Energy Transition Outlook 2021
The Scope 3 Standard complements and builds upon the Corporate Standard to promote additional completeness and consistency in the way companies account for and report on indirect emissions from value chain activities. The Corporate Standard classifies a company’s direct and indirect GHG emissions into three “scopes,” and requires that companies account for and report all scope 1
Since the Corporate Standard was revised in 2004, business capabilities and needs in the field of GHG accounting and reporting have grown significantly. Corporate leaders are becoming more adept at calculating scope 1 and scope 2 emissions, as required by the Corporate Standard. As GHG accounting expertise has grown, so has the realization
ENERGY TRANSITION OUTLOOK 2021
clarity and confidence to the market and OGUK acknowledges the work of the IIGCC Oil and Gas Net Zero 16 Standard as a prominent example supporting standardisation within the sector. Specifically, within this framework it notes the need for companies to retain flexibility. OGUK strongly believes that the value of ESG is achieved through standardised corporate reporting that allows companies to retain flexibility and own their strategic direction. We look forward to engaging further with government following the publication of their Greening Finance; A roadmap to sustainable investing which outlines the next steps to delivering a UK wide taxonomy and sustainable disclosure requirements. emissions (i.e., direct emissions from owned or controlled sources) and all scope 2 emissions (i.e., indirect emissions from the generation of purchased energy consumed by the repor ing com any). The Corporate S andard give companies flexibility in whether and how to account for scope 3 emissions (i.e., all other indirect emissions that occur in a company’s value chain). Figure 1.1 provides an overview of the three GHG Protocol scopes and categories of scope 3 emissions. that significant emissions – and associated risks and opportunities – result from value chain activities not captured by scope 1 and scope 2 inventories. Scope 3 emissions can represent the largest source of emissi ns for compani s and present the most significant opportunities to influence GHG reductions and achieve a variety of GHG-related business objectives (see chapter 2). Developing a full corporat GHG emissions inventory – incorporating scope 1, scope 2, and scope 3 emissions – enables companies to understand their full emissions Figure [1.1] Overview of GHG Protocol scopes and emissions across the value chain CO 2 CH 4 N 2 O CO 2 CH 4 SF 6 N 2 O HFCs PFCs
Snapshot of total capital investment in renewables as a share of capital expenditure % (Top 5 UK based operators) 2018 2019
ENI
4.0 3.0 9.0 5.0 5.6
17.0 10.0
Total Energies
HFCs
Shell
8.7 7.5 2.6
CO 2
CH 4
N 2 O
HFC
PFCs
SF 6
CO 2
CH 4
N 2 O
HFCs
PFCs
SF 6
Equinor
CO 2
CH 4
N 2 O
HFCs
PFCs
SF 6
BP
CO 2
CH 4
N 2 O
HFCs
PFCs
SF 6
purchasedelectricity, steam, heating&cooling forownuse
CO 2 CO 2
CH 4
N 2 O
HFCs
PFCs
SF 6
N 2 O purchasedelectricity, steam, heating&cooling forownuse
CH 4
HFCs
PFCs
SF 6
CO 2
CH 4
N 2 O
HFCs
PFCs
SF 6
HFCs purchasedelectricity, steam, heating&cooling forownuse N 2 O HFCs SF 6 PFCs
CO 2
CH 4
N 2 O
PFCs
SF 6
CO 2
CH 4
N 2 O
HFCs
Source: Capital Economics for CMS Cameron McKenna
CO 2
CH 4
PFCs
SF 6
purchasedelectricity, steam, heating&cooling forownuse
CO 2
CH 4
N 2 O
Scope 1 DIRECT HFCs SF 6 HFCs
PFCs
SF 6
N 2 O Scope 2 INDIRECT CH 4
transportation anddistribution
processingof soldproducts
CO 2
N 2 O
PFCs
SF 6
CO 2
CH 4
HFCs
PFCs
SF 6
CO 2
CH 4
N 2 O
HFCs
PFCs
company facilities
CO 2
CH 4
N 2 O
HFCs company facilities
PFCs
SF 6
purchasedelectricity, steam, heating&cooling forownuse
capital goods transportation anddistribution
Scope 3 INDIRECT business travel fueland energy related activities processingof soldproducts
purchasedelectricity, steam, heating&cooling forownuse
transportati n an distribution
processingof soldproducts
purchased goodsand services
As discussed in OGUK’s Economic Report , investors and stakeholders are increasingly looking at a far wider range of non-financial disclosures from businesses with respect to their alignment with environmental, social and governance (ESG) factors, in parallel with company profitability. OGUK expects this trend to continue over the next decade as climate, environmental and social co-benefit policies are embedded into the market through initiatives including the Taskforce on Climate-Related Financial Disclosures (TCFD), Taskforce on Nature- based financial disclosures (TNFD), and Green Taxonomies. Recognising this, OGUK has established a new work stream to support industry in meeting appropriate ESG criteria. A key challenge to address will be to assimilate the reporting requirements placed on companies and across the value chain with regards to Scope 1–3 emissions. As ESG becomes further embedded in the markets, there will be a need for some standardisation to ensure efficiency and the ability for benchmarking across not only the sector on a global level but other energy intensive industries. This will provide
N 2 O purchased goodsand services
HFCs capital goods
PFCs fueland energy related activities
CO 2
CH 4
SF 6
company facilities
purchasedelectricity, steam, heating&cooling forownuse purchasedelectricity, steam, heating&cooling forownuse CH 4 N 2 O purchasedelectricity, steam, heating&cooling forownuse purchasedelectricity, steam, h a ing&cooling forownuse purchasedelectricity, steam, heating&coolng forownuse waste generated in operations Scope 3 INDIRECT company facilities HFCs purchased goodsand services purchased goodsand services purchased goodsand services transportation anddistribution fueland energy related activities
company facilities
CO 2
PFCs
SF 6
transportation anddistribution useof sold products
processingof soldproducts
capital goods
fueland energy related activities
end-of-life treatmentof soldproducts
fueland energy related activities processingof soldproducts fueland energy related activities business travel busines travel end-of-life treatmentof soldproducts transportation anddistribution
processingof soldproducts
capital goods
purchasedelectricity, steam, heating&cooling forownuse purchasedelectricity, steam, heating&cooling forownuse transp rtation nd istribution
transportation anddistribution company facilities
