Chief of environmental technology company ReFlow agrees with PwC Norway that shipping companies are not reporting well enough on scope 3 emissions. If they don’t pick up the slack soon, it will hit them full force in a couple of years, he says.
Photo: ReFlow
Shipping companies must improve their reporting on scope 3 emissions. If they don’t, they will be doing themselves a disservice.
Such is the verdict from Rasmus Elsborg-Jensen, CEO & founder of environmental technology company ReFlow, which helps companies determine their exact carbon footprints.
In an interview with WPO, Elsborg-Jensen states that he agrees with PwC Norway and its climate index report, which has criticizes shipping companies for their lack of action on the issue, which has provoked certain companies to react.
Eventually, shipowners will also be required to report on scope 3 emissions. The greener a vessel is in direct emissions, the more of the vessel’s emissions will transfer into scope 3.
“From my point of view, the criticism by PwC is valid because shipowners will need to get used to accounting for their scope 3 emissions down the line in order to meet future environmental requirements,” Elsborg-Jensen explains.
Currently, however, such reporting is done on a voluntary basis.
”Lacking climate reporting”
WPO has previously reported on PwC Norway’s latest climate index report wherein four Norwegian shipping companies were all classified as “companies with lacking climate reporting” in category 5, with category 7 being the lowest.
Shipping companies do not know the lifecycle emissions of their vessels, because most shipowners have not prioritized this yet
Rasmus Elsborg-Jensen, CEO & Founder, ReFlow
One of PwC Norway’s criticisms towards the four companies – Odfjell, Höegh Autoliners, G2 Ocean and Wallenius Wilhelmsen – was their lack of reporting on “significant scope 3 reductions”, Sophie Bruusgaard Jewett, head of Climate Change & Sustainability at PwC, told WPO.
Odfjell and Wallenius Wilhelmsen do not agree with PwC Norway and told WPO that they both voluntarily report scope 3 emissions to the Carbon Disclosure Project (CDP).
Elsborg-Jensen says it is important to look at what exactly shipping companies are reporting as he is certain that they are not aware of the lifecycle of their vessels.
About ReFlow
“It is highly unlikely that there are shipowners reporting on the exact scope 3 emissions of their vessels. Shipping companies do not know the lifecycle emissions of their vessels, because most shipowners have not prioritized this yet. And right now, we are the only ones in the industry who are doing it. I think they must be reporting on something else,” the CEO says, adding:
“But if shipowners say they are reporting, it’s always interesting to see what they are reporting, because the data needed to report on scope 3 will be the emissions tied to the very construction of the ship.”
No such thing as a carbon-neutral vessel
Elsborg-Jensen believed it would be in the best interest for shipping companies to jump into ”deep waters” and start disclosing as much within the scope 3 category as possible, such as the emissions tied to ship construction.
“The narrative for many shipowners is that scope 1 is by far the highest percentage of their emissions, and they should therefore only report on those,” Elsborg-Jensen explains.
”But the interesting thing that we see is, when you start changing the carbon intensity emissions of the fuels by, for example, substituting methanol or a battery, you are changing the percentage share of emissions from scope 1 to scope 3, because scope 3 represents supply chain emissions from production and raw materials,” he adds.
For example, if one builds an electric ferry, there will be no direct emissions – those reported in scope 1. But there will be plenty in scope 2 and 3 – as it is highly unlikely that all the steel to create the ferry was green steel and that production and the entire supply chain supporting construction of the vessel was green.
”The ’aha’ moment”
Thus, none of the ”green vessels” are actually zero-emission vessels as they will still produce emissions when you look at the entire lifecycle, Elsborg-Jensen highlights.
