How to initiate a GHG quantification and reduction process
What is a greenhouse gas?
The greenhouse gas effect is the process by which gases in the atmosphere traps infrared radiation from the sun and maintain Earth at a suitable temperature. Increasing the proportion of those greenhouse gases increase the quantity of rays trapped in the atmosphere, thus increasing Earth’s temperature. The main greenhouse gas emitted by human is CO2 and comes from the combustion of fossil fuel. Some gases emitted has a cooling effect, has aerosols, and others have a higher warming potential than CO2. Global warming potential is the effect a gas has on the warming of the planet in comparison with CO2. For example, freon, mainly used for air conditioning, has a global warming potential of more than 1000X higher than CO2.
Greenhouse Gas inventory
A greenhouse gas inventory is an environmental audit detailing all GHG emissions emitted into the atmosphere by the reporting company. GHG inventories are based on protocols that ensure standardized calculations. Many different protocols exist to quantify GHG emissions, and some are mandatory to use in regard of the organisation context. some companies have cap and trade programs in their states and are required by law to quantify emissions. Those have audits to deliver each years on GHG emissions. For companies wishing to quantify their GHG on a voluntary basis or to obtain a certification, as the Science Based Target or to disclose with the Carbon Disclosure Project, the Greenhouse Gas Protocol (GHGP) establish a guideline to quantify GHG emissions.
Greenhouse Gas Protocol
The Paris Agreement commits countries to reduce greenhouse gas emissions to limit global warming to well below 2 degrees Celsius to avoid the worst of climate change. The GHGP arose from the necessity to report and mitigate emissions by countries and companies. Standardization became a necessity to identify, reduce and compare GHG emissions between reporting actors.
The Greenhouse Gas Protocol (GHGP) provides accounting and reporting standards, sectorial guidance, calculation tools, and training for businesses and local and national governments. It has created a comprehensive, global, standardized framework for measuring and managing emissions from private and public sector operations, value chains, products, cities, and policies to enable greenhouse gas reductions across the board.
GHGP Quantification method
To produce a complete GHG inventory meeting the requirements of the GHGP, it is necessary to follow the guidelines defined. Those are separated between grand sections called scopes, and each got its own categories of emissions. Covering each scope of the GHGP signifies that an organization covers GHG emissions throughout the overall value chain.
Scope 1: Direct emissions from operations
Scope 1 emissions include all direct emissions from an organization, or in other words emissions from activities that occur from sources that are controlled or owned by the reporting organization. Emissions associated with fuel combustion, in either a vehicle or in facilities are included in this scope. The scope also includes fugitive emissions from leakage of climatization or other chemicals throughout the activities of the reporting company.
Scope 2: Indirect emissions from electricity consumption
Scope 2 emissions come from the electricity usage of electricity produced by a tierce party. As an example, electricity produced onsight by fuel consumption or solar panels is included in scope 1. Scope 2 emissions account for the production of this electricity and transportation of this electricity is accounted for in scope 3.
Scope 3: Indirect emissions from the overall value chain
Scope 3 emissions account for all emissions throughout the value chain that are not directly controlled by the reporting company. The Greenhouse gas Protocol defines 15 categories separated between upstream and downstream activities. The GHGP standardizes the quantification for each category with complete guidance on how to produce the report. The image bellow show the different categories listed by the GHGP.
Scope 3 is the most complex section to quantify as data can be incomplete or missing. GHG emissions from scope 3, depending on sectors, are generally accountable for more than 80% of overall emissions and could go as high as 98 to 100% of total emissions. Thus, while being challenging to quantify, emissions from scope 3 are generally a necessity to evaluate. Publishing an inventory only on scope 1 and 2 can have a negative effect on the reporting organisation depending on their sector.
Emission hotspots are different from one company to another and depend on a multitude of factors such as the sector of activity, values, habits, location, etc. Graphs below demonstrate how emissions vary across the different GHGP scopes and categories based on the broad GCIS categories of MCIS. The following data shows a trend across sectors but does not reflect the specific emissions of any particular company. Graphs show how emissions can be distributed across the value chain and the need to do a comprehensive job of quantifying GHGs across the 3 scopes in order to reduce.
The previous graph shows how important it is to account for Scope 3 emissions in order to obtain a representative GHG inventory of the company’s emissions. Some companies that are highly dependent on fossil fuels for their activities, such as those involved in the extraction of raw materials or the transportation of goods and services, might have scope 1 and 2 higher than scope 3. On the other hand, the vast majority of companies will have to detail their scope 3 to effectively reduce their emissions.
Tackling scope 3 may seem too complex or difficult a task for a company depending on the data and resources available to create the inventory. The vast majority of companies publishing their inventories do not disclose the scope 3 inventory on the 15 GHGP categories. An initial assessment should be made to recognize the high-impact categories as well as those where data are available. It is necessary at the time of publication to explain any omitted data in the inventory with the objective of transparency. Generally, first inventories contain a limited number of categories, and work on the accuracy of the data allows for more complete inventories in subsequent years.
