Greenhouse gas (GHG) emissions are like invisible blankets in the Earth’s atmosphere. They are gases that come from various activities, like burning fossil fuels (like coal, oil, and gas), cutting down forests, and even some natural processes. These gases trap heat from the sun and keep our planet warm enough to support life.
However, when there are too many greenhouse gases in the atmosphere, it’s like adding too many blankets, making the Earth too warm. This extra warmth can lead to problems like rising temperatures, melting ice, and more extreme weather events, which can be harmful to the environment and people.
So, GHG emissions are the gases we release into the air that can make our planet get warmer, and managing and reducing these emissions is important to protect our planet.
There are mainly three scopes of emissions,
Scope 1(BURN)
A straightforward definition of scope 1 emissions is: Direct emissions from sources owned or controlled by a reporting company. And a shorthand for scope 1 is burn,” because it includes things your business burns—fuel to heat or power buildings, vehicles, and other equipment. Scope 1 also includes accidental or fugitive emissions like chemical and refrigerant leaks and spills.
Examples:
Scope 1 emissions—again, also referred to as direct emissions—result from the combustion of fuels on-site. This includes oil and natural gas, gasoline and diesel fuel in vehicles and stationary equipment, as well as propane, lubricants, vegetable oil, biomass like wood, and any other fuels. Scope 1 emissions also include gases released from refrigerants in commercial cooling equipment like air conditioners and refrigerators, fire suppression systems, and certain industrial chemicals and processes.
Stationary combustion: fuel—like oil and gas—burned in buildings or equipment owned or operated by your organization. Think boilers and other fuel-powered machinery used for industrial processes.
Mobile combustion sources: fuel your organization’s purchases for owned or leased vehicles and mobile equipment (e.g., cars, trucks, company vehicles, gas-powered tools).
Fugitive emissions, refrigeration, and chemical releases from AC and refrigeration equipment your organization owns or controls
Fugitive emissions: fire suppression; chemical releases from or use of building fire suppression systems or equipment like fire extinguishers that your company owns or controls.
Scope 2(BUY)
Scope 2 emissions are indirect emissions generated from purchased energy, including electricity, steam, heating, and cooling. A simple shorthand you can use to remember scope 2 is buy,” because your organization typically buys energy to run its operations.
Examples:
Scope 2 emissions come from purchased electricity, steam, heating, or cooling. You can usually calculate Scope 2 emissions based on the consumption outlined in energy bills. What we mean when we say steam, heat, and cooling is that they must be generated off-site. Essentially, it’s what you purchase from a utility or other supplier—for instance, district heating and cooling or steam used in industrial processes. It shouldn’t be confused with the heat you generate on-site by using a boiler or furnace or cooling your facility with an electricity-powered AC unit.
The production and distribution of electricity you purchase from the utility or another supplier impact your scope 2 emissions. If your electricity mix is high in fossil fuels—if your supplier burns a lot of coal to produce your electricity—your Scope 2 emissions will be higher than electricity produced by biomass, renewable electricity, or even natural gas.
Scope 3(BEYOND)
Scope 3 emissions are likely to be the largest share of your carbon emissions—typically 80–90%. But what are Scope 3 emissions? Essentially, all the carbon emissions are indirectly generated by a business: business travel, employee commutes, waste disposal, purchased goods and services, the goods you produce, end-of-life disposal of your products, transportation, distribution, and more.
Take, for example, a clothing brand. Its scope 3 emissions come from an array of places—vehicles that transport clothing to retailers, energy used in manufacturing (if at facilities not owned by the company; otherwise, these would be scope 1), energy used to grow raw materials, energy used by consumers to wash and dry the clothing, greenhouse gas emissions generated as the materials decay in a landfill—the list goes on.
Examples:
Upstream emissions-producing activities (everything to produce your product)
1. Goods and services you purchase
2. Capital goods (like buildings, machinery, and tools to make your product)
3. How materials are transported and distributed to your manufacturing facility
4. Waste generated in day-to-day operations
5. Business travel
6. Employee commutes
7. Leased assets
Downstream emissions-producing activities (everything that consumes your product)
1. How your product gets to your customers via transportation and distribution
2. Processing of sold products
3. Use of sold products
4. Disposal or recycling of sold products
5. Franchises
6. Investments
The Benefits of Monitoring Carbon Emissions for a Business:
The private sector is often pointed at when looking for culprits in climate change. Reducing your carbon emissions seems to be the slogan of the year, but how do companies start with such a blurry task? How do we measure progress? Back in 1954, Peter Drucker wrote the premise of an answer: “What gets measured, gets managed.”
