From data to action: monetising carbon intensity management in the energy sector

Introduction

The urgent necessity to minimise carbon footprints across various industries has led to the establishment of numerous regulations aimed at addressing this critical challenge. These regulations recognise the significant social and global impacts of carbon emissions. On a global scale, stringent policies such as the European Union Renewable Energy Directive II (EU RED II) (European Union 2018), the EU 2024/1787 regulation ‘on the Reduction of methane emissions in the energy sector’ (European Union 2024), and the Carbon Border Adjustment Mechanism (CBAM 2025) seek to value and penalise carbon emissions while ensuring global competitiveness during the transition to a low-carbon economy. The EU CBAM transition period has already begun (CBAM 2025), requiring some imported products into the EU to report their emissions, with tariffs starting from 2026. CBAM aims to address carbon leakage by balancing the carbon price paid by EU producers under the EU Emissions Trading Scheme (ETS), with those carbon costs paid by producers outside of the EU. As a result, the CBAM reporting templates, certificates and documentation is already an important tool for those global producers wanting to import products into the EU.

In Australia, the Safeguard Mechanism requires approximately 200 large industrial facilities to keep their emissions at or below their baseline levels, providing a regulatory framework that drives emission reductions and encourages the adoption of cleaner technologies. Under the Safeguard Mechanism, standard facility baselines must decline by 4.9% each financial year through to 30 June 2030 (Australian Clean Energy Regulator 2024).

Impact on trade for Australia exports

According to the International Energy Agency Gas Market report for Q1 2025 (IEA 2025), during 2024 liquefied natural gas (LNG) imports into Asia–Pacific grew by 9.3% and critically for Australia’s key LNG trading partners expanded by 11% into China and 7% into South Korea. Globally, Technavio estimates that sustainable aviation fuels (SAF) is estimated to grow at a massive 75.62% compound annual growth rate from 2024 to 2028 (Technavio 2024).

This shows the international trade and exports are significant for Australian producers of LNG, and a growing influence of SAF, hence a requirement to have a strong carbon intensity impact assessment for all new projects planned going forward.

Carbon intensity management technology

To comply with these evolving regulations and incentive schemes, technology can facilitate the measurement, monitoring, reporting and reduction of carbon intensity throughout the hydrocarbon value chain. This can validate projects and create new revenue streams and differentiated products for energy suppliers. Additionally, the technology can then be expanded to allow operators to control and optimise plant operations to meet specific carbon intensity levels. This capability enables differentiation of products based on their carbon footprint, allowing companies to capitalise on market demand for varying levels of carbon intensity. Carbon intensity management technology will be an effective way to increase the bankability of green projects by providing a credible and auditable framework, digitally unlocking the benefits of reduced carbon intensity and monetising carbon reduction to make businesses more resilient to the changing environment.

Although carbon intensity cannot be directly measured for all sources, it can be effectively estimated using a variety of data sources and algorithms based on frameworks established by ISO 14060 family (International Organization of Standardization 2018), ISCC+, GREET (US Department of Energy 2024) and CORSIA CERT (International Civil Aviation Organization 2024). These frameworks provide standards that industries can use to comprehensively track and manage their carbon emissions and provide auditable emissions data, which is crucial for both regulatory compliance and the pursuit of sustainability goals. However, having multiple frameworks also provides a challenge, and selecting the correct calculation method is critical to achieve the tax credits, tariffs or carbon tax or offset depending on the regulatory program the producer is required to be involved in. Hence, carbon intensity management technologies should be able to handle different calculation models for different regulatory programs, as well as provide the evidence and reporting to be able to be audited by independent experts to verify and validate carbon intensity calculations.

Uncertainty in the cost of carbon

There is a lot of variability and uncertainty in the longer-term cost of carbon, which provides even more complications for exporters of products across regions and differing regulations. Some countries have a carbon tax, others have a cap and trade, while Australia’s Safeguard Mechanism (Australian Clean Energy Regulator 2025) was updated in July 2023 to be a declining baseline and credit ETS.

