Demystifying a Greenhouse Gas Inventory

By Miranda Rankin, 3R Senior Manager, Sustainability and Climate

What is a GHG inventory?

A greenhouse gas (GHG) inventory is one way of measuring your organization’s environmental impact. GHG inventories specifically look at the different GHGs that are released as an outcome of your organization’s business activities. There are many ways organizations produce GHG emissions, ranging from operational processes like heating, cooling, and lighting spaces, to manufacturing products or purchasing decisions made across the supply chain. GHG emissions are broken up into three scopes. Scope 1 is direct emissions from internal operations like natural gas usage, purchased fuels, owned vehicles/corporate fleet, and refrigerants. Scope 2 is indirect emissions from purchased energy like electricity, steam, and heating/cooling. Scope 3 is all other indirect emissions in the value chain (both upstream and downstream).

Why is it important?

GHGs help mediate the temperature of our planet by absorbing the sun’s heat that radiates from Earth’s surface and trapping it in the atmosphere. Without GHGs, Earth’s temperature wouldn’t be habitable. However, since the mid-1700s (i.e., the Industrial Revolution), human activities have been emitting an unprecedented amount of GHG emissions, throwing off the natural balance of GHGs in the atmosphere and leading to the warming of Earth’s average temperature. This imbalance is leading to more extreme weather events and causing long-term climatic shifts across Earth. Reducing GHG emissions will allow Earth to start restoring its previous natural balance.

The GHG Inventory Process

You can’t manage what you don’t measure, and GHG inventories are all about measuring. The first step in calculating an inventory is understanding the different business activities within your organization that use energy. Energy, while not the only element in a GHG inventory, is one of the most important data inputs. This means understanding the energy that heats, cools, and powers your building; the fuel used in your company’s fleet and within your business operations such as gasoline, diesel, and propane; and the energy usage that occurs throughout your supply chain. Once you’ve identified those activities, it’s time to start collecting data. Understanding the type and amount of energy consumed is critical to determine the appropriate emission factors used to calculate your GHG emissions. Emission factors quantify the amount of GHGs that are emitted into the atmosphere as an outcome of a specific activity.

Step 1 – Understand your business activities that use energy.

Step 2 – Collect data.

Step 3 – Determine appropriate emission factors based on the data available.

Step 4 – Calculate your organization’s GHG emissions.

What’s Next?

Once you have your initial inventory calculated, you can start to identify where there are opportunities to reduce your emissions. A few key considerations include:

    • Determining your organization’s largest sources of emissions – This will likely use your inventory as a starting point and then require additional data to understand what your end users are within each energy type.
    • Creating a phase-out list for all major building and/or manufacturing equipment – This will help your organization understand when you should replace your equipment and/or fleet and help with any CAPEX planning.
    • Understanding your organization’s opportunities for using renewable energy – Regardless of your industry and organization, renewable energy will play a key role in reducing your emissions. There are many different options when it comes to using renewable energy, such as installing onsite renewables or procuring renewable energy through Power Purchase Agreements (PPAs).

Common Misconceptions

If my business is growing, I can’t possibly set a target and reduce my emissions.

As mentioned above, there are two pieces of the equation when calculating your emissions.

Activity data X Emission Factor (EF) = GHG Emissions

Lowering the emission factor is one way you can account for growth (i.e., an increase in activity data). For example, if your organization installs or procures renewable energy, that emission factor becomes incredibly small, if not zero. Therefore, even if you increase your business operations and your activity data goes up, you’ve significantly reduced your emission factor, so your GHG emissions have decreased.

I’m not a manufacturer, I don’t have GHG emissions.

As mentioned above, there are three scopes of GHG emissions. Any organization that has at least one employee will have scope 3 emissions. If you’re an organization that has office space, you will also likely have scope 1 and 2 emissions.

I can’t calculate my scope 3 emissions because my supply chain is too big.

Calculating scope 3 emissions will likely become an increasingly difficult process with a larger and more complex supply chain, but it is not impossible. Scope 3 is the largest scope of emissions for most organizations, and therefore it is critical to calculate. While the data can be harder to obtain and the size of your organization’s supply chain can be overwhelming, there are steps that can be taken to help make this more approachable.

Step 1 – Conduct a scope 3 screening to identify your organization’s applicable categories and hotspots.

Step 2 – Prioritize your data collection efforts based on the hotspots from your screening.

Step 3 – Create a data collection guide to educate your organization on the types of data that can be collected for each category.

Step 4 – Work with your procurement team to understand your largest suppliers and determine if they have specific emissions data that can be used in your inventory.

Step 5 – Make an inventory management plan to document the steps and teams/individuals that provided data to help streamline the process for future years and identify opportunities for further improvement.

The team at 3R is here to answer your questions related to GHG inventories and assist in calculating your inventories.