Learn about Scope 3 Category 3 emissions from fuel- and energy-related activities and discover strategies to manage them. Strengthen your ESG approach with expert guidance.
Dive into the specifics of Scope 3 Category 3 emissions, which stem from fuel- and energy-related activities not included in Scope 1 or 2. This detailed guide offers valuable insights and practical steps to help your business address these emissions effectively.
By managing Category 3 emissions, you can enhance your sustainability efforts and improve your ESG performance. Leverage the expertise of ESG Pro to develop tailored strategies that drive impactful change in your energy management practices.
3.3 Fuel- and Energy-related Activities
Energy Ecosystem Impact: Managing Scope 3 Emissions in Fuel and Energy Activities
1. Introduction to Scope 3, Fuel- and Energy-related Activities
Scope 3 emissions from “Fuel- and Energy-related Activities” (not included in Scope 1 or Scope 2) encompass the indirect greenhouse gas (GHG) emissions associated with the production, transmission, and distribution of fuels and energy purchased and consumed by a company, but not directly emitted by the company itself. These emissions are considered upstream and relate to the energy supply chain outside of the company’s direct control. This category is essential for a comprehensive understanding of a company’s carbon footprint, as it accounts for the emissions embedded in the lifecycle of energy products used.
2. Key Components of Fuel- and Energy-related Activities
- Extraction, Production, and Refining: Emissions from extracting raw materials (like coal, oil, and natural gas), processing, and refining them into usable fuels or energy sources.
- Transmission and Distribution: Emissions associated with the transportation of fuels (e.g., via pipelines, trucks, ships) and the distribution of electricity through the grid. Losses that occur during transmission and distribution (line losses in electricity networks, for example) also contribute to these emissions.
- Wasted Energy: Emissions related to energy that is purchased but not used, due to inefficiencies or losses in the company’s own operations.
3. Importance of These Emissions
Understanding and managing emissions from fuel- and energy-related activities are crucial for several reasons:
- Comprehensive Carbon Footprint: For companies looking to accurately report their full carbon footprint, considering these upstream emissions is vital. They can represent a significant portion of a company’s overall GHG emissions, especially for organisations that consume large amounts of energy.
- Energy Efficiency and Reduction Opportunities: Identifying the full scope of emissions related to energy use can highlight opportunities for increasing energy efficiency and switching to lower-carbon energy sources, contributing to overall emissions reduction goals.
- Supply Chain Engagement: By understanding these emissions, companies can engage with suppliers, utilities, and energy providers to encourage the adoption of cleaner, more efficient energy production and distribution practices.
- Regulatory Compliance and Reporting: Comprehensive emissions reporting, including Scope 3 categories, is increasingly required by regulators, investors, and certification bodies. Accurately accounting for fuel- and energy-related emissions is a part of fulfilling these requirements.
4. Strategies for Reduction
- Energy Efficiency Improvements: Implementing energy efficiency measures to reduce the amount of wasted energy and overall energy consumption.
- Renewable Energy: Shifting to renewable energy sources where possible, either by direct procurement (e.g., renewable energy certificates, power purchase agreements) or by investing in on-site renewable energy generation (e.g., solar panels, wind turbines).
- Supplier Engagement: Working with energy suppliers to choose greener energy options and to support investments in renewable energy infrastructure.
- Energy Management: Implementing comprehensive energy management systems to monitor, manage, and optimise energy use across all operations.
Calculating and addressing emissions from fuel- and energy-related activities requires understanding the complexities of the energy supply chain and engaging in strategic actions to minimise the environmental impact associated with energy consumption.
5. Example: Airline Company
Consider an airline company that operates a fleet of aircraft. Here’s how Scope 3 emissions from “Fuel- and Energy-related Activities” might apply:
- Jet Fuel Combustion: The airline burns jet fuel to power its aircraft during flights. This combustion emits greenhouse gases such as carbon dioxide (CO2), nitrogen oxides (NOx), and water vapour. These emissions contribute to Scope 1 emissions for the airline.
- Jet Fuel Production: Jet fuel is derived from crude oil through refining processes. The extraction, production, and transportation of crude oil involve energy-intensive activities that emit greenhouse gases. Additionally, jet fuel needs to be transported from refineries to airports, which further contributes to emissions.
- Lifecycle Considerations: The entire lifecycle of jet fuel, from extraction to end use, contributes to Scope 3 emissions. This includes emissions associated with exploration, drilling, extraction, refining, distribution, and combustion of the fuel. Factors such as fuel quality, extraction methods, transportation distance, and emissions control technologies influence the overall emissions intensity of the fuel.
6. Calculation of Fuel- and Energy-Related Activities
Calculating Scope 3 emissions from fuel- and energy-related activities involves estimating the greenhouse gas (GHG) emissions associated with the production, transmission, and distribution of the energy that a company purchases and consumes, but which are not directly emitted by the company itself. This category is distinct from Scope 2 emissions, which account for indirect emissions from purchased electricity, heat, or steam. Here’s a step-by-step approach:
Define the Scope of Energy Use
- Identify Energy Sources: List all the types of energy the company purchases and uses, such as electricity, natural gas, diesel, gasoline, and any other fuels.
- Determine Energy Use: Quantify how much of each energy source is consumed within the reporting period. This data is often available from utility bills, fuel purchase records, or energy management systems.
Collect Data on Energy Production and Supply
- Gather Information on Energy Mix: For electricity, understand the energy mix of the grid from which it’s purchased, as the GHG emissions intensity varies significantly depending on whether the electricity comes from renewable resources, coal, natural gas, etc.
- Fuel Production and Transportation Data: For fuels, consider the emissions associated with extracting, refining, and transporting the fuel to the point of use.
Use Appropriate Emission Factors
- Select Emission Factors: Obtain emission factors that represent the GHG emissions per unit of energy consumed. These factors should reflect the specific mix of energy sources, and the processes involved in their production and delivery. Emission factors can be sourced from government agencies, international organisations (like the IPCC), or industry groups.
Calculate Emissions
- Apply Emission Factors: Multiply the amount of each type of energy consumed by its corresponding emission factor to estimate the GHG emissions. For electricity, this involves using factors that account for the specific generation mix of the grid. For other fuels, use factors that include emissions from production, processing, and transportation.
The basic formula looks like this:
- Account for Transmission and Distribution Losses: Especially for electricity, adjust the calculation to account for losses during transmission and distribution. This involves using factors that represent the average losses in the grid.
Summarise Total Emissions
- Aggregate Emissions: Add up the emissions calculated for each type of energy to get the total Scope 3 emissions from fuel- and energy-related activities.
Document and Review
- Documentation: Keep detailed records of the data sources, assumptions, and methodologies used in your calculations. This is important for verification, reporting, and identifying opportunities for improvement.
- Continuous Improvement: Regularly update your calculations as better data becomes available and as your energy mix changes, especially if you increase your use of renewable energy sources.
7. Conclusion
Effectively reducing Scope 3 emissions from fuel- and energy-related activities is a critical aspect of a company’s comprehensive environmental strategy. This effort involves scrutinising the entire energy supply chain, from fuel production to consumption, and implementing measures to minimise associated emissions. By advocating for and investing in cleaner energy sources, optimising energy use, and engaging with suppliers to encourage sustainability, businesses can significantly lessen their indirect environmental impact. These initiatives not only contribute to the global reduction of greenhouse gas emissions but also position companies as leaders in sustainable practices, improving their competitiveness and aligning with the growing demand for corporate accountability in environmental stewardship.
Why ESG Pro Limited is the Ideal Partner for your GHG reporting and Corporate Net Zero Pledge
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