ExxonMobil debuts indirect emissions data from consumption of its products

ExxonMobil has moved to disclose indirect emissions data resulting from the consumption and use of its fuel products for the first time, as part of its 2021 Energy & Carbon Summary, released on 5 January.

The so-called Scope 3 emissions from the global energy major's petroleum product sales were equivalent to 730 million metric tons (MMmt) of carbon dioxide in 2019. Upstream production was associated with another 570 MMmt, and refining with a further 630 MMmt.

ExxonMobil has been reporting its Scope 1 and Scope 2 direct greenhouse gas emissions (GHG) for years. In its 2021 report, the company said its GHG emissions declined about 5% between 2010 and 2019 due to energy efficiency improvements, and reductions in flaring, venting and fugitive emissions.

"At year-end 2020, the company expected to achieve the emission reduction goals outlined in 2018. These included a 15% reduction in methane emissions versus 2016 levels and 25% reduction in flaring versus 2016 levels," it said.

Engine No. 1, an investment firm that had been pushing for the disclosure, said it was pleased with the announcement, but that it was only a first step. "Today's announcement reinforces the urgent need for ExxonMobil to develop a strategy for long-term value creation and for new directors with successful track records in energy industry transformations to help it do so. While reducing emissions intensity is important, nothing in ExxonMobil's stated plans better positions it for long-term success in a world seeking to reduce total [GHG] emissions. Likewise, as the company itself acknowledges, nothing in its enhanced Scope 3 disclosure will lead to the reduction of such emissions," Engine No. 1 said in a statement.

"ExxonMobil remains committed to aggressive oil and [natural] gas capital expenditure plans requiring high oil and gas prices to break even and continues to eschew material business diversification opportunities. This strategy inherently restricts ExxonMobil's ability to pursue aggregate emission reduction targets and prevents it from better positioning itself to create long-term shareholder value in an evolving industry," Engine No. 1 continued.

In explaining its calculation of Scope 3 emissions, ExxonMobil said that increases or decreases must be taken in full context. "Scope 3 emissions do not provide meaningful insight into the company's emission-reduction performance and could be misleading in some respects," it said. "For example, increased ... gas sales by ExxonMobil that reduce the amount of coal burned for power generation would result in an overall reduction of global emissions but would increase Scope 3 emissions reported by the company."

Previously, ExxonMobil pledged to achieve net-zero emissions by 2050, as it is focusing on developing technologies that could reduce emissions from the three sectors that emit 80% of all energy-related GHG—power generation, industrial processes, and commercial transportation.

Definitions

ExxonMobil's announcement, coming the same week as an environmental report by international commodities trading firm Trafigura, shows how Scope 3 emissions can be defined differently even among companies operating in the oil and gas industry.

While issuing its 2020 Responsibility Report on 6 January, Trafigura said it will produce by the end of 2023 "meaningful" goals for reducing its Scope 3 emissions—another indication of the widespread interest by investors and stakeholders in holistic assessment of emissions programs.

But Trafigura does not consider emissions from the use of the fuels that it trades as part of its Scope 3 accounting, whereas ExxonMobil's calculation does. Scope 3 for Trafigura will account for the emissions created by ships, trucks, and other transportation services that move the refined products that Trafigura buys and sells.

Trafigura said its Scope 3 calculations cover emissions from burning fuel refined from oil that it produces directly, and this will include its share of Russian oil producer Rosneft's Arctic production, if an investment in Rosneft that was announced in December is finalized.

Includes original reporting by Frank Tang, editor, OPIS.

Posted 07 January 2021 by Kevin Adler, Editor, Energy and Natural Resources Group, IHS Markit