The following resource shows, for the different GCIS categories, what the average percentage emission of the different GHGP categories is. When conducting initial GHG inventories, it is essential to estimate the share of emissions by scope 3 categories in order to focus data collection. As an example, a software company will need to do some rigorous work on the energy use of its products to accurately assess the emissions associated with this category, which will likely be a GHG hotspot. A plastics processing company will not have to do this work on the use of its products but will have to do more work on its procurement, which will certainly be a hotspot.
Greenhouse Gas Protocol key principles
GHG iventory created in accordance with the GHGP needs to follow five essential principles that are a gage of quality on all inventories and demonstrates the company’s good environmental intentions.
- Relevance: For a GHG report to be defined as relevant, it must contain the information that users need for their decision-making. This includes both internal and external stakeholders. An important aspect of relevance is the selection of an inventory scope that best reflects the economic reality of the organization
- Completeness: All relevant emission sources within the inventory scope must be included for an inventory to be complete and meaningful. In practice, the lack of data or the cost of data collection can be a limiting factor. This encourages the definition of a minimum threshold of emissions accounting below which some sources can be omitted from the inventory. The definition and implementation of such a threshold is contrary to the GHGP completeness principle
- Consistency: Consistency between different inventories is essential to produce comparable results over time. Thus, the scope and calculation methods must be similar from one inventory to another. In case of change, a recalculation of previous inventories can be performed to ensure consistency and to be able to follow the evolution of emissions
- Transparency: Transparency implies that information about the processes, procedures, assumptions and limitations of the GHG inventory is disclosed in a clear, factual, and understandable manner and is based on accurate documentation. Exclusions and inclusions must be clearly identified and justified, as well as the assumptions and references used
- Accuracy: The data used should be sufficiently accurate to allow users to make decisions with reasonable assurance that the information reported is credible
First steps to produce a GHG Inventory?
Usually, companies can either calculate their own emissions or work with an external consultant. It is recommended to choose the second option as an external auditor is impartial and increases the overall project’s credibility. Other arguments in favor of working with a consultant:
- Expertise
- Knowledge of available resources
- Impartial
- No need to hire or form an employee
Once the stakeholders of the GHG inventory are determined, it will be necessary to collect all the information needed for a chosen baseline year. The reporting company will follow the guidance of the consultant or internal resources to obtain the necessary data for calculations. The baseline year is a target year for the company that will serve as the basis for tracking CO2 emissions and a GHG reduction target. This should be based on a normal year of emissions. For example, it is not recommended to use the year 2020 as a base year when Covid may have had an impact in reducing the company’s CO2 emissions.
Data collection and emission factors
Once the baseline year is chosen, it is necessary to create a data collection strategy. The different categories of scopes 1, 2 and 3 included in the inventory will have to be mentioned, explaining why certain categories are omitted in relation to the GHGP principles. For example, no data may be available for a category in the first inventory. Generally, the second and third inventories are more accurate and complete than the first one since an accounting strategy will have been put in place.
The data required to account for GHGs are related to the emission factors of the categories.
Emission factors are constants established by peer-reviewed scientific studies that allow for a conversion between an X-data and the global warming potential. The following equation relates the emission factor to the data and the global warming potential:
Data X Emission Factor = Global Warming Potential (CO2e)
As an example, gasoline produces 2.5kgCO2e per L of gasoline burned. A full tank of gasoline of 50L would thus emit :
50L X 2.5kgCO2/L = 125kgCO2e
Emission factors can be found in several libraries such as EcoInvent. An exhaustive list of accepted and recognized databases can be found on the GHGP website https://ghgprotocol.org/life-cycle-databases. Most of the databases are not free.
The different emission factors have a greater or lesser accuracy depending on several criteria and the role of GHG quantification experts is to be able to find the right emission factors to keep the accuracy in the study. For example, the emission factor from aluminum production will be different if the aluminum comes from Asia, Europe or North America depending on the quality of the energy network and the production techniques. It is therefore important for the accuracy of the study to assess which emission factors are the most accurate.
In addition to the emission factors, it is also important to evaluate what data is available and how it can be translated into global warming potential. Using the example of filling up a vehicle, it may not be possible to obtain data in liters, but data in km may be available. This data, called precision 2, allows the use of an emission factor that converts the km into CO2e. Finally, if only a monetary value is available, such as the cost of purchasing a tank of gasoline, a low precision emission factor can be used to convert $ into CO2 for the purchase of gasoline.
Determining all data and emission factors available for the different categories of the GHGP is a necessity to develop the data collection strategy.
In order to complete the inventory, the reporting company will calculate the different global values for each years. As an example, the reporting company will quantify the overal quantity of gasoline used throughout the year, so that it will be able to estimate the total GHG emissions from gasoline.
Once the analysis is completed for the baseline year, the next step consists in choosing a science-based target reduction and creating an overall plan to track and reduce emissions. Those will be defined in the next article.
