Transport, the supply chain and scope 3 emissions
The transportation of mined materials makes up a large portion of mining companies’ scope 3 emissions. Zachary Skidmore explores their impact and what solutions exist to the reduction of scope 3 emissions derived from transport.
any miners have already set targets on significantly reducing their scope 2 and 3 emissions. However, scope 3 emissions remain largely unaccounted for in reported targets. Within mining, scope 1 and 2 emissions account for 4%-7% of global greenhouse gas emissions. However, this rises to 28% of global emissions when accounting for scope 3, according to January estimates from McKinsey.
Consequently, mining companies need to reshape their business operations to adhere to net-zero aims. The changes required will be varied, including a drive towards renewable power generation, sustainability of production methods and greater efficiency and reduction of fossil fuel-powered transportation.
For an industry so reliant on global freight and haulage for transport to deliver both raw and processed materials, the lack of action on tackling scope 3 emissions from most major mining companies is notable. Despite scope 3 usually accounting for the highest proportion of miners’ emissions, the average of the five largest diversified miners has been calculated at 26 times scope 1 and 2 combined.
Currently, CO2 emissions from global freight transport account for around 30% of all transport-related CO2 emissions from fuel combustion and more than 7% of global emissions. Projections made by the International Transport Forum foresee an increase in trade-related freight transport emissions by a factor of 3.9 to 2050.
Subsequently, mining companies must actively engage with the entire supply chain to ensure all stakeholders adhere to procedures consistent with their net-zero targets and support the steady decarbonisation of transport systems used within the industry.
Shipping is a crucial enabler of international trade, accounting for more than three-quarters of freight transport activity. It is also one of the most energy-efficient ways to carry cargo in energy use per tonne-kilometre transported.
However, although the global maritime fleet has become more energy efficient, much stricter measures are needed to achieve a 1.42% average annual reduction in emissions between 2020 and 2030, consistent with the Net Zero Emissions pathway.
The short-term measures entail an average annual efficiency improvement of the global vessel fleet of almost 2% between 2020 and 2030. An environmental framework already exists to support this. At the multinational level, the Paris Agreement’s ‘20-20-20’ target, which involves reducing carbon dioxide emissions by 20%, will significantly impact the shipping industry over the long run.
At the multinational level, the Paris Agreement’s ‘20-20-20’ target will significantly impact the shipping industry over the long run.
Additionally, the move towards lower sulphur content fuel oils or other low-sulphur emission fuels, such as LNG and ammonia, is projected to be the main low-carbon fuel for transoceanic journeys in the Net Zero Emissions Scenario, yet it is still at the prototype phase.
The International Maritime Organisation has also targeted a 40% reduction in carbon emissions by 2030 and 70% by 2050, together with a total reduction of 50% of all greenhouse gas emissions from their 2008 levels by 2050.
However, despite these announcements, the biggest challenge that remains is that the existing technology and practices of the shipping industry are not sufficient to meet these ambitions.
Cost of transport
Emissions arise from transportation and distribution activities throughout the value chain, including air transport, rail transport, road transport, marine transport, storage of purchased products in warehouses, distribution centres and retail facilities.
Consequently, a large percentage of mining’s scope 3 emissions come from the transport of mined materials. This is exacerbated by the often-long distances between the extraction of metals and minerals and the end-user of the contained materials.
A large percentage of mining’s scope 3 emissions come from the transport of mined materials.
Additionally, the transportation of the materials is mainly predicated on fossil fuels through global haulage and freight networks, resulting in significant offsite greenhouse gas emissions that are not considered to be within mining companies’ scope of influence.
A major challenge for mining companies is obtaining data on emissions derived from transportation. Transportation data may be easier to obtain from upstream suppliers than downstream customers and transportation companies.
Therefore, companies may need to use the distance-based method to calculate downstream transportation emissions. This is often imperfect due to the myriad of different transportation systems within mining’s supply chain.
A major failure is the abject lack of monitoring undertaken to collect information on transport emissions. By collecting a range of data, including transport emissions, mining companies will be able to effectively tailor their solutions and further attempt to alleviate the impact of transport on global greenhouse gas emissions.
A data-led approach therefore seems the most likely to allow mining companies to effectively monitor the extent of their transportation scope 3 emissions. This will help remove the volatility of corporate reporting on scope 3 emissions, allowing institutional investors the opportunity to consider better, broader value-chain climate risks in their climate-related risk management and portfolio-construction practices.
Greenhouse Gas Protocol has outlined a set of simple steps to help companies measure and reduce scope 3 transport emissions.
Greenhouse Gas Protocol has outlined a set of simple steps to help companies measure and reduce scope 3 transport emissions. It asks companies to research their information, understand who their partners are, collect data and identify who and where improvements can be made.
Companies have so far been reluctant to set scope 3 emissions. However, as climate commitments and greenhouse gas targets across shippers, motor carriers, railways and major energy companies grow, collaboration throughout the supply chain between transportation and mining companies will accelerate.
This will strengthen scope 3 audits throughout the commercial sector, providing the data necessary for mining companies to report and tackle their scope 3 emissions.
// Main image: Diesel locomotive 2TE116 pulls a train. Credit: Zahnoi Alex / Shutterstock.com