Climate and Nature

Why tackling scope 3 emissions will help win the climate change war

White and black ship with smoke emitting at port by water: The mining industry looks at shipping as part of scope 3 emissions produced along its value chain.

The mining industry looks at shipping as part of scope 3 emissions produced along its value chain. Image: Unsplash/Chris LeBoutillier

Rohitesh Dhawan
President and Chief Executive Officer, ICMM
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Climate and Nature

  • All companies are responsible for reducing scope 1 and 2 emissions – those directly and indirectly in their control – but significant change will only happen if we tackle those further along the supply chain – scope 3 emissions.
  • On-site emissions are easy to reduce for some industries but there are hard-to-abate sectors that make total decarbonization more challenging.
  • Examples of how scope 3 emissions are addressed can be seen in the mining and metals industry, with companies working with shipowners and operators to switch to lower-carbon maritime fuels.

The Northern Hemisphere has faced a relentless summer of extremes. July 2023 was the hottest month on record globally, with wildfires ravaging Greece, Syria, Canada, Spain and Hawaii, causing a tragic loss of life alongside environmental devastation. The harsh reality of climate change is hitting populations worldwide and scientists believe it is only the start. As temperatures soared, oil demand reached an all-time high, according to the International Energy Agency. While ambitious net-zero targets have been set and investment in renewable energy systems is rising, the structural transformation of global energy systems to wean ourselves off of fossil fuel is at risk of remaining a distant dream.

While policy-makers must create the right conditions to enable such a transition, the private sector must live up to our decarbonization responsibilities to help achieve a low-emission global economy. Our primary responsibility is to reduce greenhouse gas emissions directly and indirectly in our operational control – known as scope 1 and 2 emissions – such as diesel used to power trucks or electricity used in factories.

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Scope 1 and 2: Every company's responsibility

If every company minimized the emissions under their control, the total of those actions would go a long way towards decarbonizing the economy. The reality, however, is that it is easier for some types of businesses and locations to decarbonize from scope 1 and 2 emissions than others.

For example, office-based companies can purchase renewable energy and use electric vehicles to reduce their scope 1 and 2 emissions to near zero. But it is much harder for the steelmaker providing beams for the office building to reduce their controlled emissions because the chemical reaction involved in traditional steelmaking generates greenhouse gasses that cannot be easily avoided or captured. Other industries that face similar challenges, known as “hard-to-abate,” include cement, aluminium and long-distance air travel.

Faced with this reality, a company or indeed an entire sector could wring its hands at the emissions outside of its control and make it someone else’s problem – which, technically, it is. Companies who do so would undoubtedly win the carbon accounting battle, especially as measurement and reporting of emissions have come a long way. But collectively, we would lose the climate change war because total emissions would continue to rise unsustainably.

Scope 3: Covering hard-to-abate

On average, scope 3 emissions – which cover those outside a company’s direct operational control –represent 75% of a company’s emissions profile. A far better approach to reduce such emissions would be for every company in the product’s value chain that needs to be decarbonized to work together. Those who supply the hard-to-abate sector and those who buy from it could change their own practices, co-invest in technology or advocate for policies – to the extent that can help tackle the hard-to-abate emissions.

That makes climate sense, and it increasingly makes business sense, too. Take, for instance, one of the greatest modern innovations in mobility, which is already significantly cutting emissions: electric cars. Already transforming everyday life for millions, the attraction lies in the fact that they offer a more sustainable way to travel.

However, due to current production methods, embedded carbon within the supply chain is undermining electric vehicles as a net-zero solution. From the consumer’s perspective, there is no difference between the carbon emitted by the miner extracting the critical minerals for the battery or the shipper commissioned to transport the vehicle across continents. The atmosphere certainly doesn’t know the difference.

To secure future demand and ensure that electric cars live up to their potential to be a more sustainable form of transportation, it is in the interest of all those involved in its production to minimize emissions as much as possible.

Scope 3 emissions across the value chain.
Scope 3 emissions across the value chain. Image: ICMM

Miners' problem and opportunity

Being right at the beginning of almost every supply chain, since what is not grown is mined, we miners have grappled hard with how we can help our customers and suppliers decarbonize while achieving net zero scope 1 and 2 emissions by 2050. To facilitate this, ICMM recently developed accounting and reporting guidance for scope 3 emissions to provide a framework for mining and metals companies to calculate and disclose their value chain emissions.

Iron ore and bauxite miners co-invest in new technology alongside steelmakers and aluminium refineries to produce low-emission materials. New technology takes time to develop, which is time the world cannot afford, so miners prioritize mining higher-quality ores and developing new products that reduce emissions from the existing process.

Since different types of primary and refined materials are often transported long distances, we’re one of the largest sources of demand for shipping. That is why mining companies are working with shipowners and operators on switching to lower-carbon maritime fuels while building low-emission ships of the future.

But we have further to go, especially as the demand for metals and minerals is set to soar as renewable energy infrastructure and electric vehicles expand exponentially. We must increase transparency and collaboration across our value chains to reduce scope 3 emissions. The atmosphere knows no boundaries, so neither should our ambitions.

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