Decarbonisation Technology - February 2022 Issue

Addressing Scope 1 and 2 emissions reduction targets Methodologies to improve, evaluate, and implement changeswithin energy production can achieve these targets whilemaintaining safe, reliable, and profitable operation

Robert Ohmes, Grant Jacobson, Roberto Tomotaki, Greg Zoll and Fred Lea Becht

A s the energy industry continues to embrace the energy transition and rationalise the impacts on its operations and viability, the major focus has been on examining and investing in diversification investments, such as renewable processing, sustainable aviation fuel (SAF), blue/ green/turquoise/pink hydrogen, wind, and solar. These investments help provide lower carbon intensity energy carriers to a growing population and meet rising energy demand requirements, thereby impacting Scope 3 emissions. However, to achieve corporate and/or governmental greenhouse gases (GHG) reduction mandates, energy producing entities should also examine opportunities to improve energy efficiency and reduce carbon footprint of their existing assets (i.e. the Scope 1 and 2 emissions). The outcomes of the COP26 climate summit in Glasgow in 2021, along with rising natural gas prices, tighter energy supply, shrinking margins, and shifts in available financing sources, are adding layers of complexity to an already challenging situation of reducing energy usage and GHG emissions. Based on IEA’s Net Zero by 2050 , energy efficiency improvements account for 10% of the total CO 2 emission reductions in order to achieve net zero targets by 2050 and are an early enabler of achieving these targets (IEA, 2021). In addition, energy consumption accounts for about 5 to 15% of many refining and petrochemical facilities’ margin, such that improving efficiency also drives profitability. To begin the process of reducing Scope 1 and 2 emissions, we must first understand the basis for these emission allocations, outline methodologies to improve, evaluate, and implement changes within energy

production facilities, and highlight practical examples of energy reduction opportunities.

What are Scope 1 and 2 emissions? To understand these definitions, let’s first start with outlining which emissions are included (Greenhouse Gas Protocol, 2020). As expected, CO 2 is at the core of carbon emissions, but other GHG like methane (CH 4 ), nitrous oxide (N 2 O), hydrofluorocarbons (HFCs), perfluorocarbons, and (PFCs) are also within the boundary. Therefore, when preparing balances for a given entity or looking for improvement opportunities, each of these areas should be explored. Scope 1 and 2 are the emissions that most entities have a clearer understanding of and accounting on, as they are often required for tracking and filing by regulatory entities and corporate mandates. These are the emissions that are created by the fuel and power that is consumed or purchased by a given entity to convert its raw materials to a final product for either processing by another entity or use by the final consumer. Therefore, whether it be the purchased electricity from the local power grid, use of natural gas or coal for steam and power generation by the plant directly, or the gasoline and diesel used by the vehicles associated with the entity, all these combine into the Scope 1 and 2 emissions. Scope 3 emissions are more challenging to account for, as they relate to the entire energy required to produce and transport the raw material, as well as the raw material itself, and then the emissions created by the next processing entity through to the final product. Hence, these are left for a future discussion.