in partnership with...chapter 7 setting ghg targets 7.1steps in setting a target 46 ... chp combined...

Published byMinistry of Natural Resources and Environment (NRE) Malaysia

In partnership withUnited Nations Development Programma (UNDP) Malaysia

Prepared byEco-Ideal Consulting Sdn Bhd

Version 1.130 December 2013

Copyright:Government of Malaysia and UNDP MalaysiaQuotations permitted with source credit

A New Beginning towards Low Carbon Business

MYCarbon GHG Reporting Guidelines

Version 1.1

Image courtesy of Pixomar / FreeDigitalPhotos.net

Image courtesy of Pixomar / FreeDigitalPhotos.net


ForewordMYCarbon is the National Corporate Greenhouse Gas (GHG) Reporting Programme for Malaysia which is the first of its-kind in this country. MYCarbon will be implemented by the Ministry of Natural Resources and Environment (NRE) Malaysia and supported by the United Nations Development Program (UNDP) Malaysia. It recognises the important roles and supports from the private sectors in moving Malaysia towards a low-carbon economy. MYCarbon will serve as a programme to measure the country’s progress in achieving the national emissions reduction target.

One of the MYCarbon development aims is to establish supporting instruments for the reporting programme and this can be achieved through the formulation and application of standards and guidance. Accordingly,

MYCarbon GHG Reporting Guidelines is developed and consists of an overall guidance for corporate accounting and reporting. These guidelines are applicable to all organisations of all sizes and shall be used by the organisations in their GHG reporting to ensure consistency and comparability of data.

These guidelines are prepared with the help of many individuals, businesses and organisations from institutions in Malaysia through extensive stakeholders’ consultation in making it as practical as possible. I gratefully acknowledge the work and expertise provided by all who have kindly reviewed and successfully prepared these guidelines.

These guidelines will be periodically updated and improved based on the feedback and experiences gained along the way. Revisions to this document and supporting documents will be included to improve the Malaysia Government’s overall ability to accurately account for and report GHG emissions over time. Comments and suggestions towards future improvement of these guidelines are most welcomed and can be sent to [email protected].

YB Datuk Seri G. PalanivelMinisterMinistry of Natural Resources and Environment (NRE)Malaysia

Table oF ConTenTsForeword

List oF Figures

List oF tabLes

List oF acronyms

cHaPter 1 introduction

1.1 Climate Change and its Economic Impacts 1

1.2 Overview of the MYCarbon Programme 2 1.2.1 Reporting Entity 3

1.3 Benefits of Corporate GHG Reporting 4

1.4 Guidelines 4 1.4.1 Information Sources and References 4 1.4.2 Objectives 6

1.5 Overview of Process 6

cHaPter 2 setting tHe accounting and rePorting boundaries

2.1 Geographical Boundaries 10

2.2 Organisational Boundaries 10

2.3 Operational Boundaries: Identify the GHG Emissions Sources 12 2.3.1 Scope 1 (All Direct Emissions) 12 2.3.2 Scope 2 (Indirect Emissions) 12 2.3.3 Scope 3 (Other Indirect Emissions) 12 2.3.4 CO2 Emissions from Biogenic Combustion 13

cHaPter 3 tracking emissions over time (base year)

3.1 Choosing a Base Year 17

3.2 Recalculating Base Year Emissions 18 3.2.1 Develop a Base Year Recalculation Policy 18 3.2.2 Determine whether the Base Year needs to be Recalculated 18

cHaPter 4 identiFying and caLcuLating gHg emissions

4.1 Calculation and Emissions Factor 22

4.2 Common Emissions Sources and Activity Data 26

4.3 Applying Calculation Tools 32


cHaPter 5 rePorting gHg emissions

5.1 Key Principles of Accounting and Reporting 40

5.2 Managing Reporting Quality 41

5.3 Accounting for GHG Reductions 41

5.4 Data Confidentiality 42

5.5 Timing of Annual Reporting 43

5.6 Required Information of Reporting 43

cHaPter 6 auditing and veriFication

6.1 Objectives 44

cHaPter 7 setting gHg targets

7.1 Steps in Setting a Target 46

annex a stePs to determine organisationaL boundaries

annex b stePs to determine oPerationaL boundaries

annex c List oF emission and conversion Factors

annex d examPLe rePort temPLate

Annex e comParing absoLute and intensity targets

gLossary and key terms

lisT oF FiguresFigure 1: MYCarbon objectives 2

Figure 2: Illustration of MYCarbon framework 3

Figure 3: Benefits of corporate GHG reporting 4

Figure 4: Overview of process 7-8

Figure 5: Overview of accounting and reporting boundaries 9

Figure 6: Overview of organisation boundary 10

Figure 7: How to determine organisational boundaries 11

Figure 8: Illustration of scopes and emissions across a value chain 12

Figure 9: Example of emission sources 13

Figure 10: Steps in identifying and calculating an organisation’s emissions 22


lisT oF TablesTable 1: Basic rules for base year emissions recalculations 18

Table 2: Four (4) main emissions source categories 23

Table 3: Malaysian grid emission factor 24

Table 4: List of emissions sources information 26

Table 5: Various industry sectors GHG sources and activities 34

Table 6: Classification of reporting organisations 41

Table 7: Steps in setting and tracking performance 46

lisT oF aCronymsACI Airports Council InternationalAF Alternative fuels CaCO3 Calcium carbonate CaO Calcium oxide CCAR California Climate Action Registry CCX Chicago Climate Exchange CDM Clean Development Mechanism CEET Carbon Emissions Estimation Tool CEM Continuous emissions monitoring CEO Chief Executive Officer CESCL IFC Climate Change Unit CF4 Tetrafluoromethane CFC Chlorofluorocarbon CH4 Methane CHCl3 Chloroform CHP Combined Heat and Power CSI Cement Sustainability InitiativeCSR Corporate Social ResponsibilityCO2 Carbon dioxide DECC Department of Energy and Climate Change (United Kingdom) Defra Department for Environment, Food and Rural Affairs (United Kingdom) EE Energy Efficiency ESI Electricity Supply Industry EPA Environmental Protection Agency (United States) EU ETS European Union Emission Trading Scheme FAQ Frequently Asked Question FY Fiscal Year GDP Gross Domestic Product GHG Greenhouse Gas GWP Global Warming Potential HCFC Hydrochlorofluorocarbon HF Hydrogen fluoride HFC Hydrofluorocarbon HHVs Higher heating values ICF International Compensation Fund ICFPA International Council for Forest and Paper Associations IEA International Energy Agency IFC International Finance Corporation


IPCC Intergovernmental Panel on Climate Change IPIECA International Petroleum Industry Environmental Conservation Association ISO International Organization for Standardization IT Information Technology LFGTE Landfill-gas-to-energy LKD Lime Kiln Dust MADA Muda Agricultural Development Authority (Malaysia) MgO Magnesium oxide MGTC Malaysian Green Technology Corporation MSIC Malaysia Standard Industrial Classification Na2CO3 Sodium carbonateN2O Nitrous oxide NCASI National Council for Air and Stream Improvement NF3 Nitrogen triflouride NGO Non-governmental organisation NH3 Ammonia NOx Nitrogen oxide NRE Ministry of Natural Resources and Environment (Malaysia) P2 Pollution Prevention PCC Precipitated calcium carbonate PFC Perfluorocarbon RE Renewable Energy ROC Registration of Company SbCl5 Antimony pentachloride SF6 Sulphur hexafluoride T&D Transmission and distribution TNB Tenaga Nasional Berhad (Malaysia) TOC Total organic carbon UNDP United Nations Development Program UNFCCC United Nations Framework Convention on Climate Change US United States WBCSD World Business Council for Sustainable Development WRI World Resources Institute WTE Waste-to-energy

inTroduCTion provides a brief introduction to climate change and its economic impact,gives an overview of the MYCarbon programme and what are the benefits that lie behind the corporate GHG reporting. Besides that, it also introduces the key aspects of MYCarbon Reporting Guidelines and its process overview to enable the readers to have a better understanding of the guidelines.

1.1 Climate Change and its economic Impacts Climate change is real and at our footstep. The impact is being felt in Malaysia, e.g.

floods and droughts which cause revenue and productivity losses and have put people’s health at risk. Generally, climate change is due to the increase in GHG emissions, especially

the GHGs covered by the United Nations Framework Convention on Climate Change (UNFCCC)/ Kyoto Protocol — currently the GHGs are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen triflouride (NF3) which cause changes in ambient temperature, extreme weather events, rise in sea water level and rapid long-term changes in weather patterns which are induced by human activities.Climate-related natural disasters can be costly and a study from 2011 Economics of Climate Change for Malaysia project stated that:

Flood

• Several major floods in Johor 2006/ 2007 - RM 1.5 billion losses.

