Background for the study
The oil and gas industry is facing evolving requirements from external and internal stakeholders when it comes to managing and reporting the GHG emissions generated from its activities. For decades the operators have been reporting direct emissions from operations of the fields and assets on the Norwegian Continental Shelf (NCS). However, in recent years also indirect emissions occurring along the value chain upstream and downstream of the fields and assets (Scope 3 emissions) have been subject to increasing scrutiny from various stakeholders. Data from IHS Markit shows that Scope 3 emissions in 2019 accounted for an average of about 88% of the total value chain carbon footprint from the oil and gas sector (Clean Energy News, 2021). As part of the energy transition, the reporting of GHG emissions, including Scope 3 emissions, is therefore developing from being a voluntary reporting activity to becoming a vital part of securing the financial backbone for the industry through meeting stakeholder expectations.
Most of the companies operating fields and assets on the NCS are already reporting Scope 3 emissions, however this reporting incorporates various levels of detail and is undertaken through different approaches and methods. The result is a lack of Scope 3 reporting alignment. How the requirements for Scope 3 emission reporting will develop in the years to come, and how fast this development will go, is difficult to predict. Hence, to be prepared for what is coming, there is a need to get a better insight into the drivers and regulations that are set to dictate how requirements will evolve. Further, in order to enable the industry to efficiently address these evolving Scope 3 emissions reporting requirements, it is important to increase the understanding of what is already being done and to identify which standards, guidelines and tools that are already available. Secondly, it is key to create a common understanding of upcoming challenges that will need to be addressed jointly by the industry.
Against this backdrop, Offshore Norge (previously the Norwegian Oil and Gas Association - NOROG) engaged DNV to conduct a study to create a common knowledge base for its members with the objective of providing:
- A better understanding of drivers and regulations behind current and future Scope 3 emission reporting requirements
- Insights into current industry practice when it comes to Scope 3 reporting
- A common understanding of what Scope 3 reporting disclosures and methodologies that need to be in place to meet future requirement.