Carbon accounting

Carbon accounting (or greenhouse gas accounting) is a framework of methods to measure and track how much greenhouse gas (GHG) an organization emits. It can also be used to track projects or actions to reduce emissions in sectors such as forestry or renewable energy. Corporations, cities and other groups use these techniques to help limit climate change. Organizations will often set an emissions baseline, create targets for reducing emissions, and track progress towards them. The accounting methods enable them to do this in a more consistent and transparent manner.

The main reasons for GHG accounting are to address social responsibility concerns or meet legal requirements. Public rankings of companies, financial due diligence and potential cost savings are other reasons. GHG accounting methods can help investors better understand the climate risks of companies they invest in. Accurate accounting methods also aid corporate and community net-zero goals. Many governments around the world require various forms of reporting. There is some evidence that programs that require GHG accounting help to lower emissions. Markets for buying and selling carbon credits depend on accurate measurement of emissions and emission reductions. These techniques can help to understand the impacts of specific products and services. They do this by quantifying their GHG emissions throughout their lifecycle. This encourages purchasing decisions that are environmentally friendly.

These techniques can be used at different scales, from those of companies and cities, to the greenhouse gas inventories of entire nations. They typically involve a combination of measurements, calculations, estimates, and reporting. A variety of standards and guidelines can apply, including Greenhouse Gas Protocol and ISO 14064. These often organize emissions into three categories. The Scope 1 category covers direct emissions from an organization's facilities. Scope 2 covers emissions from electricity purchased by the organization. Scope 3 covers other indirect emissions, including those from general suppliers and use of the organization’s products.

There are a number of challenges in creating accurate accounts of greenhouse gas emissions. Scope 3 emissions, in particular, can be difficult to estimate. In project accounting, additionality and double counting issues can affect the credibility of renewable energy and forest preservation efforts. These limitations can, in turn, impact perceptions of progress on climate change. Methods are being developed to provide accuracy checks on accounting reports from companies and projects. Organizations like Climate Trace are now able to check reports against actual emissions via the use of satellite imagery and AI techniques.