• Kedah flood 2010 - RM 500 million losses. Kedah waterlogging as a result of too much rain - RM 65 million to take care of 8,000 ha of paddy fields.

• Allocation for floods have risen from RM 56 million (3rd Malaysia Plan) to RM 1 billion (10th Malaysia Plan) - an indication of how serious the floods have become in terms of national planning.

drought• Agricultural Development Authority (MADA)

paddy planting in 1978 which costed RM 350 million - due to 360,000 tons of paddy destroyed.

• 2004 major water shortages in Klang Valley for several weeks - over RM 100 million losses.

Drought season in Sabah @ Teluk Likas, Kota Kinabalu by Mohd Azrone Sarabatine.Berita Harian, 2010

Flood @ Kampung Haji Baki, Sarawak

1


Stakeholder consultation workshops

1.2 overview of the MYCarbon ProgrammeMalaysia has announced the intention to work towards up to 40% reduction in emissions intensity of Gross Domestic Product (GDP) by year 2020 based on the year 2005 level provided that technology transfer and financial support are provided from the developed countries.

In managing climate change, Malaysia has initiated a programme called MYCarbon – National Corporate GHG Reporting Programme for Malaysia in August 2013. MYCarbon aimed for an advanced GHG reporting and management by organisations in Malaysia, particularly those in the private sectors.

Specific objectives of the programme are to:

Figure 1: MYCarbon objectives

The MYCarbon framework is developed by taking into consideration suggestions and comments from the participants who have attended

the two stakeholders’ consultation workshops held in year 2012.

An illustration of the framework developed in October 2012 is as shown below:

Figure 2: Illustration of MYCarbon framework

This framework is designed to guide and assess the development of a true and fair account of organisations’ emissions report. The focal point serves as an organisation structure which manages and coordinates MYCarbon as a whole. This is then supported by the development of national reporting standard and guidance and the support measures such as fiscal incentives, awards, etc. From time to time, the framework will be revised to be consistent with the national committee/council and in line with on-going programmes both nationally and internationally. A web-based submission of report will be applied and the data will be kept under a national registry. It is expected to receive a corporate/entity level of accounting and reporting. If needed by the reporting entity, carbon management services provider and carbon management audit provider are essential in assisting them in the reporting.

For more information, please visit: www.mycarbon.gov.my.

1.2.1 reporting entityMYCarbon defines the reporting entity – the type of organisations required to report its GHG emissions to the programme – at the corporate level. Under corporate-level reporting, an organisation reports emissions from all of its facilities, subsidiaries and other organisations as determined by its organisational boundaries.

Defining the reporting entity at the corporate level is consistent with the definitions and rules of financial accounting which are based on either ownership or control approach.

Carbon Management Services Provider

(if needed)

Supports Measurese.g. �scal incentives, awards,

training etc.

Corporate/ Entity Level Accounting and Reporting

National Corporate GHG Reporting Programme for

Malaysia

National Reporting

Standard & Guidance

Focal Point

National Registry(Web-based Report)

Carbon Management Audit Provider

(if needed)

Organisation A Company A Industry A

Organisation B Company B Industry B

MYCarbon

National Committee/

Council

On-going programmes nationally and internationally

3

The Greenhouse

Gas Protocol: A Corporate Accounting and Reporting Standard (revised

edition) is developed by the World Resources Institute and World Business Council for Sustainable Development (WRI /

WBCSD) in year 2004.

More information is available at website: http://www.ghgprotocol.org

The Greenhouse

Gas Protocol: A Corporate Accounting and Reporting Standard (revised

edition) is developed by the World Resources Institute and World Business Council for Sustainable Development (WRI /

WBCSD) in year 2004.

More information is available at website: http://www.ghgprotocol.org


1.3 Benefits of Corporate GHG reporting

There are direct benefits to organisations in the accounting and reporting of GHG emissions, including:

Figure 3: Benefits of corporate GHG reporting

1.4 GuidelinesThis MYCarbon Reporting Guidelines (hereafter referred to as “Guidelines” ) has been prepared to meet the demand in accordance with the programme’s targeted outcome and to help the organisations to take action themselves to manage and reduce GHG emissions. The organisations are required to use these Guidelines when reporting their GHG emissions.

These Guidelines is neither designed for quantifying the reductions from individual GHG mitigation projects nor does it include strategies for reducing GHG emissions. Each organisation is expected to take into account its own circumstances in utilising these Guidelines.

1.4.1 Information Sources and referencesThe principal source of information used in developing these guidelines is:

• A Corporate Accounting and Reporting Standard

Facilitate climate change reportingProvide detailed GHG data sourcePower development of future policies and measuresCreate synergies between Renewable Energy (RE)/ Energy E�ciency (EE) sector and waste sector

Deliver corporate sustainability and accountabilityCarbon reductions identi�cation will lead to enhanced e�ciency and competitiveness

Recognition of a level of environmental integrityEnhance awarenessConsidered as best business practices

Government &Researcher

Business Sector

Civil Society

These Guidelines has also made reference to the following internationally relevant existing GHG accounting and reporting programmes and standards:

• The Greenhouse Gas Protocol: Corporate Value Chain (Scope 3) Accounting and Reporting Standard (October 2011)

• The Greenhouse Gas Protocol: Measuring to Manage: A Guide to Designing GHG Accounting and Reporting Programs (December 2007)

• International Organization for Standardization (ISO) 14064-1: Specification with Guidance at the Organization Level for Quantification and Reporting of Greenhouse Gas Emissions and Removals

• Department for Environment, Food and Rural Affairs (Defra), United Kingdom: Guidance on How to Measure and Report your Greenhouse Gas Emissions (September 2009)

• The Climate Registry: General Reporting Protocol 2.0

• Australian Government: National Greenhouse and Energy Reporting System Measurement (July 2013)

• Environment Canada, Facility Greenhouse Gas Emissions Reporting Program: Technical Guidance on Reporting Greenhouse Gas Emissions (April 2013)

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1.4.2 objectivesThe main purpose of these Guidelines is to provide information to facilitate reporting by organisations using the above standard, i.e. A Corporate Accounting and Reporting Standard (Corporate Standard) on a voluntary basis for their operations in Malaysia. It is for the organisations to understand the emissions that they are responsible for, know how much they are emitting and which activities are causing the highest emissions.

Standardised approaches in these Guidelines will increase the consistency and transparency in GHG accounting and reporting among the organisations. At the same time, it will also help to simplify and reduce the costs of preparation and compilation.

1.5 overview of ProcessThese Guidelines provide a comprehensive facilitation on the core issues of GHG accounting and reporting at an organisation level. Organisations might find it helpful to start by looking at Figure 4.

Below is a list of frequently asked questions (FAQs) with directions to the relevant chapters.

How should the reporting entity be defined? CHAPTER 1

How should I define my geographic boundary? CHAPTER 2

How do I deal with complex company structures and shared ownership? CHAPTER 2

What is the difference between direct and indirect emissions and what is their relevance? CHAPTER 2

Which indirect emissions should I report? CHAPTER 2

What is a base year and why do I need one? CHAPTER 3

My emissions change with acquisitions and divestitures. How do I account for these? CHAPTER 3

How do I identify my organisation’s emission sources? CHAPTER 4

What kinds of tools are there to help me calculate emissions? CHAPTER 4

What data collection activities and data management issues does my organisation haveto deal with? CHAPTER 4

What determines the quality and credibility of my emissions information? CHAPTER 5

How should I account for and report GHG offsets that I sell or purchase? CHAPTER 5

What information should be included in a GHG public emissions report? CHAPTER 5

Should I get my emissions data verified? CHAPTER 6

What is involved in setting an emissions target and how do I report performance inrelation to my target? CHAPTER 7

6

Does your parent company/ organisation report GHG emission?

Has any Scope 1 & 2 emissions been excluded from this report? (Chapter 2.3)

Insert diagram to depict your operational boundaries (Chapter 2.3)

Are Scope 3 emissions included in this report? (Chapter 2.3)

Explain for exclusion

NOYES

Information on emissions (Chapter 2.3 & 4)

Reporting period (Chapter 5.5)

Organisation information

Organisation boundary (Chapter 2.2)

OPTION2

Financial Control(list and Yes/No)

OPTION1

Equity share(list and %)

OPTION3

Operational Control(list and Yes/No)

Insert diagram to show the relationship of the reporting subsidiary as well as other subsidiaries (Chapter 2.2)

NOYES

Specify and justify their exclusion

YES NO

Scope 1, 2, 3 & total in mtCO2e

All UNFCCC/ Kyoto Protocol GHGs in mt

Each scope disaggregated by source types in mtCO2e

Biogenic combustion in mtCO2e

7


Figure 4: Overview of process

Has this report been prepared by an external consultant?

