The GHG Protocol defines Scope 4 as encompassing emissions that are avoided when a product is used as a substitute for other goods or services, performing the same functions but with lower carbon intensity.
The #GHG Protocol, short for Greenhouse Gas Protocol, is a widely used accounting tool and standard for measuring and managing greenhouse gas (GHG) emissions. To understand Scope 4, let’s quickly recap how the GHG sets out guidelines and methodologies for identifying and calculating emissions from various sources, including direct emissions from owned or controlled sources (Scope 1 emissions), indirect emissions from purchased electricity, heat, or steam (Scope 2 emissions), and other indirect emissions from the value chain (Scope 3 emissions).
What is Scope 1,2,3:
Scope 1 Emissions – are direct greenhouse gas emissions that come from sources owned or controlled by an organization. Examples include emissions from combustion of fossil fuels in company-owned vehicles and emissions from on-site fuel combustion in boilers or furnaces.
Scope 2 Emissions – are indirect greenhouse gas emissions resulting from the generation of purchased electricity, heat, or steam consumed by the organization. Scope 2 emissions are associated with the generation of energy off-site but are still considered relevant to the organization’s carbon footprint because they are a consequence of its activities.
Scope 3 Emissions – are all other indirect greenhouse gas emissions that occur in an organization’s value chain but are not directly owned or controlled by the organization. Scope 3 emissions include emissions from sources such as business travel, transportation of goods, purchased goods and services, employee commuting, and waste disposal.
So, what is Scope 4?
Scope 4 : As per the GHG Protocol, Scope 4 accounts for emissions avoided when a product replaces other goods or services, serving the same function but with lower carbon intensity.
It also includes emissions avoided through product recycling.
Notably, the French regulatory method supported by ADEME and the Bilan Carbone® method, along with ISO standards, do not utilize the term Scope 4; instead, they refer to these emissions as “avoided emissions.” According to ADEME and the Bilan Carbone® method, these avoided emissions signify reductions in a company’s carbon footprint resulting from activities, products, or services outside its primary scope of operations. Companies can achieve these emissions reductions by providing low-carbon solutions, services, and supporting environmentally friendly projects. It is essential to recognize that Scope 4, by definition, represents just a portion of the avoided emissions as defined by the French regulatory method and ISO 14069 standard.
One thing that seems to create confusion is the treatment of Avoided Emission as opposed to Reduced Emission. Distinguishing between avoided emissions and reduced emissions is crucial. Reduced emissions result from actual reductions in a company’s greenhouse gas (GHG) emissions after implementing measures to lower its carbon footprint over a fixed period. On the other hand, avoided emissions are determined by comparing a low-carbon product or service to a reference scenario. Avoided emissions can manifest in two ways:
1. Emissions reductions when the reference scenario matches the previous situation.
2. Less increase in emissions when projects lead to a smaller increase compared to the counterfactual scenario.
Objective of Calculating Avoided Emissions:
Through quantifying avoided emissions, a company can assess the climate impact benefits of its products and services throughout their entire life cycle. This approach provides customers with complete transparency and visibility into the carbon footprint of the products, empowering them to comprehend their environmental impact better. Especially for a rapidly expanding company facing a rise in scope 3 emissions, calculating avoided emissions offers an opportunity to establish a positive stance as a low-carbon player.
Method of Calculation of Avoided Emissions:
Various reference frameworks, including the GHG Protocol, the ISO 14069 standard, the French regulatory method, and the Bilan Carbone® method, have provided definitions and methodologies for computing avoided emissions. Additionally, the Net Zero Initiative and Carbone 4 have released a guide outlining the approach to calculate avoided emissions, along with recommendations for reporting and communication.
Reporting Avoided Emission:
When reporting/ communicating avoided emissions, careful consideration is essential to avoid undermining their measurement. The Pillar B guide, authored by the Net Zero Initiative and Carbone 4, emphasizes the importance of linking avoided emissions to tangible business outcomes. For instance, a company can report the percentage of sales associated with the quantity of emissions avoided.
ISO 14069 refers to the process of accounting for avoided emissions as “response accounting.” It is distinct from carbon accounting, and these emissions should never be combined with or deducted from the greenhouse gas (GHG) balance sheet. Notably, the GHG Protocol, the Carbon Footprint® method, and the French regulatory method all stress the significance of separately reporting avoided emissions from the GHG emissions inventory.
To sum up-
- ‘Avoided emissions’ offer organizations transparency and visibility, allowing them to demonstrate their contributions to low-carbon products or projects.
- Although the scope of calculations may differ based on the reference system, the methodologies for calculating avoided emissions are quite similar. They involve comparing emissions from two scenarios with similar technical characteristics, one of which includes a low-carbon solution.
- Regarding reporting, these standards are in agreement. Avoided emissions should never be included in the greenhouse gas balance sheet.
- Whether discussing Scope 4 or avoided emissions, the calculation and reporting methods are similar. The only distinction lies in the scope, with the term Scope 4 being specific to the GHG Protocol.
- While the GHG Protocol is a widely used and recognized standard, it is essential to keep in mind that reporting frameworks and classifications keep evolving over time. Therefore, it is essential for stakeholders to stay abreast of the latest developments, in order to continue to actualize their low carbon goals.
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