waste generated in operations end-of-life treatmentof s ldproducts
purchasedelectricity, steam, heating&cooling forownuse
business travel
useof sold products
company vehicles
transportation anddistribution
processingof soldproducts
useof sold products
end-of-life treatmentof soldproducts end-of-life treatmentof soldproducts franchises
transportation anddistribution
processingof soldproducts
capital goods
purchasedelectricity, steam, heating&cooling forownuse
purchasedelectricity, steam, heating&cooling forownuse
transportation anddistribution transportation anddistribution company vehicles
purchased goodsand services
capital goods
company facilities business travel
purchasedelectricity, steam, heating&cooling forownuse waste generated in operations transportation anddistribution transportation anddistributi n
processingof soldproducts processingof s ldproducts
company facilities waste generated in operations company facilities waste generated in operations easedassets
company vehicles transportation anddistribution useof sold products transportation a ddist ibution
processingof soldproducts processingof soldproducts
company facilities
transportation ddistribution
processingof soldproducts
useof sold products
purchasedelectricity, steam, heating&cooling forownuse
leasedassets
employee commuting
investments
purchasedelectricity, steam, heating&cooling forownuse
company vehicles
purchased goodsand services purchased goodsand services fueland energy related activities purchased goodsand services purchased goodsand services transportation anddistribution transportation anddistribution purchased goo sand services capital goods purchased goodsand services waste generated in operations transportation anddistribution leasedassets business travel transportatio a ddistribution transportation anddistribution transportation nddistribution capital goods
capital goods capital goods capital goods business travel
fueland energy related activities transportation anddistribution fueland energy related activities fueland energy related activities fueland energy related activities fueland en rgy related activities employee commu ing business travel company facilities capital goods employee commuting business travel business travel business travel business travel
transportation anddistribution
processingof soldproducts
l aseda sets
employee commuting
transportation anddistribution
company facilities company facilities processingof soldproducts
investm nts
transportation anddistribution leasedassets
fueland energy related activities employ e ommuting fueland energy related activities company facilities
purchased goodsand services
capital goods
processingof soldproducts
investments transportation anddistribution ompany facilities
transportation anddistribution capital goods
purchased goodsand services
capital goods
purchased goodsand services
processingof soldproducts
company vehicles
company facilities leasedassets company vehicles company facilities
capital goods
useof sold products
capital goods company facilities
end-of-life treatmentof soldproducts end-of-life treatmentof soldproducts end-of-life treatment soldproducts
leasedassets
franchises
useof sold products
end-of-life treatmentof soldproducts
investments
end-of-life treatmentof soldproducts processingof soldproducts company facilities end-of-life treatmentof soldproducts
transportation anddistribution
leasedassets
franchises
useof sold products useof sold products
transportation anddistribution transportation anddistribution fueland energy related activities purchased goodsand services
purchased goodsand services fueland energy related activities fueland nergy related activities
purchased goodsand services
capital goods
waste generated in operations waste generated in op rations waste generated in operations investments waste generated in operations leasedassets leasedassets company v hicles
useof sold products
fueland energy related activities leasedassets company vehicles end-of-life treatmentof soldproducts
useof sold products useof sold products
capital goods
useof old products
franchises end-of-life treatmen of soldproducts
business travel
waste generated in operations fueland energy related activities waste generated in operations wast generated in perations
investments leasedassets
leasedassets
franchises
business travel company vehicles
transportation anddistribution
employee commuting waste g nerated in operations
useof sold products
end-of-life treatmentof soldproducts useof sold products
company vehicles company vehicles useof s ld products
end-of-life treatmentof soldproducts
company vehicles end-of-life treatmentof soldproducts company vehicles end-of-life treatmentof soldproducts
purchased goodsand services
transportation anddistribution business travel business travel waste g nerated in operatio s
company vehicles
useof sold products
end-of-life treatmentof soldproducts
company vehicles
transportation anddistribution business travel
waste generated in operations
transportation anddistribution
waste generated in operations
business travel
waste generated in operations
company vehicles
useof sold products
employee commuting
investments
leasedassets
franchises
company vehicles
employee commuting Upstream activities investments employee commuting leasedassets leasedassets business travel leasedassets employee commuting wast generated in operations employee commuting employee commuting employee commuting investments employee commuting leasedassets
investments
leasedassets
franchises Downstream activities franchises
Reporting company leasedassets
investments investments
leasedassets company vehicles leasedassets
transportation anddistribution
leasedassets
employee commuting
franchises
franchises
leasedassets
investments
lea edassets
franchises
investments
leasedassets
franchises
leasedassets
investments
leasedassets
franchises
Source: GHG Protocol
leasedassets
company vehicles invest ents
leasedassets
franchises
employee commuting
investments
leasedassets
employee commuting
leasedassets
franchises
l asedassets
franchises
[05]
leasedassets
employee commuting
investments
leasedassets
franchises
leasedassets 16 https://www.iigcc.org/download/iigcc-net-zero-standard-for-oil-and-gas/ ?wpdmdl=4866&refresh=6155d9cbb0ef31633016267 franchises employee commuting leasedassets investments
20
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