Veri�cation / Assurance (Chapter 6)

Fill in consultant’s contact information

YES NO

Reduction initiativescompared to BAU

scenario

Base year (Chapter 3)

Recalculations policy

Context trigger recalculations

Year chosen Scope 1, 2, 3 & total in mtCO2e

All UNFCCC / Kyoto Protocol GHGs in mt

Each scope disaggregated by source types in mtCO2e

Biogenic combustion in mtCO2e

Methodologies and emission factors (Chapter 4)

Self-assurance or self-veri�cation

Veri�ed by a third party registered with NRE

Reduction strategies and targets (Chapter 7)

Overall reductiongoal

Active emissionsreduction target

Future emissionsreduction target

Emissions overtime trend graph

Optional information

Information on emissions and performance

Information on carbon o�setting (Chapter 5.3)

Declaration

8

An organisation needs to clearly identify its boundaries to develop a consistent GHG accounting and reporting. Chapter 2 –

Setting the Accounting And RepoRting BoundARieS sets out the approach to determine an organisation’s accounting and reporting boundaries. The key questions to be answered in this chapter are:

• How should I define my geographical boundary? • How do I deal with complex company structures and shared ownership?

• What is the difference between direct and indirect emissions and what are their relevance?• Which indirect emissions should I report?

Geographical boundaries determine within which organisations’ physical location will be included in a GHG accounting and reporting.

Organisational boundaries determine which organisations will be included in a GHG accounting and reporting based on the organisation’s ownership or control over those organisations.

Operational boundaries determine which GHG emissions will be included in the GHG accounting and reporting based on the organisation’s ownership or control over emission sources at each of those organisations.

Figure 5: Overview of accounting and reporting boundaries

9

Parent company

Company A

Company C

Company D

Company B

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Owned/ controlled building

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Owned/ controlled building

Leasing buildingDirect and indirect emissions

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2.1 Geographical BoundariesFor the geographical boundaries, it requires only the operations in Malaysia to be accounted for and have its emission sources reported.

If an organisation wishes to report its worldwide emissions, separation of the emissions report and verification statement will be required, i.e. one for Malaysia-only and one for worldwide emissions. The organisation must also use appropriate methodologies and default values based on the location where the emissions occur.

2.2 Organisational BoundariesOne of the first steps in developing a GHG emissions accounting and reporting is for the organisations to decide and stipulate what their organisational boundary is. An organisation selects an approach for consolidating GHG emissions and then consistently applies the selected approach to define the operations and processes that constitute the organisations.

The three established approaches (equity share, financial control and operational control approaches) that can be used to consolidate GHG emissions are:

Figure 6: Overview of organisation boundary

Organisation boundary

Equity share approach Control approach

An organisation account for GHG emissions from operations according to its share of equity in the operation (typically aligned with ownership percentage)

An organisation account for 100% of the GHG emissions from operations over which it has control over. It does not account for GHG emissions from operations in which it owns an interest but has no control. There is a potential for double-counting if more than two (2) organisations hold mutual interests but use di�erent approaches. The control approach can be de�ned in either �nancial or operational terms

An organisation has �nancial control over the operations if it can direct the �nancial and operating policies with a view of gaining economic bene�ts from its activities

Financial control approach

An organisation has operational control over an operation if the organisations or one of its subsidiaries have full authority to introduce and implement its operating policies regarding the speci�c operations

Operational control approach

10

The diagram in Figure 6 depicts a clearer view on how an organisation can determine its organisational boundaries. For example, a parent company (reporting entity) which

Figure 7: How to determine organisational boundaries

chooses to report its emissions based on financial control should consider reporting on 100% of its emissions. If

it chooses to report based on operational control then it should report on 100% of emissions from

operations it controls where as if it chooses to report based on equity share X%, then it

should report on X% of its emissions.

case study: Company Theta – Reporting on the

basis of operational control

In the oil and gas industry, ownership and control structures are often complex. A group may own less than 50% of a venture’s equity capital but have operational control over the venture. On the other hand, in some situations, a group may hold a majority interest in a venture without being able to exert operational control, for example, when a minority partner has a veto vote at the board level. Because of these complex ownership and control structures, Theta, a global group of energy and petrochemical companies has chosen to report its GHG emissions on the basis of operational control. By reporting 100% of GHG emissions from all ventures under its operational control,irrespective of its share in the ventures’ equity capital, Theta can ensure that the GHG emissions reporting is in line with its operational policy including its Health, Safety and Environmental Performance Monitoring and Reporting Guidelines. Using the operational control approach, the group generates data that is consistent, reliable and meets its quality standards.

Parent company

Control condition?Approach to emission

reporting

Financial controlReport on 100% of

emissions

Operational controlReport on 100% of

emissions from operations it controls

Equity share X%Report on X% of

emissions

reporting tipsMeasure or calculate an organisation’s emissions based on Malaysian operations

only.

It may be challenging to collect data from the organisations’ operations. However, organisations should make best endeavours to collect data from their Malaysian operations to give a complete picture of their operations.

Additional tips for determining boundary lines can be referred to Annex A - Steps to Determine Organisational Boundaries.

reporting tipsApply the chosen organisational boundaries

approach consistently.

The operational control approach will be the main option and equity share approach will serve as an alternative option followed by the financial control approach. The operational control approach is recommended because the potential of controlling and reducing GHG can be more realistic through activity control.

Level of Control

Wholly-owned

Partially-owned with financial and operational control

Partially-owned with financial control; no operational control

Partially-owned with operational control; no financial control

Not owned but have a capital or financial lease

Not owned but have an operating lease

% GHG emissions to report

100%

100%

0%

100%

100%

100%


2.3 Operational Boundaries: Identify the GHG Emissions SourcesAfter an organisation has determined its organisational boundaries in terms of its own control, it can then set its operational boundaries – where an organisation need to identify which activities in their organisation/ organisations are responsible for GHG emissions being released into the atmosphere. This involves identifying emissions associated with its operations, categorising them as direct or indirect emissions and

choosing the scope of accounting and reporting.

Corporate Standard c a t e g o r i s e s emissions sources into Scope 1, Scope 2 and Scope 3 activities. A summary of the different types of emission sources is illustrated and described in Figure 8.

Figure 8: Illustration of scopes and emissions across a value chain

2.3.1 Scope 1 (All Direct Emissions)Direct emissions occur from sources that are owned or controlled by the organisations, for example, emissions from combustion in owned or controlled boilers, furnaces or vehicles and emissions from chemical production in owned or controlled process equipment. Direct CO2 emissions from the combustion of biomass shall not be included in Scope 1 but reported separately (see Chapter 9 of the Corporate Standard).

GHG emissions not covered by the UNFCCC/Kyoto Protocol, e.g. chlorofluorocarbons (CFCs), nitrogen oxide (NOx), etc. shall not be included in Scope 1 but maybe reported separately (see Chapter 9 of the Corporate Standard).

2.3.2 Scope 2 (Indirect Emissions)Indirect emissions are GHG emissions which are being released into the atmosphere and are associated with the generation of purchased electricity consumed in its owned or controlled equipment or operations in the organisations. The emissions are a consequence of the organisation’s activities but which occur at sources which the reporting organisation does not own or control. Transmission and distribution (T&D) losses are considered emissions of the company or organisation that controls the T&D operations.

2.3.3 Scope 3 (Other Indirect Emissions)Scope 3 is a consequence of the activities of the organisations but occurs from sources not owned or controlled by them. Some examples of Scope 3 activities are extraction and production of purchased materials, transportation of purchased fuels and the use of sold products and services. Leased assets, outsourcing and franchises may be accounted in Scope 3.

CO2 SF6 CH4 N2O HFCs PFCs

SCOPE 2INDIRECT

SCOPE 1DIRECT SCOPE 3

INDIRECT

purchased electricity for own use

company owned

vehiclesfuel combustion

product use

outsourced activities

production of purchased materials

business travel

waste disposal

contractor owned vehicles

NF3

12

The programme proposed that reporting for Scope 3 emissions to be voluntary at the start of the programme. Nonetheless, it shall be encouraged. Sectors with particularly high Scope 3 emissions shall be prioritised.

