On a global scale, fuels are top impacting products and are number one contributor of climate change due to fossil fuels. They account for around 60% of total greenhouse gas (GHG) emissions and they are one of the main causes of air quality deterioration. Additionally, fossil fuel extraction requires a lot of water, especially for hydraulic fracking. Drilling and fracking shale gas formations typically requires 3 to 6 million gallons of water per well. Extraction is also a main source of soil pollution and oil spills regularly weaken marine ecosystems. Large amounts of land are disturbed by drilling wells, access roads, processing facilities and pipelines connected to oil and gas drilling operations, coal mining and biofuel-related agriculture. Last but not least, the fuel industry produces coal mining residues, hazardous waste from refining activities and agricultural waste linked to biofuel production.
This high impact intensity framework includes equipment manufacturers and service providers at all stages of the value chain, from fuel extraction or production, to storage, conversion, transportation and final use. The framework integrates the impacts of fossil and renewable fuels in all physical forms: solids (biomass, coal…), liquids (crude oil, gasoline, diesel, biodiesel, liquified natural gas…) and gasses (natural gas, biogas, hydrogen, methane, propane…). Unlike the products of many other industries, fuel has a significant environmental impact during the end-use phase. The following diagram shows final-use sectors for the fossil fuels and their related NEC frameworks.
Main final use sectors of oil, gas and thermal coal products. Source: I Care & Consult analysis
How the NEC measures impacts of fuels
For each type of fuel, volume is expressed in the same energy unit, usually barrel or ton oil equivalent, and the NEC is thus calculated by summing four NEC components, as follows: +Final use NEC: derives, for each type of fuel (coal, oil, gas), from the combined NEC of the final uses provided by the other fuel-intensive frameworks, such as transportation, heating, electricity and chemistry. + Upstream incremental NEC: reflects the upstream specificities of fossil fuels’ impacts, in particular via the extraction technique used,e.g. fracking +Over-carbon budget incremental NEC: as fossil fuel use is clearly identified as a primary and massive driver of climate change, a negative incremental NEC or malus has been introduced to capture this environmentally non-sustainable nature with an over-carbon budget negative component or malus per fossil fuel type (coal, gas, oil) +Specific incremental NEC: relates positive or negative specific impacts such as biosourcing, energy efficiency or renewable H2
The main environmental issues that arise for the fuel sector and that are measurable at company or activity level are driven by the type of fuel (coal, oil, gas), its fossil or renewable character and its specificities (upstream extraction conditions, downstream energy savings, etc.). As a result, their directly and indirectly integrate the whole impact spectrum: climate, air quality, water consumption and pollution, biodiversity and waste.
What does the fuel NEC look like
Default value based on world average are summarized in the table below. All form of thermal coal and unconventional oil are by far the most impacting fuel par barrel oil equivalent: their NEC is -100%. As biosoured fuels are covering highly heterogeneous realities, only a guiding range in given and each case is to be assessed specifically using third-party comparative studies and certifications schemes.
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WHAT IS THE NEC METRIC?
Designed to inform and empower investment decision makers, it uses physical data from across the whole value chain to provide a snapshot of an activity’s net environmental contribution and it can be applied at a company, portfolio, index or product/source level.
The NEC evaluates the impact of economic activities based on environmental issues including climate change, water and biodiversity impacts.
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