How to Calculate Your Company's Greenhouse Gas Emissions
In these challenging times, many companies, especially from the manufacturing and construction industries, are already committed to addressing the reduction of greenhouse gas emissions. However, in the coming years, the topic will also become increasingly relevant for SMEs from other, less emissions-intensive industries. To keep track of the many terminologies, we have already written a blog article on the topic of CO2-neutral vs. climate-neutral, in which we briefly explain and differentiate between some of the most common climate-related terms.
The purpose of this article is to discuss the important steps in calculating greenhouse gas emissions in companies and how greenhouse gas neutrality can be achieved with the help of CO2 reductions and/or offsets.
When the term "greenhouse gas emission" is used, the first thing that comes to mind is polluters from the transportation sector: cars, trucks, airplanes, etc. burn fossil fuels to be powered and then emit exhaust gases (including CO2). However, the IPCC report (2014) shows that the transportation sector is only the 2nd most emitting greenhouse gas. In fact, the most emissions-intensive sector is the energy sector, which is responsible for almost one-third of total global greenhouse gases. Only in third place is industry.
Share of Emissions by Main Sector in 2014 – Sectoral Greenhouse Gas Emissions by IPCC Sectors
The Greenhouse Gas (GHG) Protocol is the most recognized international standard among experts for greenhouse gas accounting by companies. It distinguishes between three types of emissions, the three "scopes".
- Scope 1 emissions, are "direct emissions" from company-owned or controlled sources.
– emissions generated by certain machines in the company's own production or generated by the company's own fleet of trucks or cars.
- Scope 2 emissions, are also referred to as the "indirect emissions" associated with the purchase of energy.
– Emissions associated with the purchase of electricity from an electricity supplier or directly from the electricity producer. Here, the energy source (coal, natural gas, wind power, etc.) largely determines the level of emissions per kWh.
- Scope 3 emissions, are all indirect emissions that are not included in Scope 2 and that occur within the value chain of the company under consideration.
– Both upstream and downstream stages of the company's value chain can be included.
When reporting under the GHG Protocol, there is a disclosure requirement for Scope 1 and Scope 2 emissions. Disclosure of Scope 3 emissions is voluntary and varies widely depending on which actors and activities in the supply chain are included. Scope 3 emissions are also the most complicated to determine, as there is often a risk of double counting emissions data or lack of access to the necessary data.
A Guide to GHG Emissions Calculation and Greenhouse Gas Neutrality.
Defining Target and Limitations
At the outset, the company in question should first define what is to be reported on, what can be included in the calculation and what should be excluded, everything should also be well justified. It should also be clear which branches, production facilities, offices, sites, etc. are to be included and what the ownership or control structures (operational and financial) are in each case. It also identifies whether and which Scope 3 emissions will be included and disclosed. In addition, a clear time period should be defined to which the values then relate.
Now follows the exact data collection. Here, all activity or consumption data are determined, related to the previously defined goals and limits.
Example values for this are:
- Electricity consumption
- Heat and power generation
- Cooling and air conditioning
- Company-owned motor vehicles
- Mobility behavior (e.g. business trips)
Greenhouse gas emissions are calculated in different ways, depending on the data available. Emission values or emission factors can be used from various data sources to quantify emissions. In principle, all relevant greenhouse gases are quantified (see above) and additionally converted into the unit of CO2-equivalents (CO2 equivalents) for each area.
Some examples of suitable emission factors are:
- Emission value per KWh from the energy supplier from whom the energy is purchased.
- Monitoring or control systems on own machines / generators that record accurate emission data
- Data on emissions and fuel consumption from vehicles in use
- Publicly available, standardized, regional emission factors for different sectors (e.g. IPCC or GHG Protocol)
Classification (in scopes) and Summary
Now the total value for the defined scopes is calculated. In summary, it should be clear which emissions occur within which scope. This is because a precise understanding of emissions coming directly from the company's own controlled sources and emissions arising indirectly through the purchase of energy or products, for example, is of great importance. This serves as transparency and is the basis for the subsequent identification of concrete reduction measures or emission offsets. Depending on the scope and emission source, different measures can be useful.
Now that the basis for decision-making is at hand, the rule is: reduce what is easiest. Sometimes, even small decisions and low costs can reduce emissions. After that, the focus is on medium- and long-term reduction targets. Whether it's switching from fossil fuels to renewables, retooling production units, or replacing upstream suppliers, the scope for action varies from company to company. If the company reaches its limits, CO2 compensation could also be considered here.
There are now many offset projects in which companies can invest in order to "neutralize" the remaining emissions that they cannot reduce by means of CO2 offsetting or sequestration. This is often referred to as climate neutrality. Strictly speaking, however, it is "only" greenhouse gas neutrality, since the balance of emitted emissions and the sequestration of CO2 from the atmosphere is neutral overall. Precise definitions and delimitations can also be found in our blog article "CO2 Neutrality vs. Climate Neutrality".
The most popular carbon offset projects revolve around reforestation. But there are also other climate protection projects, such as the support of renewable energies or improvement of energy efficiency, waste management or environmental education.
As every path to emission reduction and greenhouse gas neutrality is individual and also complex, our experts will be happy to accompany you through the various steps, from the identification of weak points to the successful implementation of solutions, reporting and communication.
Feel free to contact us for a no-obligation initial consultation.