2.3.4 Co2 emissions from Biogenic CombustionCO2 produced from the combustion of biomass or biofuels, i.e. combustion of biomass for electricity and/or heat generation should be reported separately to emissions in Scopes 1, 2 and 3; reported for informational purposes, but not included in organisations’ totals. This is because the CO2 would have been emitted anyway when the plants from which the biomass are derived, decay naturally at the end of their life.

However, two other GHGs, N2O and CH4 are commonly emitted when biomass is combusted. These would not be emitted during natural decay and any N2O or CH4 emissions from biomass or biofuel consumption should therefore, be included in the organisation’s GHG emissions under the three scopes.

CO2 produced from biomass or biofuels not as a result of the combustion of biomass or biofuels, i.e. industrial fermentation should also be reported within the scopes.

Figure 9: Example of emission sources

Scope 1: Direct

Mandatory

Fuels Combustion (e.g. boilers, gensets

or turbines)

Owned Vehicle (e.g. trucks, trains, ships, airplanes and cars)

Process Emissions (e.g. cement, aluminium

and waste processing)

Fugitive Emissions (e.g. air-conditioning

and refrigeration leaks and methane leaks

from pipelines)

Scope 2: Indirect

Mandatory

Consumption of purchased electricity,

heat, steam and cooling for own use

Scope 3: Other

indirectOptional

Purchased materialsand fuels (e.g.

extraction, processing and production)

Transport-relatedactivities, from / to point of ownership

transfer (e.g. commuting, business

travel, distribution)

Waste disposal (e.g. waste and recycling)

Leased assets, franchising and

outsourcing

Sold goods and services (e.g. use of goods and services)Note:

Some examples of Scope 3 activities. There are a total of 15 activities which fall under Scope 3.

reporting tipsMandatory: Organisations must determine and measure/ calculate emissions

that fall under their Scopes 1 and 2.

It is recommended to draw a diagram depicting the boundary for the reporting organisation.

Optional: Organisations to include Scope 3 emissions and how many levels up the supply chain they want to investigate.

The Corporate Standard states that Scope 3

emissions should be reported if they are: (a) Significant in the context of the whole GHG

accounting and reporting(b) Material to stakeholders(c) Easy to reduce

Additional tips to decide which Scope 3 emissions to measure or calculate can be referred to Annex B - Steps to Determine Operational Boundaries.

reporting tipsMandatory: Organisations must determine and measure/ calculate emissions

that fall under their Scopes 1 and 2.

emissions should be reported if they are: (a) Significant in the context of the whole GHG

accounting and reporting(b) Material to stakeholders(c) Easy to reduce

Additional tips to decide which Scope 3 emissions to measure or calculate can be referred to Annex B - Steps to Determine Operational Boundaries.

case study: How does a large retail trade organisation, company Alphai identifies which of its activities release GHG

emissionsintotheatmosphere?

The Company Alpha diagram below shows which activities were included and excluded in its GHG emissions reporting.

The dotted line represents the boundary line. Every source of emissions located within the dotted line is included in Company Alpha’s GHG emissions reporting while the ones located out of the dotted line are not included.

Company Alpha’s approach:

• Scope 1 – These are the direct GHG emissions that originate from assets that Company Alpha owns or controls. For example, these include emissions from gas and other fuel consumption in their stores, distribution centres and offices. Company Alpha also includes emissions from fuel consumption in their owned vehicles transporting the products that they sell. As well as energy, Company Alpha also includes emissions from refrigerant gas leakage from systems in their stores or their vehicles.

• Scope 2 – This includes the indirect GHG emissions from the generation of electricity and district heating which Company Alpha uses.

• Scope 3 – This includes other indirect GHG emissions generated along Company Alpha’s value chain. Under Scope 3 emissions, Company Alpha reports business travel and emissions from distribution arranged by them but provided by third parties. Business travel includes travel by air, rail, company car, taxi and short-term hire car.

• Company Alpha follows the “operational control approach” to help them determine when to include emissions within their GHG emissions. Company Alpha’s operational boundary (shown in the diagram) includes operations where they have full authority to introduce and implement operating policies. In the case of emissions from distribution, Company Alpha also includes journeys which are provided by third parties but have been arranged by them. These are included in their Scope 3 emissions.

• The main direct Company Alpha’s emissions-generating activities are the operation of stores and distribution centres (“property”), the transport of goods (“distribution”) and employee business travel.

14

Alpha owned and leased o�ces and buildings

Refrigerantemissions

Alpha distribution centres

Primary distribution

(UK only) Secondary distribution

Trunking

Business travel

Alpha owned and leased

stores

Alpha homedelivery

Store and o�ce construction and

demolition

International freight

Production of goods, and provision of

services

Supplier transport

Customer transport

Consumption and disposal

of goods

Waste recycling and disposal

Employee commuting

case study:

Company Lambda – Accounting for out sourced transportation services

Company Lambda serves large loads and special transport needs as well as worldwide express package and document deliveries and offers courier, express, parcel, systemized and speciality business services. The company found that 98% of its emissions originate from the transport of goods via out sourced partner transportation firms. Each partner is required, as an element of the subcontract payment scheme, to enter data on vehicles used, distance travelled, fuel efficiency and background data. This data is used to calculate total emissions via a tailored calculation tool for out sourced transportation which gives a detailed picture of its Scope 3 emissions. Linking data to specific carriers allows the company to screen individual carriers for environmental performance and affect decisions based on each carrier’s emissions performance which is seen through Scope 3 as Lambda’s own performance. By including Scope 3 and promoting GHG reductions throughout the value chain, Lambda increased the relevance of its emissions accounting and

reporting, expanded opportunities for reducing its impacts and improved its ability to recognize cost-saving

opportunities. Without Scope 3, Lambda would have lacked much of the information needed to

be able to understand and effectively manage its emissions.

15

• Other activities are excluded for two main reasons: a lack of data (e.g. emissions from waste) or because they fall outside of Company Alpha’s direct control (e.g. use phase of goods). It is possible that any of the activities currently excluded be included as better information becomes available in the future or as Company Alpha is able to influence those activities more directly. It is also important to note that Company Alpha is taking steps to reduce emissions in some areas even though full data is not yet reported, e.g. through products’ GHG emissions report and diverting 100% of waste from the landfill.

• In line with their operational control approach, emissions from the following businesses and sources are not included in the reporting:

• Company Alpha’s mobile services – these are delivered using Company Beta’s mobile network infrastructure and these emissions are reported within Company Beta’s GHG emissions.

• Company Gamma – Company Alpha owns a part stake in this business and do not have full operational control.

• Company Alpha’s direct home delivery – these are carried out by separate companies where Company Alpha does not have control over the delivery operations.

• Independent external assurance of Company Alpha’s GHG emissions reporting has been provided by sustainability consultancy

Company Delta.

Scope

Scope 1

Scope 2

Scope 3

TOTAL

emissions (tCo2)

6,500

52

327,642

334,194

Image courtesy of Castillo Dominici / FreeDigitalPhotos.net

• Other activities are excluded for two main reasons: a lack of data (e.g. emissions from waste) or because they fall outside of Company Alpha’s direct control (e.g. use phase of goods). It is possible that any of the activities currently excluded be included as better information becomes available in the future or as Company Alpha is able to influence those activities more directly. It is also important to note that Company Alpha is taking steps to reduce emissions in some areas even though full data is not yet reported, e.g. through products’ GHG emissions report and diverting 100% of waste from the landfill.

• In line with their operational control approach, emissions from the following businesses and sources are not included in the reporting:

• Company Alpha’s mobile services – these are delivered using Company Beta’s mobile network infrastructure and these emissions are reported within Company Beta’s GHG emissions.

• Company Gamma – Company Alpha owns a part stake in this business and do not have full operational control.

• Company Alpha’s direct home delivery – these are carried out by separate companies where Company Alpha does not have control over the delivery operations.

• Independent external assurance of Company Alpha’s GHG emissions reporting has been provided by sustainability consultancy

Company Delta.


FAQ

1. AmIrequiredtoreportemissionsfromthecombustionofbiomass?Yes, it is necessary for reporters to calculate and report the quantity of CH4 and N2O emissions from the combustion of biomass materials. This does not include emissions resulting from land clearing . The CO2 emissions from biomass combustion must be calculated and reported separately in the report.

