8 - Challenges of Green House Gases (GHG) Reporting and its applicability in the Oil & Gas Industry
Updated: Oct 12, 2018
In recent years, governments and regulators have put more emphasis on reducing corporate's carbon footprint and impact on the environment.
While there are 40 countries that impose Green House Gases (GHG) emissions reporting requirements, there is no agreement on universal policies nor standards to govern the reporting process.
However; several organizations have put in place guidelines for GHG reporting, and have categorized the several sources of emissions under different scopes. This aims to facilitate reporting, achieve transparency and ensure consistency.
What Are The GHG That Should Be Reported?
CO2, CH4 (Methan), N2O, and any relevant HFCs, PFCs, and SF6.
What Are The Most Widely Used GHG Reporting Methods?
There are currently two widely used GHG Reporting methods:
ISO 16064 - Developed by the International Standard Organization (ISO)
GHG Protocol - Developed jointly by the World Resources Institutions (WRI) and the World Business Council for Sustainable Development (WBCSD)
What Are The GHG Reporting Scopes?
Currently, there are three defined scopes for GHG accounting and reporting purposes.
"Scope 1" - Direct GHG emissions
Contains the GHG emissions that are generated from company owned or controlled sources. An example of such emissions are the fugitive and venting gases.
Canada will impose stricter methane regulations by January 2020 for Upstream Oil & Gas activities.
"Scope 2" - Indirect emissions
Accounts for GHG emissions from the generation of electricity consumed by company owned or controlled facilities. An example will be offices, refineries, and power plants.
"Scope 3" - Other Indirect emissions
This scope is optional (part of the GHG Protocol). It includes the GHG emissions resulting from activities that are not under the direct control of the reporting company.
Downstream and upstream transportation of petroleum products, as well as the emissions generated by the use of the petroleum products are examples of such emissions.
"Scope 1" and "Scope 2" are straight forward and fall within the control of the reporting company.
"Scope 3" reporting remains challenging as it falls outside company control.
What Are The Emissions Categories Under "Scope 3"?
Scope 3 includes 15 emission categories numbered as per the GHG Protocol:
Purchased Goods and Services
Capital Goods
Fuel and Energy
Waste Generated In Operations
Business Travel
Employee Commuting
Upstream Leased Assets
Processing of Sold Products
Use Of Sold Products
End-Of-Like Treatment of Sold Products
Downstream Leased Assets
Franchises
Investments
What Are The Reporting Limitations Faced By Oil & Gas Companies?
We highlighted three major limitations faced with Scope 3 optional reporting.
Data Availability
Since emissions come from sources that are not under the direct control of the reporting company, data collection remains problematic and its accuracy is questionable.
Immateriality Of Some Categories
For examples the Downstream and Upstream transportation of petroleum products (Category 4 & 9) are insignificant compared to the reporting of petroleum products use (Category 11).
Double Reporting
While GHG Protocol ensures no double reporting is occurring within the reporting company, there is no guarantee that the same reported emissions are not accounted for in another company. For examples Transportation of Petroleum products can be:
Scope 3 for the selling company (Downstream Transportation)
Scope 1 for the logistics company
Scope 3 for the buying company (Upstream Transportation)
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