4.2 Identifying and Calculating GHG Emissions | DART – Deloitte Accounting Research Tool

4.2.1 Identify GHG Emission Sources

The first step is to identify and organize the GHG emission sources by defined category within the reporting company’s inventory boundary.

4.2.1.1 Source Categories

Corporate Standard, Chapter 6, “Identifying and Calculating GHG Emissions,” Page 41

Identify GHG Emissions Sources . . .

GHG emissions typically occur from the following source categories:

Stationary combustion: combustion of fuels in stationary equipment such as boilers, furnaces, burners, turbines, heaters, incinerators, engines, flares, etc.
Mobile combustion: combustion of fuels in transportation devices such as automobiles, trucks, buses, trains, airplanes, boats, ships, barges, vessels, etc.
Process emissions: emissions from physical or chemical processes such as CO2 from the calcination step in cement manufacturing, CO2 from catalytic cracking in petrochemical processing, PFC emissions from aluminum smelting, etc.
Fugitive emissions: intentional and unintentional releases such as equipment leaks from joints, seals, packing, gaskets, as well as fugitive emissions from coal piles, wastewater treatment, pits, cooling towers, gas processing facilities, etc.

Reporting companies will have GHG emissions that fit into one or more of the above source categories. Determining the appropriate category for a reporting company’s GHG emissions is crucial to appropriately calculating those emissions and applying the calculation tools described in Section 4.2.4.

4.2.1.2 Identify Scope 1, Scope 2, and Scope 3 Emissions

Once a reporting company has organized its GHG emissions into source categories, it is advised to classify the GHG emissions from each source category by scope. Not all GHG emissions in a given source category will necessarily fall within the same scope.

To determine the appropriate scope classifications, a reporting company is advised to first identify the direct (Scope 1) emissions in each source category. It would then identify each source category’s Scope 2 emissions, which the glossary of the Scope 2 Guidance defines as “[i]ndirect emissions from the generation of purchased or acquired electricity, steam, heat or cooling consumed by the reporting company” (see Chapter 5 for more information). Lastly, it would identify each source category’s Scope 3 emissions (if it chooses to report such emissions), which the glossary of the Scope 3 Standard defines as “[a]ll indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions” (see Chapter 6 for more information). See Chapter 3 for more information about the determination of operational boundaries.

4.2.2 Select a GHG Emission Calculation Approach

After identifying its GHG emission sources and classifying the GHG emissions in each source category by scope, a reporting company is advised to choose an appropriate calculation approach. The Corporate Standard includes the following discussion of calculation approaches:

Corporate Standard, Chapter 6, “Identifying and Calculating GHG Emissions,” Page 42

Select a Calculation Approach . . .

[T]he most common approach for calculating GHG emissions is through the application of documented emission factors. These factors are calculated ratios relating GHG emissions to a proxy measure of activity at an emissions source. The IPCC guidelines (IPCC, 1996) refer to a hierarchy of calculation approaches and techniques ranging from the application of generic emission factors to direct monitoring.

The “IPCC guidelines (IPCC, 1996)” referred to above are the Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories: Reference Manual, an internationally approved set of guidelines and methods for estimating the amount of GHG emissions released by a reporting company. The IPCC guidelines were issued by the Intergovernmental Panel on Climate Change (IPCC), which the Corporate Standard’s glossary describes as an international body of climate-change scientists whose role is “to assess the scientific, technical and socio-economic information relevant to the understanding of the risk of human-induced climate change.”

The Corporate Standard recommends that a reporting company choose the method that most accurately reflects its GHG emissions and that is most appropriate for its reporting context.

4.2.3 Collect Data and Choose Emission Factors

Most reporting companies monitor and are able to calculate Scope 1 emissions by tracking their own direct GHG emissions and using publicly available GHG emission factors. For example, when calculating the GHG emissions from fuel it burns on site, a reporting company may multiply the amount of fuel purchased by an established emission factor per volume unit.

Scope 2 emissions are related to purchased electricity, steam, heating, or cooling. Consequently, a reporting company will often use utility bills or purchase records to determine the quantities of Scope 2 emission sources it purchased and thereby calculate its Scope 2 emissions. See Chapter 5 for more information about Scope 2 emissions.

