{"id":252762,"date":"2024-06-19T14:00:00","date_gmt":"2024-06-19T14:00:00","guid":{"rendered":"https:\/\/news.republicofgreen.com\/scope-3-emissions-inventories-in-the-energy-sector\/"},"modified":"2024-06-19T14:00:00","modified_gmt":"2024-06-19T14:00:00","slug":"scope-3-emissions-inventories-in-the-energy-sector","status":"publish","type":"post","link":"https:\/\/news.republicofgreen.com\/scope-3-emissions-inventories-in-the-energy-sector\/","title":{"rendered":"Scope 3 Emissions Inventories in the Energy Sector"},"content":{"rendered":"

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The energy sector plays a significant role in the global push to reign-in climate change. Currently, energy and heat utilities are the greatest contributors to global greenhouse gas (GHG) emissions. That, however, is changing. In the United States, the world\u2019s second-largest producer of GHG emissions, a significant majority of utilities have committed to net-zero goals, a trend visible across both emerging and established economies around the globe.<\/p>\n

Emissions inventories are a powerful tool for identifying sources of GHG emissions \u2013 a vital step in working toward net-zero goals. Read on to learn how these inventories can help energy sector businesses gain a clearer picture of Scope 3 emissions.<\/p>\n

Scope 3 Emissions and the Energy Sector<\/strong><\/p>\n

Unlike direct emissions (Scope 1) or indirect emissions from purchased energy (Scope 2), Scope 3 emissions encompass all other indirect emissions that occur in a company\u2019s value chain. These can range from the extraction and production of purchased materials to the emissions associated with disposed products.<\/p>\n

Scope 3 in the energy sector<\/strong><\/p>\n

In the energy sector, Scope 3 emissions often constitute the bulk of an energy company’s carbon footprint. This is due to the sector’s extensive supply chains and the energy-intensive nature of its products’ lifecycle, from extraction through to final consumption.<\/p>\n

For example, the majority of Scope 3 emissions related to fossil fuel companies come from the extraction, refinement, and transportation of raw materials. For renewable energy firms, the largest source of Scope 3 emissions are in the manufacturing and transportation of materials for technology like solar panels or wind turbines.<\/p>\n

Scope 3 challenges and opportunities<\/strong><\/p>\n

The sheer scale of emissions to track, coupled with the complexity of gathering reliable data from multiple sources across the supply chain, can make conducting a Scope 3 inventory daunting. There is also the added difficulty of engaging and incentivizing suppliers and customers to adopt greener practices.<\/p>\n

However, the opportunities for improvement and innovation in this area are substantial and can lead to enhanced relationships with stakeholders, improved regulatory compliance, and increased attractiveness to investors looking for sustainable investment opportunities.<\/p>\n

For example, some companies are setting targets based on rigorous criteria with the Science Based Targets initiative (SBTi). Science-based targets (SBTs) are greenhouse gas (GHG) emission reduction targets that are in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement. This agreement aims to limit global warming to well below 2\u00b0C above pre-industrial levels and pursue efforts to limit it to 1.5\u00b0C.<\/p>\n

Setting science-based targets is a strategic move for businesses aiming to future-proof their operations, enhance their reputation, and contribute to global climate action. Specifically setting Scope 3 targets encourages businesses to work closely with their suppliers, customers, and other stakeholders to reduce emissions across the entire value chain.<\/p>\n

Regulatory Environment Surrounding Scope 3 Emissions<\/strong><\/p>\n

Regulations governing Scope 3 emissions reporting vary significantly, impacting how companies in the energy sector and beyond must navigate compliance and stakeholder expectations in different markets.<\/p>\n

The Methodology Behind Scope 3 Emissions Reporting<\/strong><\/p>\n

To effectively calculate and report on Scope 3 emissions, energy companies should follow established methodologies like those outlined in the GHG Protocol\u2019s Corporate Value Chain (Scope 3) Standard.<\/p>\n

This standard provides a step-by-step framework to:<\/p>\n