Calculation

O4: GHG intensity  = (GHGs released in energy consumption for production  + GHGs released in energy consumption for overhead  + GHGs released by transport used for business travel  + Additional GHGs released from production process)  / Normalisation factor

Unit of the indicator: tCO2e/normalisation factor

 

Why this indicator is important

Greenhouse gases (GHGs) are a group of substances that contribute to global warming. They include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6), perfluorocarbons (PFCs) hydrofluorocarbons (HFCs) and many other compounds listed by the IPCC*. The 100-year Global Warming Potentials (GWP) for these substances range from 1 to 22,800 CO2e (relative to CO2). More detail can be found in the IPCC report.

GHGs are released from natural sources but the combustion of fossil fuels, agricultural activities, waste generation and industrial processes over the past have increased their concentrations well beyond historical levels.

This indicator represents the GHG intensity of the facility including production processes and overhead (energy-related emissions and. business travel). The GHG emissions associated with the production of input materials and the logistics (shipping of inputs and finished products as well as staff commuting) can also be counted by extending the accounting boundary. The GHG intensity of the product use stage is calculated separately.

With respect to the WRI/WBCSD GHG Protocol, this indicator principally combines Scope 1 (all direct GHG emissions) and Scope 2 (indirect GHG emissions from consumption of purchased electricity, heat or steam). The extension of the accounting boundary allows to cover part of Scope 3 (Other indirect emissions, such as the extraction and production of purchased materials and fuels, transport-related activities in vehicles not owned or controlled by the reporting entity, electricity-related activities (e.g. T&D losses) not covered in Scope 2, outsourced activities, waste disposal, etc.). The remainder of Scope 3 in the Toolkit is accounted for in the Indictor P7: Intensity of GHG emissions from products.

 

Interpretation

If the indicator is normalised by the value of the products (total factory gate price), it will show the intensity of GHGs relative to production. It does not show the total amount of GHGs released. Ideally, the intensity will decrease enough so that the facility’s total GHG emissions will also decrease – even with increases in production.

The most cost-effective way to decrease GHG intensity is through improved energy efficiency, conservation and the use of lower-carbon energy sources.

Releases from production processes may not be easily reduced. To determine areas of potential improvement, review the detailed data to pinpoint specific processes that could be made more energy-efficient or where fuel substitutions could be made.

Reviewing business travel is another way to reduce GHGs. Public transit is generally less GHG-intensive than private automobiles and economy class air travel is less GHG-intensive than business class. It may also be possible to avoid some travel through the use of teleconferencing, etc.

 

Related issues

If the indicator is normalised by the total value of facility’s output (total factory gate price), it will be sensitive to price fluctuations. For example, if the price of the product increases, the denominator may become larger** and the GHG intensity will decrease. Furthermore, if production increases and the price of the product remains the same, this indicator will not show increases in total GHG emissions. To manage GHGs, it is important that the company monitor both intensities and total emissions. To keep the indicator set small, only GHG intensity is included in this Toolkit.

Carbon offsets or other emissions trading programmes are not accounted in this Toolkit.

* The IPCC Fourth Assessment Report lists 63 substances.

** This would occur if the price increase is not due to changes in exchange rates or changes in world prices.