With the emergence of environmental, social, and governance (ESG) reporting, companies are working rigorously to identify, assess, and reduce their greenhouse gas emissions.
What counts as greenhouse gas emissions?
Gases that trap heat in the atmosphere are referred to as greenhouse gases (GHGs).
Common greenhouse gasses include, but are not limited to, the following:
- Carbon dioxide (CO2), which enters the atmosphere through the combustion of fossil fuels, solid waste, trees, and other biological material. Certain chemical reactions - such as the manufacture of cement - also result in CO2 emissions.
- Methane (CH4), which is emitted during the production / transportation of certain fuels. It also results from livestock and various agricultural practices and land uses. Decomposition of organic waste in municipal solid waste landfills also contributes CH4.
- Nitrous oxide (N2O), which is released through a variety of agricultural, land use, and industrial activities. N2O is emitted during the combustion of fossil fuels and solid waste. Wastewater treatment processes also result in the release of N2O.
- Hydrofluorocarbons (HFCs), which are synthetic fluorinated gases (also known as F-gasses) commonly used in a wide variety of applications including refrigeration, building insulation, fire extinguishing systems, and aerosols.
- Perfluorocarbons (PFCs) is a synthetic F-gas used in a variety of products and industrial processes.
- Sulphur hexafluoride (SF6) is another synthetic F-gas used in a range of products and industrial processes. SF6 has been described as the world's worst greenhouse gas. The EPA cites SF6 as 22,800 times more potent than CO2 over a 100-year period.
According to the EPA, in 2020, U.S. greenhouse gas emissions were estimated as follows:
- Carbon dioxide: 79%
- Methane: 11%
- Nitrous oxide: 7%
- Fluorinated gasses: 3%
Greenhouse gas emissions by scope (i.e., 1, 2, and 3)
When a company claims to report its "Scope 1 and Scope 2" emissions, what does that mean?
In the majority of instances, this is in reference to the standards offered by Greenhouse Gas (GHG) Protocol.
GHG Protocol was jointly convened in 1998 by World Business Council for Sustainable Development (WBCSD) and World Resources Institute (WRI). GHG Protocol maintains a collection of standards to help a wide range of enterprises address their GHG emissions.
The GHG Protocol Corporate Standard classifies a reporting company's greenhouse gas emissions into three ‘scopes’:
- Scope 1 accounts for direct emissions from owned or controlled sources (including all assets such as facilities, equipment, and vehicles).
- Scope 2 accounts are indirect emissions from the generation of purchased energy. Keep in mind that an energy mix (and the resulting emissions) can vary significantly by location.
- Scope 3 accounts for all indirect emissions (except for indirect Scope 2 emissions) that occur throughout the value chain of the reporting company. This includes both upstream and downstream emissions. It also includes the life-cycle embodied emissions of products rendered by the reporting company. The GHG Protocol Corporate Value Chain (Scope 3) Standard and GHG Protocol Product Standard define value chain or life-cycle approaches to GHG emissions accounting.
See the figure below for a graphic representation of GHG Protocol scopes and emissions across a company's value chain.
Figure: Overview of GHG Protocol scopes and emissions across the value chain.