Carbon Emissions Management – what is it and why you need it?

There has been a lot of noise made by the media around the subject of Climate Change, and policy makers are taking on a more serious and mandatory approach as the looming Australian Federal Government commitment to achieving a renewables target of 26-28% by 2030, as well as the Paris Agreement Net Zero Carbon Emissions by 2050 targets approach.

We have probably all heard the terms:

  • Carbon Stock Assessments
  • Greenhouse Gas Inventories
  • Carbon offsets
  • Carbon Credits
  • Carbon Pools

All these terms relate to various methods, and initiatives to mitigate climate change, and a way for business to start understanding carbon life cycles. Once business and consumers understand the impact of their decisions on the environment, we can all start making plans to reduce or eliminate that impact.

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The Carbon Management Lifecycle

Developing a plan to manage an organisations carbon reduction, is the same as any other business plan. The steps required to reach an intended goal are best achieved through systematic steps:

  • Doing an inventory of the products and/or services in the organisation that produce carbon [Read more]
  • Having the inventory quantified and verified
  • Purchasing carbon offsets, & selling Carbon Credits [Read more]

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What is Carbon Inventory?

At a highest level, a Nation produces a Carbon Inventory each year as part of its obligations under the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol.

These high-level inventories provide key evidence on greenhouse gas emission trends and inform policy recommendations on climate change. Enabling the monitoring of progress towards our emissions reductions targets.

At a more detailed level, a business may produce an inventory or require a department or project to produce a carbon inventory providing a detail account of its actual emissions or in the case of a planned project, an estimate of the emissions that will be released during both its implementation and later operation.

More detailed level inventories include:

  • Business inventory
  • Department inventory
  • Project carbon inventory providing a detail account of its actual emissions
  • Planned projects may require an estimate of the emissions that will be released during both its implementation and later operation.

Information presented in a carbon inventory can help inform corporate strategies, project portfolios and prioritise actions to reduce emissions and provide benchmarks against which the success of these activities can be measured. Read a case study

If your currently planned projects are designed to include carbon reduction standards, you won’t be caught on the back-foot when changes to building and infrastructure policies are proposed by state and council authorities as they set their focus on development that minimises energy use and carbon footprint.

NSW Design and Place State Environmental Planning Policy
The proposed Design and Place SEPP that is being proposed in NSW will be relevant to all new developments on urban land in NSW.  It will apply to both public and privately owned developments in urban and regional places across the State. The SEPP will include development thresholds to explain when and where particular considerations will apply.  Read more

The Greenhouse Gas Protocol defines emissions across three scopes.

ISO 14064-1 defines emissions across six categories rather than the three scopes of the GHG Protocol.

GHG Protocol Scope  ISO 14064-1:2018 Category Emission Description Examples
Scope 1 Category 1 Direct GHG emissions and removals Stationary Combustion
Process emissions
Blasting (Explosives)
Fuel use
Refrigerant leakage
Direct emissions and removals from land use
Land Use Change
Scope 2 Category 2 Indirect GHG emissions – from imported energy Purchase of energy and utilities
Scope 3 Category 3 Indirect GHG emissions – from Transportation for persons and goods Provisioning
Business Travel
Car Hire
Freight transport
Transport of clients & visitors
Staff Commute
Downstream transport & distribution losses
Refrigerant use (from chilled transport or air conditioner)
Upstream emissions from fuel manufacture and distribution (well-to-tank)
Category 4 Indirect GHG emissions – from products an organisation uses Electricity transmission & distribution losses
Materials & waste (Solid & Liquid)
Emissions generated through leased assets
General services used
Category 5 Indirect GHG emissions – from the use of the organisations products Total expected lifetime emissions of the product sold
Investments
End of life stage emissions
Downstream franchises/leased assets
Emissions from investments (targeting private or public financial institutions)
Category 6 Indirect emissions – other sources Specific emissions or removals which cannot be recorded in any other category. It is the organisations responsibility to define the content of this category.

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Carbon Quantification & Verification

Inventory Quantification adopts standard methods for measuring and calculating the GHG emissions attributed to an Organisation. The Intergovernmental Panel on Climate Change (IPCC) provides the world’s most authoritative scientific assessments on climate change and provides guidance for greenhouse gas inventory arrangements and management, data gathering, compilation, and reporting.

To quantify and report GHG emissions, organisations need data about their activities (for example the quantity and type of fuel used). They can then convert this into information about their emissions (measured in tonnes of CO2-e) using emission factors.

