EXPLAINER ON GHG REPORTING: 101

GREENHOUSE GAS REPORTING 101: UNDERSTANDING THE BASICS

Greenhouse gas (GHG) reporting is a crucial aspect of environmental stewardship for businesses and organizations seeking to understand and mitigate their impact on climate change. In this explainer, we provide a brief overview of greenhouse gas reporting, covering topics such as the nature of greenhouse gases, emission scopes, the data required for reporting, and the distinctions between voluntary and mandatory reporting.

Greenhouse Gases - What’s the fuss?

Carbon Dioxide
CO₂

Methane
CH₄

Fluorinated
Gases

Nitrous Oxide
N₂O

Water Vapour
H₂O

Greenhouse gases are compounds in the Earth’s atmosphere that trap heat, contributing to the greenhouse effect. This effect is essential for maintaining the planet’s temperature, but human activities have significantly increased the concentration of these gases, leading to global warming and climate change. Carbon dioxide (CO2), notorious for its long atmospheric lifetime, results primarily from human activities such as burning fossil fuels and is the most well-known greenhouse gas.

Other prominent greenhouse gases include methane (CH4), nitrous oxide (N2O), fluorinated gases, and water vapor. To compare the warming potential of different greenhouse gases, scientists use Global Warming Potentials (GWPs), with CO2 serving as the baseline with a GWP of 1. Methane, another significant greenhouse gas, has a higher GWP than CO2 over a shorter time horizon, leading to the concept of CO2 equivalents (CO2e), which allows for a standardized measure of emissions by expressing them in terms of their impact relative to CO2. This metric aids in comprehending and addressing the varied contributions of greenhouse gases to global warming.

Emission Scopes - Classifying your impact.

Source : https://www.epa.gov/climateleadership/scope-1-and-scope-2-inventory-guidance

To comprehensively assess an organization's impact on climate change, greenhouse gas emissions are categorized into three scopes:

Scope 1: Direct Emissions – These emissions result from sources that are owned or controlled by the reporting entity. Examples include on-site combustion of fossil fuels, process emissions, and transportation fleets owned by the organization. Understanding the sources of direct emissions enables organizations to pinpoint areas where they have direct control and influence.

Scope 2: Indirect Emissions – These emissions result from the generation of purchased energy, such as electricity or heat. Organizations often do not have direct control over these emissions but understanding the carbon intensity of electricity or heat sources allows companies to make informed decisions about their energy procurement strategies. Transitioning to renewable energy, improving energy efficiency, and exploring innovative technologies can significantly reduce Scope 2 emissions.

Scope 3: Indirect Value Chain Emissions – This scope encompasses all other indirect emissions that occur in the value chain, including the supply chain, product use, and disposal. Scope 3 emissions are often the most challenging to quantify, as they involve activities outside an organization’s immediate control.

Understanding and categorizing emissions into these scopes provides a holistic view of an organization’s carbon footprint. This allows companies to strategically prioritize mitigation efforts by focusing on the most significant sources of emissions, yielding maximum environmental impact.

DATA REQUIRED FOR GREENHOUSE GAS REPORTING – WHERE TO START.

Generating a comprehensive greenhouse gas report requires collecting and analyzing various types of data. Key data elements include:

Activity Data – Information related to the organization’s activities that produce greenhouse gas emissions, such as fuel consumption, energy usage, and production levels.

Monitoring and Measurement Data – Accurate measurements and monitoring data from equipment and processes, essential for calculating emissions accurately, especially at higher tiers.

Emission Factors – Factors that quantify the amount of greenhouse gas emissions associated with a specific activity, such as the carbon intensity of a particular fuel or the emissions per unit of electricity consumed.

Reporting Boundaries – Clearly defining the organizational and operational boundaries for reporting, including any exclusions or limitations in data coverage.

Collecting and organizing this data is essential for creating a transparent and reliable greenhouse gas report. The availability of good quality data can also improve the accuracy of an organizations greenhouse gas report. This relates to the concepts of reporting tiers, a hierarchical approach for assessing and reporting greenhouse gas emissions, providing a framework for increasing precision and reliability in the estimation process. There are three tiers which can be summarized as follows:

Tier 1 – Tier 1 represents the most basic and generalized level of GHG quantification. It involves using default or standardized emission factors provided by international or national sources to calculate emissions. This tier is often characterized by simplicity and is suitable for organizations or regions with limited resources or data availability. However, it may not capture site-specific or industry-specific nuances accurately.

Tier 2 – Tier 2 involves a more refined approach, incorporating country-specific or industry-specific emission factors. Organizations at this tier collect more detailed and accurate activity data to calculate emissions. This level of quantification often includes on-site measurements and monitoring, providing a more precise estimate of emissions compared to Tier 1.

Tier 3 – Tier 3 represents the highest level of GHG quantification, involving comprehensive, organization-specific data collection and advanced methodologies. It includes detailed process-level measurements, continuous monitoring, and extensive data analysis. Tier 3 quantification allows for a highly accurate and detailed understanding of emissions, making it suitable for organizations committed to robust sustainability practices and those operating in industries with significant environmental impacts.

REPORTING REQUIREMENTS – MANDATORY AND VOLUNTARY.

Greenhouse gas reporting can be categorized as either voluntary or mandatory, depending on the regulatory framework and an organization’s commitment to sustainability.

Mandatory Reporting – Many jurisdictions have implemented regulations requiring certain organizations to report their greenhouse gas emissions. In a country like South Africa, there is national legislation which mandates organizations meeting certain Scope 1 emission thresholds to report their emissions to the government. This is often driven by the government’s efforts to monitor and reduce overall emissions to meet international commitments. Compliance with these regulations is compulsory, and failure to report accurately may result in penalties. Mandatory reporting will usually enforce organizations to report on Scope 1 at a minimum, while also setting specific reporting tiers for specific activities and sectors.

Voluntary Reporting – Beyond regulatory requirements, some organizations voluntarily choose to disclose their greenhouse gas emissions as part of their commitment to corporate social responsibility and sustainability. Voluntary reporting allows companies to showcase their environmental efforts, attract environmentally conscious investors, and engage with consumers who prioritize eco-friendly practices. Initiatives like the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) provide frameworks for voluntary reporting.

Voluntary Reporting

Compliance Reporting

CONCLUSION – WHERE NEXT?

Greenhouse gas reporting is a critical tool for organizations to understand, manage, and mitigate their impact on climate change. By identifying and categorizing emissions, collecting accurate data, and choosing between voluntary and mandatory reporting, businesses can contribute to global efforts to combat climate change while demonstrating their commitment to environmental responsibility. As the world continues to address the challenges of climate change, effective greenhouse gas reporting will play an increasingly important role in shaping sustainable business practices.

Need Help?

As an industry leader in greenhouse gas reporting advisory, Brundtland has leveraged its over decade long experience in the subject to develop comprehensive services to assist clients at every stage of their greenhouse gas reporting journey. From organizations just getting started to industry leaders looking to automate their reporting with our tailored EPCAM ESG Cloud solution. Get in touch with our team for all of your greenhouse gas reporting needs.