Fossil fuel equivalence ratio discussion paper

As oil and gas companies face increasing scrutiny of their climate strategies, understanding the methodologies behind their emissions targets is essential. Scope 3 Category 11 emissions from the combustion of sold products represent the majority of the sector’s climate impact. In recent years, more companies have started including these emissions in their reduction targets, frequently setting carbon-intensity targets based on the energy they sell. An often-used yet underexplored element in these calculations are Fossil Fuel Equivalence (FFE) ratios.

This discussion paper aims to enhance stakeholders’ understanding of oil and gas companies’ decarbonisation commitments and support investors in their engagement efforts. It demystifies the concept of FFE ratios and analyses whether and how it is applied by 15 oil and gas companies with Scope 3 targets. Based on this analysis, the authors at the Transition Pathway Initiative Centre (TPI Centre) at the London School of Economics and Political Science (LSE) put forward recommendations for investors.

The discussion paper was written by Nikolaus Hastreiter, Policy Fellow, TPI Centre and LSE PhD student, Jared Sharp, Project Lead, Net Zero Standards (NZS), TPI Centre, and Prof. Simon Dietz, Research Director, TPI Centre and Professor of Environmental Policy, the Department of Geography and Environment, LSE.

We thank Dan Gardiner, Institutional Investors Group on Climate Change (IIGCC), for reviewing the paper.

For the TPI Centre’s latest NZS assessments and relevant resources on the oil and gas sector, click here.  

You can also access additional Management Quality and Carbon Performance data for the oil and gas sector, by filtering by sector or company: https://www.transitionpathwayinitiative.org/corporates. 

Finally, we welcome your feedback. Please let us know if you have any questions or suggestions. Email here.