A Joined-up Approach to Scope 1-3 Decarbonization

A Joined-up Approach to Scope 1-3 Decarbonization

The hydrocarbon industries are major Scope 1-3 emitters and are coming under increased investor, consumer, and regulatory pressure to reduce emissions. Cumulative greenhouse gas (GHG) emissions from refineries worldwide reached approximately 34 gigatons (Gt) from 2000 to 2021 with an average annual increase in the rate of 0.7%, making the global oil refining industry the third-largest contributor to greenhouse gas (GHG) emissions from stationary sources (Ma et al., 2022).

In response, most refineries have set ambitious reduction targets for 2030 and 2050 with net-zero Scope 1 and 2 emissions being the focus of the former and replacement products being the latter. Currently, emission reduction and energy efficiency are the focus of Scope 1 and 2, and companies worldwide are driven by government regulations, subsidies, and/or incentives depending on the location. A lack of clarity on either can hamper the pace of investment and many companies find themselves locked in this boardroom debate.

What it is and what it is not

Hydrocarbon operations must begin a journey of becoming energy complexes with an actionable plan to eliminate fugitive emissions, decrease carbon footprints in day-to-day activities, substitute products for lower carbon versions, and, ultimately, replace carbon in favor of other molecules such as hydrogen, oxygen, and nitrogen. The United Nations Sustainability Development Goals and subsequent classification of Scopes 1-3 decarbonization initiatives is helpful to establish common definitions and alignment. However, change needs to occur in upstream and downstream hydrocarbons to meet sustainability goals, which require a 45% reduction in global CO2 emissions by 2030 from 2010 levels, and net zero emissions by 2050.

Each operating asset is different and will require a dynamic roadmap charting the appropriate course. What it is not is ‘Scope 1, 2, and possibly 3’ it is ‘Scopes 1-3,’ and a joined-up approach is required that maps out the decarbonization journey. It draws on practical experiences, best practices, and current leading-edge technologies. Reducing Scope 1 emissions is a given, self-imposed next step, but how shall we proceed? Which option is the best choice – a digital energy management system, a new gas turbine with furnace exhaust integration, hydrogen or ammonia-fired gas turbines, and/or the use of renewable power generation? While the choices are vast, the impacts of each are significantly different. So, how does an operator conduct a joined-up approach to Scopes 1-3 decarbonization and how can we transform a challenge into an opportunity that lasts decades?

Best practices

The best practice is to reflect on the big picture. Look across Scopes 1-3 today and out 10-20 years of operation. Then, construct a strategic roadmap that converts strategy into action by:

• Getting a clear view of the current situation.
• Identifying all drivers of GHG emissions.
• Brainstorming all the possible common and uncommon options prioritized by viable options.
• Developing a credible, technically rigorous tool kit to map potential paths to achieve emission reduction goals.
• Narrowing the wide range of potential solutions by evaluating the business attractiveness of each, then comparatively and assesses the risk both technically and financially to avoid the potential for regret capital.
• Understanding the optimal sequence of investments based on the capital outlays of many options and likely minimal returns and potential for change or regulatory uncertainty.

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