Carbon Emissions Calculation Formulas: How to Choose the Best?

In recent years, the concept of sustainability has gone from a trend to a vital requirement in the business world. Companies, especially those operating in resource-intensive sectors, face increasing pressure to monitor, report and, most importantly, reduce their carbon emissions. This focus on sustainability is driven by a combination of government regulations, pressure from consumers and investors, and a growing awareness of the need to mitigate climate change.  

In this context, calculating carbon emissions is fundamental to developing effective decarbonization strategies and creating a positive impact on the environment.  

In this article, we explore the main formulas for calculating carbon emissions, their applications and limitations, and guide you in choosing the most appropriate one for your business.

The Urgency of Measuring Carbon Emissions

Before we delve into the subject of formulas, it is essential to stress the importance of measuring carbon emissions. Measuring greenhouse gas (GHG) emissions - predominantly carbon dioxide (CO₂), but also methane (CH₄), nitrous oxide (N₂O) and others - is the first step in any emissions reduction strategy. Carbon emissions result directly from companies' daily activities, from energy use to logistics, and contribute significantly to climate change.

Measuring these emissions accurately has multiple benefits:

1) Identifying Emissions Hotspots: By measuring emissions, companies can identify the main sources of carbon in their operations, which allows them to focus their efforts on those areas that offer the greatest potential for reduction.

2. Compliance with regulations: Governments and international bodies are increasingly imposing strict regulations on carbon emissions. Complying with these rules not only avoids sanctions but can also open the door to tax incentives and other advantages.

3. Building a Positive Corporate Image: Companies that adopt a proactive approach to sustainability are viewed more favorably by consumers, partners and investors, which strengthens their reputation and competitiveness in the market.

4. Access to New Market Opportunities: With the growing demand for products and services that have a low environmental impact, measuring and, more importantly, reducing carbon emissions becomes a crucial competitive advantage.

Approaches to Calculating Carbon Emissions

There are various methodologies for calculating carbon emissions, each adapted to different types of organizations and objectives. Choosing the right methodology depends on the complexity of the company's operations, the resources available for collecting and analyzing data, and the sustainability goals you want to achieve.

1. Basic Formula: GHG = Activity x Emission Factor

The simplest and most widely used formula for calculating carbon emissions is:

GHG=Activity×Emission Factor

This basic approach is useful for companies that are just starting to measure their emissions and need a quick and easy estimate. The formula can be applied to different types of activities, such as energy consumption, the use of fossil fuels, or transportation.

• Activity: Refers to the amount of resources used or the level of production. It can be measured in kilowatt-hours (kWh) in the case of electricity consumption, liters of fuel, kilometers traveled by a fleet of vehicles or tons of materials processed.

• Emission Factor: This is a coefficient that indicates the amount of GHG emissions associated with each unit of activity. Emission factors are generally provided by official bodies, such as the International Energy Agency (IEA), and vary according to the type of resource used and the geographical region.

Practical example: A company that consumes 20,000 kWh of electricity in a year, in a region where the emission factor for electricity is 0.233 kg CO₂/kWh, will calculate its emissions as follows:

GHG=20,000kWh×0.233kg CO₂/kWh=4,660kg CO₂

Advantages:

• Simplicity: This formula is easy to apply and does not require detailed or complex data.

• Accessibility: It is suitable for companies that are starting to measure their emissions and need a simple and quick tool.

Limitations:

• Limited Accuracy: Does not capture all emission sources, especially those associated with indirect or complex operations.

• Scalability: This may not be enough for companies with diversified operations or those looking for a detailed analysis of their environmental impact.

2. Detailed Formula: GHG = ∑ (Energy Use x Emission Factor)

This formula is an extension of the basic approach, and is particularly useful for companies with more complex operations that use multiple energy sources or have several production lines. The formula is applied individually to each emission source and then the total emissions are added together to get a complete picture.  

GHG=∑ (Energy Use×Emission Factor)

Practical example: A factory that uses electricity, natural gas and diesel can calculate its total emissions as follows:

Total GHG=(Electricity in kWh×Emission Factor)+(Natural Gas in m³×Emission Factor)+(Diesel in Liters×Emission Factor)

If the factory consumes 10,000 kWh of electricity, 5,000 m³ of natural gas and 1,000 liters of diesel, with respective emission factors of 0.233 kg CO₂/kWh, 1.94 kg CO₂/m³ and 2.68 kg CO₂/liter, the emissions would be calculated as:

GEE=(10.000×0,233)+(5.000×1,94)+(1.000×2,68)

GHG=2,330+9,700+2,680=14,710 kg CO₂

Advantages:

• Detail and Accuracy: Allows for a more detailed and accurate analysis, capturing emissions from various energy sources.

• Flexibility: Suitable for companies with multiple lines of operation or diverse emission sources.

Limitations:

• Complexity: Requires more detailed and specific data, which can be a challenge in terms of collection and management.

• Resource Intensive: Can be more difficult to implement without adequate data management systems.

