extra costs

of fuels) 3.0

Thermal generation simple and combined

heat & power (excluding extra costs

of fuels) 0.9

Nuclear generation combined heat & power

3.7

Generation from renewables

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These items are not posted as current environmental expenditure but separately recorded, as they do not fully meet the requirements of “specific environmental taxes”:

payment without a specific consideration;

>

direct outlay, i.e. excluding taxes incurred by suppliers or service providers,

>

which are passed through to the industrial price of goods or services; tax base included among those that Eurostat regards as environmentally

>

relevant (emissions into the atmosphere, ozone-depleting substances, releases of polluting substances into water bodies, waste management, noise, energy products, transportation, resources);

use of the tax revenue to finance environmental protection expenditure, in the

>

specified proportion (partially or totally).

Other items of expenditure pertaining to financial year 2007, which were separately recorded as they were not explicitly allocated to environmental protection, are:

7 million euro (at Group level) for purchasing carbon dioxide emission

>

allowances to cover the deficit of allocations (under Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading) with respect to actual emissions; these costs radically declined in 2007 vs. 2006 (84 million euro) owing to the sharp drop in CO2 prices;

39 million euro for purchasing Green Certificates in order to fully comply with

>

the renewables obligation: under Legislative Decree no. 79 of 1999, importers or producers of electricity from non-renewable sources are required to inject into the power system a given proportion of electricity generated by renewable-energy power plants that became operational after April 1, 1999.

Finally, it is worth mentioning the loss of revenues due to reduced generation by some hydro power plants, which were required to release part of the diverted water into the original streambed (minimum in-stream flow) in order to protect ecosystems. In 2007, these losses were equal to roughly 80 million euro.

Environmental criticalities

The use of the most rigorous and advanced organization and management measures cannot avoid the occurrence of environmental criticalities, which originate from various factors, including the excessive emphasis that the media place on some issues, thus inducing particular expectations among communities. An environmental criticality is the rejection of or opposition to installations (and/or to the impact deriving from their operation). Such rejection or opposition is expressed – obviously for environmental reasons – by a third party feeling disturbed, damaged or threatened by present or future installations.

Environmental opposition translates into public or private initiatives which may involve significant costs owing to failed authorizations, suspension of works, modifications of installations, etc. Examples are administrative measures, warning letters, written protests (direct or through the press), actions by mass media, as well as verbal complaints (when reception desks or on-site premises are available). Each protest concerning the same installation corresponds to a different criticality. A criticality ends with the end of the circumstances generating it. However, environmental litigations are excluded from environmental criticalities. All the soil, groundwater and surface water criticalities were related to thermal generation in Italy (Brindisi power plant) and in Bulgaria (Maritza power plant); in both cases, warning letters from private individuals were received. Criticalities involving electric & magnetic fields arose in connection with the power grid in

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Italy (unlike in other parts of the world, Italian communities are particularly concerned about this aspect). Biodiversity and landscape criticalities were almost exclusively focused on electricity distribution in Italy and Spain; 8% of them were due to hydro generation, always in Spain. Air & climate criticalities were practically limited to thermal generation in Bulgaria (72%) and Slovakia (24%), while those pertaining to waste waters were almost exclusively connected with thermal generation in Bulgaria (85%).

40% of the criticalities resulted from administrative measures, 40% from warning letters and the remaining part from the other above-mentioned initiatives. In the overall Group, environmental criticalities as of December 31, 2007, were 167 and mostly due to electricity generation (74%).

With regard of Italian operations, environmental criticalities significantly diminished over time, passing from 165 in 2004 to 84 in 2005, to 75 in 2006 and to 60 in 2007. Unlike the criticalities developing in other countries, most of the Italian ones involve the power distribution grid.

As to environmental domains, the most frequent criticalities were related to soil, groundwater and surface water (35% in the overall Group, 41% in Italy), air and climate (about 20%), waste waters (15.7%), biodiversity and landscape (14.5% in the overall Group as against 27% in Italy), electric & magnetic fields (9% in the overall Group vs. 25% in Italy).

In Chile, Endesa experienced but promptly responded to two environmental criticalities (oil spill and dispersion of coal dust from storage activities) in its thermal power plants in 2007.

