What is Carbon Accounting and Why Does It Matter? Part One.

Written by
Emily Cai
Materials Specialist at On

Must read

Mar 26, 2024

In the late 1990s, the World Research Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) created the Greenhouse Gas Protocol, an international and corporate standard for greenhouse gas accounting. Since its first edition in 2001, the GHG Protocol has continually updated its guidance and tools so corporations can consistently calculate all their greenhouse gas impacts.

The GHG Protocol defines three categories that combine and dictate a corporation's footprint: Scope 1, Scope 2, and Scope 3 emissions. Scope 1 emissions are generated from an organization directly. Scope 2 emissions come from indirect energy sources purchased and used by an organization. Scope 3 emissions account for the remaining emissions within an organization's value chain. In general, an organization has more control over its Scope 1 and 2 emissions, and its Scope 3 emissions are often more difficult to calculate. In this first article, we discuss Scope 1 and 2 emissions, how they are measured, and explain their relationship to current greenhouse gas emission policies.  

"By calculating Scope 1 and 2 emissions, an organization can take its first big step towards improving energy efficiency."

Overview of GHG Protocol scopes and emissions across the value chain

Adapted from: WRI/WBCSD Corporate Value Chain (Scope 3) Accounting and Reporting Standard (PDF), page 5.

What are Scope 1 and 2 emissions? 

First, Scope 1 emissions are generated by sources directly owned by the organization. For example, if the reporting organization owned factories, this could be the factory's boiler or furnace emissions. Additionally, emissions from company-owned vehicles also fall under Scope 1. 

Second, Scope 2 emissions are indirect emissions purchased for the organization's use and produced off-site from an energy provider. For example, the emissions yielded by an off-site power plant or processing plant providing the organization with electricity, heating, or cooling are considered Scope 2. Though generated off-site, the organization holds responsibility for the emissions.

How is data collected, and how are emissions calculated?

Typically, organizations readily access and maintain comprehensive data for Scope 1 and 2 emissions. This information can come from electricity bills, utility providers, fleet odometer readings, gas expenses, and maintenance records. Even if the exact quantity of energy consumption total is unavailable from these sources, its spending data allows for a complete expenditure calculation.

Since each greenhouse gas has varying global warming potential, one calculates GHG emissions by the weight of "carbon dioxide equivalents (CO2e)".

To quantify Scope 1 and 2 emissions, one must use emission factors to convert the data. Emission factors relate the quantity of pollutants emitted with the polluting activity. More specifically, for electricity used by all energy sources in the US in 2021, each kilowatt-hour of electricity roughly generated 0.855 pounds of carbon dioxide equivalent emissions. Since each greenhouse gas has varying global warming potential, one calculates GHG emissions by the weight of "carbon dioxide equivalents (CO2e)". Moreover, the emissions factor may change depending on where you source electricity and the source's cleanliness. The same study found that electricity from petroleum generated around 2.44 pounds of CO2e, while natural gas generated only 0.97 pounds of CO2e. These values could change depending on location. When calculating greenhouse gas emissions, one should use the most detailed data available to obtain the most accurate results

How can Scope 1 and 2 emissions be reduced? 

Fortunately, an organization has the most control over its Scope 1 and 2 emissions and can reduce them in many ways. For example, prioritizing renewable energy investments or switching to natural gas can reduce the use of fossil fuels in operations. Also, unplugging unused appliances at the end of a workday can drastically reduce electricity usage. Similarly, an organization can increase its energy efficiency. For instance, by upgrading building insulation or using its heating and cooling systems more efficiently, it can reduce energy loss. Organizations can lower their utility expenses and emissions by reducing energy consumption and improving energy-use efficiency.

To reduce emissions, organizations must first locate the source. The United States is one of many countries mandating greenhouse gas emissions reporting. The Environmental Protection Agency (EPA) requires over 8000 of the country's largest greenhouse gas emissions sources to report emissions annually. Examples include industrial gas suppliers and carbon dioxide injection sites.  

Under this program, these organizations must report their Scope 1 emissions from individual facilities and the overall parent organization. Additionally, they must report Scope 3 CO2e emissions created during the combustion and usage of their products. Experts estimate that emissions reported through the Greenhouse Gas Reporting Program constitute up to 90% of total US emissions.

With new legislation driving increased supply chain transparency and traceability, understanding how to quantify environmental impact using carbon dioxide equivalents is becoming increasingly important. By calculating Scope 1 and 2 emissions, an organization can take its first big step towards improving energy efficiency.

How Rheom Materials can mitigate your greenhouse gas impact. 

At Rheom Materials, our mission is to universalize sustainable, bio-based material solutions through collaboration. To meet that mission, we assess our products using recognized standards that accurately calculate the carbon footprint of our products. 

This year we completed a preliminary Life-Cycle assessment* (LCA) of our bio-based leather replacement, SHORAI™. This methodology provides the necessary transparency and accountability to determine our impact verses alternatives. That is why we feel confident in saying SHORAI™ uses 80% less CO2e emissions than that of synthetic leather when considering uptake and biogenic factors. We always look for ways to improve our material and are currently working to drive that number further down for our next version ofSHORAI™. We plan on completing an updated LCA for our next version of SHORAI™ later this year. Join us on our journey to build a cleaner, greener world!

*The LCA was completed using ISO14044:2006 - Environmental management — Life cycle assessment — Requirements and guidelines https://www.iso.org/standard/38498.html.