3. Product Carbon Footprint

This approach is more comprehensive and includes calculating carbon emissions throughout a product's life cycle, from the extraction of raw materials to their disposal or recycling. This method is known as Life Cycle Analysis (LCA), and allows companies not only to measure the emissions associated with production, but also those that occur along the supply chain and during the use of the product.

Practical example: Let's consider a company that manufactures plastic bottles. The product's carbon footprint would include the emissions associated with:

1. Extraction of Raw Materials: The emissions generated during the production of the plastic used in the bottles.

2. Transportation of Raw Materials: Emissions related to the transportation of plastic to the factory.

3. Production: Emissions from the energy used in the machines to mold the bottles.

4. Distribution: Emissions from transporting the bottles produced to the points of sale.

5. Use of the Product: Although in this case it is minimal, some analyses include the use of the product by the consumer.

6. End of Life: Emissions associated with the disposal or recycling of bottles after use.

Advantages:

• Comprehensive approach: Offers a complete view of carbon emissions throughout the product's life cycle.

• Identifying Reductions along the Value Chain: Helps identify opportunities to reduce emissions at various stages of the value chain.

Limitations:

• Extremely complex: Requires detailed analysis and a significant amount of data throughout the supply chain.

• High resources: It can be expensive and time-consuming, especially for small and medium-sized companies that may not have the capacity to carry out such detailed analyses.

4. GHG Protocol: A Comprehensive and Standardized Approach

The GHG Protocol (Greenhouse Gas Protocol) is one of the most internationally recognized standards for calculating and managing GHG emissions. Developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), this protocol provides a comprehensive framework for companies to measure and manage their emissions. The GHG Protocol divides emissions into three scopes, which helps to categorize the different sources of emissions:

• Scope 1: Direct emissions from sources owned or controlled by the company. Examples include fuels burned in boilers, furnaces or vehicles belonging to the company.

• Scope 2: Indirect emissions associated with the consumption of electricity, steam, heating and cooling purchased by the company. These emissions occur at the facility that generates the electricity, but are attributed to the company that consumes the energy.

• Scope 3: Indirect emissions that occur in the company's value chain, including emissions associated with the purchase of raw materials, transportation, business travel, waste and even the use of products by the end consumer.

Practical example: A manufacturing company can calculate its emissions as follows:  

1. Scope 1: Emissions from the company's fleet vehicles, industrial processes and fuel consumption on the premises.

2. Scope 2: Emissions associated with electricity consumption in factories and offices.

3. Scope 3: Emissions resulting from the logistics and transportation of goods, business travel by employees, and even the use of products by consumers.

Advantages:

• International Standard: Widely accepted and used by companies all over the world, which makes it easier to compare and report emissions.

• Comprehensive Breakdown: Allows companies to have a complete overview of their emissions, including those that are not immediately visible or easy to measure.

Limitations:

• Complex Implementation: Requires a significant commitment in terms of resources, both financial and human, to collect and analyze the necessary data.

• Training needed: Companies may need specialized training to apply the GHG Protocol correctly.

Choosing the Right Formula for Your Business

The decision on which formula or methodology to use depends on a number of company-specific factors. Let's explore the main criteria that should guide this choice:

1. Company Objectives: If the main objective is simply to comply with basic environmental regulations, a simpler formula, such as Activity x Emission Factor, may suffice. However, if the company wishes to develop a detailed decarbonization strategy and identify specific areas for emissions reduction, more complex methods, such as the GHG Protocol, are recommended.

2. Complexity of Operations: Companies with simple operations, such as a single office or a small store, may benefit from a basic approach. On the other hand, companies with several factories, a large fleet of vehicles, or a global supply chain may need more detailed approaches, such as product life cycle analysis or the GHG Protocol.  

3. Data Availability: Some methodologies, such as Life Cycle Analysis or the GHG Protocol, require a significant amount of detailed data, which is not always available or easy to collect. Companies that do not yet have robust environmental data management systems can start with simpler approaches and evolve as they improve their data collection and analysis capabilities.

4. Available resources: Implementing more detailed methodologies can require significant resources, both in terms of time and human capital. Small and medium-sized companies, which may not have the same resources as large corporations, should consider starting with simpler and less expensive methodologies.

Conclusion

Measuring carbon emissions is an essential step for any company that wants to align itself with global sustainability goals and contribute to climate change mitigation. Choosing the right formula to calculate these emissions depends on several factors, including the company's objectives, the complexity of its operations, the availability of data and the resources available.

While the simplest formulas may be sufficient for initial estimates and for companies with less complex operations, those looking for a detailed analysis and a strategic approach to reducing emissions should consider more comprehensive methodologies, such as Life Cycle Analysis or the GHG Protocol.

Regardless of the methodology chosen, the most important thing is to start the measurement process and continue to evolve the company's sustainability strategy. As more companies adopt these practices, the collective impact will be significant, helping to build a more sustainable future for everyone.

If you need help on your organization's path to sustainability, book a meeting with us here.