How to measure greenhouse gas (GHG) emissions: A comprehensive guide
As pressure to tackle climate change intensifies, so does scrutiny of the actions we’re taking to reduce our carbon footprint. On a corporate level, this plays out in many ways. For instance, organizations are exploring how to measure greenhouse gas emissions, minimize their corporate impact and manage and report on their environmental, social and governance (ESG) performance overall. Reducing your carbon footprint is a core objective if your organization wants to address its environmental impact.
Greenhouse gas (GHG) emissions are a fundamental aspect of this. Here, we look into how to measure your emissions and report on them in a way that meets your obligations.
How to Measure Greenhouse Gas Emissions and Why It's Important
Since 2010, certain US businesses have been required by law to report on greenhouse gas emissions. These include manufacturers of vehicles and engines, suppliers of fossil fuels or industrial GHGs, and facilities that emit at least 25,000 metric tons of GHGs per year. These businesses must submit annual reports to the US Environmental Protection Agency (EPA).
Businesses and others can use the data reported under this program to track and compare facilities’ greenhouse gas emissions, identify opportunities to cut pollution, minimize wasted energy, and save money. Another driver for measuring GHG emissions is the increasing weight being given to non-mandatory reporting. One example is the ESG disclosures that inform ESG ratings and scorecards used by investors and advisors when making investment choices and recommendations.
Reporting frameworks like TCFD, which is now supported by more than 1,700 organizations in 77 countries, are becoming more accepted and expected, even being mandated in some countries. Even for businesses not legally obliged to report, ESG reporting is becoming the norm, with carbon emissions and sustainability as a whole forming a vital element of this reporting.
Many organizations are also proactively choosing to commit to lowering greenhouse gas emissions and making net-zero commitments as they recognize the broader benefits of prioritizing the planet and people alongside profit.
In a world where buying decisions are increasingly being made with an eye to environmental performance, businesses need to demonstrate their nature-positive credentials and a focus on reducing their corporate carbon footprint.
What Greenhouse Gas Emissions Reporting Do Businesses Have To Do?
As above, in the US, companies that meet specific criteria have to report by law to the US Environmental Protection Agency (EPA). The EPA’s Greenhouse Gas Reporting Program (GHGRP) captures data covering 85-90% of all US GHG emissions. A complete list of the industrial operations covered by the reporting requirements is available on the US EPA’s website.
Organizations have to calculate their emissions in line with specific methodologies set out by the EPA and report using an online tool, the Greenhouse Gas Reporting Tool (e-GGRT). Accuracy is vital. The EPA carries out a verification process on all data received to ensure it’s “accurate, complete, and consistent.” Verified data is made publicly accessible online, opening companies to public scrutiny and comparisons.
How to Measure Greenhouse Gas Emissions by Scope
Knowing what you need to report is one thing, but how do you calculate greenhouse gas emissions?? When measuring greenhouse gas emissions, you need to understand your obligations around Scope 1, Scope 2 and Scope 3 emissions.
- Scope 1 emissions are those that fall directly within your remit: emissions from your activity and sources directly controlled by your organization.
- Scope 2 emissions are those you indirectly control. They include emissions generated via your organization’s purchase of energy: the gas you buy to run your buildings’ heating; the electricity you buy to power your air conditioning.
- Scope 3 emissions are the result of activities from assets you don’t directly own or control, but that result from you buying products from your suppliers or from your customers using your products. The majority of an organization’s total GHG emissions tend to fall into Scope 3 – but Scope 3 emissions can also be the hardest to calculate.
You can read more detail on what scope 1, 2 and 3 emissions in greenhouse gas reporting are, and how to measure them, in our article on the topic.
3 Steps to Measuring Greenhouse Gas Emissions
How do you measure greenhouse gas emissions?? There are three essential steps when it comes to measuring GHGs:
1. Decide which GHGs to measure
2. Collect the necessary data
3. Calculate your greenhouse gas emissions
Which Greenhouse Gases Should I Measure?
Climate change is impacted by a number of gases. When measuring greenhouse gas emissions, how do you know where you should focus?
Six main greenhouse gases are covered by the Kyoto Protocol:
- Carbon dioxide (CO2)
- Methane (CH4)
- Hydrofluorocarbons (HFCs)
- Nitrous oxide (N2O)
- Perfluorocarbons (PFCs)
- Sulphur hexafluoride (SF6)19
The U.K Government recommends that businesses start by measuring these six GHGs. Organizations should also identify the emissions their activity is most likely to emit, as different business activities will release different greenhouse gases. These findings may also influence the GHG emissions you choose to measure.
What Data Is Needed To Calculate GHG Emissions?
