The science behind carbon accounting: how it’s calculated

The landscape of carbon accounting is forever evolving, and presents complexities for organizations looking to reduce their footprint. The need for standardisation across regulations and guidelines is increasingly important, and with that there needs to be a synergy between that and how emissions are measured. In this article, we explore the key concepts in carbon accounting, and the units of measurement used

Overview of carbon accounting

Carbon accounting is the process of measuring, managing, and reporting the amount of carbon dioxide equivalents (CO2e) emitted by an entity, whether it be an individual, organization, or country. 

It involves quantifying emissions from various sources such as energy use, transportation, and industrial processes, and can also account for carbon sequestration activities that remove CO2 from the atmosphere. 

By accurately measuring these emissions, carbon accounting enables entities to identify reduction opportunities, comply with regulatory requirements, participate in carbon trading markets, and demonstrate environmental responsibility. Despite its importance, carbon accounting can be quite complex, as there are a number of factors that should be considered, each with their own methods of measurement. Let’s explore in more detail. 

Key concepts

Carbon accounting assesses an organization's emissions through two primary methods: spend-based and activity-based, with a hybrid approach integrating both. Here’s a brief overview of both: 

Spend-based approach

With the spend-based approach, GHG emissions are estimated by multiplying the monetary value of goods or services purchased by an emission factor, which represents the emissions generated per unit of currency spent. 

This method relies on environmentally extended input-output (EEIO) models, which track resource flows across various economic sectors, allowing for the calculation of average emissions per monetary unit spent in a given industry and region. 

However, this method may not provide specific results because it uses industry-wide averages for emission factors. For instance, purchasing furniture like a chair would only be categorized broadly, without considering the material (e.g., iron or wood) it's made from.

Activity-based approach

The activity-based method calculates emissions based on the actual quantity of materials or products a company purchases, such as liters of fuel or kilograms of textiles, using emission factors derived from scientific research to quantify the emissions from these specific activities. This approach offers more precise tracking of emissions related to specific actions or materials. 

For the purposes of this article, we’ll be looking into untis of measurement and gases considered in the activity-based method, as this provides a more detailed insight into an organization’s emissions. 

Carbon Dioxide Equivalent (CO2e)

Carbon Dioxide Equivalent - also known as CO2e - is a standard unit used in carbon accounting to quantify the impact of different GHGs on global warming relative to the impact of the same amount of carbon dioxide. CO2e enables the comparison and aggregation of emissions from various GHGs based on their Global Warming Potential (GWP). This unit of measurement is also used when measuring units of scoped emissions.

Scope 1, 2, and 3 Emissions

Scoped emissions in carbon accounting categorize greenhouse gas emissions as outlined in the GHG Protocol based on their origin, allowing organizations to assess and manage their carbon footprint more effectively. This framework helps in identifying direct and indirect emission sources, guiding companies in developing targeted strategies for emission reduction. 

• Scope 1 includes direct emissions from owned or controlled sources, such as company vehicles and facilities.
• Scope 2 accounts for indirect emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the reporting entity.
• Scope 3 includes all other indirect emissions that occur in the value chain of the reporting company, including both upstream and downstream emissions.

Scoped emissions encompass all the GHG emissions associated with an organization's activities, from the production of purchased materials to the use of sold products and services. By understanding the full spectrum of emissions related to their operations, organizations can make informed decisions on how to reduce their impact on climate change. 

This approach not only aids in compliance with environmental regulations but also supports sustainability goals and improves corporate reputation by demonstrating a commitment to reducing carbon emissions.

Global Warming Potential (GWP)

Different greenhouse gases have varying global warming potentials (GWP). GWP is a measure that allows the comparison of the warming potential of different gases over a specified time horizon, usually 100 years. For instance, methane has a higher GWP than carbon dioxide over a shorter period, reflecting its more potent but shorter-lived impact. Here’s a full breakdown of the GWP of different greenhouse gases:

Life Cycle Assessment (LCA)

Life Cycle Assessment - sometimes referred to as LCA - is a method used to evaluate the environmental impacts associated with all the stages of a product's life from raw material extraction through:

• Materials processing
• Manufacture
• Distribution and transportation
• Use, repair and maintenance
• Disposal or recycling

Measurements in LCA are conducted in various units depending on the type of impact being assessed. For example, carbon dioxide equivalents (CO2e) are used for measuring greenhouse gas emissions, kilograms of SO2 equivalents for acidification, and cubic meters of water for water use. The results are often presented per functional unit of the product or service, such as per kilogram of product, per service rendered, or per unit of energy consumed.

An example of LCA could be comparing the environmental impacts of plastic versus paper shopping bags. This assessment would measure the total energy consumption, greenhouse gas emissions, water use, and waste production from the production of raw materials to the disposal of the bags, presenting the findings in terms of impact per 1,000 bags used.

Carbon Offsetting

Carbon offsets are often measured in metric tons of CO2e - this is to ensure consistency against the emissions identified as part of the carbon audit. Carbon offsetting involves investing in projects that reduce or remove an equivalent amount of GHGs to compensate for emissions. Common offset projects that use metric tonnes of CO2e to measure their impact include: 

• Reforestation and afforestation -  Planting trees in areas where forests have been cut down (reforestation) or in areas where there were no forests previously (afforestation).
• Renewable energy projects - Investing in renewable energy sources like wind, solar, and hydroelectric power that do not emit CO2 during energy production. Offsets are calculated based on the amount of GHG emissions avoided by replacing fossil fuel energy with renewable sources.
• Energy efficiency improvements - Supporting projects that reduce energy consumption, such as upgrading to more energy-efficient appliances or industrial equipment. The offsets are quantified by the reduction in GHG emissions resulting from lower energy use.
• Methane capture - Capturing methane emissions from landfills or livestock operations and using it for energy production. This prevents methane, a potent GHG, from entering the atmosphere and is measured by the amount of methane captured or the CO2 equivalent emissions reduced.

Carbon accounting software calculates CO2e by applying the GWP of each gas to convert its emissions into an equivalent amount of CO2 that would have the same global warming impact over a specific time frame, typically 100 years.

This calculation enables organizations to understand their total climate impact from various sources and activities, simplifying reporting, compliance with regulations, and the development of strategies for reducing emissions.and Minimum’s emissions data platform can help you do just that. 

How Minimum can help

Minimum can help organizations to understand their existing carbon output, and create plans to mitigate climate related risks in the future.  Our Emissions Data Platform seamlessly collects and processes emissions data from every corner of your organization and supply chain - no matter the format. Making it the ideal platform for emissions audits and all-round business intelligence. 

Learn more about how Minimum's Emission Data Platform can help to power you all the way to Net Zero today.