Carbon Considerations and the Circular Economy
With rising temperatures and climate issues arising around the world, carbon has become a focus for governmental bodies, organisations and businesses. Increasingly, pressures are being placed on companies to be aware of their carbon emissions and environmental impact.
Greenhouse gases, carbon accounting, scope 1, 2 and 3, and CO2e are phrases that every business must be aware of in an environment that is becoming more focused on the future wellbeing of our planet and a sustainable future.
What is CO2?
CO2 is the chemical compound for carbon dioxide. Generally, CO2 is released into the atmosphere through the burning of fossil fuels, and as concentrations of the gas in our atmosphere grow, the planet warms. CO2 does not encompass greenhouse gases or CO2e.
What are Greenhouse Gases (GHGs)?
GHGs warm our planet by trapping heat within the Earth’s atmosphere, resulting in the rising temperatures associated with climate change and global heating.
Amongst the GHGs are CO2, Methane, Nitrous Oxide and Fluorinated gases. Each of these has an effect, when emitted, on our planet’s temperature; however, the effect each gas has differs in intensity and duration and therefore they are reported in one measurement: CO2e, or CO2 equivalent.
What is CO2e?
CO2e is the accepted metric for measuring the warming effect of the GHGs emitted into our atmosphere. For example, 1kg of methane emitted has a 25-times more powerful warming effect than 1kg of CO2, so 1 kg of methane is equivalent to 25 kg CO2e.
This metric allows all greenhouse gas effects to be reported equally according to the impact they have on global warming.
Reporting on Carbon | What is Carbon Accounting?
Understanding the language around carbon allows us to measure and report on the GHGs we produce.
Carbon accounting is the process an organisation follows to calculate and report its carbon footprint – the total GHG emissions associated with its operations – which is spread across three scopes defined by the Greenhouse Gas Protocol (GHG Protocol), the world’s leading framework for carbon accounting.
These three scopes are:
- Scope 1: Direct Emissions.
- Scope 2: Indirect emissions from purchased energy.
- Scope 3: indirect emissions from supply and value chains.
In countries like the UK, large companies are legally required to report on their scope 1 and 2 footprint, and any science-based Net Zero pledges will require measurement and reduction of scope 3 as well. In the face of this and mounting consumer pressures, carbon accounting is becoming an increasingly important issue.
Accounting for a Circular Economy
While the GHG Protocol has paved the way for significant progress in corporate sustainability, its methodology is designed for a linear economy. It largely assumes all products bought and sold by a company follow a traditional take-make-waste process, where virgin materials are mined to create a product that is then used and disposed of. From a carbon reporting perspective, this makes things very simple: a company that buys a new laptop, for example, would account for the emissions from the initial production process (the embodied carbon) in their scope 3 category 1 (purchased goods and services). In most cases, this makes a lot of sense, but what if the laptop isn’t new?
The Circular Economy doesn’t fit within this framework. Let’s go back to the laptop example and say that, instead of recycling or disposing of the laptop at end of life, the company sells it to be refurbished. If the next company that buys this refurbished laptop has to include the full embodied carbon in their scope 3, this would be double counting, as the first company has already accounted for it.
In reality, this is exactly what the GHG Protocol suggests, as it includes no dispensation for purchasing reused items. In fact, it would also require the company to include the cost of the refurbishment process on top of the initial embodied carbon, so a refurbished laptop would come with a bigger carbon cost than a new one!
The knock-on effect of this is that companies are penalised from a scope 3 perspective if they buy refurbished hardware, which perversely incentivises businesses to reduce their scope 3 by buying new. It also means that a refurbishment company may have a higher carbon footprint than one that produces new hardware, despite the fact that it is reducing global emissions by promoting reuse. At the other end of the life cycle, meanwhile, this means there’s no scope 3 incentive for businesses to sell to the secondary market.
Mixed messages and inconsistent reporting
The issues with this framework are clear, so some sustainability and carbon consultancies are telling their clients that they don’t need to include the embodied carbon of a second-hand item. While this is certainly an improvement on the GHG Protocol recommendations, it reduces standardisation across companies reporting, which is crucial to enable accurate benchmarking and comparison. Similarly, it leaves us with no method of assessing the impact of increased circularity on carbon footprints.
What we need is a consistent approach that can be applied by all businesses, one that considers previous life cycles and is designed to incentivise decisions that deliver global emissions reductions. This is exactly what we’re working on, so watch this space!
At Techbuyer we believe that you can’t escape the carbon conversation; we need to open ourselves up to learning more, finding solutions and reconsidering our carbon emissions for a sustainable future.
This piece marks the first in a three part series designed to offer digestible information, thought-provoking discussions and sustainable solutions for having the carbon conversation and working as a collective to reduce our environmental impact on the planet.
Learn more about key definitions on core carbon topics, such as life cycle assessment, carbon neutrality and net zero, embodied carbon and scope three below or get in touch to start your carbon conversation.
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