Snam: increased investments in the 2020-2024 plan

and net zero emissions target by 2040

Net Zero Carbon and new ESG goals

• Carbon neutrality target by 2040 ("Scope 1" and "Scope 2")
• 50% reduction of CO₂ eq. emissions "Scope 1" and "Scope 2" to 2030 vs 2018
• New projects with subsidiaries and suppliers to reduce "Scope 3" emissions
• More than 600,000 t of CO₂ eq. avoided in 2024 thanks to activities in the energy transition
• Launch of a "scorecard" to measure performance across 13 ESG areas

Growing investments for system decarbonisation and long-term development

• Total investments: approx. € 7.4 bn (approx. + € 1 bn vs € 6.5 bn of the 2019- 2023 plan)

• € 6.7 bn of investments in regulated energy infrastructure, focused on hydrogen ready replacements, digitalisation, decarbonisation and Sardinia
• Investments almost doubled to € 720 mn in the businesses of the energy transition. In particular:
• € 220 mn in biomethane infrastructure to reach a capacity of at least 64 MW
• € 200 mn in energy efficiency to consolidate the national player position
• € 150 mn in hydrogen for the start of projects for the conversion of railway lines and the installation of fuel cells in the Snam network
• € 150 mn in mobility to expand the distribution infrastructure with a focus on LNG, and launch the first hydrogen distributors

International strategy

• Evolution towards portfolio management with a focus on the opportunities deriving from sector coupling, net zero policies and the growing centrality of green gases
• Established presence in India following the entry into China
• Development of a portfolio of services, leveraging on Snam's distinctive competences in core business, digitalisation, technology and energy transition
• International associates: stable contribution over the plan period, expected average annual cash return on the initial investment of 10% (from acquisition to the end of the plan)
• TAP completed on schedule, commercial operations started last week

Growth of main indicators

• RAB: >2.5% annual average in the period 2020-2024. The need to replace the grid implies a growth at least in line with this trend in the period 2024-2040
• EBITDA of energy transition businesses: € 150 mn by 2024
• Net profit: +2.5% annual average to 2024 (2019 base)

Snam also intends to reflect in the company by laws its corporate purpose ("Energy to inspire the world"), aimed at creating long-term value for shareholders, taking into account the interests of relevant stakeholders and in line with the new recommendations of the Code of Corporate Governance, also in order to institutionalize the company's commitment to favour and promote the energy transition process in line with the new initiatives to be undertaken. The Board of Directors has reserved the right to take any resolution on the topic in a future occasion.

The new trends in the energy transition and Snam's role as enabler

The achievement of the global climate objectives will lead to significant investments in the decarbonisation of the energy sector over the next 30 years. To date, several countries, accounting for over 50% of global emissions, have announced or are elaborating climate neutrality targets. A new "super cycle" of public and private investments of about $ 100-150 trillion for the innovation of energy systems is therefore expected, which will result in new opportunities for creating value for operators along the entire value chain. In this context, green gases - and particularly hydrogen - have significant growth prospects and can potentially reach over 25% of the global energy mix by 2050.

Europe is leading on this front thanks to the Hydrogen Strategy launched last July by the EU Commission and the national plans launched or soon to be launched in countries such as Germany, France, the United Kingdom, Spain and Portugal. The guidelines of the Italian hydrogen strategy, under consultation from November 24th, envisage investments of up to € 10 billion, 5 GW of installed electrolyser capacity and a target of 2% of the energy mix by 2030, with an expected growth up to 20% in 2050.

Green hydrogen, in particular, is expected to become competitive in a few years in various sectors - starting from rail and heavy transport - thanks to the progressive and already evident reduction in the production costs of renewable energy, combined with the reduction in the cost of electrolysers. The most efficient way to transport green hydrogen is through the gas infrastructure. Indeed, at a European level, retrofit costs would be limited, equal to 10-25%1 of those for newly built pipelines.

In recent years, Snam has repositioned itself to capture the new megatrends of the energy transition, thanks to infrastructure assets that will be key to achieve decarbonisation targets, its presence in the energy transition business, its international footprint and thanks to a disciplined approach to capital allocation.

Snam's position in the capex supercycle benefits from infrastructure assets that are 70% hydrogen-ready, and that will enable the energy transition.

1 Guidehouse "European Hydrogen Backbone" July 2020

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