The data you will need to calculate your greenhouse gas emissions includes:
| Activity | Unit of Measurement | Data Sourced From |
|---|---|---|
| Electricity use | Total kilowatt hours | Electricity bill |
| Gas use | Total kilowatt hours | Gas bill |
| Water supply/treatment | M2 of water supplied/treated | Water bill |
| Fuel usage – company vehicles | Gallons of fuel bought | Invoices/receipts |
| Company travel | Miles flown, mileage covered by car, train and other transport | Distance calculations |
| Waste recycling | Tons of waste disposed of | Waste collection provider invoices |
You may need to go to a number of departments within your business to get the data you need.
Your facilities and finance teams, for example, should have details of your energy use. The team(s) responsible for booking corporate travel and/or the corporate travel agency you use will have information on flights, train journeys and other travel.
How To Calculate Greenhouse Gas Emissions
As we mentioned earlier, businesses have to calculate their emissions in line with specific methodologies.
A prescribed set of emission factors specify how emissions for different categories of pollutant should be calculated. Greenhouse gases are then calculated by multiplying these emission factors by the activity data you uncovered in the step above. The formula is therefore:
Activity data x Emission Factor = GHG emission
When calculating your GHG emissions, there are some considerations. For example, ensure the period your data covers is indicative of your overall performance. Measuring gas usage in the summer, when buildings are not heated, may give smaller readings than when measuring in the winter. Ensure your data accurately reflects your usage across the entire year.
Reporting on Greenhouse Gas Emissions
Reporting on GHG emissions is becoming mandatory in more and more countries. In the U.S., as we noted, in-scope facilities has to report their greenhouse gas emissions to the Environmental Protection Agency annually via the Greenhouse Gas Reporting Tool (e-GGRT). Some states made reporting mandatory even before this; California, for instance, which has required GHG emissions reporting since 2006.
Greenhouse gas emissions reporting is mandatory in around 40 countries worldwide, including most of the G20 nations, and as we saw earlier, even in countries where reporting isn’t mandatory, it is increasingly the norm for a number of reasons: compliance, financial and regulatory.
What Are the Challenges in Measuring Greenhouse Gas Emissions?
When considering how to measure greenhouse gas emissions, you will inevitably come up against several challenges. Some of the obstacles businesses face when measuring carbon emissions are:
- It’s time-consuming. Greenhouse Gas Emissions in many reporting initiatives such as the Carbon Disclosure Project (CDP), Dow Jones Sustainability Index (DJSI) and FTSE4Good index make up less than 40% of the total questions. However, these can take up to 90% of the total time involved in compiling the report for some responding organizations.
- The range of data needed can be overwhelming. Organizations may need to prepare, track and disclose key metrics in line with many regulatory frameworks and standards — and across a large number of data points, in their own operations and their supply chain.
- Reporting rules and emissions factors are ever-evolving. For instance, different countries, industries, and cities may have different reporting requirements and emissions targets. The number of emissions factors is growing all the time. Keeping pace with your obligations can be exhausting.
- Reporting has to be done within tight deadlines. Under the US GHGRP, businesses are required to report emissions from the previous calendar year by March 31 of each year. You need to work quickly to capture, verify and report on all the metrics within your remit. The stakes are high. When it comes to climate-related reporting, accusations of greenwashing are rife; investors, customers and other stakeholders are suspicious of a “smoke and mirrors” approach to compliance. Accuracy is imperative — but with so many data points, often across entities and geographies, accurate and comprehensive data can be elusive.
- More broadly, best practice in environmental, social and governance (ESG) demands that you integrate your greenhouse gas emissions reporting with broader environmental and ESG strategies. This is a challenge for many organizations; data-gathering is a struggle, and aggregating metrics into a comprehensive ESG strategy is even more so.
How to Measure Greenhouse Gas Emissions: Overcoming the Obstacles
It’s easy to be daunted by the complexity of collecting climate data and reporting it in a way that meets regulatory reporting and audit requirements. With emissions sources covering data points ranging from waste and water to business travel and supply chain, knowing where to start and how to ensure a complete, accurate picture can seem an impossible task. No wonder that many organizations are turning to technology to help.
Data collection via an online platform shares the load, enabling colleagues worldwide to input to data gathering. User-friendly platforms not only make data entry easier (therefore reducing human error), they can also present results back in easy-to-read dashboards.
A good solution will provide access to an up-to-date and comprehensive list of emissions factors, simplifying the job of measuring your greenhouse gas emissions. And the best will remove the risk of calculation errors, which can occur when converting one unit of measure to another, by translating inputs to the required unit of measure.
ESG reporting is still a developing science. With the media and public ready to shine a harsh spotlight on any failings, it’s not surprising that businesses are nervous about reporting and keen to ensure a meticulous approach.
Any organization struggling with how to measure greenhouse gas emissions can hopefully take some tips from this article on overcoming the challenges and move towards more integrated, accurate and comprehensive emissions reporting.
You can find out more about Diligent ESG and see how we can help to simplify your data collection, benchmarking and reporting, no matter where on your ESG journey you are.
