Responsibility for emissions falls to entire oil value chain: Lundin CEO
The responsibility for addressing greenhouse gas emissions falls to the entire oil value chain and not just upstream producers, Nick Walker, CEO of Swedish producer Lundin Energy, said at the FT Energy Transition Strategies Summit on October 5.
Lundin, which is developing fields off Norway, aims to make its operations carbon neutral by 2023, representing the most ambitious climate target for an oil company of its size. This target covers Scope 1 and 2 emissions from its operations, as well as Scope 3 supply chain emissions associated with vessels, logistics and travel. But it does not cover the far greater Scope 3 emissions released from the use of its products by customers.
"Our view is that we're just an upstream company – we don't have a direct connection to the customer," Walker said. "We need to look at the full value chain and each element of the chain needs to deal with its Scope 1 and 2 emissions. And if we do that, then we take care of all the Scope 3 emissions ... we decarbonise the full chain."
He also noted that not all the oil it sells is burnt, with around a quarter used for producing petrochemicals.
Oil and gas producers have come under increasing scrutiny in recent years over their Scope 3 emissions. This was highlighted in May, when a Dutch court ruled that Shell must cut its Scope 1, 2 and 2 emissions by 45% by 2030 versus 2019 levels. The Anglo-Dutch major has said it will appeal the ruling, however, and analysts are skeptical that the court's decision will be upheld.
Lundin sold the world's first ever certified carbon neutrally-produced oil to a refinery in Italy in April and aims to expand this to all its production in the next few years. The company is decarbonising its operations mostly by powering its facilities with renewable energy from the Norwegian shore. For those emissions it cannot eliminate, it uses forestry initiatives to offset them.
Norway has one of the highest carbon taxes in the world, currently at $100/metric tons of CO2. The government recently announced it would raise this to nearly $240/mt by the end of the decade. Walker said he supported Norway's high carbon tax as "a good tool for encouraging behaviour changes in the industry." Given its low emissions, his company should not be affected much by future tax, he said.
Lundin's methane emissions are minimal, Walker said, and under law, Norwegian companies can only flare methane in the event of emergencies.