Scope
The Greenhouse Gas Protocol Initiative is a multi-stakeholder partnership of businesses, non-governmental organisations (NGOs), governments, and others. The GHG Protocol has produced standards and guidance for companies and organisations to account for GHG emissions from their operations and value chains and the GHG impacts of their actions by leveraging two different accounting approaches: inventory accounting and project/intervention accounting. GHG Protocol is understood to serve as a foundation for other programs and initiatives playing complementary yet differentiated roles, such as those engaged in target setting, disclosure, and regulation.
Launched in 1998, the Initiative’s mission is to develop internationally accepted greenhouse gas (GHG) accounting and reporting standards for businesses and promote their broad adoption. In 2016, 92% of Fortune 500 companies responding to the Climate Disclosure Project (CDP) used the GHG Protocol directly or indirectly through a program based on it.
Summary
GHG Protocol includes standards and tools. Standards are as follows:
The GHG Protocol Corporate Accounting and Reporting Standard provides requirements and guidance for companies and organisations preparing a corporate-level GHG emissions inventory.
The standard covers the accounting and reporting of seven greenhouse gases covered by the Kyoto Protocol – carbon dioxide (CO₂), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3). It was updated in 2015 with the Scope 2 Guidance, which allows companies to credibly measure and report emissions from purchased or acquired electricity, steam, heat, and cooling.
The Corporate Standard (2004) established corporate-level GHG emissions accounting and reporting rules and first defined Scope 1, Scope 2, and Scope 3. The Scope 2 Guidance (2015) introduced the location-based and market-based methods for accounting for indirect Scope 2 emissions from purchased energy. The GHG Protocol’s multi-stakeholder process will determine the appropriate organisation of additional guidance on market instruments and actions (e.g., interventions).
Scope 1
Scope 1 emissions are direct emissions released from sources owned or controlled by the reporting company.
Scope 2
The Scope 2 Guidance (2015) introduced an approach for accounting for indirect Scope 2 emissions from purchased electricity, steam, heating, or cooling using two allocation methods:
- The location-based method reflects the average emissions intensity of grids on which energy consumption occurs (using mostly grid-average emission factor data).
- The market-based method reflects emissions from the electricity companies have purposefully chosen (or their lack of choice). It derives emission factors from contractual instruments, including any contract between two parties for the sale and purchase of energy bundled with attributes about the energy generation or for unbundled attribute claims.
All organisations are required to report their scope 2 emissions using the location-based method. Organisations with any operations in electricity markets providing product or supplier-specific data in contractual instruments must report scope 2 emissions according to the location-based and market-based methods (i.e., “dual reporting”). The Scope 2 Guidance defines additional requirements for the market-based method of purchasing electricity, such as meeting several quality criteria for contractual instruments and using residual emission factors.
Scope 3
See Corporate Value Chain (Scope 3) Standard below.
The Product Life Cycle Accounting and Reporting Standard can be used to understand the full life cycle emissions of a product and focus efforts on the greatest GHG reduction opportunities.
Responsible for an estimated 75% of global energy-related carbon dioxide emissions, cities represent the single greatest opportunity for tackling climate change. The first step for cities to realise their potential is to identify and measure where their emissions come from — you can’t cut what you don’t count.
GHG Protocol is working to give cities the standards and tools they need to measure their emissions, build more effective emissions reduction strategies, set measurable and more ambitious emission reduction goals, and to track their progress more accurately and comprehensively.
The GHG Protocol Mitigation Goal Standard provides guidance for designing national and subnational mitigation goals and a standardised approach for assessing and reporting progress toward goal achievement.
The standard can help governments set emission-reduction targets, meet domestic and international emissions reporting obligations to groups like the UNFCCC, and ensure that efforts to reduce emissions achieve their intended results.
