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Introduction
THE GREENHOUSE GAS PROTOCOL INITIATIVE

The Greenhouse Gas Protocol Initiative is a multi-stakeholder partnership of
businesses, non-governmental organizations (NGOs), governments, and others
convened by the World Resources Institute (WRI), a U.S.-based
environmental NGO, and the World Business Council for Sustainable
Development (WBCSD), a Geneva-based coalition of 170 international
companies. Launched in 1998, the initiative’s mission is to develop
internationally accepted greenhouse gas (GHG) accounting and reporting
standards for business and to promote their broad adoption.
To date, the GHG Protocol Initiative comprises two separate but linked
standards:
 GHG Protocol Corporate Accounting and Reporting Standard

(Corporate Standard), which provides a step-by-step guide for
companies to use in quantifying and reporting their GHG emissions
 GHG Protocol Project Quantification Standard (Project Standard),

which serves as a guide for quantifying reductions from GHG
mitigation projects.
The first edition of the Corporate Standard, published in September 2001,

enjoyed broad adoption and acceptance around the globe by businesses,
NGOs, and governments. Many industry, NGO, and government GHG
programs 1 used the Corporate Standard as a basis for their accounting and
reporting systems. Industry groups, such as the International Aluminum
Institute, the International Council of Forest and Paper Associations, and the
WBCSD Cement Sustainability Initiative, partnered with the GHG Protocol
Initiative to develop complementary industry-specific calculation tools.
Widespread adoption of the Corporate Standard can be attributed to the

inclusion of many stakeholders in its development and to the fact that it is
robust, practical, and builds on the experience and expertise of numerous
experts and practitioners. The revised edition of the Corporate Standard is the
culmination of a 2-year multi-stakeholder dialogue, designed to build on
experience gained from using the first edition.
PUBLIC SECTOR PROTOCOL
1
GHG program is a generic term used to refer to any voluntary or mandatory
international, national, sub-national government, or non-governmental authority that registers,
certifies, or regulates GHG emissions or removals.
i
Increasingly, public or government agencies at the local, state and federal
level have been called upon to demonstrate leadership by reporting and
reducing their greenhouse gas emissions. While the principles in the
Corporate Standard can provide the basic means by which any organization
can create an entity-level GHG inventory, public sector operations entail
certain unique elements (including organizational structures, control, tools,
freedom of information, and national security) not found in the private sector.
To ensure consistency in resulting reported values, as well as interagency
coordination, specific details unique to those operations must be agreed upon.
In response to this need, LMI began working with WRI in 2008 to develop
GHG accounting and reporting guidance for public sector organizations to as
part of the ongoing work of the GHG Protocol Initiative. Like the Corporate
Standard, this document was developed through a multi-stakeholder process
involving over 60 experienced public sector managers, technical experts, and
consultants across a range of organizations (see the Contributor’s section).
This document, The Public Sector GHG Accounting and Reporting Protocol
(Public Sector Protocol), is a stand-alone document that provides standards
and guidance for public agencies at the local/city, state and federal level. It
applies the principles and standards of the revised Corporate Standard to the
unique structures and needs of public agencies. It covers the accounting and
reporting of the six greenhouse gases covered by the Kyoto Protocol—carbon
dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and
sulphur hexafluoride. It does not modify or directly address the Project
Standard, nor does it provide guidance for state or community-level
inventories. (These types of inventories are based upon boundaries,
assumptions and methodology which are significantly different than those
referenced and utilized in the Public Sector Protocol).
Each chapter is divided into “standards” and “guidance” sections, with the
“standards” sections conveying the required elements for each inventory
component, and the “guidance” sections elaborating on the context and details
of those choices. Together, these sections were designed with the following
objectives in mind:
 To help public organizations prepare a GHG inventory that represents

a true and fair account of their emissions, through the use of
standardized approaches and principles
 To simplify and reduce the costs of compiling a GHG inventory
 To provide the public sector with information that can be used to build
an effective strategy to manage and reduce GHG emissions
 To facilitate participation in voluntary and mandatory GHG reporting

programs
ii
 To increase consistency and transparency in GHG accounting and
reporting among public sector organizations and GHG programs.
All stakeholders benefit from converging on a common standard, which

