March 20, 2023

Carbon Accounting in Oil & Gas: Scarier than the IRS Tax Codes?

Carbon accounting has become increasingly important as operators seek to reduce their carbon footprint, turn cost centers into revenue, and comply with regulations.

The oil and gas industry will play a central role in the energy transition as financial markets move to address climate change.

As a result, emissions accounting has become increasingly important as operators seek to reduce their carbon footprint, turn cost centers into revenue, and comply with regulations.

Big Idea 🧠: Carbon Accounting involves the measurement, reporting, and verification of greenhouse gas emissions from oil and gas operations. This includes direct emissions from sources such as combustion and flaring (Scope 1), as well as indirect emissions from sources such as electricity consumption (Scope 2) and transportation (Scope 3).

Going Deeper: One of the biggest challenges in emissions accounting for the oil and gas industry is the lack of consistent methodologies for measuring different types of emissions and fragmented reporting protocols.

  • There are various protocols available such as the international GHG Protocol or ISO 14064-1 that provide guidance on how to measure these emissions while regulatory frameworks such as US EPA or individual states prescribing a different way to calculate and report.
  • Yes, But: They can be difficult to implement consistently across different facilities, especially those located in different states and countries with varying regulations.

Unclear Guardrails 🛣️: Another challenge is the complexity of the supply chain involved in extracting and processing oil and gas.

  • Emissions occur at every stage of this process – from exploration to production, transportation, refining, distribution, and consumption.
  • They can be difficult to account for with existing methodologies, infrastructure and data management practices.

The Solution: Despite these challenges, there are also opportunities for innovation in carbon accounting within the oil and gas industry.

  • New technologies such as drones surveillance or continuous monitoring can help improve accuracy in measuring methane leaks or other forms of fugitive emissions.
  • Machine learning algorithms and Systems of Intelligence, such as Iconic Air, can also be used to analyze data more efficiently.

In Conclusion: While there are certainly challenges involved in implementing effective carbon accounting practices within the oil and gas industry, it is crucial that companies continue to prioritize emissions intelligence as leaders in the energy transition.

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