These CO2 emissions should not be included as part of the total emissions. However, the CH4 and N2O emissions are to be included in each of the GHG type emissions totals. Materials to be considered as biomass materials are:

• Plants or plant materials, animal waste or any product made of either of these• Wood and wood products, charcoal and agricultural residues and wastes (including organic

matter such as trees, crops, grasses, tree litter or roots)• Biologically-derived organic matter portion in municipal and industrial wastes; inclusive of

wastewater treatment sludge from pulp and paper plants. It is important to note that only the biomass portion of industrial or municipal waste should be included in this category. If the portion derived from fossil fuels is combusted, the emissions from this portion must follow the rules for non-biomass based sources

• Bio-alcohols• Black liquor• Gas from landfill• Gas from sludge• Animal- or plant-derived oils

2. IfmostoftheCO2 emissions from my organisation are from the burning/combustion of natural gas in the boilers and furnaces, do they count as “CO2 emissions from the combustion of biomass

1”?No, because fossil fuel is a standard commercial natural gas and hence, does not fall into the category of biomass fuels. All GHG emissions from the commercial natural gas combustion (e.g. CO2, CH4 and N2O) must be reported and counted in emission totals or when the organisation is assessing reporting threshold.

Only specialized, biomass-derived gas (e.g. CH4 produced from a digester or landfill and usually used on site) would be considered as a biomass fuel.

1 CO2 emissions from the combustion of biomass materials are not included in the total for stationary fuel combustion as it is assumed that the biomass is produced in a sustainable manner.

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Image courtesy of renjith krishnan / FreeDigitalPhotos.net

Tracking Emissions ovEr TimE (BasE YEar) describes the major steps for establishing a base year. The key questions to be answered in this chapter are:

• What is a base year and why do I need one? • My emissions change with acquisitions and divestitures. How do I account for these?

Establishing a base year is important for organisations in order to track its emissions over time. The reasons that lie behind this are because

of the organisations may be restructured over time such as acquisitions, divestments and mergers and they may also need to track emissions over time in response to a variety of business goals, including:

• Public reporting• Established GHG targets• Managing risks and opportunities• Addressing the needs of investors and other

stakeholders

A meaningful and consistent comparison over this time requires a recalculation of historic emission data. Accordingly, organisations need to choose and report on a base year.

3.1 Choosing a Base YearBase year should be the earliest year that verifiable emissions data is available. It can be chosen either as a single year or a multi-year average (e.g. 2006-2008). Reasons for choosing that particular year need to be specified.

The reporting base year can also be used as a basis for GHG target’s base year to set and track progress towards a GHG target.

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Reporting TipsA multi-year average may help smooth out unusual fluctuations in GHG emissions that would make a single year’s data unrepresentative of the organisation’s

typical emissions profile.

Organisation which chooses to have its base year data similar with its emissions year data should not need to report its base year data provided that it is clearly mentioned in the report.

For new reporting organisation, the base year can be the same as the reporting year.

Reporting Tips

To allow meaningful comparisons, organisation should use the same method to calculate their emissions in subsequent years as they do in their base year. If organisation changes their method of calculation, adjust the base year calculations accordingly.

Reporting TipsA multi-year average may help smooth out unusual fluctuations in GHG emissions that would make a single year’s data unrepresentative of the organisation’s

typical emissions profile.

Organisation which chooses to have its base year data similar with its emissions year data should not need to report its base year data provided that it is clearly mentioned in the report.

For new reporting organisation, the base year can be the same as the reporting year.

Reporting TipsIt is recommended that an organisation only recalculate its base year if the changes meet their significance threshold.


3.2 Recalculating Base Year Emissions

3.2.1 Develop a Base Year Recalculation PolicyA base year recalculation policy should be developed which clearly explains the basis and context for any recalculations and should be applied in a consistent manner. If applicable, the policy shall state any significance threshold applied for deciding on historic emissions recalculation. Organisations need to determine the significance threshold that triggers base year emissions recalculation and to disclose it whereas the verifier will confirm the organisation’s adherence to its threshold policy.

Significance threshold determination may want to take into account the cumulative effect of different scenarios to the organisation’s base year emissions. To recalculate an organisation’s GHG emissions data, it can be done either for all years between the base year and the reporting year or just the previous year and the reporting year following a base year recalculation. In some circumstances following

very large structural changes or mergers, it may be simpler to roll an organisation’s base year forward to its current reporting year.

3.2.2 Determine Whether the Base Year Needs to be RecalculatedThe following process can be the key to determine whether an organisation needs to recalculate its base year:

• Identifyanychangesthathaveoccurredtotheorganisationinthereportingperiodwhichmayrequirea base year recalculation

• Applytheconditionsinthetablebelowtohelptodeterminewhichchangesmayrequireabaseyearrecalculation

Table 1: Basic rules for base year emissions recalculations

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Change Scenario Base Year Recalculation

Mergers,AcquisitionsandDivestitures

1.Acquisitionof(orinsourcing)a facility from another organisation

a. Facility existed in organisation’s base year

Recalculate organisation’s base year to include the emissions from the newfacility(attheleveltheemissionswereinitsbaseyear).

In respect of in sourcing, recalculate organisation’s base year if the acquiredemissionswerenotincludedin its base year emissions total and will be included in its current year’s total.

b. Facility that did not exist in organisation’s base year

Nobaseyearrecalculationisrequired.

Case Study: Company Iota – Recalculation

of base year emissions because of acquisition

Company Iota consists of two (2) business units (A and B). In its base year (Year 1), each business unit emits 25tCO2. In Year 2, the company undergoes “organic growth”, leading to an increase in emissions to 30tCO2 per business unit, i.e. 60tCO2 in total. The base year emissions are not recalculated in this case. At the beginning of Year 3, the company acquires production facility C from another company. The annual emissions of facility C in Year 1 were 15tCO2 and 20tCO2 in Year 2 and 3 respectively. The total emissions of Company Iota in Year 3, including facility C are therefore, 80tCO2. To maintain consistency over time, the company recalculates its base year emissions to take into account the acquisition of facility C. The base year emissions increase by 15tCO2 – the quantity of emissions produced by facility C in Iota’s base year. The recalculated base year emissions are 65tCO2. Iota also (optionally) reports 80tCO2 as the recalculated emissions for Year 2.

• Where there have been changes forwhich it is recommended to recalculate an organisation’s established base year if these meet the significance threshold in the organisation’s base year recalculation policy.

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Reporting Tips

It is recommended that an organisation only recalculate its base year if the changes meet their significance threshold. The assumptions used in making base year emissions recalculations should be included.

Change Scenario Base Year Recalculation

Mergers, Acquisitions and Divestitures

3. Transfer of ownership or control of emissions sources. This includes changes in lease status

Increased ownership should be treated in the same way as a new acquisition (follow scenarios 1a and 1b conditions above).

Decreased ownership should be treated in the same way as a disposal (follow scenarios 2a and 2b conditions above).

4. Organic growth:• Increaseinproductionoutput• Changeinproductmix• Openingofnewplantsoroperatingunitsownedorcontrolled

by the company

No base year recalculation is required.

Organic Growth and Decline

5. Organic decline:• Decreaseinproductionoutput• Changesinproductmix• Closingofplantsoroperatingunitsownedorcontrolledby

the company


6. Changes in emission factors or methodologies (e.g. change in activity data) that reflect real changes in emissions (i.e. changes in fuel type or technology)


Changes in Quantification Methodologies or Errors

7. Changes in measurement methodologies, improvements in the accuracy of emission factors or activity data or discovery of previous errors or number of cumulative errors

Recalculate base year emissions to be consistent with new approach or to correct errors

b.Facilitythatdidnotexistinorganisation’s base year


2. Disposal of (or outsourcing) a facility to another company

a.This facility existed inorganisation’s base year

Recalculate organisation’s base year to subtract the emissions from the disposed facility (at the level the emissions were in its base year).

In respect of outsourcing, recalculate organisation base year if the out sourced emissions were included in its base year emissions total and will not be included in its current year’s emissions total.

Case Study: Company Iota – Recalculation

of base year emissions because of acquisition

Company Iota consists of two (2) business units (A and B). In its base year (Year 1), each business unit emits 25tCO2. In Year 2, the company undergoes “organic growth”, leading to an increase in emissions to 30tCO2 per business unit, i.e. 60tCO2 in total. The base year emissions are not recalculated in this case. At the beginning of Year 3, the company acquires production facility C from another company. The annual emissions of facility C in Year 1 were 15tCO2 and 20tCO2 in Year 2 and 3 respectively. The total emissions of Company Iota in Year 3, including facility C are therefore, 80tCO2. To maintain consistency over time, the company recalculates its base year emissions to take into account the acquisition of facility C. The base year emissions increase by 15tCO2 – the quantity of emissions produced by facility C in Iota’s base year. The recalculated base year emissions are 65tCO2. Iota also (optionally) reports 80tCO2 as the recalculated emissions for Year 2.

Reporting Tips

It is recommended that an organisation only recalculate its base year if the changes meet their significance threshold. The assumptions used in making base year emissions recalculations should be included.

