Progress in 2022

Planet

Creating an energy system that sustains and protects our planet is one of the greatest challenges we face.

Biodiversity loss and global environmental change, including climate change, are the defining issues of our time, with direct and profound impacts on societies and economies.

Our primary business focus is energy and we recognize the global challenge to ensure energy is delivered sustainably.

Energy mix

We have made deliberate efforts to diversify our portfolio over the years both organically and inorganically to shift away from oil toward lower carbon energy sources and business that is now dominated by gas and power trading.

Electrification of the energy system with cleaner forms of energy is key to the energy transition and we believe gas will continue to play an important role both as a replacement for higher carbon emission fuels and as a back-up for renewables. We have also increased our focus on metals relevant to the energy transition. 

The following two charts illustrate both the growth of our traded volumes in lower carbon products since inception.

Historical percentage of traded volumes by product type

Oil vs. non-oil ratio

CO2 intensity of commodities traded

A further measure we monitor is the carbon intensity of traded energy products. This is still trending downwards as the company continues to evolve its activity away from traditional fuels to lower carbon forms of energy including more gas, power, carbon certificates and other cleaner energy products.

The pattern is not even year-on-year due to natural variance in trading patterns and energy system changes across different markets between years. However, we have through our deliberate evolution to supplying cleaner forms of energy, continued to make improvements in the carbon intensity, which supports our and the global objective toward achieving Net zero while concurrently supporting universal access to energy.

This metric is shown as intensity of energy commodities traded: emissions (g CO2e) per unit of energy (MJ)). This comprises energy products (oil, gas, power, coal) and related energy products (i.e. carbon certificates, which relate to energy consumption). Our metals trading is not captured in this.

In addition, to diversifying the products we trade, we have invested significantly to support the development of new low carbon energy. Read about some of the innovative companies we have invested in here: Partner Profiles.

Carbon management & carbon neutrality

In addition, to investing in the energy transition, we recognise, and are actively working to manage carbon in our operations and across our investment companies. Initiatives range from switching feedstocks, piloting and using lower carbon shipping fuels, installation of solar generation, re-using waste products, purchase of renewable power and energy efficiency improvements.

To further demonstrate our commitment we have also offset all of our Scope 1 & 2 carbon emissions in 2022.

By doing this and continuing to make reductions and investing across the low carbon sector and nature based solutions, we are supporting the world’s transition to net zero and our own company’s journey toward net zero.

2022 CO2 emissions

We have been measuring our GHG footprint over a number of years and have continued to make improvements during 2022.

In 2022, we have sought to improve data quality, processes around data collection and calculations where better data or approaches are now available.

Carbon accounting standards and new guidance continue to evolve and we have sought to update our approach accordingly.

2022 CO2 emissions across scopes 1, 2 and 3:

NOTE: The marked figures (✔) were reviewed by PricewaterhouseCoopers SA.

2022 CO2 emissions in scope 3 breakdown:

NOTE: The marked figures (✔) were reviewed by PricewaterhouseCoopers SA.

3 year comparison of global GHG footprint by operational control in tonnes of CO2e:

Commentary on changes: 2021 vs 2022

Overall Scope 1 and 2 emissions have changed marginally from 2022. This reflects a largely stable asset base and activity set year on year. There have been some improvements in data and overall approach, which supports our overall goal to improve reporting on an ongoing basis.

Scope 3 changes relate to:

  1. a new business was started providing time charter services
  2. flows of energy cargoes changed significantly to support the energy needs of Europe following the outbreak of war in Ukraine and had to be sourced from different locations – in certain instances this has increased shipping distances travelled and therefore fuel consumed.
Basis of reporting

The purposes of this section is to outline the approach and scope used as the basis of preparation for the calculation and reporting of our GHG footprint for 2022. The scope of the report includes the Trading business and Assets held at Mercuria Energy Group Ltd, as well as assets held at Mercuria Energy Group Holdings Ltd level.

Background

We have been measuring our GHG footprint over a number of years and have continued to make improvements during 2022.

In 2022, we have sought to improve data quality, processes around data collection and calculations where better data or approaches are now available. Carbon accounting standards and new guidance continue to evolve, and we have sought to update our approach accordingly.

For 2022, the GHG emissions have been calculated applying the following basis of preparation.

Guidance and Emission factors

The guiding standard used is the GHG Protocol, Revised Edition. Given the diversity of our activity and investments, we have considered the principles from various guidance (e.g. IPIECA for oil and gas) for the respective activity. As new guidance becomes available we will continue to review and update our approach.

Our approach has to been to gather primary data (e.g. actual consumption data from invoices and management reports) in quantifying emissions where available, or reported emissions from regulatory reports or where this was not possible derived figures were applied to activity based data to estimate the emissions.

The emissions factors we have used have been sourced primarily from the IPCC, DEFRA, EPA and IMO.

