Understanding Emissions Scope

As oil and gas companies seek to reduce the carbon intensity of their operations there is often a lot of talk of scope 1, scope 2, and scope 3 emissions. What’s the difference between each of these emission categories?

Built for the Future of Energy: deltawave.energy

Scope 1 — Direct Emissions:

Scope 1 emissions are those that are created directly from assets owned or wholly controlled by the organization. In oil and gas companies, for instance, these include emissions from gas flaring at the wellhead and emissions from methane leaks. Efforts to reduce scope 1 emissions in oil and gas tend to focus on reducing the carbon intensity of operations, reducing or eliminating gas flaring and methane leaks, and improving the management and maintenance of existing assets.

Scope 2 — Indirect Emissions:

Scope 2 emissions are outside the organization’s immediate control but are generated by energy sources purchased and utilized by the company to run its operations. For instance, it might be from the burning of fossil fuels used to generate electricity to drive equipment, heating and air conditioning, and lighting. Efforts to reduce scope 2 emissions focus on improving energy efficiency or changing energy suppliers to a “green” energy source such as hydro, wind, or solar power.

Scope 3 — Other Indirect Emissions:

Scope 3 emissions are caused by inputs and suppliers to the company that is outside the immediate control of the company. For instance, for oil and gas companies, the biggest component of these emissions is from customers burning their product (for instance, to drive their cars). They can also include business travel, third-party transportation logistics, and emissions caused by other inputs required for the company to carry out its day-to-day operations.

Efforts to reduce scope 3 emissions tend to be complicated as companies are required to look throughout their value chains at upstream and downstream activities. That’s one of the reasons that many oil and gas companies have committed to ambitious targets to reduce Scope 1 and Scope 2 emissions but very few have announced much for Scope 3 reductions.

According to McKinsey, Scope 1 and Scope 2 emissions account for approximately 9% of global GHG emissions (8% Scope 1, and 1% Scope 2). The industry’s Scope 3 emissions — from the burning of its products — account for 33% of global greenhouse gas emissions. Many of the oil and gas companies are now investing heavily in alternative sources of energy to fossil fuels as well as carbon capture and storage technologies to lay the foundation for a carbon-neutral economy by 2050.