If a company wants to become more sustainable, the first step it should take is to try to understand its current situation and start monitoring its carbon emissions.
Measuring carbon emissions is not an easy task. Major companies that do not have carbon measurement and reduction programs have become the exception to the rule. Apple, Facebook, and even oil giants like Shell or BP all report on their CO2 emissions. This is not just because these CEOs care about the environment.
Less CO2 equals fewer costs.
Identifying and quantifying CO2 emissions helps identify excessive energy usage or other inefficiencies. Lowering GHG emissions typically goes hand in hand with increasing efficiency and cost-effectiveness in a company’s processes.
Case Study:
Walmart identified through its GHG emissions that it spends a lot of energy on the heating and cooling of its buildings. Because of this, they installed around 10,000 high-efficiency rooftop heating and cooling units. These units avoid 614 000 tonnes of CO2 per year. This also led to €8 million in cost savings.
Access the carbon market
In addition to internal cost reductions, more and more companies have to pay a price for every tonne of CO2 they emit. This is the so-called carbon emission trading system.
Globally, already 57 carbon pricing systems have been implemented, including 28 in the form of an Emission Trading System (ETS) and 29 carbon taxes. The value of traded global markets for carbon dioxide (CO2) allowances soared 250% between 2018 and 2019 to a record high of €144 billion. In an ETS, a maximum number of tons of CO2 are turned into allowances, and companies can buy and sell these allowances according to their emissions.
The other format, a carbon tax, is a set price you have to pay per unit of carbon emissions. Within both carbon pricing systems, you are obliged to measure your emissions. A lot of people advocate that these systems are THE solution to making real change.
On a trend level, more carbon pricing initiatives are emerging, prices for GHG emissions are on the rise, and the private sector is implementing internal carbon pricing systems of its own. Monitoring and lowering your carbon emissions is not only becoming an obligation but also a business opportunity to get ahead of competitors. All of this is only available if your company measures its carbon emissions, which is the first step to surviving the sustainable market shift.
Transparency is the new black
Another very good reason to start measuring and reducing your carbon emissions is your brand’s image. Customers, whether companies or individuals, care about who they do business with.
Sustainable conscience is on the rise, as demonstrated in the streets, polls, and business circles. According to Euromonitor International’s latest sustainability survey, 54% of global consumers believe that ethical purchase decisions make a difference. Clients are looking for ways to lower individual and collective carbon footprints, minimize waste, buy green products, and get services from environmentally friendly companies.
Transparency over emissions has become so basic that even the most polluting industries disclose their (vast) footprint. In a race to become the most sustainable carriers, major airlines like Easyjet and Delta have announced sweeping plans to measure, reduce, and offset their respective carbon footprints.
The sustainable market is not going anywhere
Sustainability awareness is very likely to continue and grow in importance. In business terms, there is a growing market for sustainable consumer goods and services, as demonstrated in the sustainable product sales graph in the U.S. (see below). Due to the pull of these end-consumers through the whole B2B supply chain, the demand for more sustainable alternatives will rise. By measuring and reducing your carbon emissions, you can make scientifically supported and, therefore, credible statements about the sustainability performance of your company.
Consumers are not the only stakeholders that are sensitive to the image of a company. According to Deloitte’s Millennial Survey, employees not only care a lot about the environment but are also more attracted to companies that are environmentally aware. Company sustainability has become a weapon of choice in the ongoing talent war. Employees who identify with the values of the company are more likely to stay on board and are more motivated.
On the investor side, there is increasing sustainability awareness. Oxford University found that more than 80% of mainstream investors now consider ‘ESG’ (environmental, social, and governance) information when making investment decisions.
This means that emerging companies have a higher chance of accessing investments when integrating environmental indicators into their business plans. As an established enterprise, collecting environmental data would provide another lens to better understand productivity, product, and market performance.
Crown Monkey’s Approach to Monitoring the Emission of All Scopes
In Crown Monkey, our primary goal is to automate the whole process of monitoring emissions from all three scopes to create trust and transparency in this process. For this, we are using Blockchain and IoT-integrated technology. IoT devices are fixed at the major emission points of the organization, and using our algorithm, we convert emissions into carbon credits, referring to the global warming potential of GHGs.
For the emissions that cannot be detected by sensors in IoT devices, we made an algorithm that follows GHG Protocol standards and automatically converts emission actions and their amounts into equivalent carbon credits.