Practical Guide - Corporate Emissions Inventory and Carbon Reduction

Learn how to calculate GHG emissions and reduce your environmental impact. Find out why this practice is becoming more common among businesses.

In recent years, environmental awareness has become a strategic theme for businesses worldwide. Organizations are increasingly concerned about minimizing their environmental impact and demonstrating commitment to sustainability, and one of the main means to achieve this goal has been through the development of corporate emissions inventories.

According to the "Stories of Change" report published by the Carbon Disclosure Project (CDP), around 18,700 companies, equivalent to about 50% of the publicly traded companies worldwide, reported their GHG emissions in 2022.

Recently, there has been a significant increase in the number of companies adopting this practice as a strategy to minimize their environmental impact and demonstrate their commitment to sustainability, transparency, and social responsibility.

Want to learn more about emissions inventories and why to do it? Just keep reading, and you'll also find some tips for calculating emissions in your company.


Enjoy your reading!


What is an emissions inventory?

Emissions inventories are tools used for managing greenhouse gas (GHG) emissions. Through these inventories, a company records and documents the amount of gasses it emits over a specific time interval.

With this data, the company can measure the magnitude of its emissions, identify the most relevant emission sources within its operations, and implement measures to reduce its GHG emissions.


How to calculate the emissions inventory?

To calculate CO2 emissions, some steps need to be followed. First, it is necessary to determine the scope of the inventory, i.e., define which emission sources will be included. Emission sources can cover various company activities, such as energy generation or consumption, transportation, product manufacturing, among others.

Next, the activity level of the analyzed sources must be determined. The activity level corresponds to the intensity with which a certain activity was performed over a specific time interval. For example, if calculating the CO2 emissions of a car, the activity would be the number of kilometers driven by the car.

Finally, the emission factor of each activity must be known. The emission factor is a representative value that informs the proportion with which a particular pollutant is emitted by a specific activity. These values are usually general averages obtained from long-term observations. Still using the car as an example, the emission factor can be expressed as kilograms of CO2 emitted per kilometer driven (kg CO2/km).

From this data, it is possible to calculate CO2 emissions using the following formula:

CO2 Emissions = Activity Level x Emission Factor


How to calculate energy consumption emissions?

One of the most common sources of GHG emissions in companies is energy consumption, and calculating emissions from this source is an important component of the corporate emissions inventory.

In this calculation, the Activity Level corresponds to the amount of energy consumed over a specific time interval. This amount is generally expressed in units such as kilowatt-hour (kWh) or megajoules (MJ).

To accurately know the amount of energy consumed by the company, consumption monitoring is essential. At this point, Internet of Things (IoT) technologies make a significant contribution to the development of emissions inventories. With IoT technologies, it is possible to monitor energy consumption in real-time and collect detailed data on energy use in each piece of equipment and company installation.

This allows organizations to identify areas with higher energy consumption and, consequently, higher CO2 emissions, implementing specific measures to reduce consumption in these areas.


Read also: How to measure equipment energy consumption simply?


Another relevant point for calculating emissions is identifying the emission factors that should be used. If the consumed energy comes from the National Interconnected System (SIN), that is, from the traditional electricity grid, the emission factors periodically released by the Ministry of Science, Technology, and Information (MCTI) on their official website should be used. 

These factors vary from month to month and correspond to the average emissions from energy generation throughout that month, taking into account all the power plants operating during that period.

If the consumed energy comes from other sources, such as generators or boilers, the emission factors compiled by the GHG Protocol program can be used. These factors are provided by official sources, such as the Intergovernmental Panel on Climate Change (IPCC), and are calculated based on a combination of primary data (experimental studies and field measurements) and secondary data (government agency reports and peer-reviewed scientific literature).

Each fuel has a specific emission factor, so knowledge of the information about the fuels used for energy generation is essential for choosing the correct factors. 

Once you have all the necessary information, simply multiply the energy consumption by the corresponding emission factor.

Thus, if a company consumes 1,000 MWh of electricity in a year, and the emission factor of their electricity grid is 0.5 tons of CO2/MWh, then the GHG emissions from electricity consumption will be 500 tons of CO2. 

It is important to emphasize that different variables can influence the calculation of emissions. CO2 emissions from biomass combustion, for example, should be reported separately, as the carbon from these emissions is considered "carbon neutral."

Therefore, care must be taken when calculating CO2 emissions from diesel combustion, as all diesel sold in Brazilian territory has a biodiesel fraction determined by the National Council of Energy Policy (CNPE). This fraction is periodically changed, and not considering it may result in higher emission values than the actual ones since the carbon released by biodiesel combustion is the same carbon that was removed from the atmosphere during its production.

Moreover, CO2 is not the only GHG, and considering the other gases is important to ensure that the emissions inventory is as complete as possible. To do this, the same calculation must be repeated, replacing the CO2 emission factors with the emission factors of each respective gas.

At the end of the calculations, the obtained values can be converted into CO2 equivalent (CO2e) and added up, allowing the GHG emissions to be grouped into a single value.


What is CO2e? 

CO2e is a unit of measure used precisely to compare and aggregate emissions of different GHGs, and its use in emissions inventories provides a total measure of these gases' emissions in a given organization. 

The conversion to CO2e takes into account the Global Warming Potential (GWP) of each gas, i.e., its ability to retain heat in the atmosphere compared to carbon.

For example, methane (CH4) has a GWP about 28 times greater than CO2, which means that one ton of methane emitted into the atmosphere would have the same global warming effect as 28 tons of CO2. Nitrous oxide (N2O), another GHG, has a GWP about 265 times greater than CO2.

Thus, if a company emitted 100 tons of CO2, 5 tons of methane (CH4), and 0.5 tons of nitrous oxide (N2O) in one year, then the total CO2e emissions would be:

100 tons of CO2 X 1 = 100 tons of CO2e

5 tons of CH4 X 28 = 140 tons of CO2e

0.5 tons of N2O X 265 = 132.5 tons of CO2e

CO2e emissions = 100 tons + 140 tons + 132.5 tons

CO2e emissions = 372.5 tons

This means that, in terms of climate impact, the company's emissions are equivalent to 372.5 tons of CO2.

In summary, calculating emissions from energy consumption can be complex and requires, above all, accurate and reliable data.

Squair and Kipos have a specialized team in sustainability and energy, capable of assisting companies in all stages of the process, from data collection to the preparation of the final report. In addition, we use internationally recognized methodologies for the preparation of corporate emissions inventories, following the recommendations of the GHG Protocol and the IPCC.

With this, we offer a complete and reliable solution for companies to measure and manage their GHG emissions and thus contribute to a more sustainable future.

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