The Game-Changing Role of Scope 3 Emissions in Logistics and Maritime Sustainability

Abstract A new energy landscape has unlocked relevant opportunities, operators are more focused on energy efficiency to tackle emissions reduction and satisfy global Climate Change initiatives driven by the Paris Agreement. The future of the oil and gas industry depends on its ability to manage its carbon footprint, not only in scopes 1 and 2- but also in scope 3 emissions which require actions, oversight and shall bring changes to the overall value chain in different sectors and countries given the new ESG requirements and other relevant regulations. The logistics & services (L&S) sector involves operations along the entire oil & gas value chain-onshore, offshore, shipping & marine services. The purpose of this paper is to emphasize the importance of scope 3 and determine its magnitude as L&S advances in its sustainability journeys and include scope 3 in its future commitment. Given the complex nature of the oil and gas operations, a model was built to estimate carbon emissions in the shipping & logistics segments associated with maritime transportation and logistics practices. Scope 3 emissions ~ 75-80% of lifecycle emissions connected with the end-users. According to the International Maritime Organization (IMO), the scope 3 emissions are not only significant but also increasing at an alarming rate- expected by up to 250% by 2050. The proposed methodology used is based on mixed methods, concerning literature review, benchmarking the L&S world-leaders, interviews with Subject Matter Experts (SMEs), and a quantitative model to define the magnitude of this scope in the sector's ecosystem. Accurate quantification of CO2 emissions equivalents along the hydrocarbon value chain is an important step to address the company's Sustainable Development Strategy and build a carbon-free future for new generations to come. The scope of every business unit was established to cover all scope 3, whereby 15 sub-categories were also established as a framework. The model outputs allow users to analyze the system's carbon intensity, raise alarms, and identify potential energy efficiency efforts and governance framework to be incorporated into the company's business plan and annual budget to reduce emissions based on their magnitude and climate impacts. Reporting scope 3 emissions across the supply chain, from production to consumption is a novel initiative, that aligns with International Oil Companies (IOCs)’ best practices and L&S global leaders in the market in addition to forthcoming regulatory obligations. Reducing emissions requires collaboration, an effective governance framework, and clear commitment among the company, regulators (e.g., IMO), and government. The UAE sustainability plans, and IMO stricter regulations are incentivizing the sector to meet ambitious goals by 2050. The global energy sector is shifting towards a more sustainable, environmentally friendly production and consumption of all energy sources, where scope 3 estimation represents an important step ahead. This common objective guides efforts at the sector level to become a decarbonization role model and hub in the region and promote more collaboration across its hydrocarbon value chain.