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Carbon Accounting Principles

GHG accounting and reporting practices are continuing to evolve and are relatively new to most businesses. However, the principles listed below are specified in all international standards, specifically ISO14064-1, and are generally accepted and adopted by a wide range of stakeholders in technical, environmental and accounting disciplines.

Like financial reporting, it’s not done once and forgotten about, rather the approach is to baseline the first year and then adopt a routine of measuring and monitoring the organisational performance.
This allows early detection of any change in carbon footprint early on.

  • RELEVANT – Ensure the GHG inventory appropriately reflects the GHG emissions of the company and serves the decision-making needs of users – both internal and external to the company.
  • COMPLETENESS – Account for and report on all GHG emission sources and activities within the chosen inventory boundary. Disclose and justify any specific exclusions.
  • CONSISTENCY – Use consistent methodologies to allow for meaningful comparisons of emissions over time. Transparently document any changes to the data, inventory boundary, methods, or any other relevant factors in the time series.
  • TRANSPARENCY – Address all relevant issues in a factual and coherent manner, based on a clear audit trail. Disclose any relevant assumptions and make appropriate references to the accounting and calculation methodologies and data sources used.
  • ACCURACY – Ensure that the quantification of GHG emissions is systematically neither over nor under actual emissions, as far as can be judged, and that uncertainties are reduced as far as practicable. Achieve sufficient accuracy to enable users to make decisions with reasonable assurance as to the integrity of the reported information.

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Siecap’s Carbon Inventory Services

Developing a plan to manage an organisations carbon reduction, is the same as any other business plan. The steps required to reach an intended goal are best achieved through systematic steps:

  • Doing an inventory of the products and/or services in the organisation or related to a specific project that produce carbon,
  • Having the inventory quantified and verified,
  • Off-setting the emissions that cannot be reduced

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Carbon Offsets & Credits

Whilst businesses may do everything, they can to reduce greenhouse emissions and their carbon footprint, it’s unlikely that just by doing this they would get to net zero under a business-as-usual scenario.
This is where purchasing carbon offsets can reduce the overall amount of carbon you would be accountable for.

A carbon offset essentially is a certificate that represents the reduction of one metric ton of carbon dioxide emissions from the atmosphere, the principal measurement of climate change. Once created the offset credit can be bought and sold on the voluntary marketplace, before an end user wishes to claim the carbon offset, at which point that credit can no longer be sold on.

Buying offsets is something anyone can do if they have the money. And unlike policies like a carbon tax , an offset is directly connected to a specific quantity of greenhouse gas emissions, at least on paper.

Different to carbon allowances , carbon offsets are not freely allocated to firms, but instead are ‘generated’/’earned’ by either preventing the release of GHG or removing them from the atmosphere (avoidance vs sequestration)
One of the keyways that business can contribute to sustainable development and reduce emissions is through the purchase carbon offsets or investing in projects that create carbon credits.

The Australian Government’s initiative Climate Active (formerly NCOS) provides guidance on what is a genuine voluntary offset and sets minimum requirements for calculating auditing and offsets.

[Read more on Carbon Offsets – What they are and how they work]

Carbon Offset Generation

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Carbon Markets

Mandatory Compliance

Voluntary

Compliance offsets are used to meet legally binding caps on carbon in schemes like the Australian Clean Energy Regulator

  • Targets are created and regulated by national, regional, international regulators. Penalties are imposed for emissions above the cap
  • Sometimes referred to as cap-and-trade programs
  • Entities with lower emissions than the cap can sell their extra carbon allowance to entities with larger emissions
  • Cap reduced over time to gradually reduce emissions
Voluntary offsets are the ones people and companies buy at their own discretion

  • Transactions that aren’t made within a cap-and-trade system
  • Driven by desire to voluntarily offset carbon emissions. Often due to ethical consideration, social responsibility/pressure, supply chain risk
  • Projects can include reforestation or other sequestration schemes, renewable energy
  • Independent bodies attempt to regulate the projects that ‘create’ these credits

Mandatory Carbon Trading Schemes

Mandatory Carbon Trading Schemes

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Related Project Management Articles

Carbon Off-sets

Carbon Off-sets!

One of the keyways that business can contribute to sustainable development and reduce emissions is through the purchase carbon offsets or investing in projects that create carbon credits. […]

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The importance of Carbon Reduction!

Significantly reducing our Carbon emissions will impact all Australian businesses in some way or another, requiring a complete rethink in decisions, projects and the way we do business. […]

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References

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