Climate change and rising global temperatures are scientifically linked to the increasing presence of greenhouse gases (GHG) in the atmosphere, which has contributed to droughts, wildfires, sea-level rise, floods, and indirect impacts to biodiversity.
Over the years, there have been urgent calls to action for corporations to reduce their GHG emissions to mitigate the effects of climate change and rising temperatures. A 2022 report from the Intergovernmental Panel on Climate Change (IPCC) pushed for government and private sector participation in developing climate resilience. United Nations Sustainable Development Goal (SDG) 13 calls for urgent action to combat climate change and its impacts. To address the effects of climate change, many countries adopted the Paris Agreement with the goal of limiting global temperature rise to well below 2 degrees or 1.5 degrees Celsius. Many companies have pledged to reduce their emissions by setting emission reduction targets and net-zero ambitions.
A constructive first step to reduce emissions is learning how to measure your organization’s carbon footprint, which refers to the emissions produced from its operations. Having this foundation of data is crucial in developing effective strategies to achieve emissions reduction targets. Emissions data should be organized in a GHG emissions inventory that follows standardized calculations and consistent methodologies so progress can be measured over time.
As the Greenhouse Gas Protocol puts it: “Developing a full corporate GHG emissions inventory – incorporating scope 1, scope 2, and scope 3 emissions – enables companies to understand their full emissions impact across the value chain and focus efforts where they can have the greatest impact.”
In the following sections, you’ll get a closer look at how to calculate your organization’s GHG emissions.
What are scope 1, 2, and 3 emissions?
GHG emissions primarily come from the burning of fossil fuels for electricity, heat, and transportation.
Scope 1 emissions are direct emissions covering emissions from sources that an organization owns or controls directly—for example, from burning fuel in heaters and boilers.
Scope 2 emissions are indirect emissions that occur when a company purchases and uses energy sourced externally. For example, if your organization is an accounting firm, the emissions caused when generating the electricity used to power your offices would fall into this category.
Scope 3 emissions encompass indirect emissions that are not produced by the company itself and are not the result of activities from assets owned or controlled by the company. Instead, these emissions are produced by upstream and downstream value chain members. An example of scope 3 emissions are emissions produced when a company buys, uses, and disposes of products from suppliers. Scope 3 emissions include all sources not within the scope 1 and 2 boundaries.
Calculating GHG emissions
Measuring greenhouse gas emissions generally involves three basic steps:
- Determine the scope and boundary of emissions across your organization’s value chain to be included in your GHG inventory.
- Collect emissions activity data.
- Calculate the overall emissions.
The most commonly measured greenhouses gases are carbon dioxide (CO2), methane (CH4), and nitrous oxide (NO2), as these are the most impactful greenhouse gases. Other gases that are often considered during GHG calculations are hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), nitrogen trifluoride (NF3), and other fluorinated greenhouse gases.
The GHG emissions calculation process
1. Determine the scope and boundary of emissions
1a. Choose a standard/protocol
As a first step, choose an appropriate standard/protocol to be used in developing the GHG inventory based on company goals and intended end uses of the inventory results. A standard/protocol contains procedures and methods to calculate GHG emissions (e.g., The Greenhouse Gas Protocol, The Climate Registry).
1b. Set a boundary
The next step is to determine the boundary of emissions across the company to be included in the GHG inventory. A boundary defines what will be included in your calculations: which gases, which emission sources, geographic area, and time span. Your company’s organizational and operational boundaries will determine the boundary of your emissions.
1c. Identify scope 1 emission sources
Scope 1 emissions typically occur from the following source categories:
- Stationary combustion: combustion of fuels in stationary equipment such as boilers, furnace burners, turbines, heaters, incinerators, engines, flares, etc.
- Mobile combustion: combustion of fuels in transportation devices such as automobiles, trucks, forklifts, buses, trains, airplanes, boats, ships, barges, vessels, etc.
- Process emissions: emissions from physical or chemical processes such as CO2 from the calcination step in cement manufacturing, CO2 from catalytic cracking in petrochemical processing, PFC emissions from aluminum smelting, etc.
- Fugitive emissions: intentional and unintentional releases such as equipment leaks from joints, seals, packing, gaskets, as well as fugitive emissions from HVAC systems, coal piles, wastewater treatment, pits, cooling towers, gas processing facilities, etc.
1d. Identify scope 2 emission sources
Scope 2 indirect emissions come from the consumption of purchased electricity, heat, or steam used in companies’ processes or services.
