Interview: A Path to Tracking Scope 3 Greenhouse Gas Emissions | SLB

A Path to Tracking Scope 3 Greenhouse Gas Emissions

Published: 04/25/2022

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As a technology company that partners with customers to access energy, SLB is advancing sustainability within the industry by developing robust roadmaps to reduce its greenhouse gas (GHG) emission footprint and designing technologies that help its customers reduce their own GHG emissions—and central to this is a coherent GHG emission accountancy framework. However, measuring Scope 3 GHG emissions is a complex process, and is still relatively in its infancy. Mikki Corcoran, VP, sustainability, discusses SLB's experiences of assessing and tracking its GHG inventory as part of a net zero commitment that is inclusive of the full value chain.

What do you mean by Scope 3 GHG emissions?

The GHG Protocol divides emissions into three scopes—Scope 1 GHG emissions are the direct emissions from the combustion of fossil fuels, while Scope 2 emissions are the indirect emissions associated with the use of electricity generated outside our corporate boundary. Our investment choices and operating practices have a clear and direct impact on our Scope 1 and 2 emissions—for example, we have already converted more than 20% of our facility emission footprint to renewable power and we have begun introducing hybrid vehicles into our fleet.

Scope 3 is a little more complex, as these are indirect emissions from our value chain—upstream from our supply chain and downstream from our customers’ use of our products. Both directions have significant overlaps that require a great deal of partnership and innovation to enable GHG emission reductions.

Is SLB's net zero target inclusive of all three scopes?

Yes, SLB is committed to getting to net zero by 2050, using 2019 as a baseline year. With minimal reliance on offsets, our plan is focused on reducing Scope 1, 2 and 3 emissions across the entire value chain validated by science-based carbon accounting.

Alongside decarbonizing our own operations and investing in low carbon new energy technology ventures, a key part of how we advance sustainability within our industry is by creating technologies that help our customers reduce their environmental footprint. We are also working with our suppliers to improve performance associated with GHG emission reduction via a disclosure process, and I’m really proud that in 2021 we received an A- supplier engagement rating from CDP.

Obviously credible reduction targets require clear accounting methods, figures that can be audited and a degree of precision appropriate to the task. These principles allow us as an industry to share common goals, be fully transparent, and move together in the right direction.

How does SLB measure its GHG emissions?

We began by conducting a screening against the GHG Protocol Corporate Standard for all Scopes and Categories to learn the relative impact of different parts of the portfolio. Expanding our emissions reporting to include Scope 3 reporting was the result of more than two years of focused work.

Although our process was designed and coordinated by a central team, we relied on dozens of subject matter experts in the company to provide input, as well as experienced third-party climate specialists who added clarity in specific cases. We found that data came from multiple sources throughout the organization. In our case over 100 people contributed information so we developed data organization and digital automation tools.

Through the inventory we learnt which of our technologies have an impact in relation to their design, but also the circumstances of their use. With this knowledge we can work with our customers to offer low carbon alternatives–for example, by re-designing the technology with improved efficiency or by incorporating a renewable resource for energy and emissions savings.

Can you share the results of the inventory?

Scope 3 emissions (represented by the sky blue in figure 1) comprise the majority of our GHG emissions. We analyzed all 15 Scope 3 categories, which confirmed our GHG footprint from the use of the technologies and products we sell and lease to customers is the biggest part of our corporate footprint by a wide margin (represented by the turquoise green in figure 2). This reinforces the importance of understanding the details of our own carbon footprint but also the impact our technologies can have on our customers’ operational emissions.

Scopes 1, 2 and 3 inventories and Scope 3 breakdown
Scopes 1, 2 and 3 inventories and Scope 3 breakdown

As I mentioned, transparency is imperative and you can view full details and the size of each emission category within our inventory in our Sustainability Report. However, GHG accounting is a continual process so we are tracking our emissions footprint throughout the year via our corporate emissions dashboard. These analytics are essential to measuring our GHG reductions as well as future forecasting.

Can you discuss some of the complexities of Scope 3 accounting?

There are many complexities of Scope 3 accounting—particularly when you consider that for each Scope 1 there is a Scope 3 counter party. Our Scope 3 is in many cases our customer's Scope 1! For example, when SLB sells artificial lift equipment, accounting rules require us to report the estimated lifetime energy consumption of that equipment within Scope 3 as our customers will operate the technology. Emissions related to energy consumed by the pump should be reported by our customer as Scope 1 if they are directly powering the pump through a diesel or natural gas generator, or Scope 2 if the supplied electricity is coming from the local grid.

There are also challenges with customer ‘avoided emissions’ which are the savings achieved by choosing one technology over another. You can think of this as a conceptual rather than an actual reduction but it’s a fundamental factor in the technology design process, bringing GHG footprint up to the level of cost and performance.

Because customer avoided emissions are conceptual, the GHG Protocol states the GHG emissions must be excluded from a corporate inventory—meaning we cannot use them as an offset to reduce our footprint. That means SLB can help customers reduce their footprint, for example, by providing subsea boosting instead of gas lift. However, our own Scope 3 increases with each booster pump that we sell despite the fact subsea boosting can offer a 62% reduction in lifetime energy consumption compared to a gas lift installation at the same project. This scenario highlights a challenge with reduction targets of all parties.

Do you have any final thoughts?

Accounting challenges should not deter an organization from making a thorough attempt at screening their GHG inventory. Identification of major contributors may be enough to plan actions that can improve performance while accounting techniques and systems mature in parallel.

Whether it’s related to existing products and services or the development of new ones, our core objective is to provide customers with the most optimal impact-reducing solution for their energy operations. Quantifying this impact is fundamental to this effort, and we are continuously working to refine our capabilities and procedures to do exactly that. Now is the time to accelerate decarbonization of industry operations and increase performance to build the best version of oil and gas we can, together.