Carbon Reduction, Why, What and How?

一    Tiffany McGrath
|    September 8, 2022

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Carbon Reduction, Why, What and How?

By Lowering your Carbon Footprint,  you can help contribute to the overall reduction of Greenhouse Gas Emissions—gain Insights relating to the GHG Protocol.

Most companies today understand the importance of doing their part to fight climate change. However, understanding and implementing the overwhelming task of identifying and accounting for source emissions and then formulating policies for reduction can seem impossible.  

We need to start by understanding what is meant by greenhouse gasses. In simplistic terms, greenhouse gasses occur naturally in the atmosphere and trap heat that keeps our planet warm. Science has shown that post-Industrial Revolution, increases in greenhouse gas emissions from human activity have made our planet dangerously warm and thus affects the climate (Climate Change). Gasses considered part of “Greenhouse Gases” include Carbon dioxide, released mainly from the burning of fossil fuels, most often emitted by the energy and transportation industries. Methane is released from landfills, the natural gas industry and the livestock sector. The agricultural sector also emits Nitrous Oxide through fertilisers and biomass burning. Fluorinated gasses are artificial gasses, a large portion of which are emitted by coolants and refrigerants. 

Why Reduction

The objective of the Paris Agreement is to limit climate change to well below 2 degrees Celsius above pre-industrial levels. Science tells us that the world needs to achieve net-zero emissions, i.e., climate neutrality, by the second half of this century to accomplish this objective.  

Businesses can make an enormous difference in contributing towards a shift to a carbon-neutral society through their choices. Previous messaging focussed on the individual; however, large-scale action has required companies and organisations to get on board, making their contributions more impactful. 

Companies can achieve carbon neutrality by reducing emissions, improving energy efficiency, sourcing renewable electricity, and procuring and retiring high-quality carbon offsets. But first, they need to know what their current emission status is. It helps to understand and use the standards outlined in the Greenhouse Gas Protocol to find this out. 

How to Account for Carbon

The key to any organisation cutting their greenhouse gas emissions is first understanding the full impact of their operation. This impact is measured through a calculation framework, such as “The Greenhouse Gas (GHG) Protocol,” a practical carbon accounting and management tool used to account for emissions within an organisation. (There are others) 

Greenhouse Gas (GHG) Protocol Corporate Accounting and Reporting Standard supplies the world’s most widely used greenhouse gas accounting standards. Whilst this is a very complex document and strategy, several key points of understanding are necessary to get started, outlined below.   

The standards are designed to provide a framework for businesses, governments, and other entities to measure and report their greenhouse gas emissions in ways that support their missions and goals. Improved understanding of your company’s GHG emissions has many benefits. 

Benefits of Reporting on and Creating a GHG Inventory Include

  • Managing GHG risks and identifying reduction opportunities 
  • Public reporting and participation in GHG programs 
  • Participating in mandatory reporting programs 
  • Participating in GHG Markets (Trading programs, external caps, calculating carbon taxes) 
  • Recognition for early volunteer action 
  • Identify risks associated with GHG constraints in the future 
  • Identify cost-effective reduction opportunities 
  • Setting GHG targets, measuring and reporting progress 
  • Eco-labelling and GHG certifications 

Setting Operational Boundaries

When working within the GHG protocol and dealing with emissions reporting, the organisation needs to set “Operational Boundaries.” GHG emissions can be accounted for on either an equity share approach or the control approach. 

  • The equity share approach is when emissions are accounted for on the operation’s equity share. 
  • The control approach is when the company accounts for 100% of the emissions it controls. (Financial or Operational Control). 

There is also a difference between GHG accounting and GHG Reporting. Depending on what approach is being used also determines the definition of direct or indirect emissions. 

Direct and Indirect Emissions

For effective GHG management, setting comprehensive operational boundaries regarding indirect and direct emissions will help better manage risk and opportunities that exist along the value chain and help provide a better understanding of the volume of emissions and their source.  It is essential to understand that;

  • Direct GHG emissions are those sources owned and controlled by the company. 
  • Indirect GHG emissions are consequences of the company’s activities but occur at source or are owned by another company. 

To help define emissions and assist organisations with transparency, climate policies and goals, the concept of “Scopes” was developed. There are 3; Scopes 1 and 2 are clearly defined to avoid two or more companies accounting for emissions within the same scope, whereas Scope 3 is an optional additional category. Companies shall separately account for Scopes 1 and 2, reporting on these at a minimum. 

Scope 1, 2 and 3

Scope 1: Direct GHG Emissions are occurring from Owned or Controlled sources by the company. Direct CO2 emissions from biomass combustion and other emissions not covered under the Kyoto protocol shall not be included in Scope 1 but reported separately. Examples of Scope 1 activities include;

  • The generation of electricity, heat, steam from the combustion of fuels such as boilers, furnaces and turbines. 
  • Any activities that are undertaken from the transportation of materials, products, waste, and employees in company-owned/controlled mobile combustion sources such as trucks, trains, busses, cars etc. 
  • Any “fugitive emissions” resulting from intentional or unintentional releases such as those resulting from equipment leaks, Hydrofluorocarbon release from air-conditioning and refrigeration, as well as venting from mining activities. 

Scope 2: Electricity and Indirect GHG Emissions are accounted for from the generation and consumption of purchased electricity consumed by the company (or brought into the company’s organisational boundary). For many companies, purchased electricity represents one of the largest sources of GHG emissions and provides the most significant opportunity for emission reduction. Companies can ake reductions by investing in energy-efficient technologies, investing in emerging green markets, switching providers to one that generates electricity through less GHG intensive sources, and or perhaps installing an on-site co-generation plant. By reporting on Scope 2, a company has a clearer understanding of its emissions and any potential opportunities for reduction. 

Scope 3: Other indirect emissions is an optional reporting category whereby emissions are a consequence of the company’s activities but occur from sources not owned or controlled by the company. Examples of Scope 3 emissions include; 

  • The extraction of purchased materials, 
  • The transportation of fuels and purchased goods, employee business travel and commuter travel, 
  • Emissions generated from the transport of sold products, emissions from leased assets (not equity controlled) 
  • Any emissions that arise because of contracted services. 
  • Waste disposal that has been generated from operations and waste disposal generated from the production of purchased materials and fuels, not forgetting the disposal of solid products at the end of their life.  

Whilst this list is daunting when dealing with the complexities of certain business activities, hotel and hospitality operations are no exception; a company can start with several essential Scope 3 emissions and target those first.  

Additional Guidelines

Guidelines also govern setting a base year, changes in business structure, reporting methodology, target setting and more. As voluntary reporting, external GHG programs, and emissions systems evolve, it is becoming more and more essential for companies to understand the implications of accounting for GHG emissions and their changes over time.  

In today’s business environment, there should be a desire to drive decarbonisation across the company’s value chain. Treating decarbonisation as a business opportunity and understanding the true carbon footprint works towards achieving this.

Written by: Tiffany McGrath

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