Case Study:

Company Eta – Recalculation of base year emissions because of divestments

Company Eta consists of three (3) business units (A, B and C). Each business unit emits 25tCO2 and the total emissions for the company are 75tCO2 in the base year (Year 1). In Year 2, the output of the company grows, leading to an increase in emissions to 30tCO2/ business unit, i.e. 90tCO2 in total. At the beginning of Year 3, Eta divests business unit C and its annual emissions are now 60tCO2, representing an apparent reduction of 15tCO2 relative to the base year emissions.

However, to maintain consistency over time, the company recalculates its base year emissions to take into account the divestment of business unit C. The base year emissions are lowered by 25tCO2 –the quantity of emissions produced by the business unit C in the base year. The recalculated base year emissions are 50tCO2 and the emissions of Eta are seen to have risen by 10tCO2 over the three (3) years. Eta (optionally) reports 60tCO2 as the recalculated emissions for Year 2.


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15

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60

25

50

80

Figure reported in respective years

Facility C emissions

1 2 3

1 2 3

Recalculated �gures

IOTA

EM

ISSI

ON

S

Facility C

Unit B

Unit A

Base Year

Increase in Production

Iota Acquires C

Legend

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ETA

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Eta Divests C

Legend

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30Unit B Unit A

case study: Company Kappa – Recalculation of base year emissions because of acquisition of a facility that came into existenceafterthebaseyearwasset

Company Kappa consists of two (2) business units (A and B). In its base year (Year 1), the company emits 50tCO2. In Year 2, the company undergoes organic growth, leading to an increase in emissions to 30tCO2 per business unit, i.e. 60tCO2 in total. The base year emissions are not recalculated in this case. At the beginning of Year 3, Kappa acquires a production facility C from another company. Facility C came into existence in Year 2, its emissions being 15tCO2 in Year 2 and 20tCO2 in Year 3. The total emissions of Company Kappa in Year 3, including facility C are therefore, 80tCO2. In this acquisition case, the base year emissions of company Kappa do not change because the acquired facility C did not exist in Year 1 when the base year of Kappa was set. The base year emissions of Kappa therefore, remain at 50tCO2. Kappa (optionally) reports 75tCO2 as the recalculated figure for Year 2 emissions.

Once the organisations’ boundaries have been established and a base year is recognised,the organisations are then able to calculate their GHG emissions.

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KAPP

A E

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NS

Unit C

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Kappa Acquires C

Legend

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Unit B Unit A

15

15 20

case study: Company Kappa – Recalculation of base year emissions because of acquisition of a facility that came into existenceafterthebaseyearwasset

Company Kappa consists of two (2) business units (A and B). In its base year (Year 1), the company emits 50tCO2. In Year 2, the company undergoes organic growth, leading to an increase in emissions to 30tCO2 per business unit, i.e. 60tCO2 in total. The base year emissions are not recalculated in this case. At the beginning of Year 3, Kappa acquires a production facility C from another company. Facility C came into existence in Year 2, its emissions being 15tCO2 in Year 2 and 20tCO2 in Year 3. The total emissions of Company Kappa in Year 3, including facility C are therefore, 80tCO2. In this acquisition case, the base year emissions of company Kappa do not change because the acquired facility C did not exist in Year 1 when the base year of Kappa was set. The base year emissions of Kappa therefore, remain at 50tCO2. Kappa (optionally) reports 75tCO2 as the recalculated figure for Year 2 emissions.

idenTiFying and CalCulaTing ghg emissions explores the issues inidentifying and calculating GHG emissions in terms of its calculation and emissions factors and applying calculation tools. The key questions to be answered in this chapter are:

• HowdoIidentifymyorganisation’semissionsources?

• Whatkindsoftoolsaretheretohelpmecalculateemissions?

• What data collection activities and datamanagement issues doesmy organisationhavetodealwith?

4.1 Calculation and emissions FactorTo ensure accurate GHG accounting and reporting, the organisations must apply appropriate and consistent calculation method and emission factors. There are generally five (5) steps in identifying and calculating an organisation’s emissions as shown in the figure below:

Figure 10: Steps in identifying and calculating an organisation’s emissions

22

Identify sources

Select calculation approach

Collect data and choose emission factors

Apply calculation tools

Roll-up data to corporate level

Step 1: Identify SourcesFirst of all, an organisation should identify its direct and/or indirect emission sources in each of its processes, products or services. Typically, GHG emissions occur from the four (4) following source categories:

Table 2: Four (4) main emissions source categories

The identification of direct emissions is referred to as Scope 1 emissions, electricity indirect emissions are Scope 2 emissions while other indirect emissions are categorized as Scope 3 emissions.

Step 2: Select Calculation ApproachThe next step in calculating GHG emissions is to select the calculation approach. There are several approaches which could be taken such as the following:

a) Direct measurement of GHG emissions by monitoringb) Calculated based on mass balance or stoichiometric basis specific to a facility or processc) Application of documented emission factors

Direct monitoring may be expensive and difficult to be implemented. On the other hand, the most common approach for calculating GHG emissions is to apply documented emission factors to known activity data from the organisations. Depending on each organisation, they should use the most accurate calculation approach available which is appropriate for reporting. If it is not possible to calculate emissions from known activity data, the organisation needs to estimate its emissions and extrapolate on the basis of known activity data. All the methods used have to be justified and explained during reporting.

Step 3: Collect Data and Choose Emission FactorsGenerally, for most small to medium-sized companies and for many larger companies, Scope 1 emissions are calculated based on the purchased quantities of commercial fuels using published emission factors while for Scope 2, emissions are primarily calculated from metered electricity consumption and supplier-specific, local grid or other published emission factors. As for Scope 3, activity data such as fuel use or passenger miles and published or third-party emission factors will be used. In most cases, source- or facility-specific emission factors are preferable to more generic or general emission factors if they are available. Section 4.2 Common Emissions Sources and Activity Data provides detailed information on the possible activity data for each of the scopes.

Local emission factors will be applied for Scope 2 purchased electricity, i.e. the grid emission factor calculated in the Study on Grid Connected Electricity Baselines in Malaysia by Malaysian Green Technology

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Stationary combustion

Mobile combustion

Process emissions

Fugitive emissions

• Combustion of fuels in stationary equipment • Examples: boilers, furnaces, burners, turbines, heaters, incinerators,

engines, flares, etc.

• Combustion of fuels in transportation devices• Examples: automobiles, trucks, buses, trains, airplanes, boats, ships,

barges, vessels, etc.

• Emissions from physical or chemical processes• Examples: CO2 from the calcination step in cement manufacturing,

CO2 from catalytic cracking in petrochemical processing, PFC emissions from aluminium smelting, etc.

• Intentional and unintentional releases • Examples: equipment leaks from joints, seals, packing, gaskets,

fugitive emissions from coal piles, wastewater treatment, pits, cooling towers, gas processing facilities, etc.

Reporting Tips

Measure or calculate emissions from the 7 GHGs covered by the UNFCCC/ Kyoto Protocol.

Corporation (MGTC). For year 2008 – 2011, the factors used are as per Table 3.

Table 3: Malaysian grid emission factor

The complete reports of how the grid emission factors were derived can be downloaded from the following websites:http://cdm.greentechmalaysia.my/up_dir/articles1016,article,1270025735,label_CDM_Baseline_2008.pdfhttp://cdm.greentechmalaysia.my/up_dir/CDM%20Electricity%20Baseline%202009.pdfhttp://cdm.greentechmalaysia.my/up_dir/Report_CDM_Baseline_2010&2011.pdf

Step 4: Apply Calculation ToolsThe general equation for calculating GHG emissions are as shown below:

Actual/Estimated Activity Data x Emission Factor = GHG emissions

In order to provide a single metric that embodies all GHGs, it is a standard practice to report GHG emissions in metric tonnes of carbon dioxide equivalent (mtCO2e). However, other common units have also been used, e.g. tCO2.

More details about the application of calculation tools are presented in Section 4.3 Applying Calculation Tools.

Designing a good data collection system can reduce errors caused by in accurate data and/or data input mistakes. Some good data collection practices include:• Requestingdatainfamiliarunits• Requestingdatafrommeteredormeasuredsources

when possible; they may be more accurate than purchase records

• Establishinginternalcontrolsystemstocatcherrors• Undertaking regular checks for technical errors.