Scope 3 are indirect emissions in the reporting company’s value chain (other than indirect emissions from purchased energy accounted for in Scope 2 – see above for Scope 1 and Scope 2 definitions). Scope 3 emissions are calculated using allocation metrics tied primarily to the physical consumption of products. Allocation is necessary when a single system produces multiple outputs, and emissions are only quantified for the entire system. A single, consistent allocation factor should be used for each system to allocate emissions. The sum of the allocated emissions for each system output should equal 100% of emissions from the system. Companies should select the allocation approach that 1) best reflects the causal relationship between the production of outputs and resulting emissions, 2) results in the most accurate and credible emissions estimates, 3) best supports effective decision-making and GHG reduction activities, and 4) adheres to GHG accounting principles.
When companies purchase products from a common pool (e.g. unsegregated supply of an agricultural commodity, common-carrier gas pipeline, fuel distribution system, etc.), they account for an allocated share of emissions from the common pool based on their share of purchased products. A common pool represents a mix of GHG emitting activities tied to the company’s physical consumption (e.g. a mix of farms with different characteristics that produce the common supply that the company consumes or a mix of gas derived from fossil, waste and other resources). When a company reaches the limit of physical traceability to a common pool, it accounts for the average emissions from that common pool.
The GHG Protocol for Project Accounting is the most comprehensive, policy-neutral accounting tool for quantifying the greenhouse gas benefits of climate change mitigation projects.
The Project Protocol provides specific principles, concepts, and methods for quantifying and reporting GHG reductions—i.e., decreases in GHG emissions or increases in removals and/or storage—from climate change mitigation projects (GHG projects).
Tools, i.e., calculation tools – usually .xls tables where the company/organisation lists all items, products, and processes contributing to GHG emissions, which are then evaluated according to GHG protocol (defined by GHG standards) to evaluate the company’s/organisation’s total footprint. As part of the mission, the protocol also provides insights into the evaluation, thus identifying critical points and proposing improvements. The tools are divided into multiple groups:
- Cross-sector tools:
- Emission Factors from Cross-Sector Tools
- GHG Emissions from Stationary Combustion (English)
- GHG Emissions from Stationary Combustion (Chinese)
- GHG Emissions from Transport or Mobile Sources
- Refrigeration and Air-Conditioning Equipment
- Measurement and Estimation Uncertainty of GHG Emissions
- Scope 3 Uncertainty Calculation Tool, etc.
- Country-specific tools
- Chinese Coal-Fired Power Plants Tool
- GHG Protocol Tool for Energy Consumption in China (Chinese)
- CO₂ Emissions from the Production of Cement (CSI) – Chinese version
- Pulp and Paper Tool – customised for Mexico (English version)
- Simplified GHG Emissions Calculator (US EPA), etc.
- Sector-specific tools
- For ICT, no specific tool is available, while recommendations can be found in the ICT Sector Guidance document
- Aluminum
- Adipic Acid
- Ammonia
- Cement (CSI) – English, Chinese, US EPA
- Iron and Steel
- HCFC-22
- Nitric Acid, etc.
- Tools for countries and cities
- Mitigation Goal Standard Calculation Tool
- Policy and Action Standard Calculation Tool
Relevance for EXIGENCE
GHG Protocol may be potentially relevant for requirements and scenarios and green incentives as GHG Protocol is being primarily a (managerial) set of tools (based on .xls tables and in-built calculations) for evaluating GHG impact from the perspective of the company/organisations as a whole (i.e., not on the “lower” technical levels as in EXIGENCE), and it introduces widely accepted methods for estimating GHG emissions, including the methodology for estimating emissions related to purchased and/or sold products and services (to avoid double counting), and is expected to expand its focus also on the incentives matter as pointed out by Detailed Summary of Responses from Market-based Accounting Approaches Stakeholder Survey, reported in April 2024:
- Some respondents suggested that a primary objective of the Corporate Standard should be to develop a system that creates incentives for participants to engage in climate action. Specifically, these respondents suggested that the GHG Protocol’s accounting and reporting framework should facilitate the delivery of incentives aligned with investment decisions faced by companies, including investments in electricity, fuels, products, and various other procurement decisions.
- Some respondents asserted a need to focus on financial incentives, both internal and external to the company, and a recognition of how market-based approaches could facilitate the deployment of financial incentives and capital allocation towards decarbonisation. Internal to the reporting company’s decision-making process, respondents noted the role of market-based approaches in helping companies to access the lowest-cost options for mitigation decisions.
