U.S. drillers and refiners will likely need to report estimated greenhouse gas emissions from the cars, trucks, planes and ships that use their fuel if a rule proposed by U.S. regulators on Monday passes later this year, according to industry analysts.

Climate-conscious investors have long called for publicly traded companies to be transparent about the full impact of their businesses on global warming, which the investors view as a critical first step in improving the environmental effects of the companies’ operations.

The Securities and Exchange Commission on Monday unveiled a long-anticipated draft rule that would require companies to disclose greenhouse gas emissions not just from their own facilities and those that power them—known as Scope 1 and Scope 2 emissions—but also the emissions generated by partners and end-users outside the company’s direct control—known as Scope 3—if it is considered “material.”

Emissions from burning fuels in engines qualifies as Scope 3 emissions for the petroleum industry.

“For refiners and for a lot of the oil industry, it will be hard to argue that Scope 3 isn’t material,” said Andrew Logan, senior director of oil and gas at Ceres, a Boston-based clean-energy investor group.

Progressives and activist investors have pushed for the SEC to require Scope 3 emissions disclosure to hold companies accountable for all the carbon dioxide and methane they help generate.

Earlier this year, a federal judge threw out the results of a Gulf of Mexico lease sale after environmental groups argued the Interior Department failed to accurately consider greenhouse gas emissions that would result from development of the blocks.

Industry Pushback

Corporations have been pushing for a narrower rule that will not boost compliance costs too sharply.

The SEC said in its draft rules that the Scope 3 requirement would include carve-outs such as exemptions for smaller companies, and that all the emissions disclosures would be phased in between 2023 and 2026.

Only a handful of oil companies, such as refiners Marathon Oil Corp and Phillips 66, and upstream service company Baker Hughes Co, have publicly set targets to reduce Scope 3 emissions.

While the specifics have yet to be worked out in the proposed rule, oil companies including refiners and exploration and production firms will have to report the basis of their supply-chain emissions, according to Mark Brownstein, senior vice president of Energy at the Environmental Defense Fund.

“In some way, shape or fashion, these companies will have to track their products’ end uses and share them with investors,” Brownstein said.

The proposed rule would also require companies to better disclose climate-related risks associated with the location of their physical assets. That could impact publicly listed refining companies that own plants exposed to extreme weather events like hurricanes and flooding.

Hurricane Ida last year caused flooding that breached the flood wall around Phillips 66′ Alliance, La., refinery and inundated control systems, resulting in millions of dollars of damage to the facility, which led to the facility being indefinitely idled.

“New reporting rules could make it clearer to investors that assets such as that refinery were really only protected by a five-foot wall of sandbags,” Logan said.

Publicly listed U.S. refiners and the U.S. refining industry trade group did not reply to a request for comment. The American Petroleum Institute said the private sector has already taken climate disclosure into its own hands.

“We are concerned that the commission’s sweeping proposal could require non-material disclosures and create confusion for investors and capital markets,” said Frank Macchiarola, the API’s senior vice president of policy, economics and regulatory affairs.

The SEC can finalize the rule after a 60-day comment period.

(Reporting by Laura Sanicola in New York; editing by Richard Valdmanis and Matthew Lewis)

*Photo Bloomberg/James Jordan