Net Zero 101

future Net Zero is launching Net Zero 101.

This is the place where we will tell you all the basics of the terms around net zero.

We will explain the difference between Carbon Neutrality and offsetting, Scope 3 emissions and COPs.

If you want to learn about net zero terms and legislation this is the place to start. And with help from our partners, we will offer immediate ways to help reduce your emissions with products and services available right now.

Easy as (Scope) 1, 2, 3

Greenhouse gases (GHG) are gases that absorb infrared light and create the greenhouse effect.

These gases are reported under the Greenhouse Gas Protocol. A framework to help organisations measure their emissions footprint. Pretty much every business activity contributes emissions to the atmosphere, either directly or indirectly.

Activities are further divided across three Scopes. Scope 1; direct emissions, Scope 2 and 3; indirect emissions.

Scope 1

These emissions occur directly from company operations. Split into four distinct categories:

Stationary combustion is the burning of fuels, such as natural gas, from equipment such as boilers for heating, ovens and hobs for cooking.
Mobile combustion is the burning of fuels from moving equipment such as cars, vans, and other vehicles. It is only classed as Scope 1 if the vehicles are owned by the company.
Process emissions occur during industrial processes including carbon dioxide released from petrochemical cracking or smelting of aluminium which releases PFCs. During these processes, emissions are released directly into the atmosphere.
Fugitive emissions occur from leaking gaskets, joints and seals from air conditioning systems using refrigerants.

Most companies will have stationary and mobile combustion, a large proportion will have fugitive emissions and few businesses will have process emissions.

It is crucial for companies to report and reduce Scope 1 where possible, as this is where businesses have most influence.

Scope 2

Scope 2 emissions are indirect emissions from purchased electricity, heat, steam or cooling. They are indirect because fuel has been consumed to generate the electricity. The generation of electricity requires combustions of fuels and the fuel used is the electricity generators Scope 1.

There may be times when companies generate electricity onsite, through an owned CHP system or generator. In this case, the fuel used to generate the electricity is Scope 1.

Scope 3

There is a lot of talk about scope 3. Many businesses I am talking to are addressing scope 3 to create an accurate view of their full carbon footprint.

So, what is scope 3?

Well, we discussed scope 1 and 2 which are relatively straightforward. Scope 3 is less so.

Scope 3 emissions are indirect emissions occurring from upstream and downstream activities. It involves the full supply chain. From extraction of raw materials, to end of life treatment of products.

There are 15 separate reporting categories. 8 upstream and 7 downstream. There are certain categories that are relevant to both upstream and downstream such as transportation and distribution.

The Scope 3 categories are split out as follows:

Upstream

Purchased goods and services
Capital goods
Fuel from energy related activities
Transportation and distribution
Waste generated in operations
Business travel
Employee commuting
Leased assets

Downstream

Transportation and distribution
Processing of sold products
Use of sold products
End-of-life treatment of sold products
Leased assets
Franchises
Investments

It may feel overwhelming with the number of categories to consider. We work with businesses to reduce the complexity and keep it simple.

We want more businesses reporting on scope 3, and if it is too complex, they don’t want to do it.

If you’re beginning your scope 3 reporting, maybe start by asking:

Is the activity significant in our operations?

If yes, it is worth reporting on it in as much detail as possible. If it isn’t significant, then it is okay using average, industry data.

For example, if you’re a distribution business but don’t own any vehicles, then you know you’re probably going to have high emissions from distribution downstream. Based on this assumption, the business should address this.

I believe it is better to focus on the main emissions contribution areas, as this is where businesses can have the most impact.

Do our suppliers calculate their emissions?

If your suppliers calculate their emissions or have life-cycle emissions of products you buy, then it makes calculating emissions for your business activities much easier and much more accurately.

Next, you’ll want to ask, what data do we have access to?

If your supplier calculates the emissions then you can use a methodology to give you a good representation of the emissions, a supplier specific methodology.

If they don’t then you need to understand what data is available before determining the best methodology for calculating emissions.

Most business start with average emissions calculations using GHG conversion factors and volume of the purchase, or whatever metric is used for the category type. There are also methods based on spend, known as the environmentally extended input-output (EEIO) method.

The downside with this method is the only way to reduce your footprint is by reducing spend. So, getting to net zero this way is virtually impossible, unless you plan to reduce your business spend by 90%.

However, I believe it is a great start point for any business with limited access to data.

Starting with something is better than not starting at all. Making continuous improvements. Getting slightly better every day.

The better the data, the more accurate the emissions calculation.

Over the coming years, companies will need to engage and influence their supply chain to improve reporting. This won’t happen overnight but it can be a business goal to work towards.

There are other nuances when calculating scope 3 using the GHG Protocol that are specific to each business.

If you have any thoughts on this topic or questions on other net zero topics, please get in touch.