Biodiversity compensation methodology based on natural capital & mitigation hierarchy

The Transmission System Operator (TSO) in Spain, aware of its role in ensuring a sustainable future, has committed to the goal of generate a net positive impact on the natural capital of the surroundings of the new facilities by 2030.

In addition to this voluntary commitment, the environmental authorization of the 'Electric

Power Transmission Network Development Plan 2021-2026' approved in March 2022 requires that all infrastructures included in it must generate at least a net zero impact on biodiversity, if not a positive one.

Therefore, the Spanish TSO, during the environmental impact assessment process of every single project, and with the aim of reducing the impact of its actions, applies all the tools included in the Mitigation Hierarchy: avoidance, mitigation/minimise, restoration, compensation/offset and net gain.

In this process, the last step to avoid net biodiversity loss consists of implementing compensatory measures for those residual impacts that could not be eliminated previously.

The ideal for compensation is to be as minimal as possible, not because its application is avoided, but because it is not mostly needed, thanks to the prioritization of the previous mitigation tools that avoid, reduce and restore impacts. The greater the intensity of the initial mitigation tools, the less need there will be for compensation. To carry out this compensation of residual impacts on biodiversity, Redeia has established its own methodology as there is no official one developed from the Administration in Spain. The approach used for designing the compensatory measures is based on a N atural Capital perspective (based on the Taskforce On Nature Related Financial Disclosure) with the aim of compensating for the residual impact of the project on various natural assets.

The concept of natural capital, originated in the late 20th century, refers precisely to the set of goods and services provided by nature, which are fundamental to our existence and quality of life.

Given the complexity of analysing the impacts on nature, to advance the implementation of net zero or positive impact commitments, it is necessary for companies to identify and focus on those natural assets over which their activities have the greatest influence. This facilitates both the definition and application of the most appropriate actions, as well as the establishment of metrics to measure progress towards the proposed goals.

Thus, the compensation actions should aim to improve the assets identified as relevant, which, in the case of electric transmission infrastructures, would be Habitat, Species (birdlife), and

Atmosphere.

• According to Habitat asset, beyond traditional reforestation projects, measures for the prevention of forest fires (cleaning and maintenance of forests), stabilization of natural waterways, or actions aimed at eradicating exotic or invasive species that su ffocate our native vegetation, could be considered. • In relation to Species asset (Birdlife), the collision risk increase of new transmission lines will be reduced by marking groundwires with bird diverters and compensate marking other power lines owned by Redeia located in the vicinity of the new ones.

This will be accompanied by projects aimed at improving the conditions of faunal groups sensitive to electric transmission infrastructures. • Climate change is another cause of biodiversity loss, due to the carbon dioxide (CO2) emissions that are no longer absorbed by forest habitats incompatible with the routes of the new electric transmission infrastructures, which must be cut down in the ROW of the lines. The active atmosphere is determined by the loss of CO2 absorption capacity of the plant species that must be removed when implementing new electric projects.