improves the consistency, transparency, and understandability of reported
information, making it easier to track and compare progress over time. The
common standard facilitates coordination of GHG reporting by multiple
entities (such as state and federal organizations), enabling them to comply
simultaneously and reduce costs.
The Corporate Standard and this Public Sector Protocol differ in several
ways. Throughout the Public Sector Protocol, focus is on the public sector, as
opposed to the focus on corporations in the Corporate Standard. This shift in
focus extends to a number of the examples provided. Discussion details the
many variants of public sector situations, and how those variants influence
reporting options. Concepts of particular interest to the public sector or those
that may have different interpretations are explained where used, for example:
reduction credits, value chain, and upstream activities. In addition, several
topics that did not necessarily require a specific public sector interpretation
but nonetheless warranted greater detail than provided in the Corporate
Standard, such as the treatment of leased assets, were expanded.
GHG ACCOUNTING IN THE PUBLIC SECTOR

As climate change has become an increasingly urgent concern, government
organizations have taken steps to measure, report and reduce their GHG
emissions as a key mitigation strategy. Many government agencies at a local,
state and federal level have demonstrated leadership in GHG management by
participating in voluntary reporting programs such as the Climate Registry,
enacting procurement policies related to energy efficiency, and engaging
where possible in emissions trading programs.
In addition to voluntary actions, government bodies are also being called upon
via legislation or executive order to track and report their GHG emissions. At
present, no economy-wide reporting requirements oblige comprehensive
public sector GHG accounting. But regional programs such as the Regional
Greenhouse Gas Initiative (RGGI) and state regulations around the United
States are beginning to require power producers and other large emitters to
submit GHG inventories, including such facilities that are owned or operated
by government agencies. In addition, some regulatory schemes, like those in
Maryland, require operators of certain types of relatively small equipment to
submit emissions statistics as part of the equipment’s permitting process.
In short, public sector organizations may choose to conduct inventories to

serve a variety of organizational goals, including:
 Demonstrating Leadership
 Identifying energy and cost reduction opportunities
iii
 Participating in mandatory reporting programs.
 Gaining relevant GHG inventory experience to inform public policy

design
WHO SHOULD USE THIS STANDARD?

Policymakers, leaders, and managers of public sector agencies at the federal,
regional, state, and local levels will find the material in this document to be a
useful blueprint for designing and implementing a GHG inventory. The
guidance in the Corporate Standard includes wording, examples, and
assumptions almost exclusively from the private sector. But public agency
operations, particularly their decision making regimes, may be more
complicated as they involve consideration of the public good, executive
policy, regulations, and compatibility with other agencies or governments as
well as international agreements.
To provide relevant guidance for these situations, this document draws

examples from actual experiences of those who manage GHG accounting
programs in the public sector. The underlying assumptions (accountability,
public interest, freedom of information, due diligence, etc.) form the basis of
decisions a public sector manager makes.
This document also serves as a source of information for policymakers

developing new regulations and organization-level GHG management
program developers. Though the stakeholder process used to develop it, key
concepts based on participants’ experiences and insights highlighted GHG
program attributes that would serve to streamline the implementation and
administration of a GHG management program. However, in some cases such
information can only be put to good use by program developers, as opposed to
those conducting inventories under established regulations where options may
no longer be available.
For example, stakeholders often highlighted costs saved through the

coordination of reporting requirements for similar activities (especially energy
consumption reports). Program developers may have the ability to design the
GHG reporting program so that those who implement the program and
conduct the inventories can coordinate data reports so they satisfy
requirements of the GHG program and energy reporting programs or other
programs.
This Public Sector Protocol should not be used to quantify the reductions
associated with GHG mitigation projects for use as offsets or credits—the
Project Standard provides standards and guidance for this purpose.
iv
RELATIONSHIP TO OTHER GHG PROGRAMS
It is important to distinguish between the GHG Protocol Initiative and other
GHG reporting or management programs. While the Public Sector Protocol
has been designed to be program and policy neutral, its core principles
adapted from the Corporate Standard are consistent and compatible with the
vast majority of voluntary reporting programs. The Public Sector Protocol
focuses only on designing a GHG inventory, including the accounting and
reporting of emissions. But it does not require emissions information to be
reported to LMI, WRI, WBCSD, or any other organization. In addition,
although this standard is designed to develop a verifiable inventory, it does
not provide a standard for conducting verification.
However, the GHG Protocol Initiative encourages government agencies at the

