Few companies commit to Scope 3 net-zero emissions

Wood Mackenzie’s report ‘How Will Oil and Gas Companies Get to Scope 3 net-zero?’ finds that only 10 large oil and gas companies have committed to Scope 3 net-zero. The most ambitious company is targeting net-zero Scope 3 in 2030. The majority are aiming for 2050.

“Scope 1 and 2 net-zero is now industry standard,” said Tom Ellacott, Senior Vice President of Corporate Research for Wood Mackenzie. “But Scope 3 net-zero requires dramatic shrinkage of oil and gas which is a fundamental threat to sustainability without a strategy to build new low carbon profit centres.”

Wood Mackenzie’s report analyses how getting to net-zero Scope 3 emissions requires huge structural change. Companies are taking different bets on the levers to manage the sustainability challenge. The aim is to leverage areas of competitive strength.

The report concludes that three business models have emerged:

• Big Energy – aggressive diversification into renewables and low emissions fuels will sustain the business as oil and gas cash flow enters decline.
• Carbon as a Service – aggressive expansion of CCS to offset Scope 3 emissions. This model allows for slower decline in oil and gas and potentially a negative emissions footprint.
• Sustainable fuels – transition to the development of low-emissions fuels and circular business solutions to offset declining oil and gas production and crude processing.

The pace and timing of the wind-down of the oil and gas business differentiate Big Energy strategies. Differentiated strategies this decade are likely to converge on the model or models that prove to work best as the energy transition unfolds.

Ellacott added, “All of these models are currently in play with companies targeting Scope 3 net-zero, but for each, there are challenges. Whether it be the risk of lower returns, stakeholder misalignment or the lack of supporting policy, the paths to Scope 3 net-zero are not easy. Companies will also have to scale up low carbon technologies that sit outside their core competencies in oil and gas.”

Read the article online at: https://www.worldpipelines.com/special-reports/31102022/few-companies-commit-to-scope-3-net-zero-emissions/