Technical errors include incomplete identification of emissions sources, use of incorrect methods or assumptions, use of incorrect data, and mistakes in data entry


24

Region

Peninsular Malaysia

Sarawak

Sabah

Year 2008

0.672 tCO2/MWh

0.825 tCO2/MWh

0.651 tCO2/MWh

Year 2009

0.683 tCO2/MWh

0.805 tCO2/MWh

0.612 tCO2/MWh

Year 2010

0.760 tCO2/MWh

0.847 tCO2/MWh

0.574 tCO2/MWh

Year 2011

0.747 tCO2/MWh

0.841 tCO2/MWh

0.531 tCO2/MWh

Reporting Tips

The grid emission factors will be updated every year or when necessary and therefore, the latest values available should be used for GHG reporting. For emission factors or values other than those for Scope 2 purchased electricity such as the carbon content of fuel, calorific/heating value of fuel, fuel density, oxidation fraction or any other process-specific factors or values, the values recommended (due to the reasons that they are more accurate / suitable / easily available, etc.) by the respective calculation tools used, e.g. the calculation tools available from GHG Protocol shall be followed. In case there are no recommendations provided or the recommended factors are not available or appropriate for use, the Intergovernmental Panel on Climate Change (IPCC)’s default values can be used (Source: http://www.ipcc-nggip.iges.or.jp/public/2006gl/index.html). In all other cases where the IPCC’s default values are not available for use, values from other reputable, commonly-used or official sources can be used provided that the sources are stated.

Step 5: Roll-up Data to Corporate Level

An organisation will need to gather and summarise data from multiple facilities which might be located in different countries and business divisions. But, please note that only Malaysian operations emissions data are accounted in the report. This final step of calculating GHG emissions should be planned carefully so as to reduce the risk of errors, minimise reporting burden and ensure that the information are collected on an approved, consistent basis. It is recommended that a standardised reporting format be used to ensure that the data and information received from different facilities is comparable besides reducing the risk of errors.

The choice of tools and processes used in data reporting depends on the information and communication infrastructure in place. In other words, how easy it is to include new data categories in corporate databases. Besides that, it is also dependent on the amount of detail that corporate headquarters wishes to be reported from facilities. Examples of the data collection and management tools include secure database available over the company intranet or internet (for direct data entry by facilities), spreadsheet templates filled out and e-mailed to corporate or division office (where data is processed further) and paper reporting forms faxed to a corporate or division office (where data is re-entered in a corporate database).

Basically, there are 2 approaches for gathering data from a corporation’s facilities:

a) Centralized approach – individual facilities will report activity/fuel use data to the corporate level where GHG emissions are calculated

b) Decentralized approach – individual facilities collect activity/fuel use data, directly calculate their GHG emissions using approved methods and report the data to the corporate level

Not much difference can be found in these two (2) approaches except in where the emissions calculations occur and in what type of quality management procedures have to be practised at each level of the corporation.

One may prefer the centralised approach if the staff at the corporate or division level can calculate emissions data in a straightforward manner on the basis of activity/fuel use data and if the emissions calculations are standard across a number of facilities.

On the other hand, facilities may prefer the decentralised approach if:

• GHG emission calculations require detailed knowledge of the kind of equipment being used atfacilities

• GHGemissioncalculationmethodsvaryacrossanumberoffacilities

• Processemissions(incontrasttoemissionsfromburningfossilfuels)makeupanimportantshareoftotal GHG emissions

• Resourcesareavailabletotrainfacilitystafftoconductthesecalculationsandtoauditthem

• Auser-friendlytoolisavailabletosimplifythecalculationandreportingtaskforfacility-levelstaff

• LocalregulationsrequirereportingofGHGemissionsatafacilitylevel

Some common reporting categories for both of the approaches which are recommended to be reported include:

• Abriefdescriptionoftheemissionsources

• Alistandjustificationofspecificexclusionorinclusionofsources

• Comparativeinformationfrompreviousyears

• Thereportingperiodcovered

• Anytrendsevidentinthedata

• Progresstowardsanybusinesstargets

25

• Adiscussionofuncertaintiesinactivity/fueluseoremissionsdatareported,theirlikelycause,andrecommendationsforhowdatacanbeimproved

• Adescriptionofeventsandchangesthathaveanimpactonreporteddata(acquisitions,divestitures,closures, technology upgrades, changes of reporting boundaries or calculation methodologiesapplied,etc.).

Overall, the reportingorganisations should choose the collection approachbasedon their needs andcharacteristics.Somemayprefertouseacombinationofthetwo(2)approachestomaximiseaccuracyandminimisereportingburdens.However,thetwo(2)approachesarenotmutuallyexclusiveandshouldproducethesameresult.

4.2 Common Emissions Sources and Activity DataThefollowingtableliststhemostcommonemissionsourcesfororganisationsandthecorrespondingdatathatshouldbecollectedforthesesources.Thislist isnotcomprehensivebutshouldserveasastartingpointforsourcesthatarelikelytoappearinorganisations.

Table4:Listofemissionssourcesinformation

Emission-producing activity

Generation of electricity, heat, or steamThese emissions result from combustion of fuels instationarysources,e.g.boilers,furnacesandturbines


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Scope 1

Potential activity data source

1.Fuel consumed in boilers, furnaces andturbines. For example, amount of dieselconsumed/monthorpurchasedquantitiesof commercial fuels (e.g. natural gas/heatingoil)

2.Technicalspecificationoftheequipment3.Electricitybill4.Manualrecordofpowermeter5.Pressure, temperature and flow rate canbe used with standard steam tables tocalculatethesteam’senergyvalue

6.Emissions associated with the productionofsteamarehighlydependentonthetypeoffuelburned.Oneneedstodeterminethesourceof the steamandwhich fuelswerecombustedforitsproduction

Physical or chemical processingMostoftheseemissionsresultfrommanufactureorprocessingofchemicalsandmaterials(e.g.cement,aluminium,adipicacid,ammoniamanufactureandwasteprocessing)

For example, CO2 from the calcinationsstep in cement manufacturing, CO2from catalytic cracking in petrochemicalprocessing, perfluorocarbon (PFC)emissionsfromaluminiumsmelting,etc.

Transportation of materials, products, waste and employees

1. Fuel consumed in all type of the vehicles(e.g.amountofpetrolfilled/month)

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Theseemissionsresultfromthecombustionoffuelsin company owned/controlled mobile combustionsources(e.g.trucks,trains,ships,airplanes,busesandcars)


2.Typeoffueluseforthevehicles3.Transportallowancegivenbythecompanytoemployee

4.Distance travelled/mileage/length anddurationofflight

5.Thevehicles condition (e.g.no.of yearontheroad,engineefficiency,roadcondition,etc.)

Fugitive emissionsThese emissions result from intentional orunintentional releases, e.g. equipment leaks fromjoints,seals,packingandgaskets;methaneemissionsfrom coal mines and venting; HFC emissionsduring theuseof refrigerationandair conditioningequipmentandmethaneleakagesfromgastransport

1.Directreadingsorfrommanual2.Propertymanager

Any other physical and chemical processing in thephysical boundarywhichwill emit or removeGHG.For example, on-site waste or sewage processingfacilitiesinthebuilding

Totalwatertreatedincubicmeters(m3)fromwaterbill

Purchasedelectricity/Electricityconsumption

Scope 2

1.Metered electricity consumption andsupplier-specific,localgrid

2.Utility bill/monthly energy consumptionbill(Totalkilowatthours(kWh)used)

Purchasedsteam Purchased steam is typically reported inenergyunits tobetter reflect theuseof thesteam.Theconversionofmeteredsteamunitsto energy units is standardized and basedon steam tables. It is recommended thatsteampurchasersrecordthequantity(mass),characteristics (temperature and pressures)andtotalenergyofthesteampurchased

Purchased goods and services (Cradle-to-gate emissions)• Extractionofrawmaterials• Agriculturalactivities• Manufacturing,productionandprocessing• Generation of electricity consumed by upstreamactivities

• Disposal/treatment of waste generated byupstreamactivities

• Landuseandland-usechange• Transportationofmaterialsandproductsbetweensuppliers

Scope 3

1.Amountandtypeoffuelconsumedbythevehicles

2.Distancetravelledbythevehicles3.Mileageclaimed4.Transportationallowance/subsidiesby thecompany

5.Energy use for machine, equipment,building,facilities(Utilitybillandtechnicalspecificationofallmachineries)

6.Amountandtypeoffuelconsumedduringthe production process (Receipts of fuelpurchased)

Emission-producing activity Potential activity data source


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Capital goodsExtraction,productionand transportationof capitalgoods purchased or acquired by the reportingcompanyExamples of capital goods include equipment,machinery,buildings,facilitiesandvehicles





Fuel- and energy-related activities(notincludedinScope1orScope2)a. Upstream emissions of purchased fuelsExtraction,productionandtransportationoffuelsconsumedbythereportingcompanyExamples include mining of coal, refining ofgasoline,transmission and distribution of naturalgas,productionofbiofuels,etc.