1e. Identify scope 3 emission sources
Scope 3 emissions can be sourced from other indirect emissions of a company’s upstream and downstream activities as well as emissions associated with outsourced or contract manufacturing, leases, or franchises not included in scope 1 or scope 2.
2. Collect emissions activity data
Activity data are quantitative measures of a level of activity that results in greenhouse gas emissions.
Examples of activity data for scope 1 include gathering how much commercial fuel (such as natural gas, diesel oil, and gasoline) is used by an organization. Scope 2 activity data, on the other hand, can be based on metered electricity, heat, and steam consumption. Scope 3 activity data depends on the scope 3 categories that are relevant to the company. This usually includes fuel use or passenger miles.
For data gathering, companies should establish a data collection system to ensure that all relevant and high-quality activity data is being captured. If activity data is not available empirically, estimates can be done by applying applicable intensity factors. It is best to collect data continually in order to do year-over-year calculations so performance against targets can be measured.
3. Identify appropriate emission factors to calculate GHG emissions
Once activity data is collected, GHG emissions can be calculated. GHG emissions will be calculated using published emission factors. Emission factors (EFs) convert activity data to emissions values. In most cases, if source- or facility-specific emission factors are available, they are preferable to use over the more generic or general emission factors.
Examples of emission factors:
- X pounds of CO2e per kWh
- X kg of CO2e per mile
- X kg of CO2e per gallon
4. Calculate emissions
Because different GHGs have different effects on the Earth’s warming, emissions are often described using a common metric, generally scaled relative to carbon dioxide (CO2). This allows analysts to compare the impacts of emissions as well as emission reduction methods. Non-CO2 emissions are typically reported as carbon dioxide equivalent (CO2-e) quantities. The most commonly used CO2 equivalent metric is the global warming potential (GWP). Determined by the IPCC, GWPs provide a common unit of measure which allows us to total emissions estimates of different gases.
To calculate emissions, we input the factors above into the appropriate equations.
To calculate emissions of specific greenhouse gases, use the following equation:
activity data x emission factor = CO2 or CH4 or N2O emissions
To calculate emissions in terms of CO2-e, use the following equation:
activity data x emission factor x global warming potential = CO2e emissions
Below is an example of these equations in action:
In 2022, Company A consumed a total of 5,000 gallons of diesel to run its emergency generators. We can calculate the total CO2e emissions in metric tonnes using the following emission factors:
CO2 factor = 10.21 kg CO2 per gallon GWP = 1
CH4 factor = 0.41 g CH4 per gallon GWP = 28
N2O factor = 0.08 g N2O per gallon GWP = 265
CO2 = 5,000 gallon x 10.21 kg CO2 per gallon x 1 x 0.001 metric tonne per kg = 51.05 mt CO2e
CH4 = 5,000 gallon x 0.41 g CO2 per gallon x 28 x 0.000001 metric tonne per g = 0.0574 mt CO2e
N2O = 5,000 gallon x 0.08 g CO2 per gallon x 265 x 0.000001 metric tonne per g = 0.106 mt CO2e
Total emissions = 51.05 + 0.0574 + 0.106 = 51.2134 mt CO2e
What if my data is not perfect?
Quality and availability of data cannot always be ensured during data collection and calculation. Therefore, it is helpful to note what estimates and assumptions have been made in the inventory so that these can be accounted for in the future. It is recommended that this information be documented in an Inventory Management Plan. An Inventory Management Plan (IMP) describes an organization's process for completing a high-quality, corporate-wide greenhouse gas inventory. Organizations use IMP to institutionalize a process for collecting, calculating, and maintaining GHG data.
Disclosure of inventory results
Investors are increasingly taking into account the ESG performance of companies they invest in. Therefore, disclosing your GHG inventory and efforts to mitigate emissions helps stakeholders make informed decisions about where to invest.
The results of the GHG inventory can be disclosed through the company website, corporate sustainability reports, ESG reports, or stand-alone climate change reports. Data can also be disclosed externally through a program (e.g., registry, mandatory programs) and internally (e.g., employees, management, board of directors).
Setting emission reduction targets and net zero ambitions has been gaining momentum across the globe over recent years. Stakeholders are also increasing scrutiny over efforts to address climate action, which can start with initiatives to measure one’s organizational carbon footprint and environmental impacts. Calculating your organization’s GHG emissions is a step closer to setting and achieving strategies to addressing climate change, and while it can be a challenging process, it can indicate to your stakeholders that you are playing an active role in addressing climate change.
As a leader in the sustainability space, ADEC ESG Solutions has the technical knowledge to support you across emissions, water, waste, air quality, social, and governance metrics. Read more about how we help companies like yours manage their ESG data in our case studies section.