Environmental litigations

As of December 31, 2007, Enel had 328 pending lawsuits, of which 294 in Italy (304 in 2006); most of these lawsuits (77.4%) are related to its power distribution grid. The distribution of lawsuits by environmental domain shows that electric & magnetic fields are largely dominant; all of them (68%) pertain to the power grid in Italy, where the population is particularly concerned about this aspect, contrary to the population of other parts of the world. Biodiversity and landscape (over 87% of the lawsuits pertain to the Italian power grid), air and climate (63% due to thermal generation in Slovakia and 37% to thermal generation in Italy) have smaller shares. Finally, waste accounts for about 47% of the litigations over electricity generation in Italy (more than 33% in thermal generation and more than 13% in hydro generation), thermal generation in Bulgaria (about 13%) and electricity distribution in Italy (remaining percentage). Litigations involving other environmental domains (soil, groundwater and surface water, waste waters, noise) are mostly ascribable to Italian operations.

In 2007, 52 new lawsuits (22 in Italy) were filed and 35 (32 in Italy) were settled. The new proceedings show the dominance of air and climate issues.

It should be pointed out that the above proceedings are only those which arose from third parties’ appeals seeking the quashing of administrative judgments in favor of Enel and the civil and criminal ones where Enel was involved (“passive litigations”). Furthermore, these proceedings have a “dominant environmental component”, while those concerning workplaces are excluded.

Enel Distribuzione was involved in various civil and administrative proceedings. In these proceedings, persons living near portions of the power grid often ask judges to take urgent precautionary measures, requiring Enel to relocate or change the way in which it operates its installations. The plaintiffs allege that these installations represent a hazard, despite the fact that they have been built in

Environmental criticalities as of Dec. 31, 2007

(Total by environmental domain - no.) In the overall Group: 167

In Italy: 60 14.4% 9.0% 35.8% 3.0% 1.8% 15.6% 0.6% 19.8%

■Air and climate

■ Waste waters

■ Waste

■Soil, groundwater and surface waters

■ Noise and vibrations

■ Biodiversity and landscape

■ Radiation (including electric and magnetic fields)

■Other 26.7% 1.7% 25.0% 5.0% 41.6% Environmental criticalities as of Dec. 31, 2007 (Total by business activity - no.) In the overall Group: 167

In Italy: 60 24.0% 1.8% 74.2% 56.6% 1.7% 41.7% ■Thermal generation ■ Hydro generation ■Electricity distribution

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compliance with the applicable legislation. In some instances, the plaintiffs

claimed for damages to their health allegedly caused by exposure to electric & magnetic fields. The rulings are usually in favor of Enel. In this regard, it is worth mentioning a decision taken in February 2008; the court ruled that, based on the most authoritative studies and evidence arising at European level, compliance with the precautionary limits of exposure to electric & magnetic fields specified in the current legislation ensures health protection. So far, no adverse final judgments have been passed on these matters and no damages for physical harm have been granted. However, a recent ruling of February 2008 (being challenged) found that harm had been caused by the stress associated with living near a power line and the fear of possible health problems. Electric & magnetic field litigations also arose in connection with medium- and low-voltage substations located in buildings, in spite of their compliance with the induction limits set by current national regulations. Two recent rulings confirmed that compliance with the relevant laws and regulations is a sufficient guarantee of protection from harm.

Some land planning and environmental disputes regarding the construction and operation of certain power plants and distribution lines are also pending. Based on analysis of the individual cases, Enel believes that the possibility of adverse rulings is remote. For a limited number of cases, however, an unfavorable outcome cannot be ruled out completely. The consequences of unfavorable judgments may range from compensation for damages to costs to be incurred for modifying the installations involved or due to their temporary unavailability.

As regards electricity generation in Italy, the Court of Adria convicted Enel’s former directors and employees for a number of incidents of air pollution caused by emissions from the thermal power plant of Porto Tolle. The judge convicted the defendants to pay damages to the plaintiffs: 367,000 euro were paid mostly to private parties, while about 2.5 million euro were paid to some Public Entities as a “provisional award”.

Environmental litigations pending as of Dec. 31, 2007

(Total by business activity - no.) In the overall Group: 329

In Italy: 294 77.2% 1.8% 3.1% 0.3% 1.5% 16.1% ■Thermal generation ■ Hydro generation ■Geothermal generation ■ Wind generation ■Electricity distribution ■ Gas distribution 2.1% 84.4% 0.3% 8.8% 1.7% 2.7%

Environmental litigations pending as of Dec. 31, 2007

(Total by environmental domain - no.)

