Curious about carbon accounting and how it can affect your business? CarbonSuite is here to help! In our Carbon Accounting 101, we’ll walk you through where carbon accounting came from, what it means, and why it matters. Let’s begin.
Since the early 2000s, carbon accounting has been gaining momentum. In recent years it has expanded rapidly. Many governing bodies and regulatory agencies are now even requiring mandatory climate reporting. And the change is happening fast. To illustrate this, we’ve tracked major policy changes over the past 10 years.
As new policies come into place, understanding what exactly is required of your business can be difficult. That’s why we’ve developed a Climate Disclosure Tracker,to keep you up to date with voluntary and mandatory reporting across the world.
But what even is carbon accounting and why do we need it?
Let’s have a look at what carbon accounting, or climate reporting, really means. To understand carbon accounting, first we need to understand greenhouse gases and how they relate to emissions. Once we understand what these emissions are, we will discuss how to calculate them. After, we will learn how to calculate those emissions into a reportable format. Let’s begin.
What are Greenhouse Gasses?
Simply put, Greenhouse Gasses (GHGs) are gasses that warm the earth. Here’s how it works:
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Sunlight (solar radiation) reaches the earth.
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The earth’s surface and atmosphere absorb some of the sunlight, while they reflect the rest back into space. The Greenhouse Gasses in the atmosphere absorb this light and re-radiate it as heat in all directions. This has a warming effect on the earth.
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The main Greenhouse Gasses are Carbon Dioxide (CO2), Methane (CH4), Nitrous Oxide (N2O), Hydrofluorocarbons (HFCs), Perfluorocarbons (PFCs), Sulfur Hexafluoride (SF6), and Nitrogen Trifluoride (NF3).
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We need Greenhouse Gasses to keep the earth warm and at the desired temperature equilibrium to harbor life. Some amount of Greenhouse Gasses are good, and they are crucial for keeping the earth at a livable temperature. If we have too many Greenhouse Gasses, however, they will warm the earth above the temperature equilibrium. This threatens the earth systems, which are designed for milder temperatures.
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Many human activities put additional Greenhouse Gasses into the earth’s atmosphere. Some examples include: burning fossil fuels, mixing cement, manufacturing steel, using fertilizer, and leaking refrigerants.
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Greenhouse Gas “Emissions” emerge when we perform GHG-creating activities like the ones listed above, which further increases the temperature of the earth.
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Note: not all GHGs are created equal. All GHGs have a “Global Warming Potential” (GWP) which represents the total impact a particular gas has on warming the earth. Carbon Dioxide (CO2) is used as the baseline gas and has a GWP of 1. Other more potent gasses like Methane (CH4) and Nitrous oxide (N2O) have GWPs of 25 and 298, respectively.
How are Emissions categorized?
GHG emissions (also referred to as “Carbon emissions”) are broken down into 3 categories, or “Scopes.”
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Scope 1 emissions are directly related to your operations (think company-owned cars / trucks and boilers / furnaces used in a manufacturing process).
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Scope 2 emissions come from purchased energy (think electricity bills).
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Scope 3 emissions include the emissions in your supply chain (such as 3rd party shipping, product end-of-life treatment, as well as emissions from companies you invest in).
Source: GHG Protocol
Check out our “Scope 3 Spotlight” blog post to learn more about Scope 3 Emissions.
How are Emissions calculated?
For calculating emissions, we use the GHG Protocol, the globally recognized standard, here at CarbonSuite. At a high level, the steps are as follows:
Identify Emission Sources:
First define all of the operations, assets, and entities within your organization that produce GHG emissions. This process involves reviewing operational processes, conducting interviews, and analyzing process documentation. As a result, the deliverable is a full list of Emission Sources for your organization.
For example: Your company owns Truck #1000 and it uses gasoline as fuel to deliver your products to your customers. Truck #1000 is an Emission Source.
Collect Data
Once you have identified Emission Sources, you can start to Collect data. Each Emission Source will have Emissions that occur during its operation. You can collect this date daily, weekly, monthly, or yearly. In general, the more frequently you can collect data, the more insight you will have into real-time emissions activity.
So, let’s say Truck #1000 provides fuel usage reports once per week. You would create one Emission every week to record the amount of fuel burned by Truck #1000 in the given week. Emissions will be created for every Emission Source that has been defined. You can do this manually, or integrate directly from a system that contains the source data.
Calculate Emissions
The next task is to Calculate Emissions. You can use a variety of methods, depending on your data available such as Emission Factors (global averages), Mass Balance, Flow Rate, and Fuel Use. After selecting one of these Calculation Approaches, you are ready to complete the Emission calculation. Note: We recommend using a validated calculation tool to complete the emission calculation.
CarbonSuite’s software solutions help you automate your entire Carbon Accounting process, from identifying emission sources to collecting data and calculating emissions. We also have built-in quality controls to ensure that you are producing the most accurate emissions reports from day one. Ready to learn more? Check out our product at offerings at https://carbon-suite.com/features/
Okay I’ve calculated my Emissions, how do I report them?
You’ve done the hard work, now it’s time to publish your findings. Just like producing and auditing financial statements, identifying, collecting, and recording carbon emissions processes require meticulous accuracy. Reporting standards can differ widely depending on your specific region and its jurisdiction’s regulations.
We update CarbonSuite’s functionality frequently to keep up with global reporting standards to ensure that you stay in compliance and take full advantage of the benefits of reporting your company’s Emissions.
What’s Next?
Once you have calculated and reported your company’s Emissions, you are ready to start building out your strategy to reduce your Emissions. Set a Science Based Target, broadcast it to the public, and get to work!
Ready to start reporting? Contact us today.
