Carbon accounting and reporting are critical to reducing greenhouse gas emissions and helping the world transition to a low-carbon economy. But because these concepts can be quite complex and involve a lot of technical jargon, many business owners and operators may struggle to understand them. To account for the carbon emissions of your business, you need to track the amount of CO2 your company produces either directly through combustion or indirectly through electricity consumption. If your organization falls into one of several key industries – such as manufacturing, mining, or transportation – you will also likely need to comply with additional greenhouse gas (GHG) reporting standards. This article introduces you to carbon accounting and reporting: the primary methods used to measure carbon emissions and document them for third parties. Read more about this topic.
What is carbon accounting?
Carbon accounting is the process of measuring and analyzing greenhouse gas emissions by calculating the amount of carbon dioxide (CO2) produced. Many organizations now use carbon accounting systems to track their emissions and determine the most cost-effective ways to reduce them. Carbon accounting also refers to the process of tracking and recording emissions from a specific activity. The result of this tracking and recording process is often called a carbon account.
Carbon accounting is essential to understanding how business activities affect the environment and whether they are likely to be regulated. It can be used to monitor greenhouse gas (GHG) emissions and other environmental impacts. These greenhouse gas emissions are largely generated by electricity and fuel production, industrial processes, dense server racks, data centers, agricultural practices, and the extraction and transportation of raw materials.
Types of carbon accounting
There are two basic methods of measuring and tracking carbon emissions: accounting and auditing. Accounting is generally used when someone is interested in tracking their own carbon emissions. An audit, on the other hand, is used when a third party is interested in examining your emissions—for example if you’re in an industry that must report its greenhouse gas emissions.
When calculating your own emissions, accounting methods are generally preferred over audit methods because they are much easier to implement and report. The accounting method is based on the concept of carbon intensity – the amount of CO2 emitted per unit of production. Accounting methods often include assumptions about the future impact of emissions on society.
The audit method quantifies actual emissions using a standardized approach. It is important to understand that these measurements can only be used to compare the performance of one company to that of another company. They cannot be used to predict the future.
Defining key terms and vocabulary
- Carbon Footprint: A measure of how much CO2 is produced as a result of an activity or product.
- Carbon Intensity: Amount of CO2 emissions per unit of production. For example, if you make 10 widgets and it takes you one hour to make them, your carbon footprint would be 10 widgets per hour.
- Carbon Offset: A reduction in carbon emissions that occurs in one location as a result of an increase in emissions in another location.
- Carbon Sink: An environmental process (such as carbon storage in soil) that removes CO2 from the atmosphere.
- Carbon tax: A tax imposed on the carbon content of fuels or electricity.
- Carbon Trading: A market-based approach to reducing CO2 emissions, where one party buys the right to emit carbon while the other party either reduces its emissions or buys the right to maintain its own emissions at current levels.
Basics of greenhouse gas reporting
If your organization falls into one of several key industries – such as manufacturing, mining or transportation – you may need to comply with additional greenhouse gas (GHG) reporting standards. These industries are responsible for a large part of global emissions and it is important for them to reduce their greenhouse gas emissions as much as possible.
There are two main types of greenhouse gas reporting – greenhouse gas inventories and carbon emissions inventories. Greenhouse gas inventories measure the amount of CO2 and other greenhouse gases emitted by a company. Carbon emission inventories measure the amount of CO2 emitted by a company. If you are required to report your greenhouse gas emissions, you will likely use one of these two reporting methods.
Carbon accounts and reporting are essential to understanding the emissions produced by your business and how best to reduce them. While this information may be somewhat technical, it is important to have a basic understanding of the concepts behind it. As a business owner, it is your responsibility to understand the environmental impact of your operations and reduce your organization’s carbon footprint as much as possible.