In the overall Group: 329

In Italy: 294 7.0% 52.0% 4.6% 2.7% 2.7% 16.7% 2.7% 11.6% 7.5% 58.2% 17.0% 4.8% 2.0% 3.0% 4.4% 3.1%

■ Air and climate

■ Waste waters

■ Waste

■ Soil, groundwater and surface waters

■ Noise and vibrations

■ Biodiversity and landscape

■ Radiation (including electric and magnetic fields)

■ Other

Environmental litigations initiated in 2007 (Total by business activity - no.)

In the overall Group: 52 In Italy: 22

26.9%

15.4% 57.7%

45.5%

27.2% 27.3%

■ Thermal generation ■Generation from renewables ■ Electricity distribution

Environmental litigations initiated in 2007 (Total by environmental domain - no.) In the overall Group: 52 In Italy: 22

19.2% 3.9% 1.9% 9.6% 11.5% 5.8% 48.1%

■ Air and climate ■ Waste waters ■ Waste ■ Soil, groundwater and surface waters

■ Biodiversity and landscape ■ Radiation (including electric and magnetic fields) ■ Other

4.6% 13.6% 4.5% 45.5% 22.7% 9.1%

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An appeal was filed against this judgment. If the criminal judge confirms the judgment, Enel may have to pay additional damages that cannot be currently quantified. If the appeal is upheld, Enel may recover all or part of the amounts already paid.

A criminal proceeding was initiated against Enel before the Court of Belluno. The plaintiff alleged that Enel’s hydro power plants had not released the quantity of water required for maintaining the minimum in-stream flow. Enel was charged with causing the death of fishes and microorganisms of the aquatic flora and fauna, damage to the environment and to the internal revenue office (damage to property subject to environmental constraints). On March 20, 2008, a first-instance judgment was passed (the reasons for the judgment are being filed): the employees involved were convicted to one year of imprisonment (suspended with probation) and to disqualification from holding public office for one year. Additionally, Enel was convicted to pay a compensation of 1 million euro to the Ministry of the Environment (plaintiff claiming damages) as a “provisional award”, pending the final determination of damages. As soon as the reasons for the ruling are filed, Enel will lodge an appeal.

In the course of 2006 and at the beginning of 2007, Enel Produzione SpA filed appeals with the Regional Administrative Court (TAR) of Sicilia (Catania section) against decisions made by various “Conferences of Services” and by the Ministry of the Environment. Under these decisions, the parties held to rehabilitate polluted sites (Law 426/1998) were also supposed to remediate marine sediments in the area off the coast of Augusta. Enel Produzione believes that it is not liable for the environmental pollution incident and that no causal link exists between the activity carried out in its thermal power plant of Augusta and the polluting agents contained in the sediments. The disputes underlying the above appeals were discussed during a hearing on December 6, 2007 and the TAR of Catania passed a first-instance judgment upholding Enel Produzione’s appeals.

In 2007, Enel was required to pay additional financial penalties totaling 167,853 euro:

2,231 euro in Italy for hydro generation: i) 2,000 euro under an agreement

>

made with the Municipality of Calasca Castiglione; the agreement concerned the final settlement of municipal claims for damages to water springs caused by construction of the new Pieve 2 power plant diversion canal; Enel had already paid such damages under a previous agreement, but – after a period of observation – the Municipality had made another claim; and ii) 230.91 euro of fine for delayed request for meter calibration following an inspection by Customs Officers;

6,500 euro in Italy for geothermal generation (legal costs incurred under

>

an order of the Montepulciano Court imposing a number of environmental mitigation measures);

300 euro in Spain for EUFER’s wind generation (fine due to installation of a

>

measuring station without the authorization of the Autonomous Government of Galicia);

158,822 euro in Bulgaria: i) 9,730 euro for exceeding regulatory limits of

>

concentration of water pollutants; ii) 92,850 euro for exceeding regulatory limits of concentration of air pollutants; iii) 5,110 euro in connection with waste disposal; iv) 51,130 euro for delays in rehabilitating the power plant and in installing the water management system.

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In 2007, the financial penalties imposed on Endesa for non-compliance with

environmental regulations were not significant.

In Spain, two proceedings are pending in connection with Endesa’s electricity distribution activity; the judgment may require compensation for damages caused by forest fires in Catalonia.

