What is carbon accounting, and what benefits can it bring?

In a shifting economy towards carbon neutrality, emissions of greenhouse gases (GHGs) must be closely monitored to build and implement an efficient decarbonisation strategy. Yet, many people do not see the value of carbon accounting, and it falsely appears to be a complex procedure. In this article, we will demystify everything about this effective process.

What are GHGs emissions? 

GHGs gather several types of gases such as Methane (CH4), Nitrous Oxides (N2O), or Sulfur Hexafluoride (SF6); however, Carbon Dioxide (CO2) is used as a standard for simplification purposes. 

GHGs can absorb and re-emit radiation from the sun at different intensities, thus increasing global warming. Therefore, to translate these gases into CO2 equivalent (CO2e or CO2eq), a unit called the Global Warming Potential (GWP) is used. Taking CO2 as a reference allows easy conversion and comparison of the impact of these gases in the atmosphere (e.g., CO2 = 1 GWP and CH4 = 25 GWP; thus 1kg of CH4 = 25kg of CO2e). Emissions are then computed to generate a carbon report. A carbon report allows a detailed overview of total CO2e emissions and is helpful to identify hotspots and monitor emissions over time.

How are GHGs emissions calculated?

Carbon accounting is the process used to measure the quantity of GHGs emitted by an organisation or individual.  As far as organizations are concerned, a well-established procedure with a global standardized framework named The GHG Protocol defines the most widespread method used. The Protocol appeared in the late 90s and divides emissions into different  scopes and categories.

Two components are needed to calculate GHGs emissions from a company: the activity data and emission factors. The activity data from a company corresponds to the quantity of a specific product or service (e.g., amount of kWh of electricity used, numbers of cars, tons of material etc.). To get the amount of CO2e emitted, the activity data is then multiplied by the corresponding emission factor, which is the average emission rate of a given source, relative to the unit of activity (e.g.,0.015 kgCO2e/kWh, 0.17 kgCO2e/km, 923 kgCO2e/ton, etc.), which gives us the formula below:

« GHG emission (CO2e) = Activity data x Emission factor »

An emission factor is calculated through a life cycle assessment (LCA), which analyses all the emissions of gases over the life of a product or service. Governmental organisations from various countries such as the ADEME for France, the AWAC for Belgium, or the EPA for the United States, share public databases of emission factors made in collaboration with international institutions such as the IPCC and the IEA, or the industry itself. These databases are consistent and kept up to date.

The calculation is accompanied by uncertainty in the result - given in percentage - inherent to data collection and emission factors development. It is essential to reduce uncertainty as much as possible by using accurate activity data, avoiding assumptions, and using adapted emission factors. Reducing the uncertainty allows better monitoring of GHGs emissions and the implementation of a more relevant carbon strategy with adapted reduction solutions.

Here is a basic example of how a calculation is made:

A Belgian company bought 5 tons of paper in 2020. The emission factor representing the purchase of one ton of paper in Belgium in 2020 equals 1.32 tonCO2e/ton of paper. Therefore, the GHGs emission associated with the purchase equals 5 x 1.320 = 6.6 tons of CO2e.

Carbon accounting benefits

Carbon accounting has been mandatory for large businesses in many countries for some time already. Beyond the clear benefit of applying the legislation, accountability and implementing reduction targets have additional advantages. The main advantage is the generation of mid to long-term savings, such as reduced energy bills or lower purchasing costs from goods and services through optimisation. Moreover, it creates a market differentiation and attracts more clients, investors, and stakeholders. It also allows access to green funding/capital and lowers carbon taxes.

The carbon accounting process is the most powerful tool for businesses to track their carbon footprint over time, identify hotspots and build a carbon strategy. It offers a wide range of services but mainly the opportunity for a company to build resilience and thrive.

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At Tapio, we provide the opportunity for companies to create high-quality carbon reports while supporting them in building an efficient carbon strategy. We have developed our own emission factors database with over 13,000 elements from various reliable sources, allowing us to choose the best-suited emission factor for a particular source and decrease the related uncertainty. Likewise, our Carbon Strategy Platform  enables the creation and use of personalised emission factors based on an existing carbon report or specific product or service.