A company’s internal cost of carbon is an important consideration when justifying long-term asset investments and new projects, and the uncertainty around this price can make a big difference in whether a project proceeds to execution. Woodside assumed a long-term carbon of US$80/tonne in justifying their emission reduction projects (Woodside Energy 2025). Whereas the 31 December 2024 weighted average spot price for generic Australian carbon credit units (ACCU) was AU$36.63 as per the Quarterly Carbon Credits reports (Australian Clean Energy Regulator 2025). However, this has been increasing since 2020 when they were under AU$20/tonne, and is expected in increase further, with EY (Hatfield-Dodds and Boulus 2023), projecting it to reach approximately AU$75/tonne before 2035. To meet global net zero commitments by 2050, Woodmac (2024) projects that a global average carbon price of US$157/tonne will be required by 2050. In contrast, their base-case scenario estimates a price of US$84/tonne. This highlights the significant variability in long-term pricing that companies must consider when assessing the financial feasibility of sustainability or new energy projects.

As this cost of carbon and ETS schemes become clearer, and the uncertainty on the price of carbon becomes more understood and manageable from a risk and finance perspective, we will see more clean energy projects get through final investment decisions (FIDs). We are already seeing many early-adopter large emitters approve efficiency projects for abatement projects under internally defined thresholds like the abovementioned Woodside projects and the Santos Cooper Basin CCS project (Santos 2024). Technology that can perform real time measurement of Scope 1 and 2 emissions with online measurement of the carbon intensity of production, such as carbon intensity management technology, can help to provide visibility to a company’s actual cost of CO₂e in real time, and can help companies make informed and financially viable decisions on projects to offset these emissions.

Examples of carbon intensity calculation technology

An example Carbon Intensity Calculator is the real time carbon emissions reporting project Honeywell did in China for the Shenghong Petrochemical. This provides a real time dashboard on the emissions for a Propane Dehydrogenation Oleflex unit (Honeywell and Shenghong Petrochemical 2024). This solution is capable of:

Solutions such as those described in the whitepaper ‘Emissions Management in the Upstream Oil and Gas Sector’ (Honeywell 2022) and ‘Production Intelligence Optimises Production Processes’ (Gupta and Prahladrao 2023) have utilised advanced control software to optimise energy expenditure in energy intensive compressors, reduce flaring including overall energy optimisation across all units in oil and gas facilities. This carbon control optimisation aids in:

Impact on industry

Carbon intensity management technology aims to increase the bankability of green projects by providing a credible and auditable structure against many of the globally recognised standards. This technology assists companies in unlocking the benefits of reduced carbon intensity and monetising carbon reduction, thereby enhancing resilience to the evolving regulatory landscapes. Furthermore, this technology is equipping future operators with the ability to control and optimise for specific carbon intensity levels, which allows companies to meet market demand for varied product carbon footprints, thus capitalising on consumer and regulatory requirements.

Additionally, from an Australian producers perspective, the technology should be able to be leveraged to trade (buy or sell) in the Australian national carbon market for ACCUs or safeguard mechanism credit units (SMCs).

Conclusion

Australia’s AU$75 billion fuel exports – particularly biofuels for SAF, LNG – face a AU$2.1 trillion global market reshaped by emissions regulations. Carbon intensity management technology solutions provide a pivotal opportunity to advance in the quest for sustainable business practices and carbon footprint reduction. These solutions support environmental goals and provide a competitive edge in a market increasingly driven by sustainability. By enabling the monetisation of carbon intensity management, these solutions help industries transition from mere compliance to generating financial returns.

In conclusion, carbon intensity management solutions not only enhance the bankability of green projects through a credible and auditable framework but also enables industries to capitalise on market demand for varying levels of carbon intensity. This strategic approach ensures businesses are resilient to the changing regulatory and environmental landscapes, truly embodying the transition from ‘Compliance to Cash’.