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Climate change

and Enel’s response

The fight against climate change is a global priority. Europe decided to fully respond to this challenge and play a leadership role. Enel is ready to give its contribution, spearheading this fight in national, European and international fora. The 13th Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), which was held in Bali in December 2007, obtained an important result in the participatory global negotiating process to define climate change policies after the Kyoto Protocol, i.e. post-2012. The Conference drew up a road map whose fundamental points are: mitigation of impacts, adaptation to the inevitable consequences of climate change, transfer of technologies and financial support to actions reducing greenhouse gas emissions. Enel took part in the Conference, consolidating its visibility as a key player on many fronts. During various side events, Enel presented its vision on long-term policies to effectively counter climate change without penalizing economic development, on its activities under the Clean Development Mechanism, on its plan for developing renewables and on its CO2 capture and sequestration initiatives. On January 23, 2008, the European Commission made known its Green Package, i.e. a set of legislative and regulatory proposals on greenhouse gas emissions, development of renewables and CO2 capture and sequestration.

With its Green Package, the European Community intends to pursue a climate change policy implementing extremely ambitious targets: 20% reduction of greenhouse gas emissions with respect to their 1990 levels and 20% contribution of renewables to coverage of energy end uses. These targets, which are very demanding to the overall Community, were further defined for each Member State and will be specified by sector at national level.

Enel is ready to actively participate in the achievement of these momentous targets through a plan of unprecedented scale, which mobilizes numerous human and other resources at central level and in all of its Divisions.

Enel’s commitment

Enel recognizes its responsibilities and is constantly committed to improving its environmental performance, while paying its utmost attention to energy security and competitiveness requirements.

Our commitment is demonstrated by the fact that Enel has adopted a specific environmental policy for more than one decade and that the targets of this policy are reviewed every year as part of the process resulting into the publication of its Environmental Report.

With regard to greenhouse gases, Enel embarked on an impressive plan of investments in generation. In Italy, the plan has already enabled Enel to exceed the targets set in the voluntary agreement signed with the Ministries of the Environment and of Industry in 2000. Thanks to a significant allocation of

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resources, we curbed specific emissions from our thermal power plants from 618 gCO2/kWh of net total generation in 1990 to 496 gCO2/kWh in 2007.

Strategy for the future

The commitment of Enel will continue and grow in the future, especially in the light of its international expansion. Enel’s strategy is based on mitigation initiatives that are consistent with our capabilities of developing and applying technologies which cut greenhouse gas emissions. Our vision is to be able to produce low-cost and zero-emission energy within 2020. As a leader of the sector, Enel deems that its commitment to the struggle against climate change is crucial to safeguarding the environment, but also and above all to maintaining its competitiveness. Enel’s strategy to combat climate change rests on five pillars:

investing in the best available technologies for thermal generation (e.g. low-CO

> 2,

high-efficiency coal-fired power plants and combined-cycle gas-fired power plants);

developing renewables in and outside Italy (planned investments in the next

>

five years: a little less than 7 billion euro);

increasing energy efficiency in power plants, grids and end uses (if the electricity

>

from our thermal power plants in Italy in 2007 had been generated with the 1990 heat rate, then CO2 emissions would have exceeded actual ones by over 3 million tonnes, owing to an increase in the consumption of fuel of about one million tonnes of oil-equivalent; moreover, initiatives of end-use energy efficiency saved about 384,000 tonnes of oil-equivalent of fuel and avoided 1.2 tonnes of CO2 emissions);

researching into, developing and demonstrating CO

> 2 capture and sequestration

and innovative renewable-energy technologies; globally committing to cut down CO

> 2 emissions by disseminating projects

and best practices in eastern Europe and in developing countries, also under mechanisms such as the Kyoto Protocol Joint Implementation and Clean Development Mechanisms.

“Environment & Innovation Project”

The “Environment & Innovation Project” is a plan of investments that Enel launched in December 2006 to strengthen its commitment to developing renewables and to technological innovation, i.e. strategic targets to be reached in order to acquire leadership in the worldwide market of renewables. Enel’s care for the environment has become a mission, ambitious in its targets but at the same time realistic and rigorous. The importance that Enel attaches to this project is demonstrated by its huge investment: 7.4 billion euro in the 2008-2012 five-year period (much higher than the already substantial figure – about 4 billion euro – allocated in its 2007 business plan), which have given new impetus to the extension of its portfolio of renewable-energy facilities and to the development of highly innovative new projects.

Investments in renewables

An important share of the total investments (6.8 billion euro in five years) is allocated to developing and building new renewable-energy power installations. The first results of this effort have already been achieved: at the end of 2007, i.e. one year after the start of the project, new power installations totaling 33 MW in Italy and 169 MW outside Italy went into service.

Additionally, in 2007, Enel acquired about 600 MW of in-service power installations, as well as wind, geothermal and hydro projects to be developed in Europe,