The aim of this section is to outline and describe the methodology and scope that serve as the basis of preparation for the calculation and reporting of our Greenhouse Gas (GHG) footprint for the year 2023. 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

For several years, we have actively measured and reported our GHG footprint, consistently seeking enhancements in our process. We continue to improve data quality, processes around data collection and calculations when better data and approaches are available. In 2023, we advanced our efforts by partnering with Validere, a third-party emissions management software provider, backed by a team of qualified experts. This collaboration was aimed at digitizing and validating our emission calculations and streamlining our   GHG reporting across multiple assets.

In addition to partnering with Validere, we also partnered with Maritech Services Limited by using their software – Sea. Sea offers a digitalized method for us to record, track and validate our voyage charter carbon emissions. This allowed us to enhance our underlying data collection methods and compare against IMO emissions reduction targets.

The following basis of preparation was employed for our GHG emissions calculations in 2023:

Guidance and Emission factors

We adhere to the GHG Protocol Corporate Accounting and Reporting Standard, as the guiding standard for our emissions. Given the diversity of our activities and investments, we have considered the principles from various guidance (e.g., IPIECA for oil and gas) for the respective activity. We continue to review and update our approach as new guidance becomes available.

Our approach, in order of priority, consists of the following steps:

• Reported Emissions: We report on emissions data reported in regulatory filings for our assets.
• Primary Data Collection: We collect primary data (e.g., actual consumption figures from invoices and management reports) to quantify emissions.
• Estimation with Derived Figures: When neither reported emissions nor primary data are available, we estimate emissions by applying derived figures to activity-based data.

Our emission factors are derived mainly from IPCC, ISO, DEFRA, EPA, and IMO. We have updated these factors to reflect the most recent publication versions and have also had them independently verified by Validere for accuracy and reliability.

Organizational footprint

We report our organizational footprint based on the GHG Protocol equity share. Asset emissions are calculated based on Mercuria’s percentage equity share of each asset. Equity share gives a better reflection of our business model compared to the operational control basis as we are not primarily an operator of assets.

The assets we own and operate cover a wide range or energy and energy-transition related assets. This includes terminals and warehousing for storage, bunkering vessels, renewable fuel refineries, gas and power assets and mining activities.

Scope of reporting

For the scope of this report, our focus is on assets and activities identified to have the largest impact in terms of emissions. This includes activities that involve combustion of fossil fuels and processes prone to atmospheric emissions through venting or similar processes. The primary sources include oil and gas production, biofuel refining, mining and transportation activities. Assets in the development stage, deemed to have a negligible GHG footprint, have been excluded from our analysis. We remain committed to periodically reevaluating their significance and will incorporate these assets into our reporting scope as they progress and develop further.

On an equity share basis, we have accounted for emissions from the chosen activities and investments in companies where our ownership exceeds 20%. The rationale for selecting this threshold is twofold: obtaining accurate data becomes considerably more difficult below this equity level and stakes smaller than this threshold contributes insignificantly to the overall emissions footprint.

These assets and investments include three bio-refining, two mining, six upstream oil and gas, one warehouse, one alternative fuel, four terminals, a bunkering and freight businesses. The emissions also include Mercuria offices, data centres, transportation via ship or pipeline and business flights for Mercuria employees.

Scopes

The following is reported in the GHG protocol scopes:

Scope 1 – Direct emissions

• Mercuria assets, activities and companies we invest in: direct emissions from operational activities, which includes stationary and mobile combustion, flaring and venting and other related operational emissions.
• Direct emissions from shipping activities performed by vessels owned by Mercuria for marine fuel bunkering.

 Scope 2 – Indirect energy imports

• Mercuria assets: purchased electricity, steam, heating and other energy imports.
• Mercuria offices and data centres: electricity and gas purchased.

Scope 3 – Selected categories

• Category 6: Upstream – Business travel
  • Reported For Mercuria’s business flights.
• Category 8: Upstream – Leased assets
  • Reported for Mercuria’s time chartering of vessels.
• Category 9: Downstream – Transportation and Distribution
  • Reported for transportation of traded commodities via gas pipeline or marine vessel.

• We adhere to the GHG Protocol Corporate Accounting and Reporting Standard
• The gases included in the calculations are those in the Kyoto basket of gases – the largest contributors are carbon dioxide and methane.
• Where possible, we have utilized supporting documents from the assets and companies we have invested in to determine emissions based on actual consumption data, or we have used GHG reports created for regulatory purposes. However, due to the widespread distribution of emission sources, challenges in data collection, or the limited scope of regulatory reports, we have occasionally resorted to estimating emissions using production or activity data. For these estimations, our centralized approach employs common emission factors and Global Warming Potentials (GWPs) as outlined in the IPCC’s Sixth Assessment Report.
• In addition to Scope 2 emissions from our assets and companies we have invested in, the scope includes emissions from our offices and data centres. In specific, we have included electricity and gas consumption from offices with a minimum of 15 employees.
• A fundamental part of our operations involves the trading of commodities among various parties, which necessitates the global transportation of physical goods across markets. This activity is directly related to Scope 3 emissions from categories 6 (Business Travel), 8 (Upstream Leaased Assets), and 9 (Downstream Transportation and Distribution). Therefore, we have incorporated these Scope 3 emission categories into our emission reporting since they are most pertinent to our business model, ensuring a comprehensive assessment of our environmental impact.

• • Category 6: Upstream – Business travel.
    • We report on our business air travel emissions. Our travel agency stores details of all business flights. Our business travel emissions are then calculated directly from this data by a third-party, Atmosfair. Atmosfair is a third-party non-profit carbon footprinting & offsetting organization. They use our flight data to calculate our emissions using DEFRA emission factors.
  • Category 8: Upstream – Leased assets.
    • Our vessel chartering business is growing. We charter vessels on time charter, and consequently charter them 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 accounted for the primary sources of our downstream emissions, focusing on the maritime transport of commodities and the conveyance of gas through pipelines.
    • Shipping emissions: The emissions include voyage charters for commodities transported using actual fuel consumption. This year we started using Sea, Maritech Services Limited’s platform for our shipping emissions. Sea contacts ship-owners directly to report actual fuel consumption, which Sea uses to calculate emissions using ISO emission factors. For some voyages where fuel data is not available, we have estimated emissions based on the distance and equivalent vessel type of other vessels reported on Sea.
    • Pipeline: For gas transportation by pipeline, we estimate losses (from leakages or usage e.g., to power compressors by the pipeline operator) by applying IPCC emission factors based on the volumes transported during the year.
  • In preparing this report, we have evaluated other Scope 3 emission categories. However, our distinct role in the value chain, primarily as an intermediary facilitating the exchange and temporary storage of a diverse array of commodities, sets us apart. Our unique position spanning various value chains across different industries without being a direct consumer or a major producer, has led us to exclude additional categories from our current reporting scope. The significant challenges in acquiring appropriate data also play a role in this decision.

We are committed to staying abreast of evolving methodologies and guidance, aiming to refine our reporting practices in future periods.

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