GCC energy players need to shift to product-level carbon accounting. (Image source: Adobe Stock)
As global regulations on reducing greenhouse gas emissions become increasingly stringent, energy companies face increasing pressure to address the carbon footprint of individual products, requiring a complete rethink of how emissions are measured, reported and mitigated
This presents both an opportunity and a challenge for GCC energy companies, as their relatively lower-carbon intense products offer a competitive edge to differentiate themselves in increasingly carbon-conscious global markets, according to a new report titled "Rethinking Corporate Decarbonization: From Enterprise Targets to Product Strategies," a collaboration between the World Future Energy Summit, and Strategy& Middle East, part of the PwC network.
Major energy players in the GCC are now required to report their overall carbon emissions - as part of national biennial carbon inventory submissions - under UNFCCC guidelines, and new carbon policies and regulatory frameworks are increasingly emphasising the carbon footprint of products, meaning energy companies must rethink their strategies to stay competitive. This shift reflects demand for transparency regarding the emissions associated with or embedded in individual products along their entire value chain, from extraction of raw materials, through processing, manufacturing, logistics and even end-of-life.
“This marks a pivotal moment for energy players. Setting broad corporate emissions targets is no longer sufficient. By adopting product-level decarbonisation, GCC energy companies can transform regulatory pressures into growth opportunities, securing their position as leaders in the global energy transition,” said James Thomas, partner at Strategy& Middle East.
The report presents a 3D framework which represents a real-time view of the latest global policies impacting sectors and products, enabling GCC energy companies to align carbon accounting and emissions mitigation efforts with regulatory demands and market expectations.
Carbon accounting as a source of competitive advantage
Shifting to product-level carbon accounting offers GCC energy players several strategic advantages, such as enabling tailored emissions reductions to meet market standards, improving compliance with global policies and enhancing product transparency to build customer trust and reputation. It also establishes flexibility for adapting to shifting policies and market dynamics, ensuring long-term resilience.
However, the report notes that many GCC energy players have yet to fully codify and deploy carbon accounting policies at the corporate level, let alone for individual products. Several GCC countries are still developing their regulatory and legislative agenda for carbon emissions. Additionally, robust methodologies and significant data management are needed to accurately allocate emissions from shared facilities, particularly in complex operations.
Four critical areas
The report recommends four critical areas for GCC energy companies to focus on:
1. Develop, codify and deploy robust product-level carbon accounting frameworks that align with global regulations
2. Invest in advanced automation and data management systems for accurate emissions reporting and real-time policy compliance
3. Focus decarbonisation efforts on products exported to high-regulation markets, ensuring compliance and competitive advantage
4. Investing in capabilities to continuously track and respond to shifting carbon policies globally, ensuring adaptability and leadership
As the GCC continues to position itself as a global energy leader, transitioning to product-level decarbonisation represents a pivotal opportunity to lead by example. By taking these steps now, GCC energy companies will be well-positioned to navigate future changes, fostering resilience and growth in a carbon-conscious world.
