Common questions about GHG reporting, explained simply to help organizations understand requirements, methodology and next steps.
1. What is GHG reporting and why is it important?
GHG reporting quantifies and discloses greenhouse gas emissions. It ensures regulatory compliance, enables risk management, guides climate action, and fosters stakeholder transparency.
2. Who needs to report GHG emissions?
Entities exceeding regulatory thresholds, such as those defined in UAE Federal Decree-Law No. 11, must report. Thresholds vary by country or program.
3. What are Scope 1, 2, and 3 emissions?
Understanding Scope 1, 2, and 3 emissions is fundamental for accurate GHG calculation and reporting. These categories, defined by the GHG Protocol, help organizations measure and manage their carbon footprint across their operations and value chain.
- Scope 1: Direct Emissions from Owned or Controlled Sources
- Scope 1 emissions are direct greenhouse gas emissions that occur from sources owned or directly controlled by a company. These emissions come from activities under the organization’s operational control, and they are the easiest to measure because the company can directly monitor the sources.
- Examples of Scope 1 Emissions:
- Fuel combustion: Emissions from boilers, furnaces, and generators used on-site.
- Company vehicles: Emissions from trucks, cars, or other transport owned or controlled by the business.
- Process emissions: Gases released during industrial processes (e.g., chemical reactions in manufacturing).
- Fugitive emissions: Accidental releases of gases, such as refrigerants or methane leaks from pipelines.
- Importance of Scope 1:
- Measuring Scope 1 emissions allows businesses to identify direct sources of carbon output, implement efficiency improvements, and reduce operational emissions at the source.
- Scope 2: Indirect Emissions from Purchased Energy
- Scope 2 emissions are indirect greenhouse gas emissions resulting from the consumption of purchased electricity, steam, heat, or cooling. While the emissions physically occur at the utility or energy provider’s facility, they are considered indirect because the consuming company drives the demand for energy.
- Examples of Scope 2 Emissions:
- Electricity used in office buildings, factories, or data centers.
- Steam, heat, or cooling purchased from external providers.
- Importance of Scope 2:
- Scope 2 emissions help businesses track energy-related environmental impacts and identify opportunities for renewable energy adoption, energy efficiency projects, or power purchase agreements (PPAs) to reduce their carbon footprint.
- Scope 3: Other Indirect Upstream and Downstream Emissions
- Scope 3 emissions are the most comprehensive and complex category, capturing all other indirect emissions in a company’s value chain, both upstream (suppliers) and downstream (customers). They typically represent the largest portion of a company’s carbon footprint, but they are the hardest to measure due to reliance on third-party data.
- Examples of Scope 3 Emissions:
- Upstream activities:
- Purchased goods and services
- Transportation and distribution by external providers
- Business travel (air travel, taxis)
- Employee commuting
- Waste generated in operations
- Downstream activities:
- Use of sold products (e.g., emissions from a vehicle sold to a customer)
- End-of-life disposal or recycling of products
- Transportation and distribution of products to customers
- Importance of Scope 3:
- Scope 3 reporting helps companies understand their full environmental impact, not just operational emissions.
- Identifies hotspots in supply chains or product lifecycles for targeted carbon reduction strategies.
- Increasingly required by regulations and investors to demonstrate comprehensive ESG performance.
- Why Differentiating Scopes Matters
- Strategic Planning: Categorizing emissions enables companies to develop targeted reduction strategies for direct operations (Scope 1), energy procurement (Scope 2), and supply chain or product lifecycle (Scope 3).
- Regulatory Compliance: Many global and regional regulations, including UAE Federal Law No. 11, mandate reporting of Scope 1 and 2, and increasingly Scope 3 where material.
- Stakeholder Transparency: Reporting across all three scopes provides a complete picture to investors, customers, and regulators, demonstrating commitment to sustainability and carbon accountability.
- Setting Science-Based Targets: Differentiating scopes is essential for setting measurable emissions reduction targets aligned with the Paris Agreement or other climate commitments.
4. How are emissions calculated?
Calculating greenhouse gas (GHG) emissions is a critical step in carbon accounting and GHG reporting. The goal is to quantify emissions accurately so organizations can manage their carbon footprint, comply with regulations, and implement effective reduction strategies.
