Measuring your GHG emissions across Scope 1, Scope 2, Scope 3 - A route to industrial decarbonisation

Shravane Balabasqer
September 29, 2021

Measuring your GHG emissions across Scope 1, Scope 2, Scope 3 - A route to industrial decarbonisation

A greenhouse gas (GHG) is any gas in the atmosphere which absorbs heat from sunlight, which makes the Earth’s atmosphere warmer than otherwise, it would be.  The main gases of significance are Water Vapor, Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O), and Ozone.   

GHGs occur naturally, but many commercial and industrial activities increase their levels in the atmosphere, causing global warming and climate change.  A large number of countries have committed themselves to an international treaty known as the Kyoto protocol to control the release of GHGs. There is also the Paris Agreement to reduce GHG emissions to ensure that the increase of global temperature is limited to below 1.5o Celsius.

What is the GHG Protocol?

The Greenhouse Gas Protocol (GHGP) establishes an all-inclusive framework applicable globally for the management of greenhouse gas emissions from all private and public sector organizations.

The GHGP provides accounting and reporting standards, guidance, calculation tools, and training for businesses and governments all around the globe. It has created a comprehensive, global, standardized framework for measuring and controlling emissions from private and public sector operations to reduce GHGs from all possible routes.

Reducing carbon emissions

Reducing your carbon emissions should be an important part of your business strategy. But how to start such a task and how to measure its progress?  To make your company more sustainable and reduce its carbon footprint you must understand what is required and how to go about managing it. Measuring carbon footprint is not an easy task, however, it has to be assessed before you can reduce it. Peter Drucker in 1954 famously exclaimed: “What gets measured, gets managed.”

What are the 3 Scopes?

The GHG Protocol corporate standard classifies the GHG emissions in three scopes. Scope 1 and 2 are mandatory to report, whereas Scope 3 is voluntary and is the most difficult to monitor and manage.

However, companies succeeding in reporting all three scopes enjoy a sustainable competitive advantage. The carbon equation defines how you count carbon, whereas the ‘scopes’ define what you count.


Scope 1: Direct Emissions

Scope 1 includes those emissions that are generated by facilities owned and operated directly by the companies. These are emissions that are released into the atmosphere as a direct result of a set of activities, at an organizational level.

Suppose your company owns a tractor, a boiler, or a smokestack that directly emits greenhouse gases into the atmosphere. You are also burning natural gas to heat a building or driving a company-owned car that burns gasoline.  All these emissions come under Scope1.

Scope 1 is divided into four categories: stationary combustion such as fuels, heating sources, etc., the combustion of fuel in all vehicles owned or controlled by a firm, emissions that are fugitive leaks of greenhouse gases such as from refrigeration or air conditioning units. Finally, process emissions that are released during industrial processes and on-site manufacturing such as CO2 produced during manufacturing, factory exhaust gases, and other chemical releases.

Scope 2: Indirect Emissions – Owned

When you purchase electricity, which generates greenhouse gases while being produced at a coal or natural gas plant, power plants come under Scope 2. These are indirect emissions from the generation of energy purchased by a company from a utility provider. This means that all GHG emissions released in the atmosphere, from the consumption of purchased electricity, steam, heat, and cooling come under the umbrella of Scope 2 emissions.


Scope 3: Indirect Emissions – Not owned

Scope 3 emissions are the most difficult to account of all the emissions. These are emissions that do not come under the purview of Scope 1 and 2 which include upstream, downstream and direct company operations. In other words, these include all emissions that are linked to the company’s operations.  

On the upstream side, there are many business travel-related activities such as the use of rail, air, and ground transportation including the use of private cars. Also, employees commuting shall be accounted for, as it results from the emissions emitted through travel to and from work. It can be decreased by using public transportation and working from home.

Waste that is generated and sent to landfills and wastewater treatments where Methane (CH4) and Nitrous Oxide (N2O) are released which cause more damage to the environment than CO2 emissions.

All the upstream emissions from the production of goods and services purchased by the company have to be accounted for, including materials, components, parts, and non-production-related products.

Transportation, distribution, and warehousing occurring in the supplier and customers' value chain is an important factor. Also, those transport activities and other energy-consuming activities that are not covered in Scope 1 & 2 relating to the third party are included in Scope 3.

Companies need to evaluate how their products are disposed of; however, this can be problematic as it usually depends on the final user, buyer, or client. This pushes industrial organisations to manufacture recyclable products that can contain landfill waste disposal.

Scope 3 Standard

The Scope 3 Standard is a convenient approach and methodology that is useful to assess, report and manage emissions from all sources. The GHG Protocol offers an accessible suite of guidance and tools to make Scope 3 accounting much easier.

Most companies have focused primarily on measuring emissions from their operations and electricity consumption, but the largest fraction of total emissions arises from Scope 3.  This means that this major fraction of emissions was until now ignored in calculating the overall carbon footprint of the company.

 

How to manage your carbon footprint?

Every company has to develop an integrated solution to reduce its environmental footprint and build a truly sustainable company culture.

First, gather your most relevant data. Second, determine where your footprint comes from and what your priorities should be. Third, take actions to reduce your emissions and offset them across your company. Finally, execute a comprehensive GHG emission inventory to direct your efforts to scale down your carbon emissions and become carbon-neutral.

Assessing, calculating, managing, and reporting carbon emissions is not an easy task. It requires thorough technical knowledge and operational excellence. Today, you are expected to measure and report total emissions entirely, across all three scopes, upstream, downstream, and in the internal operations.

Conclusion

Businesses must reduce their environmental impact, and this definitely starts with monitoring carbon emissions. Companies will face serious challenges if they persist in addressing climate change only as a corporate social responsibility matter, and not as a correct business approach.

Additionally, it is key to understand and evaluate your true carbon footprint with accuracy across the entire value chain. Your company will be coming under increased pressure to be ethical and socially responsible, but at the same time, you have to ensure efficient operations. 

As carbon pricing is mandated and regulatory requirements become stringent, accurate carbon footprint modeling will require a deeper understanding and proactive mitigating actions. 

If you are seeking to fully understand and reduce your company’s carbon footprint. Come talk to us, CarbonAnalytics by Prognostic. We are the only carbon tracking and intelligence company that measures carbon footprint at an asset level. We build asset level traceability accessing data to deep dive Scope 1, Scope 2 and Scope 3, and the capability of our tool really shines in Scope 3 supply chain sustainability analytics in real-time with high accuracy.


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