The Challenges and Benefits of Carbon Data Reporting

When US President Joe Biden signed his ambitious Inflation Reduction Act of 2022 into existence earlier this year, he cemented a historic $369 billion investment in the modernization of the American energy system.

The wide-ranging act proposes a range of measures and mechanisms to help the country reduce its GHG emissions to 50-52% below its 2005 levels by 2030.

As oil and gas operators prepare for the low carbon operating environment, they need high quality data that can help them to better understand their emission sources and identify the right opportunities for abatement.

But ESG reporting standards are still in emerging.  

“It took humans centuries to come up with financial accounting standards, and we have much less time to develop sustainability standards,” points out Oscar G. Herdocia, U.S. Energy Transition & Sustainability Advisor at Shell.

Further, he says, high quality and accurate data comes at a cost. “It's costly to acquire; it requires resources and energy to deliver,” he says.

Herdocia will be speaking at Oil and Gas IQ’s upcoming Carbon Data Tracking and Reporting conference in Houston next year. We caught up with him to discuss the role of carbon data tracking and reporting in the energy transition, the critical trade offs you need to consider between data accuracy and cost of measurement, and why you should look at emissions reporting as an opportunity rather than a compliance burden.

Diana Davis, Oil and Gas IQ: There are historic changes happening in the oil and gas industry as we transition to this low carbon economy. Can you tell us about Shell’s role and what role carbon data tracking and reporting plays in the energy transition?

Oscar Herdocia, Shell: Shell has undertaken the challenge of not just being ready for change, but to really be a leader in transforming the energy system.

Over the last few years we have taken big steps in terms of solar and wind, hydrogen, renewables, and natural gas. We're also doing SAF [Sustainable Airline Fuel], renewable diesel and other low carbon fuels, along with EV charging and green power for residential customers. Not to be forgotten – Shell in the US is a leader in the Gulf of Mexico, which provides some of the lowest carbon footprint oil in the world. To balance the continued need for fossil fuels today and in the coming decades, we also invest in nature-based solutions and carbon offsets.

So, we don’t fit the paradigm of just an oil and gas company anymore. We're an integrated energy company with a target to be a net-zero by 2050.

Where does carbon data tracking come in? Being able to accurately measure current and future carbon footprints is fundamental to achieving society’s net-zero ambitions. Adopting common data standards will enable companies, and those who scrutinise them, to quickly assess performance across complex global supply chains.

Reporting accurately provides transparency to stakeholders - shareholders as well as employees, customers, governments, and other organizations - to keep us accountable to our commitments.

Reporting is also a necessary component to track emissions up and down the supply chain for scope 3. We need to understand how the emissions that are not directly emitted or measured by us stack up – especially as more than 90% of Shell’s emissions are from Scope 3.  

Not all companies include Scope 3 emissions in their targets; but recognizing the materiality of Scope 3 emissions from the energy products we sell, we do include this in our net zero target.    I hope that when scope 3 emissions are easier to track, more companies will include them in their targets.

Diana Davis, Oil and Gas IQ: Obviously, accurate data is an important part of this. What are the big challenges confronting the industry in terms of measuring and collecting accurate emissions data?