At a high level, emissions are calculated by multiplying activity data with emission factors and expressing the results in carbon dioxide equivalents (CO2e) using the Global Warming Potential (GWP) of each gas. Let’s break this down step by step:
1. Collecting Activity Data
The first step in emissions calculation is gathering detailed information on all activities that produce greenhouse gases. This includes:
- Fuel consumption: Diesel, gasoline, natural gas, or other fuels used in vehicles, machinery, or boilers.
- Electricity and energy usage: Electricity, steam, or heating purchased from utilities.
- Transportation and logistics: Distance traveled by company vehicles or third-party transport.
- Industrial processes: Material consumption, chemical reactions, or manufacturing byproducts that release GHGs.
- Waste generation and disposal: Solid waste, wastewater, or recycling processes that produce emissions.
Activity data is typically measured in physical units, such as liters of fuel, kilowatt-hours (kWh) of electricity, or kilometers traveled. Accurate, comprehensive data is essential for reliable emissions reporting.
2. Applying Emission Factors
Once activity data is collected, it is multiplied by emission factors. Emission factors represent the average emissions produced per unit of activity.
Examples of emission factors:
- 2.68 kg CO2 per liter of diesel fuel burned
- 0.45 kg CO2 per kWh of electricity (may vary by country or energy mix)
- 0.25 kg CO2 per km traveled by a specific type of vehicle
Emission factors are often sourced from international databases, such as the IPCC, the GHG Protocol, or local government guidelines (for example, UAE-specific factors for electricity or fuel).
This step converts activity data into mass of greenhouse gases, usually expressed in kilograms or metric tons of CO2.
3. Converting to CO2 Equivalent (CO2e) Using Global Warming Potential (GWP)
Not all greenhouse gases have the same impact on climate change. For example:
- CO2 has a baseline GWP of 1
- Methane (CH4) is 25 times more potent than CO2 over 100 years
- Nitrous oxide (N2O) is 298 times more potent than CO2
Using Global Warming Potential (GWP), all greenhouse gases are converted to CO2 equivalent (CO2e). This standardization allows businesses to aggregate emissions from multiple sources and compare them consistently across operations and time.
Example:
If a company emits 1 ton of CH4:
1 ton CH4 × 25 (GWP of CH4) = 25 tons CO2e
4. Aggregating Emissions by Scope
After calculating CO2e for all activities, emissions are summed according to Scope 1, 2, and 3 categories:
- Scope 1: Direct emissions from owned or controlled sources
- Scope 2: Indirect emissions from purchased energy
- Scope 3: All other indirect emissions in the value chain
This provides a comprehensive carbon footprint for the organization.
5. Quality Checks and Verification
To ensure accuracy:
- Validate data with internal departments and operational records
- Apply correction factors or estimation methods for missing data
- Optional third-party verification enhances credibility, reduces errors, and ensures compliance
5. What standards and frameworks should be followed?
Common frameworks include GHG Protocol, ISO 14064, TCFD, and local regulations like the UAE Climate Law.
6. How often and where should emissions be reported?
Typically annually, submitted to regulators or platforms like CDP.
7. How can companies improve data accuracy and transparency?
Implement robust data collection, staff training, verified methodologies, and third-party audits.
8. What role do consultants play in GHG reporting?
Consultants assist with boundary setting, data collection, calculation, reporting, compliance, and verification.
9. What challenges do companies face in GHG reporting?
Scope 3 complexity, data gaps, regulatory changes, limited resources, and maintaining transparency.
10. How do I convert emissions into CO2 equivalent?
By applying Global Warming Potential factors to each GHG.
11. What emission factors should I use?
Use internationally recognized or local emission factors (UAE-specific where available) for accuracy.
12. How to report emissions from transportation, waste, or leased assets?
Follow GHG Protocol guidelines, allocating emissions according to operational or financial control and Scope categorization.
Take the first step toward transparent, compliant, and actionable GHG reporting. Contact Planet First Consultant today for a tailored emissions assessment and carbon management strategy.
