GHG Protocol Scopes and Emissions Across the Value Chain

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Written By Jeff Winter

Understanding and Implementing Carbon Accounting Standards

As businesses strive to reduce their carbon footprint, understanding and implementing carbon accounting standards is crucial. Here is an overview:

What are Scope Emissions?

The division into Scope 1, 2, and 3 emissions was established as part of the Greenhouse Gas (GHG) Protocol, a comprehensive global framework for measuring and managing greenhouse gas emissions, developed in the late 1990s. This categorization is instrumental in enabling organizations to systematically measure, manage, and report their emissions, thereby facilitating more effective climate action strategies. The GHG Protocol corporate standard classifies Scope 3 emissions into 15 different categories (8 for Upstream and 7 for downstream).

Scope Emissions Defined:

  1. Scope 1 Emissions: These are direct emissions that occur from sources owned or controlled by the organization.

  2. Scope 2 Emissions: These emissions are indirect and result from the generation of purchased electricity, heat, steam, or cooling that the organization consumes.

  3. Scope 3 Emissions: This category encompasses all other indirect emissions that occur in the organization’s value chain, both upstream and downstream. In other words, most of a business’s Scope 3 emissions are the Scope 1 and 2 emissions of other companies.

Ever Heard of Scope 4 Emissions?

Scope 4 Emissions, a newer addition to the emissions categorization framework created by the World Resources Institute in 2013, are a voluntary metric also known as “avoided emissions”. They serve to recognize and quantify the emissions that are avoided as a result of the use of a company's products or services compared to a baseline scenario.

Interesting Emissions Statistics:

  • Scope 3 emissions usually account for more than 70% of a business’s carbon footprint.

  • Industries vary widely in their scope emissions: Cement has the highest Scope 1 emissions (~78% of total emissions), Paper and Forestry have the highest Scope 2 emissions (~10% of total emissions), and Capital Goods has the highest Scope 3 emissions of non-financial institutes (~99% of total emissions).

  • Industrial sectors, across production and energy, contribute over 30% of global GHG emissions.

  • The Steel industry at 8% is the top manufacturing sub-vertical to contribute to global energy-related GHG emissions.

Relation to Industry 4.0

Industry 4.0 integrates advanced technologies like IoT, AI, and big data analytics into industrial processes, fundamentally transforming how businesses operate. These technologies enable more efficient, flexible, and sustainable operations by optimizing resource usage, predicting equipment failures, and enhancing supply chain transparency. For example, IoT sensors monitor energy consumption in real-time, allowing immediate adjustments to improve efficiency, while AI analyzes data to identify inefficiencies and optimize production schedules. Big data analytics provide insights into every aspect of the production process, enabling informed decisions that lead to more sustainable practices. This integration supports a circular economy by facilitating product lifecycle tracking, recycling, and remanufacturing, ultimately reducing waste and environmental impact.

Achieving Carbon Accounting Goals

Industry 4.0 technologies are crucial for effective carbon accounting. IoT devices offer real-time data on energy use and emissions, allowing businesses to monitor and manage their carbon footprint more accurately. AI analyzes this data to optimize processes and reduce waste, while digital twins simulate different sustainability initiatives to minimize resource consumption. Blockchain technology ensures transparency and traceability in supply chains, verifying the origin of materials and tracking their journey to ensure compliance with sustainability standards. By leveraging these technologies, businesses can significantly enhance their carbon accounting efforts, improve efficiency, reduce environmental impact, and achieve their sustainability goals.

To aid with sustainability reporting, the Digital Lifecycle Passport (DLCP) based on the Asset Administration Shell (AAS) offers a robust solution. The AAS is a standardized framework from Plattform Industrie 4.0 in Germany that facilitates seamless data sharing between stakeholders throughout a product’s lifecycle. It represents a digital counterpart to physical assets, capturing all relevant information in an organized structure.

The DLCP extends this concept by incorporating lifecycle information, making it accessible to all stakeholders, including manufacturers, recyclers, and consumers. This digital record includes data on materials, production processes, and environmental impacts, enabling accurate sustainability reporting and enhancing transparency. The DLCP helps track carbon emissions, improve product design for recyclability, and ensure compliance with environmental standards. By leveraging AAS and DLCP, businesses can better manage their carbon footprint, optimize resource use, and contribute to a more sustainable circular economy.

References

Jeff Winter
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