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Greenhouse gas (GHG) emissions, mainly carbon dioxide (CO2), have soared to unprecedented levels, triggering accelerated global warming and inflicting catastrophic outcomes on our planet. In 2022, global GHG emissions from energy sources surged to an all-time high of 36.8 billion tons, as reported by the International Energy Agency (IEA). This represents an increase of approximately 1% compared to 2021 and is more than 50% above pre-industrial levels. According to the Intergovernmental Panel on Climate Change (IPCC) report released in March 2023, the Earth is projected to experience a temperature increase of 1.5°C above pre-industrial levels as early as 2030, irrespective of immediate actions taken to reduce global GHG emissions.
The anthropogenic nature of climate change is now acknowledged by the global scientific community, resulting from unsustainable trends in energy, land use, consumption, production, and lifestyles. The scientific community estimated in May 2022 that six out of the nine planetary boundaries had been breached.
The first crucial step, then, is to understand the impact of our activities on GHG emissions. Whether at an individual, community, or industrial level, we must assess and quantify our emissions. This involves collecting accurate and comprehensive data on our consumption patterns, production methods, and energy choices.
In the context of assessing GHG emissions for a company, it is equally crucial to adopt a comprehensive and exhaustive approach by collecting all activity data throughout the value chain, from upstream to downstream. These activity data, such as consumed kWh, transported tonnage, euros spent, etc., are then multiplied by coefficients known as emission factors. Emission factors are key in converting activity data into GHG emissions and are calculated using technical studies, often based on life cycle assessments, which evaluate the environmental impact of an activity or product and determine the quantity of emitted GHGs.
Thus, two approaches are possible for conducting the assessment of an organization's GHG emissions:
- The monetary flow approach: activity data consists of financial data (in euros, dollars, pounds, etc.), which are converted into GHG emissions (in t CO2eq) using emission factors called monetary ratios (expressed, for example, as kg CO2eq/€).
- The physical flow approach: activity data consists of physical or "real" data (kilometers, kilowatt-hours, kilograms, etc.), which are converted into GHG emissions (in t CO2eq) using physical emission factors (expressed in kg CO2eq/physical unit), whether they are secondary emission factors (industry averages) or primary emission factors (directly from the supplier for a specific product).
Today, many companies rely primarily on monetary ratios to assess their GHG emissions. Unfortunately, although this approach is quick, it has significant limitations. It fails to enable the identification of relevant reduction actions, especially for major categories such as indirect emissions (scope 3). Furthermore, the monetary approach is sensitive to external variations unrelated to company activities, such as price fluctuations and inflation, and lacks precision due to the use of ambiguous and highly uncertain emission factors. For instance, the ADEME Footprint Database exhibits a high uncertainty of nearly 80% for most monetary ratios, thus warning the user about the low reliability of the displayed value.
The physical approach remains the best method for obtaining accurate and reliable carbon assessments and pursuing a realistic and effective decarbonization strategy. However, collecting physical data, particularly from suppliers, can be complex. It adds a significant burden in terms of time and costs to the GHG emissions inventory process. In this context, companies must prioritize data collection and choose the most appropriate calculation method to achieve their objectives.
Fortunately, new technological solutions are emerging in the market and can assist organizations in carbon accounting, data collection, data validation, and carbon footprint assessment. These solutions can ingest data or directly connect to a company's information systems that handle physical data, such as procurement software, supply chain management systems, IT services, employee mobility management, etc. Additionally, they can automate the distribution of surveys to numerous internal and external data contributors, simplifying the GHG accounting process.
To delve deeper into this GHG inventory method and its relevance, and illustrate it with concrete examples, come meet with the Axionable team at their booth during VivaTech! Booth L25-004
This article was written by: Imène Boumghar @Axionable
Questions? Reach out to the author: email@example.com
Axionable supports financial institutions, industrial players, and public sector actors in measuring and reducing their carbon footprint.