Carbon Footprinting

How do you calculate the green house gas emissions of an organisation? While regulated schemes are governed by specific rules, voluntary reporting should follow official guidance and standards on carbon accounting. In particular the Green House Gas Protocol and the ISO 14064 Climate Change Standard. Carbon footprinting is the first step in a carbon management strategy, as it provides a framework for measuring and monitoring.

In line with standards, the carbon footprint can be determined applying a 5-step process:

1. Define Purpose for Determining Carbon Footprint:

The process of carbon footprinting The first question has to be: What is the purpose of calculating the footrpint?

Some organisations are required by law to monitor their green house gas emissions, although those regulated schemes cover only part of the organisation's footprint. For instance, the EU Emissions Trading Scheme only includes industries with high energy intensity, whereas the UK's Carbon Reduction Commitment covers large companies in low energy intensity industries. Most organisations however, are not regulated. Yet, establishing a carbon footprint voluntarily may still be worthwhile to drive cost savings or new opportunities.

The purpose has an immediate impact on scoping (in step 2) and level of detail in data collection (step 4).

Having established the gross emissions, further activities may net off or offset some of the emissions - important for accounting and trading purposes.

Finally, reporting the footprint helps to formulate a carbon management strategy.

2. Define Scope

Carbon Footprinting Scope

Physical Boundaries

As a minimum, an organisation must include all green house gasses as defined by the Kyoto Protocol. However, if material, other gasses might be included - though should be reported separately.

Organisational Boundaries

Define exactly which entity is being examined. For organisations, it should be the entity at the highest level of aggregation, i.e. the holding company. For other purposes, the footprinting may be limited to an event, a project or segment of the value chain.

Operational Boundaries

Which sources of emissions should be included in the investigation? Typically, there are 3 scopes defined:

Scope 1 Direct Green House Gas Emissions Emissions from sources that are owned or controlled by the company Emissions from combustion in own boilers, furnaces and vehicles (excluding biomass)
Scope 2 Energy Indirect GHG Emissions Emissions from provision of purchased energy consumed by the organisation. Emissions from generation ot electricity, heat steam or cooling
Scope 3 Other Indirect GHG Emissions Other emissions of green house gasses as a consequence of the activities of the organisation, but from sources that are not controlled by the organisation.
  • Upstream: Production and transport of purchased materials or fuels.
  • Downstream: Waste disposal, distribution and use of sold products and services.
  • Employees: Commute and business travel

Under the GHG Protocol, the assessment of "Scope 3" emissions is optional. However, an analysis limited to "Scope 1 & 2" may account for just a fraction of the organisation's carbon footprint. For instance, most emissions of supermarkets are indirect emissions from the products and associated transport costs.

3. Choose approach to Invested Assets and Leases

Organisational BoundariesAnother important question is how to treat subsidiaries, joint ventures and other corporate partnerships. There are three different approaches:

Financial Control

If the parent has financial control of the subsidiary, it ought to report 100% of its emissions. The same applies to financial or capital leases.

Operational Control

If the parent has operational control, it may report the emissions form the operations is controls. The same goes for operational leases or rented facilities.

Equity Share Approach

In this approach, the organisation accounts for GHG emissions from operations according to its share of equity.

Which approach should be chosen?

The parent organisation sets the approach that the subsidiaries have to follow. The preferred approach is using Financial Control. Where the Operational Control or Equity Share approaches are selected, the parent must inform other entities that it is reporting some of their emissions in order to avoid double- reporting.

4. Collect data and calculate the footprint

For each activity that is within the chosen scope,

  • define how the activity can be quantified
  • collect the activity data
  • look up (or calculate) the emission conversion factor from published, governmental guidelines or from suppliers directly (for instance, electricity supplier)
  • Emission Quantity = Activity Data x Emission Factor
  Category Example Activity Data
Scope-1 Burning natural gas on site Use kWh from gas bill
Emissions from vehicles number of vehicles / type / mileage
Scope-2 Purchased electricity kWh from electricity bill
Scope-3 Staff commute number of staff / km to travel
Purchased goods (paper) Amount spent
Waste disposal Volume disposed per year
Waste collection Number of skips per week

5. Net and Offset

Netting

If the organisation generates electricity from renewable source on site, Scope 1 should include both emissions from the total electricity used and from generating the electricity (in case of wind or solar: zero).
However, the own-used electricity from on-site renewables can be netted off against the gross emissions.

Selling Credits

If the entity generates carbon emissions certificates (e.g. wind farm in China), those sold certificates have to be added back onto the gross emissions of the entity.

Buying Credits

If the entity buys carbon offsets, this amount can be deducted from the gross emissions.

6. Reporting of Carbon Sinks

If the organisation owns a forest or other biomass assets, the resulting carbon sink should be assessed, but not automatically netted against the organisation's other emissions.

 

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