Scope 3 emissions are much more difficult for reporting companies to monitor because they largely occur outside of those companies’ monitoring capabilities. Reporting companies must drill down into each of the 15 categories of Scope 3 emissions (as outlined in Chapter 6) by (1) using invoices, purchase orders, and surveys and (2) making estimates when necessary.

Some companies may have additional methods available to them when calculating emissions, including both sector-specific guidelines and guidance published by industry associations with which the companies are affiliated. The GHG Protocol Web site, for example, provides a list of tools specific to industries such as those that calculate GHG emissions related to the production of aluminum, ammonia, cement, iron and steel, pulp and paper, semiconductors, and wood. For more information about calculation tools, see the next section.

4.2.4 Apply Calculation Tools

Various GHG emission calculation tools are available on the GHG Protocol Web site. Although the Corporate Standard recommends these tools, it does not require reporting companies to use them.

There are two main categories of calculation tools: cross-sector tools and sector-specific tools. Cross-sector tools can be applied consistently across different industries, while sector-specific tools are unique to certain industries. Reporting companies will often need to use a combination of tools to accurately report their GHG emissions.

The table below, which is adapted from Table 3 in Chapter 6 of the Corporate Standard, describes various tools available on the GHG Protocol Web site that reporting companies may use in their calculations. Each tool contains specific guidance on how to perform the calculation.

Table 4-3 Overview of Calculation Tools Available on the GHG Protocol Web Site

Calculation Tools	Main Features
Cross-Sector Tools
Stationary combustion	Calculates direct and indirect CO2 emissions from fuel combustion in stationary equipment. Provides two options for allocating GHG emissions from a cogeneration facility. Provides default fuel and national average electricity emission factors.
Mobile combustion	Calculates direct and indirect CO2 emissions from fuel combustion in mobile sources. Provides calculations and emission factors for road, air, water, and rail transport.
HFC from air conditioning and refrigeration use	Calculates direct HFC emissions during manufacture, use, and disposal of refrigeration and air-conditioning equipment in commercial applications. Provides three calculation methods: a sales-based approach, a life-cycle-stage-based approach, and an emission-factor-based approach.
Measurement and estimation uncertainty for GHG emissions	Introduces the fundamentals of uncertainty analysis and quantification. Calculates statistical parameter uncertainties due to random errors related to calculation of GHG emissions. Automates the aggregation steps involved in developing a basic uncertainty assessment for GHG inventory data.
Sector-Specific Tools
Aluminum and other nonferrous metals production	Calculates direct GHG emissions from aluminum production (CO2 from anode oxidation, PFC emissions from the “anode effect,” and SF6 used in nonferrous metals production as a cover gas).
Iron and steel	Calculates direct GHG emissions (CO2) from (1) oxidation of the reducing agent, (2) the calcination of the flux used in steel production, and (3) the removal of carbon from the iron ore and scrap steel used.
Nitric acid manufacture	Calculates direct GHG emissions (N2O) from the production of nitric acid.
Ammonia manufacture	Calculates direct GHG emissions (CO2) from ammonia production. This is for the removal of carbon from the feedstock stream only; combustion emissions are calculated with the stationary combustion module.
Adipic acid manufacture	Calculates direct GHG emissions (N2O) from adipic acid production.
Cement	Calculates direct CO2 emissions from the calcination process in cement manufacturing (WBCSD tool also calculates combustion emissions). Provides two calculation methods: the cement-based approach and the clinker-based approach.
Lime	Calculates direct GHG emissions from lime manufacturing (CO2 from the calcination process).
HFC-23 from HCFC-22 production	Calculates direct HFC-23 emissions from production of HCFC-22.
Pulp and paper	Calculates direct CO2, CH4, and N2O emissions from production of pulp and paper. This includes calculation of direct and indirect CO2 emissions from combustion of fossil fuels, biofuels, and waste products in stationary equipment.
Semiconductor wafer production	Calculates PFC emissions from the production of semiconductor wafers.

4.2.5 Roll Up Data to Corporate Level

In accordance with the Corporate Standard, reporting companies take a bottom-up approach to calculating GHG emissions, under which GHG emissions are calculated at an individual source or facility and subsequently accumulated up to the corporate level (see Section 8.2). In performing this step, reporting companies must take precautions to avoid making errors when accumulating the data at the corporate level.