GHG Emissions Changes: Redrawing baselines
Greenhouse gases (GHG) can be measured by recording emissions at source by estimating the amount emitted using active data and applying relevant conversion factors. These conversion factors allow organizations to calculate GHG emissions from a range of activities. Accurate greenhouse gas reporting is a key deliverable of any sustainability software. A significant part of this challenge is to ensure that the appropriate conversion factors are in place and being applied to energy expenditures correctly. With recent changes to how the Department for Environment, Food and Rural Affairs (DEFRA) calculate CO2 emissions, the potential exists for companies in the UK to experience significant shifts in both individual emission factors and overall Scope 1, 2 and 3 emissions. These changes have been published as part of DEFRA’s greenhouse gas conversion factors for company reporting: methodology paper for emission factors which reviewed the format and content of GHG conversion factors.
Electricity Greenhouse Gas Changes
One of the major changes in the latest GHG emission factor set is separating the GHG emissions associated with electricity consumption into two clear sections: emissions created through electricity generation and emissions created through transmission and distribution of electricity. There is an energy cost in moving electricity around the network and according to the new DEFRA boundaries, any energy spent delivering your electricity to your door can be considered as a third party emission and so would fall into Scope 3. By creating a division between generation and transmission, DEFRA has been able to create a more accurate set of emission factors for use in the calculation of GHG emissions from electricity consumption. Typically, over the last 20 years, around 5-10% of electricity emissions in the UK have come from the transmission and distribution of electricity around the network. Taking this new approach should have no impact on the overall CO2e reported, but it will mean a 5-10% drop in CO2e emissions under Scope 2. Additionally, DEFRA has looked at how best to integrate the emissions from imported electricity into an overall GHG factor. Annually, around 3% of electricity consumed in the UK is imported and the new guidelines calculate this electricity using an emission factor based on the French generation profile.
‘All Scopes’ Factors
In a similar manner to the changes to electricity emission calculation, DEFRA has sought to clarify the boundaries of responsibility for fossil fuel emissions. By eliminating ‘All Scopes’ emission factors, DEFRA aims to make it much easier for companies to understand the boundaries of Scope 1, 2 and 3. Each fossil fuel now has a clear and distinct ‘Well to Tank’ emission factor. This new methodology presents the opportunity to provide more detailed emission factors, with a single fuel expenditure having its GHG emissions broken over more than one scope and so having more than one emission factor. The objective of these changes is to allow companies to understand the difference between direct activity emissions and upstream emissions. Therefore, companies will find it easier to report on Scope 3 emissions, which will allow them to provide their customers with a better understanding of their overall emissions.
For companies who have an existing and effectively deployed sustainability software, adapting to new DEFRA guidelines should be a reasonably pain free experience. If the appropriate emission calculations are setup within their system then the use of these new emission factors should not require a significant effort. Where a greater degree of granularity is expected or required, then a more significant piece of work may be needed. A switch to more segmented reporting could require the implementation of dual GHG indicators for each energy source; the first indicator calculating the Scope 1 or 2 emissions and the second indicator calculating the Scope 3 emission. Finally, any headline GHG indicators would need to be updated to consider these new calculations.
The change is methodology released by DEFRA is designed to provide companies with a greater capability to produce more accurate corporate reports that consider not only Scope 1 and 2, but also Scope 3 emissions. The changes in the methodology means that it is important to update the emission factors used during GHG calculations to ensure that historic data is using the correct emission factors. While these changes will undoubtedly require a re-drawing of existing CO2 baselines, the increased GHG accuracy and reporting capabilities are worth the required effort and will provide companies that adopt this new methodology with a more accurate overall emissions total and a lower Scope 1 and 2 emission total.
Ailsa writes in the area of sustainability often focusing on issues related to managing and reporting sustainability data, including writing for the SustainIt blog. SustainIt is a leading sustainability data consultancy. SustainIt work with companies who need support managing their sustainability data, maximizing sustainability programs by helping performance manage sustainability data. Join SustainIt on Twitter, LinkedIn and Google+.
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