Australia’s regulation of scope 3 emissions

Abstract

Greenhouse gas (GHG) emissions occur throughout the value chain of petroleum developments, including scope 3 emissions, which occur because of activities related to a development but not controlled or owned by that facility’s business. Scope 3 emissions are created predominately by using hydrocarbon products produced by Australia’s petroleum industry. The Australian petroleum industry is subject to a structured and robust regulatory framework to manage environmental impacts. Recently, scope 3 emissions from Australia’s petroleum sector are facing greater regulatory scrutiny. There are a number of drivers for scope 3 emissions regulation, including: Environment Protection and Biodiversity Conservation Act 1999 (Cth) section 527E indirect consequences of an action. Western Australian Draft revised Environmental Factor Guideline – Greenhouse Gas Emissions. These mechanisms provide Australian regulators the ability to enforce project proponents to manage their scope 3 emissions. Some measures that project proponents use to meet these requirements are: Assist the upstream supply network (e.g. regasification and distribution) to implement fugitive methane emissions reduction measures such as the Methane Guiding Principles; Undertake an annual review of indirect emissions; and Collaboratively work with customers to reduce emissions. This creates a project-centric approach to scope 3 emissions management. This paper explores regulation of scope 3 emissions, the impacts this regulatory approach has on project proponents and customers, whilst also considering alternative mechanisms to manage these emissions and meet regulatory requirements and climate goals.