Setting a Science based target
A key way to demonstrate an organization’s climate ambitions is through the specific reduction targets it has set for itself. These targets not only disclose to stakeholders the direction in which the organization intends to go against climate change, but also its goals to prosper in the long term.
Science based target
In order to establish rigorous and credible reduction targets, it is necessary to align with the science and follow the various recommended objectives. The International Panel on Climate Change (IPCC) provides the scientific foundation for this. The IPCC, created in 1988, provides comprehensive reports on the evolution, consequences and possible mitigation scenarios of climate change. This group of thousands of scientists publish these reports publicly and make recommendations to avoid the worst of climate change.
Paris Agreement and the different COPs
The IPCC develops a framework to align the decisions of different governments in the fight against climate change. Annually, the parties meet at the Conference of the Parties (COP) to discuss GHG reduction targets and other environmental ambitions. Some notable COPs include the Kyoto Protocol (signed in 1997), which is the first international agreement on limiting and reducing GHG emissions. The Paris Agreement, adopted at COP21 in 2015, set the goal of limiting global warming to well below 2degrees, and preferably 1.5degrees, compared to pre-industrial temperatures. The targets of the Paris Agreement are derived from the recommendations of the 5th IPCC report.
Carbon budget and window of opportunity
The IPCC shows that the earth’s temperature is increasing with a direct correlation to GHG emissions. Thus, while it is not possible to predict precisely the amount of GHGs needed to bring global warming to 2C, it is still possible to estimate the cap, or limit, on emissions to mitigate warming. Currently, the planet has warmed by 1.1 to 1.3C since the pre-industrial period. By studying this progression with past emissions, it becomes possible to estimate a carbon budget, or the amount of GHGs that will cause the temperature to exceed the targets. The most ambitious target of the Paris Agreement, to limit warming to 1.5C, will be exceeded after emitting 420GTCO2e (2/3 chance) or 580Gt (1 chance /2). This budget, at the current rate of 45Gt per year, will be reached early in the next decade.
Thus, the later the actions are taken, the more drastic they will have to be to avoid exceeding the carbon budget.
Setting a science-based GHG reduction target
Setting a science-based target specific to the company’s context is an important step in the GHG reduction process. This company-defined target must be appropriate for the specific context. For example, deciding to include scope 3 (defined by the GHGP) in the climate ambitions, may show the seriousness of the approach, but may not be economically or technologically feasible. Another interesting avenue is to have two targets, one medium-term (typically 2030) and one long-term (2050). It often becomes difficult to establish and track plans over several decades, and medium-term targets allow for accelerated mitigation efforts.
Validating targets with a well known organization
Reduction targets are an excellent way to show your commitment to climate change. In order to publicize this goal and its seriousness, different organizations can publish their targets by certifying their goals with the Science Based Target initiative (SBTi). SBTi is a non-profit organization that helps companies publish and maintain targets. The organization has several strict criteria for only accepting reduction targets sufficient to mitigate climate change. There is also a tracking system to ensure that targets are met and a company that does not meet its standards will be removed from certification.
IPCC Report 6
While the Paris Agreement provides clear reduction targets for the various parties, the new IPCC report shows several potential emission reduction scenarios as well as potential temperature increases. The different IPCC scenarios lead almost all, except the most demanding in terms of fighting climate change, to a warming above 2C
Report 6 and window of opportunity
The 6th report, released in 3 parts, presented on April 4, 2022 the last of the three, the one concerning the solutions to achieve climate change mitigation
Creating an action plan towards SBT
The term backcasting is often used in sustainability, where an organization defines a target, or a future state where it would like to be, and then lists the possible actions to get there. Actions are discussed and chosen according to their relative importance in achieving the target. This action plan must cover the entire GHG inventory and be on track to achieve the target defined by the organisation. Some actions might only be possible with a population behavioural change of governmental policies, as the grid quality or the way consumers travel. Organisations should encourage those stackholder to help them succeed on those actions.
Once the target has been adopted and the action plan adopted, the main work becomes to execute the different actions and keep track of the emissions every year or two, in order to evaluate the need to modify the action plan or simply quantify the real reduction according to the one anticipated at the beginning.
Tracking emission reduction
Many private companies offer tracking platforms to monitor GHG emissions from year to year. The different platforms allow for the publication of annual inventories to different organizations and standards such as CDP or GRI. The choice of a platform depends on the organization’s objectives and budget.
Some platforms allow for real-time tracking of GHG emissions. For this, the organization must have an optimized and mature internal data management system. Smaller organizations rarely have this type of visibility into their data and manually enter their data annually. For this, an Excel tracking document may suffice if the inventory was produced on this application.
In order to choose the right platform for your organization, you need to know the level of visibility on your data as well as your organization’s objectives in terms of achieving certifications and standards.
It may be that the needs change from year to year, where the organization gains maturity and visibility on its data and wants to align with certain standards. When this change occurs, the organization may change its quantification platform or modify its inventory accordingly.