Page 4 - 2022 CPC Corporation,Taiwan

Chairman’s Introduction The 3 pillars of ESG a new page for carbon neutrality In 2021, with COVID-19 continuing to affect the world, a glimmer of hope in the form of herd immunity arose as the vaccination rate gradually increased. However, mutation of the virus brought back lockdowns, casting uncertainty over global economic recovery. The surge in oil prices in the second half of the year lead to an unprecedented energy crisis. In compliance with the government’s policy of price stabilization, and to reduce the impact of the COVID-19 pandemic on the domestic economy and people’s livelihoods, CPC absorbed the fluctuations in oil and gas prices, further worsening our annual financial performance. In spite of severe challenges, CPC colleagues stayed at their posts and strove to stabilize oil, gas and petrochemical supply in Taiwan and, in line with the government’s new energy policies, achieved significant results in all aspects of business. In terms of international exploration and production cooperation, CPC obtained the Pirity block working interest in Paraguay, and SL10B/13 block working interest in Somaliland, in an attempt to find oil and gas deposits with commercial value, and to increase Taiwan’s energy independence. In the area of natural gas business, with the joint efforts of environmental protection, ecology and external communication, we were pleased to see a majority of the voters disapprove the proposition to relocate the new third liquefied natural gas (LNG) terminal away from the coast of Datan in the referendum on December 18, 2021, supporting a major construction project vital not only for CPC’s long-term development but also for national energy transformation. To continue to increase CPC’s overall transmission and storage capability, CPC plans to expand its existing receiving terminals and related facilities. In 2021, the first liquefied gas cargo arrived at the Taichung terminal on contract with Cheniere in the US. A long-term contract was signed with Qatar Energy, as well, to further stabilize domestic gas supply. In terms of importing carbon neutral products, following the first attempt at carbon neutral cooperation with Shell in 2020, CPC continues to cooperate with international energy groups, and three carbon neutral LNG cargoes with third-party certification arrived in Taiwan in 2021. The carbon credit obtained was equal to the annual carbon absorption of 1,645 Da-an Forest Parks in Taipei City. On September 16, CPC signed the Natural Gas Carbon Neutral Plan MOU with TSMC, providing certified carbon neutral natural gas to a customer for the first time. On December 10, CPC also imported carbon neutral ethylene through cooperation with Japan’s Marubeni Corporation, a first for Taiwan and the world. The number of carbon offset credits obtained was equal to the annual carbon absorption of 50 Da-an Forest Parks, writing a new page in history from low carbon to zero carbon emission. With regards to innovative marketing services, combining energy creation, energy storage, energy use and smart managements R&D results, CPC continued to set up Smart Green gas stations-Jiadong Station in Taoyuan and Guangfu Station in Hualien; CPC achieved the target of establishing 216 charging stations for electric scooters on time and established the first electric automobile charging station at the car park of Fulin Gas Station in Taipei; CPC also promoted Cup & Go cafes next to gasoline pumps, an innovation in integrated operating models. In terms of R&D and green energy applications, CPC follows government policy to localize the domestic production of catalysts. CPC established the Advanced Catalyst Center to research the carbon reduction economy, energy conservation and environmental protection, and green products, in order to develop independent key technologies in catalysts and to facilitate the development of a “circular” economy. A steel and chemical joint production strategy has been established with China Steel with the aim of capturing carbon emissions at source and for the processing of green products. On December 10, 2021, CPC received an A-grade certification from TIPS (the Taiwan Intellectual Property Management System). We have also disclosed a company-wide intellectual property management plan and published an annual execution report, as well as implemented a corporate governance evaluation, linking operational objectives with an intellectual property strategy, and grounding future innovation. In terms of applying new digital technologies, in 2021, the CPC 5G AIoT Promotion Project Office was established. Combining ICT technology and intelligent IoT, the potential applications can be used in various management systems for production, sales, logistics and storage, and lead CPC toward a fully developed smart enterprise. In terms of Corporate Social Responsibility, in 2021, and in line with the epidemic prevention policy, CPC continued to offer an 8% discount to taxi drivers on gas purchases using deposits. We also enhanced the disinfection of the toilets in our gas stations during the COVID-19 pandemic and provided free CUP&GO coffees to support frontline medical and police staffs in different areas. Construction work on the Baling Gas Station in Fuxing Township in Taoyuan began to provide gas to people in remote areas, showing our sincere care for local people. In response to World Toilet Day on November 19, and to achieve the UN SDGs, we cooperated with franchisee partners to enhance our public toilet hygiene and provide people with a quality toilet environment.