Scoping Out Scope 3 Emissions

Scope 3 emissions—those indirectly caused by a company—have been a four-letter word in the oil and gas industry. But as emissions tracking and reporting continues to be refined, standardized, and even legally required, Scope 3 emissions are in sight. 

From sievo

Most net-zero promises come with the exclusion of Scope 3 emissions while others are tackling Scope 3 with carbon credits and carbon removal. As of now, there is no legislation that regulates Scope 3 emissions or their reporting—just stakeholder calls for action and new technologies for tracking and reporting. 

Scope 3 emissions aren’t straightforward. One company’s Scope 3 emissions are likely another company’s Scope 1 responsibility. How does an oil and gas company go about reporting the emissions from downstream use of its products? 

“It requires collecting enormous amounts of data and relying on information provided by value chain partners,” said Tisha Schuller, Founder & CEO of Adamantine Energy. 

Each ton of emissions would require reporting at different Scopes, meaning three companies could need to account for that in reporting. Doing so would require streamlined, standardized reporting through the entire supply chain, with checks and balances to keep things as clear as possible.

Unsurprisingly, most companies start with Scope 1 emissions—the activities they have direct control over. Scope 1 emissions are easier to track and report, and limiting to just Scope 1 emissions inherently makes total emissions look lower. 

In 2021, Baker Hughes added Scope 3 emissions to its reporting, which caused its emissions number to jump drastically. But, the company said, since understanding their Scope 3 emissions, they’ve been able to take steps to reduce them. 

The climate-related disclosure requirements recently proposed by the SEC do include Scope 3 emissions for certain public companies. This shows how important downline emissions reporting is for investors and stakeholders. 

Scope 3 emissions could turn into a giant game of “musical chairs” or “no goes” if not handled correctly. In that case, there would be no winners.