b. Upstream emissions of purchased electricityExtraction,productionandtransportationoffuelsconsumed in thegenerationofelectricity, steam,heating and cooling that is consumed by thereportingcompanyExamplesincludeminingofcoal,refiningoffuels,extractionofnaturalgas,etc.

c. T&D lossesGeneration of electricity, steam, heating andcoolingthatisconsumed(i.e.lost)inaT&Dsystem–reportedbyend-user

d. Generation of purchased electricity that is sold to end-usersGeneration of electricity, steam, heating andcooling that is purchased by the reportingcompany and sold to end-users – reported byutilitycompanyorenergyretailerNote:Thisactivityisparticularlyrelevantforutilitycompanies that purchase wholesale electricitysupplied by independent power producers forresaletotheircustomers




6.Amountandtypeoffuelconsumedduringthe production process(Receipts of fuelpurchased)

• Any other activities prior to acquisition by thereportingcompany

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Upstream transportation and distributionTransportation and distribution of productspurchasedbythereportingcompanyinthereportingyearbetweenacompany’stier1suppliersanditsownoperations(including multi-modal shipping wheremultiple carriers are involved in the delivery of aproduct)Third-party transportation and distribution servicespurchasedbythereportingcompanyinthereportingyear (either directly or through an intermediary),including inbound logistics,outbound logistics (e.g.of soldproductsand third-party transportationanddistribution between a company’s own facilities.Emissionsmayarisefromthefollowingtransportationanddistributionactivitiesthroughoutthevaluechain:• Airtransport• Railtransport• Roadtransport• Marinetransport• Storage of purchased products in warehouses,distributioncentersandretailfacilities



2. Distancetravelledbythevehicles3.Mileageclaimed4.Transportationallowance/subsidiesby thecompany

Waste generated in operationsThis category includes emissions from disposalof both solid waste and wastewater. Only wastetreatment in facilities owned or operated by thirdpartiesisincludedinScope3Thiscategoryincludesallfutureemissionsthatresultfromwastegeneratedinthereportingyear.Wastetreatmentactivitiesmayinclude:• Disposalinalandfill• Disposal in a landfill with landfill-gas-to-energy(LFGTE)–i.e.combustionoflandfillgastogenerateelectricity

• Recoveryforrecycling• Incineration• Composting• Waste-to-energy (WTE) or energy-from-waste(EfW) – i.e. combustion ofmunicipal solidwaste(MSW)togenerateelectricity

• WastewatertreatmentCompanies may optionally include emissions fromtransportationofwaste

1.Paymentbill/receiptsfromwastecontractor2.Production and waste record in theproductionplant

3.Amountandtypeoffuelconsumedbythevehicles (when transportation of waste isinvolved)

4.Distance travelled by the vehicles (whentransportationofwasteisinvolved)

5.Energy use in recovery and recycling,incineration(Utilitybill)

6.Tonnesofwastetreatedbywastetype(e.g.paper, glass, waste to landfill) fromwastecollectionprovider

7.Landfillhasordoesnothavea landfillgascollectionsystem

Business travelEmissionsfrombusinesstravelmayarisefrom:• Airtravel• Railtravel


2.Distancetravelledbythevehicles3.Mileageclaimed



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• Bustravel• Automobiletravel(e.g.businesstravelinrentalcarsoremployee-ownedvehiclesotherthanemployeecommutingtoandfromwork)

• OthermodesoftravelCompanies may optionally include emissions frombusinesstravellersstayinginhotels

4.Transportationallowance/subsidiesby thecompany

Employee commutingThis category includes emissions from thetransportation of employees between their homesandtheirworksitesEmissionsfromemployeecommutingmayarisefromautomobiletravel,bustravel,railtravel,airtravelandothermodesoftransportationOrganisations may include emissions fromteleworking(i.e.employeesworkingremotely)inthiscategory


2.Distancetravelledbythevehicles3.Transportationallowance/subsidiesby thecompany

Upstream leased assetsOperation of assets leased by the organisations(lessee)andnot included inScope1andScope2–reportedbylesseeOnlyapplicabletoorganisationthatoperatesleasedassets (i.e. lessees). For organisations that own andlease assets to others (i.e. lessors), see downstreamleasedassetscategory

1.Leasedcars’vehiclemilesasdefinedintheleasingcontracts

2.Leased office and storage space obtainedfrom internal business data managementsystems

3.Themonetarypurchasingvolumeforleasedequipmentderived from internalbusinessdatamanagementsystems

Downstream transportation and distributionEmissions from downstream transportation anddistributioncanarisefrom:• Storage of sold products in warehouses anddistributioncenters

• Storageofsoldproductsinretailfacilities• Airtransport• Railtransport• Roadtransport• MarinetransportCompanies may include emissions from customerstravelingtoretailstoresinthiscategorywhichcanbesignificant for companies thatownoroperate retailfacilities




6.Amountandtypeoffuelconsumedduringthe production process(Receipts of fuelpurchased)

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Processing of sold productsThis category includes emissions from processingof sold intermediate products by third parties (e.g.manufacturers) subsequent tosaleby the reportingcompanyIntermediate products are products that requirefurther processing, transformation or inclusion inanother product before use and therefore, result inemissions from processing subsequent to sale bythe reporting companyandbeforeuseby theend-consumer. Emissions from processing should beallocatedtotheintermediateproduct



Use of sold productsThisstandarddividesemissionsfromtheuseofsoldproductsintotwotypes:• Directuse-phaseemissions• Indirectuse-phaseemissionsThis category includes the total expected lifetime emissions from all relevant products sold in thereportingyearacrossthecompany’sproductportfolio

1.Products that directly consume energy(fuels or electricity) during use (Fuelconsumedandelectricitybill)

End-of-life treatment of sold productsWastedisposalandtreatmentofproductssoldbythereportingcompany(inthereportingyear)attheendoftheirlife

1.Paymentbill/receiptsfromwastecontractor2.Production and waste record in theproductionplant

3.Amountandtypeoffuelconsumedbythevehicles (when transportation of waste isinvolved)

4.Distance travelled by the vehicles (whentransportationofwasteisinvolved)

5.Energy/fuel consumed for incineration(Electricitybill/receiptsforfuelpurchased)

Downstream leased assetsEmissions of lessees that occur during operation ofleasedassets (e.g. fromenergyuse)not included inScope1andScope2–reportedbylessor

1.Typeofcompany’sleasedassets:financeorcapital leases/operating leases (check thecompany’sauditedfinancialstatements)

2.Categorized as direct (Scope 1) emissionsor indirect (Scope 2 or 3) emissions incompany’soperationalboundary

FranchisesEmissionsoffranchiseesthatoccurduringoperationof franchises (e.g. fromenergy use) not included inScope1andScope2–reportedbyfranchisor


InvestmentsOperationofinvestments(includingequityanddebitinvestments and project finance) not included inScope1andScope2Only applicable to investors (i.e. organisations thatmakean investmentwiththeobjectiveofmakingaprofit)andcompaniesthatprovidefinancialservices

1.Scope 1 and Scope 2 emissions of theassociated/affiliated companies and fixedasset investmentswereobtainedfromtherespective companies/investments uponinquiry


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4.3 Applying Calculation ToolsThis section provides an overview of the GHG calculation tools and guidance available on the GHG Protocol Initiative website (www.ghgprotocol.org). Organisations are encouraged to use these tools as they have been peer-reviewed by experts and industry leaders, are regularly updated and are believed to be the best available. However, the tools are optional and organisations may use their own GHG calculation methods provided that they are more accurate than or are at least consistent with the Corporate Standard approaches.

Typically, larger scale organisations will utilise more than one tool to calculate their GHG emissions. Conversely, small to medium-scale organisations will typically utilise a more centralised and generic tool to account for their GHG emissions.

Under the GHG Protocol, a selection of calculation tools and guidance are available to cater for both cross-sector and sector-specific emissions.

• Cross-sector tools – applicable to different sectors (stationary combustion, mobile combustion, etc.)

• Sector-specific tools – designed to calculate emissions in specific sectors such as aluminium, iron and steel, cement, oil and gas, pulp and paper, office-based organisations, etc.

Each calculation tool consists of automated worksheets and a guidance document that includes information on how to choose activity data and emission factors, which calculation method is applicable, good practice guidance for quality control and guidance on internal reporting and documentation.

By using the automated worksheets, one only needs to insert activity data and select appropriate emission factor(s). Customized emission factors could also be used to replace the default emission factors whenever they are more representative (please refer to the reporting t

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