Organizational footprint

GHG Protocol equity share approach has been applied i.e. asset emissions are included based on Mercuria’s equity share. This is a change for 2022, in previous years we had used operational control. The results are not significantly different for this year, but we considered equity share to be a better reflection of our business model as we are not primarily an operator of assets. There is not at present a significant difference at the aggregate level – for comparison only we have included operational control data for this reporting period as well.

Mercuria operates assets and owns investments in a wide cross section of energy and energy transition related assets, including terminals and warehousing for storage, bunkering vessels, renewable fuel refineries, gas and power assets (wind and solar), and mining activities

For the purposes of preparing this report, we have included assets and activities where we have assessed there to be larger emission sources – e.g. from activities that use fossil fuels for combustion and processes where there is potentially loss to the atmosphere through venting or similar. These are principally from oil and gas production, biofuel refining, mining and transportation activities. For the equity share basis we have included emissions from selected activities and investment companies where our shareholding is above 20%[1].

Below this level of shareholding, obtaining appropriate data is more challenging and the relevant equity stake is small, so the contribution to the overall emissions footprint is not significant.

We have also not included assets that are in development stage where we assessed their GHG footprint to be negligible. We will continue to reassess their relevance and include these in our reporting boundary as these activities further develop.

[1] This relates to two bio-refining, two mining, four upstream oil and gas, one warehouse, three terminal, one shipping fuel supply related and one freight business. It also includes Mercuria offices, data centres and flying for business.

Scopes

The following is reported in the GHG protocol scopes:

Scope 1 – direct emissions

  • Mercuria assets, activities and investment companies: direct emissions from operational activities, which includes static or mobile combustion, venting and other related emissions
  • Includes direct emissions from shipping activities, performed by vessels owned by Mercuria for marine fuel bunkering

 Scope 2 – indirect energy imports

  • Mercuria assets: power or other energy imports
  • Mercuria offices and data centres: power and gas purchased

Scope 3 – selected categories

  • Category 6: Upstream – business travel
    • Reported for Mercuria’s business flights
  • Category 8: Upstream – Leased assets
    • Reporting of emission sources from time chartering of vessels
  • Category 9: Downstream – Transportation and distribution
    • Reporting of emission sources from transportation of traded commodities via gas pipeline or marine vessel
      Further detail on approach
      • The gases included in calculations are those in the Kyoto basket of gases (the largest contributors are carbon dioxide and methane).
      • Wherever possible we have relied upon supporting documentation provided by the assets and investments companies to calculate the emissions from actual consumption or relied upon GHG reports prepared for the asset for say regulatory reasons. However, in some instances given the dispersed nature of emissions sources and difficulty obtaining data or a limited scope of the regulatory reports, estimates have been calculated based on production data or activity data. In this centralised model, calculations apply common emission factors and GWPs from the IPCC’s fifth assessment report.
      • Scope 2 emissions include office energy use and those from our data centres. We have included  offices where we have 15 staff or more and we have included our data centres.
      • A key part of our business is trading commodities between other parties. This entails moving physical products across markets globally. Therefore, we have included the following categories under Scope 3 as we consider them most relevant to our business model:
        • Category 6: Upstream – business travel.
          • The primary source of emissions is from our air travel for business. The emissions are based on details of flights provided and recorded through our travel agency. A third-party (Atmosfair, a non-profit carbon footprinting & offsetting organisation[2]) uses this data to provide a detailed calculation using DEFRA emission factors.
        • Category 8: Upstream – Leased assets.
          • A new part of our business this year is the chartering of vessels on time charter, which are then chartered to third parties for their own use. Emissions are calculated based on the total actual consumption of fuel across the period of the time charter during the year.
        • Category 9: Downstream – Transportation and distribution.
          • We have included the two main sources of emissions: transportation of all commodities by marine vessels and gas by pipeline.
            • Shipping emissions: We include voyage charters for commodities transported using actual fuel consumption as reported by the ship-owner; for some voyages where fuel data is not available we have estimated emissions based on the distance and equivalent vessel fuel consumption using a third party estimation.
            • Pipeline: For gas transportation by pipeline losses (from either leakages or usage i.e. to power compressors by the pipeline operator) are estimated by applying IPCC emission factors based on the volumes transported during the year.
          • Other Scope 3 categories have been considered in the preparation of this report. However, we play a unique role in the value chain, which is primarily that of an intermediary between many parties involved in the exchange of a wide variety of different commodities and temporary storage. Given this unique position across many value chains across different industries and that we are not a consumer nor a significant producer we have not included further categories within our reporting boundary  at present. There are also significant hurdles to gathering suitable data. We will continue to monitor approaches and guidance for future reporting periods.

      [2] https://www.atmosfair.de/en/

      Independent practitioner's limited assurance report

      Read the PWC limited assurance report on selected non-financial information published in this section of the Mercuria CSR website for 2022

      Environmental releases

      During the 2022 calendar year there were two occurrences where our operations (one under our staff, and the other by a contract operator) were responsible for spills into the environment which triggered the involvement of authorities at a state, federal or national level. In both instances immediate efforts were taken first to safely address and stop the source of the releases. This was promptly followed by ensuring appropriate spill clean-up resources were activated to recover and clean up spilled material to the satisfaction of the relevant authorities. Neither event resulted in any injuries, or other potential hazards such as fires or explosions. As is a standard practice across all of Mercuria’s businesses, subsequent to the initial crisis response, follow-up investigations were conducted to assess the factors contributing to these failures with the aim of identifying preventative measures to help guard against similar recurrence.

