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How to identify and set boundaries for your company GHG inventory

In this section, you will learn how to identify GHG emissions sources that your company should account for.

Corporate GHG emissions are classified according to their sources in a similar way as financial accounting. GHG emissions sources are classified across 3 scopes, in line with the GHG Protocol:

  • Scope 1:

Direct GHG emissions from sources that are owned or controlled by the company. For example, emissions from combustion in a company's owned or controlled boilers, furnaces, vehicles, etc.; emissions from chemical production in owned or controlled process equipment.

  • Scope 2:

Indirect GHG emissions associated with the purchase of electricity, steam, heat, or cooling.

  • Scope 3:

Other indirect GHG emissions, i.e. from assets not owned or controlled, but that your company indirectly impacts in its value chain.

Image: GHG emissions and scopes

Source: GHG Protocol

Explore typical emission sources across scopes 1 and 2 by sector

Leverage the table below. Please note it is only indicative. This table will be enriched with scope 3 typical emissions sources later.

Table: Typical emission sources across scopes 1 and 2 by sector

Source: GHG protocol p. 92-95

1. Scope 1

Emissions come from sources owned or controlled by your company

Direct GHG emissions mainly result from the following activities:

  • Generation of electricity, heat, or steam on site: emissions from the combustion of fuels in stationary sources such as furnaces, boilers or power generators.

  • Transportation of employees, materials, products or waste: emissions from the combustion of fuels in company owned/controlled mobile combustion sources, such as trucks, light vehicles or excavators.

  • Physical or chemical processing: emissions resulting from the manufacture or processing of chemicals and materials, such as catalytic cracking in petrochemical processes or aluminium smelting.

  • Fugitive emissions: emissions from intentional or unintentional releases, such as methane emissions from coal mines and venting, or hydrofluorocarbon (HFC) emissions from refrigeration and air conditioning equipment.

  • Land use changes: forests or natural areas that are converted to other land uses release carbon dioxide and are counted as emissions, such as the conversion of a forest into agricultural land.

2. Scope 2

GHG emissions from purchased or acquired electricity, steam, heat and cooling

Scope 2 emissions physically occur at the facility where electricity is generated, which is why they are not accounted for in Scope 1. Scope 2 emissions represent a significant – and often cost effective – opportunity for companies to reduce emissions.

There are two approaches for measuring scope 2 emissions. Best practice is to use both approaches and report the figures.

  • The location-based method reflects the average carbon intensity of the grids where a company’s energy consumption occurs – it, therefore, does not reflect specific procurement choices. This method clearly reflects changes in energy efficiency / consumption.

  • The market-based method reflects procurement choices, such as renewable electricity purchases via contractual mechanisms. Switching to renewable electricity can help reduce market-based scope 2 GHG emissions and, so, contribute to achieving GHG targets.

3. Scope 3

Includes all emissions that occur in your company’s value chain from sources not owned or directly controlled, but related to your company’s activities

Accounting for and reducing these value chain emissions are increasingly required for full transparency on emissions.

It is important to acknowledge that double counting among companies is inherent to Scope 3 emissions as they effectively cover other entities' scope 1 and 2 emissions.

Double counting between companies is considered acceptable because each entity in the value chain has differing degrees of influence and different opportunities to reduce emissions. It means that there will be simultaneous action among multiple entities to reduce emissions.

4. Greenhouse gases and Global Warming Potential

Your company's GHG footprint should cover the seven greenhouse gases included in the UNFCCC/Kyoto Protocol

These are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), perfluorocarbons (PFCs), hydrofluorocarbons (HFCs), sulphur hexaflouride (SF6), and nitrogen triflouride (NF3).

The impact of these gases is estimated in CO2 equivalent, calculated using Global Warming Potential.

The Global Warming Potential (GWP) is a measure of the relative potency of a climate warming a gas when compared with carbon dioxide. It was developed to allow comparisons of the global warming impacts of different gases: it measures how much energy the emissions of 1 ton of a gas will absorb over a given period of time, relative to the emissions of 1 ton of carbon dioxide (CO2). The larger the GWP, the more a given gas warms the earth compared with CO2 over the same time period. CO2-equivalent emissions are usually estimated using global warming potential (GWPs) values over a 100-year time horizon, defined by IPCC Assessment Reports.

There are some debates around the GWP values of certain greenhouse gases. For example with GWP* proposing to take better account of short-lived climate pollutants (SLCP) such as methane, relating a change in the rate of emissions compared to a fixed quantity of CO2. These discussions are ongoing in the academic community and translate into GWP values that can evolve over time.