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Carbon Footprint Analysis

Carbon footprint analysis is a tool that organizations can use to measure direct and indirect emissions of greenhouse gases associated with their provision of goods and services. Carbon footprint analysis is also known as a greenhouse gas inventory, while greenhouse gas accounting describes the general practice of measuring corporate greenhouse gas emissions. The measurement of greenhouse gas emissions (1) allows voluntarily disclosure of data to organizations such as the Carbon Disclosure Project, (2) facilitates participation in mandatory emissions regulatory systems such as the Regional Greenhouse Gas Initiative, and (3) encourages the collection of key operational data that can be used to implement business improvement projects.

Similar to generally accepted accounting principles in the financial world, a set of standards and principles has emerged that guide data collection and reporting in this new area. In general, companies and individuals calculate their corporate emissions footprint for a twelve-month period. They are also increasingly calculating the footprint of individual products, services, events, and so forth. Established guidelines for greenhouse gas accounting, such as the Greenhouse Gas Protocol, define the scope and methodology of the footprint calculation.

The Greenhouse Gas Protocol, one commonly accepted methodology, is an ongoing initiative of the World Resources Institute and the World Business Council for Sustainable Development. The Greenhouse Gas Protocol explains how to do the following:

1. Determine organizational boundaries. Corporate structures are complex and include wholly owned operations, joint ventures, and other entities. The protocol helps managers define which elements compose the "company" for emissions quantification.
2. Determine operational boundaries. Once managers identify which branches of the organization are to be included, they must identify and evaluate which specific emissions sources will be included.
3. Identify indirect sources. Sources that are not directly owned or controlled by the company but that are nonetheless influenced by its actions are called indirect sources, for instance, electricity purchased from utilities that produce indirect emissions at the power plant or emissions from employee commuting, suppliers' activities, and so forth.
4. Track emissions over time. Companies must select a "base year" against which future emissions will be measured, establish an accounting cycle, and determine other aspects of how they will track emissions over time.
5. Collect data and calculate emissions. The protocol provides specific guidance about how to collect source data and calculate emissions of greenhouse gases. As a rule of thumb, the amount of energy consumed is multiplied by a series of source-specific "emissions factors" to estimate the quantity of each greenhouse gas produced by the source. Because multiple greenhouse gases are measured in the inventory process, the emissions for each type of gas are then multiplied by a "global warming potential" (GWP) to generate a "CO₂ equivalent" to facilitate streamlined reporting of a single emissions number. CO₂ is the base because it is the most abundant greenhouse gas and also the least potent one. For instance, over a century, methane would cause over twenty times more warming than an equal mass of CO₂:

Total emissions in CO₂eq = σ(fuel consumed × fuel emissions factor × GWP).

The method for calculating emissions from a single facility or vehicle is the same as that for calculating emissions for thousands of retail stores or long-haul trucks; hence, quantifying the emissions of a Fortune 500 firm or a small employee-owned business involves the same process.

Companies can reduce their carbon footprint by reducing emissions or acquiring "offsets," actions taken by an organization or individual to counterbalance the emissions, by either preventing emissions somewhere else or removing CO₂ from the air, such as by planting trees. Offsets are traded in both regulated (i.e., government-mandated) and unregulated (i.e., voluntary) markets, although standards for the verification of offsets continue to evolve due to questions about the quality and validity of some products. A company can theoretically be characterized as "carbon neutral" if it causes no net emissions over a designated time period, meaning that for every unit of emissions released an equivalent unit of emissions has been offset through other reduction measures or that the company uses energy only from nonpolluting sources.