      Owing to our environmental compliance failures, we paid fines in the amount of USD 24,113 during the 2022 calendar year.  By appropriately taking responsibility for our failures we worked with authorities to reach settlement agreements with no other restrictions or covenants placed upon our business.

      * Exclusive of any spill events where another party had primary responsibility for the event or where notification was given to state federal or national authorities as a courtesy – but was not required.

      For clarity concerning these statistics, any discharges that were authorized or which did not otherwise mandate formal notification to authorities were not included as part of our statistics, irrespective of any courtesy notifications that may otherwise have been made to authorities. Finally only penalties paid directly to state, federal or national authorities which were assessed for non-compliant health, safety or environmental issues are reported. Taxes or other regulatory fees that might also be paid to authorities are not included, nor are any other potentially related expenses incurred for repairs or corrective work, or amounts that might be paid to local agencies, or counterparties or service providers.

      HUB Ocean partnership

      Mercuria and HUB Ocean have had an important strategic partnership since May of 2021. Established in 2019 by the Aker Group and the World Economic Forum network of Fourth Industrial Revolution Centres worldwide.

      HUB Ocean is based in Oslo, Norway and is a non-profit, technological foundation that is dedicated to unlocking and sharing ocean data. It is the first thematic Centre dedicated to the ocean.

      HUB Ocean’s core product, the Ocean Data Platform (ODP), allows aggregation of unprecedented volumes of diverse ocean data sets. ODP itself is a global, open-source and integrated digital data ecosystem providing new and faster insight for the ocean we need and want.

      The partnership will bring about many synergies by combining Mercuria’s expertise in the global maritime industry with HUB Ocean’s expertise as an international provider of market-leading ocean and maritime technological solutions. For example, experts from Hub Ocean and Mercuria participated together in the program of the inaugural Summit of the Villars Institute, a Swiss foundation that aims to accelerate the transition to a Net Zero and Nature Positive economy through intergenerational collaboration and systems leadership.

      In 2022, our collaboration with HUB Ocean extended to begin the creation of a new citizen science app built on the ODP for seafarers, following market research on how such an app might be used was completed by a team of summer students. Seafarers have a unique opportunity to collect ocean data and observe things that the rest of us cannot, and Mercuria has more than 500 seafarers working on the group’s vessels globally. Worldwide there are close to 2 million seafarers.

      “We want to give them the ability to share their observations and help change the fate of the oceans. We know from our employees that there is a very strong wish to contribute to marine sustainability”

      Victoria Attwood Scott, Head of Compliance, Mercuria

      The mobile app is being designed to collect and upload images of marine life and marine waste so that researchers and scientists can then use this data to map wildlife populations and identify migration patterns, as well as study the effects of marine waste on ecosystems. For NGOs, it can help them raise awareness about endangered marine wildlife and high-waste areas.

      To change the fate of the ocean, we need to harness the power of citizen science. Achieving ocean health is a massive collaborative effort that will require giving citizens a greater say.

      Read more about HUB Ocean in their Partner Profile.

      Earth Innovation Institute partnership

      Mercuria is proud to have started partnering with The Earth Innovation Institute (EII) during 2022.

      The EII help states and provinces in tropical forest regions make the shift to low-emission, nature-positive, socially-inclusive development.

      EII takes a long-term, systemic approach to this ambitious goal, working on the core assumption that broad, cross-sector awareness within each state or province of the potential benefits conferred by this shift can drive the collective action and public policy innovation that are necessary for it to take place.

      EII’s global team of 35 experts in rural development, carbon markets, geospatial analysis and public policy has helped fifteen states and provinces in Brazil, Colombia, Indonesia and Peru begin their transitions to climate- and nature-friendly development. EII was chosen as the lead partner by ten states and provinces in these countries who are members of the Governors’ Climate and Forests Task Force to support the participatory design of low-emission development plans and investment strategies.

      Earth Innovation Institute, incorporated as a non-profit charity in California, is one of the co-authors of the regional, “jurisdictional” approach to low-emission development and is the leading organization globally supporting state-wide REDD+ programs to provide high-integrity verified forest carbon credits to the rapidly growing carbon market. Its analyses, publications and positions are frequently covered by major media outlets such as the Economist, Washington Post, Wall Street Journal, and BBC.

      In 2022, Mercuria’s funding supported the work of the Earth Innovation Institute with multiple states in Brazil that helped define a legal framework for States to develop jurisdictional programs to stop deforestation. This included working with multiple law firms and academics to understand how States can access carbon finance for their actions to reduce deforestation. It also included capacity building for Amazon States to understand how to implement such programs.

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