Objective
Welcome to the first step of your journey with Carbon GPT. In this chapter, you will gain a foundational understanding of what a GHG Inventory is, why it's crucial for your organization, and how Carbon GPT will guide you through this process. By the end of this step, you will be able to clearly define what a GHG Inventory includes, understand its key components, and begin building your own inventory using Carbon GPT.
What is a GHG Inventory?
A GHG (Greenhouse Gas) Inventory is a comprehensive account of all greenhouse gas emissions produced by your organization over a specific period. It serves as a critical tool for tracking and managing your environmental impact, enabling you to measure, report, and reduce your carbon footprint. For example, a manufacturing company might produce Scope 1 emissions from on-site fuel combustion, Scope 2 emissions from purchased electricity, and Scope 3 emissions from the transportation of raw materials by third-party suppliers.
Key Concepts
Greenhouse Gases (GHGs): These are gases that trap heat in the atmosphere, contributing to global warming. The primary GHGs include Carbon Dioxide (CO2), Methane (CH4), Nitrous Oxide (N2O), and fluorinated gases like HFCs, PFCs, and SF6.
In Carbon Accounting, these GHGs are aggregated into kilograms or tonnes of Carbon Dioxide Equivalent value (kgCO2e / tonCO2e). 1 unit of Methane has the same Global Warming Potential (GWP) as 28 units of Carbon Dioxide, which means 1 kg of Methane = 28 kgCO2e.
Global Warming Potential Comparison Table:
| Greenhouse Gas | Abbreviation | Global Warming Potential (GWP) | Example Sources |
|---|---|---|---|
| Carbon Dioxide | CO2 | 1 | Fossil fuel combustion, deforestation |
| Methane | CH4 | 28 | Livestock, landfills, natural gas |
| Nitrous Oxide | N2O | 298 | Agricultural soil management, industrial activities |
| Hydrofluorocarbons | HFCs | 100-12,400 | Refrigerants, aerosols |
| Perfluorocarbons | PFCs | 6,500-9,200 | Aluminum production, electronics |
| Sulfur Hexafluoride | SF6 | 23,500 | Electrical insulation, magnesium production |
Scopes of Emissions:
Scope 1: Direct emissions from sources that are owned or controlled by your organization, such as emissions from company vehicles or on-site fuel combustion.
Scope 2: Indirect emissions from the generation of purchased electricity, steam, heating, and cooling consumed by your organization.
Scope 3: All other indirect emissions that occur in your value chain, including emissions from suppliers, business travel, and waste disposal.
Figure: A diagram visually distinguishing Scope 1, 2, and 3 emissions to enhance understanding.
Importance of a GHG Inventory
Regulatory Compliance: Listed Companies are already required to report their emissions as part of their Sustainability disclosure, and soon SMEs and enterprises will need to as well, especially as Listed Companies demand Scope 3 emissions data from their suppliers.
Business Continuity: To maintain relationships with your clients, SMEs and enterprises must do carbon accounting or risk losing business.
Corporate Responsibility: Tracking emissions shows a commitment to sustainability, boosting reputation and stakeholder trust.
Risk Management: Understanding your emissions helps you mitigate risks related to climate change and regulations.
Real World Case Study
Company X has multiple factories in different ASEAN countries. After completing their GHG Inventory, they were able to compare the emissions of each factory. Using the emissions calculated, they calculated the Carbon Intensity of each product (kgCO2e / unit of product). This allows for a fair comparison between the emission performance of each factory.
With this data, they drilled down into their Philippines plant which was their highest emitting factory. The Scope 2 - Purchased Electricity emissions was abnormally high when compared to the other facilities. With this information, they initiated a carbon reduction program to find a renewable energy provider.
After changing their energy provider to a renewable source, they were not only able to reduce their GHG emissions by 20% but also reduce their operational costs by 10%.
Next Steps
Determine Your Reasons for Doing Carbon Accounting: Clearly define why your organization is pursuing carbon accounting. This understanding will help guide your decisions on the scope and requirements of your emissions report, ensuring that your efforts align with strategic business objectives such as compliance, risk management, or stakeholder engagement.
Identify Key Stakeholders: Identify the intended audience for your emissions report. These could be internal stakeholders such as senior management, sustainability teams, or external stakeholders like regulatory authorities, customers, or investors. Knowing your audience helps tailor the information you present to meet their needs and expectations.
Engage Internal Teammates: Determine who within your organization can help you with the carbon accounting process. This might include individuals from various departments such as operations, facilities management, finance, and sustainability teams. Assign responsibilities and ensure they understand their role in providing necessary data or supporting the carbon accounting initiatives.