The Greenhouse Gas (GHG) Protocol provides a framework for carbon accounting. It has become a widely adopted by companies to assess their carbon footprint by quantifying greenhouse gas emissions across three distinct categories known as scopes. A key challenge in this process is the potential for double counting emissions. Recognizing and understanding these nuances is crucial for ensuring accurate GHG reporting.
Companies are increasingly measuring their environmental impact by calculating greenhouse gas (GHG) emissions through the Greenhouse Gas Protocol (GHG Protocol). This protocol categorises emissions into three scopes.
- Scope 1 - Direct emissions from owned or controlled sources (e.g., factory smokestacks)
- Scope 2 - Indirect emissions from purchased energy
- Scope 3 - Other indirect emissions across the value chain (e.g., supplier activities, product use, waste management)
One key concern regarding these calculations is double counting emissions, meaning the same emissions being counted more than once. Let's explore this concept further, using excerpts from the GHG Protocol for clarity.
Double counting within a company?
'Scope 1, scope 2, and scope 3 are mutually exclusive for the reporting company such that there is no double counting of emissions between the scopes.'
The three categories for measuring emissions (scopes 1, 2, and 3) are distinct to avoid companies counting emissions multiple times. Each scope covers specific sources, like direct emissions (scope 1) and indirect emissions from electricity (scope 2). This separation ensures accurate reporting without duplication.
Double counting across companies and scopes?
'The GHG Protocol Corporate Standard is designed to prevent double counting of emissions between different companies within scope 1 and 2. For example, the scope 1 emissions of company A (generator of electricity) can be counted as the scope 2 emissions of company B (end-user of electricity) but company A's scope 1 emissions cannot be counted as scope 1 emissions by company C (a partner organisation of company A) as long as company A and company C consistently apply the same control or equity share approach when consolidating emissions.'
The GHG Protocol prevents double counting emissions between companies in scopes 1 and 2. Company A's emissions from generating electricity are counted by B (the end-user) as scope 2, but not by C (A's partner) as their own scope 1, as long as both A and C use the same method of setting organisational boundaries.
Organisational boundary can be set using three approaches: the equity share approach, where emissions are accounted for based on the company's ownership stake; the financial control approach, which includes 100% of emissions from operations under the company's financial control; and the operational control approach, which accounts for 100% of emissions from operations where the company has direct operational control. Partner companies should align their choice of boundary setting approach to prevent double counting.
Scope 3 emissions, unlike scopes 1 and 2, inherently involve some double counting. This happens because different entities in a supply chain might both account for the same emissions source.
'Double counting within scope 3 occurs when two entities in the same value chain account for the scope 3 emissions from a single emissions source – for example, if a manufacturer and a retailer both account for the scope 3 emissions resulting from the third-party transportation of goods between them. This type of double counting is an inherent part of scope 3 accounting.'
While double counting is largely avoided within a company and between companies in scopes 1 and 2, it's an inherent feature of scope 3 due to the shared nature of emissions across the value chain. Understanding these nuances is crucial for accurate and comprehensive GHG reporting and effective emission reduction strategies.
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