Carbon emissions reporting

Human activities continue to impact Earth's climate through the emission of greenhouse gases. One of the proposed ways to combat this climate change is through reporting by businesses on the impact of their activities. Large power stations and manufacturing plants are often required to report their emissions to appropriate government entities, for example to the European Union as part of the Emissions Trading System or to the US EPA as part of the Greenhouse Gas Reporting Program. In the United Kingdom, Department for Environment, Food and Rural Affairs (Defra) has described climate change as the "greatest environmental challenge facing the world today,"[1] and it is now a legal requirement for all quoted companies to report their annual greenhouse gas emissions.

Many companies have adopted the standards put forth by the Greenhouse Gas Protocol, a partnership between the World Resources Institute and the World Business Council for Sustainable Development. The widespread acceptance of these standards has made it increasingly feasible to compare emissions by companies both within and across sectors. The protocol divides emissions into various scopes of production, ranging from direct emissions from production to indirect emissions due to employee travel and the lifecycle use of produced goods.

The leading emitters

Global emissions of greenhouse gases have surpassed 30,000 teragrams per year and have been increasing rapidly. In 2008, the top carbon dioxide (CO2) emitters were China, the United States, the European Union, India, the Russian Federation, Japan, and Canada. This includes CO2 emissions from fossil fuel combustion, as well as cement manufacturing and gas flaring. Together, these sources represent a large proportion of total global CO2 emissions. The sectors contributing the most emissions were Energy supply, industry, forestry, agriculture, and transportation, with the remainder attributed to residential and commercial buildings and waste and wastewater.

Political powers

The Kyoto Protocol, a United Nations agreement which set internationally binding emission reduction targets adopted in 1997, requires countries that agreed to the protocol to submit annual greenhouse gas inventories and provide estimates of greenhouse gas emissions by sources and removals by sinks. While the Kyoto Protocol had wide-ranging international support, subsequent climate negotiations, most recently in Warsaw, have tried to lay the groundwork for a renewed protocol to be agreed in 2015. One of the many struggles to the adoption of such an agreement is to agree on who should be responsible for paying for reductions in greenhouse gas emissions, and to what extent the developed world should provide support for developing nations which may be struggling to adapt with the already apparent effects of climate change.

Individual Company Reporting

Across the globe, the need to know the effects of emissions has driven many central and local governments to study the rate of their emissions. In many developed nations there have been institutions around large companies to report on their emissions rate. One popular reporting mechanism has been the Carbon Disclosure Project (CDP), which invites companies to disclose environmental impacts, including greenhouse gas emissions, water usage rates, and emissions of wastes.

Critics may argue that carbon reporting can be exceedingly costly and should therefore not be made mandatory. However, in an effort to promote themselves as sustainable, many companies have voluntarily provided greenhouse gas emission data, and Corporate Sustainability Reports (CSRs) are frequently published alongside annual reports.

A survey was conducted by DEFRA and PricewaterhouseCoopers that studied 150 large companies which reported their annual carbon emission. It found that 50% of these companies reported that the benefits of GHG reporting outweighed the costs. It further helps companies build their image among investors by becoming more environmentally friendly, which increases investment. [2]

Governmental Institutions

In addition to business activities, governments also contribute a significant amount of greenhouse gas emissions. In Financial Year 2010, the US federal government estimated its total GHG emissions to be over 54 million metric tons, mostly from non-highway vehicles, aircraft, ships, and equipment. Over 51 million metric tons were from the Department of Defense alone. In the United Kingdom, of the carbon that was emitted by the Central Government, 73% came from the Defense and Health sectors [3].

Mandatory Greenhouse Gas reporting

In the past there were several attempts to institute mandatory reporting legislation but none has been implemented in the US. In the wake of BP oil spill in the Gulf of Mexico and increasing social awareness about the environment, the US Environmental Protection Agency (EPA) started the environmental Greenhouse Gas Reporting Program. The EPA’s GHG reporting program became a law on January 1, 2010. It forces 85% of the nation’s top emitters to report on how much GHG they have emitted. According to this law companies are due to report their emission for the year of 2010 on March 21 of 2011.

In the first year of this legislation only 85% of the nations leading emitters are required to report their annual reports. Plans are to slightly increase this number each year to ultimately have 100% of major emitters in the nation to start keep tabs on the amount they emit.

This program is the initial step into countering rising emissions rate. While many believe that if companies are forced to report their emissions, they will be more inclined to lower their impact, this effect has not been thoroughly studied. The ability to attract more investment as consumers prefer environmentally friendly products may be another incentive, but again there is little evidence to support any strong claims.

In June 2012, the UK coalition government announced the introduction of mandatory carbon reporting, requiring all UK companies listed on the Main Market of the London Stock Exchange - around 1,100 of the UK’s largest listed companies - to report their greenhouse gas emissions every year. Deputy Prime Minister Nick Clegg confirmed that emission reporting rules would come into effect from April 2013 in his piece for The Guardian. However, this date has now been set to 1 October 2013.

Scope of Reporting

The GHG Protocol divides emissions into 3 Scopes. Scope 1 covers direct GHG emissions from sources owned by a company. Scope 2 covers the indirect emission of GHG from electricity purchases. Electricity consumption numbers are then converted to GHG emissions using an agreed-upon conversion factor that will vary by location around the world. Scope 3 covers all other indirect GHG emissions and is considered an optional reporting category, though it can be a major component of overall GHG emissions for some industries. Scope 3 emissions would include transportation used by company employees, the extraction and production of purchased inputs other than electricity, and the emissions due to the use of produced goods. This can be important for such companies as automobile manufacturers, whose footprint may be largely impacted by the efficiency of their automobiles. Scope 3 emissions (also known as value chain emissions) often represent the largest source of greenhouse gas emissions and in some cases can account for up to 90% of the total carbon impact.

Scope 1 and 2 emissions are frequently added together to give an idea of a company's total greenhouse gas footprint. This is usually a good starting point for comparison between companies in similar industries and of similar size, as it accounts for the company's energy intensity (in the form of Scope 2 emissions) and direct GHG impact (in Scope 1 emissions). While not a perfect measure, it is ideal for comparison due to the standards set forth by the GHG Protocol.

See also

• Regulation of greenhouse gases under the Clean Air Act

References

• http://sd.defra.gov.uk/2010/12/the-carbon-footprint-of-government/
• http://www.treehugger.com/files/2010/09/carbon-emissions-reporting-belongs-global-financial-accountants.php
• http://carbon-emissions-reporting.com/category/carbon-market
• http://www.hss.energy.gov/nuclearsafety/env/guidance/ghg/ghg_reporting.pdf
• http://www.pwc.co.uk/eng/publications/carbon_reporting.html
• http://www.nytimes.com/gwire/2010/11/09/09greenwire-epa-issues-emissions-reporting-rules-for-oil-a-30139.html
• http://www.carbonassociates.com.au/Home/carbon-accounting-beyond-the-calculation-and-looking-to-the-future

Works Cited

• Garvin, Peter. "Carbon Accounting: Beyond The Calculation and Looking To The Future." Green Economy Post 9 Feb. 2010. < http://greeneconomypost.com/carbon-accounting-7439.htm >

External links

• UK Mandatory Carbon Reporting
• Defra
• The Carbon Trust
• Carbon Reporting
• Tree Hugger
• Verisai
• EPA Regulations
• Greenhouse emissions report
• Energy and environment