local, state and federal level to participate in voluntary reporting programs
which offer agencies a means of added accountability as well as a platform for
exchanging technical information on best practices. Where the Public Sector
Protocol can offer a rigorous framework for designing a GHG inventory,
other reporting programs can specify and assist in data collection,
management and technical support. In particular, the Local Government
Operations Protocol (LGOP) provides GHG inventory guidance specifically
for local governments across the globe and shares compatibility with the core
principles in the Public Sector Protocol. The LGOP was drafted jointly by
ICLEI (the International Council for Local Environmental Initiatives), The
Climate Registry and the California Air Resources Board.
Because GHG programs often have specific accounting and reporting

requirements, public sector organizations should always check with any
relevant programs for any additional requirements before developing their
inventory. Conversely, GHG program developers and GHG account managers
should explore how reporting requirements for other programs may overlap or
complement one another, offering potential efficiencies.
Since the guidance in the Corporate Standard has served as the basis for most
GHG reporting and trading programs to date, the Public Sector Protocol is
also compatible with these, including the following organizations (also listed
in Appendix C):
 Voluntary GHG reduction programs, e.g., the World Wildlife Fund

Climate Savers, U.S. Environmental Protection Agency Climate
Leaders, Climate Neutral Network, and Business Leaders Initiative on
Climate Change.
 GHG registries, e.g., The Climate Registry, the Eastern Climate

Registry, and the World Economic Forum Global GHG Registry.
 National and regional industry initiatives, e.g., the New Zealand

Business Council for Sustainable Development, Taiwan Business
v
 GHG trading programs, 2 e.g., the United Kingdom Emissions Trading
Scheme, Chicago Climate Exchange, and European Union Greenhouse
Gas Emissions Allowance Trading Scheme.
 Sector-specific protocols developed by a number of industry

associations, e.g., the International Aluminum Institute, International
Council of Forest and Paper Associations, International Iron and Steel
Institute, WBCSD Cement Sustainability Initiative, and International
Petroleum Industry Environmental Conservation Association.
 Initiatives established in other countries such as Mexico, China, Brazil,

Philippines, and India.
 Mandated compliance schemes, e.g., regional (RGGI, Western Climate

Initiative, Midwestern Greenhouse Gas Reduction Accord), many
states (e.g., California’s AB32, Maryland’s Healthy Air Act), and
cities who have adopted the Mayor’s Climate Protection Center
guidelines.
GHG CALCULATION TOOLS

For many public agencies, the calculation methods and tools utilized to
complete a GHG inventory may be selected at a technical management level
and/or integrated into existing environmental reporting mechanisms. Agencies
that join voluntary reporting programs like The Climate Registry will draw
upon their online reporting and calcaultion tools. Similarly, ICLEI offers a
suite of methods and tools that can be aligned with their Local Government
Operations (LGO) Protocol. This Public Sector Protocol does not require the
use of any particular calculation tool, but does require that all methods,
procedures and tools utilized in completing a GHG report are transparently
detailed. Additionally, when a comprehensive tool does not exist, estimates
and thorough documentation of the assumptions and shortcomings of those
estimates may be required. A full list of existing calculation tools can be
found in Ch. 6.
To complement the standard and guidance provided here, WRI offers a

number of cross-sector and sector-specific calculation tools for free on the
GHG Protocol Initiative website (www.ghgprotocol.org). These tools provide
step-by-step guidance and electronic worksheets to help users calculate GHG
emissions from specific sources or industries. The tools are consistent with
those proposed by the Intergovernmental Panel on Climate Change (IPCC) for
compilation of emissions at the national level (IPCC, 1996). They have been
2
Trading programs that operate at the level of facilities primarily use the GHG Protocol
Initiative calculation tools.
vi
refined to be user-friendly for non-technical staff and to increase the accuracy
of emissions data at an organization level.
REPORTING IN ACCORDANCE WITH THE PUBLIC

SECTOR PROTOCOL
The GHG Protocol Initiative encourages all public sector organizations—
regardless of their experience in preparing a GHG inventory—to use this
document. The term “shall” is used in the chapters containing standards to
clarify what is required to prepare and report a GHG inventory in accordance
with the Public Sector Protocol; not to convey a statutory requirement. This is
intended to improve the consistency with which the standard is applied and
the resulting information that is publicly reported. It also has the advantage of
providing a verifiable standard for public sector organizations interested in
taking this additional step.
However, when regulatory requirements are not consistent with GHG

Protocol, the organization’s report must describe the variance from the
protocol and reason for it. For example, regulations may require that only
three GHGs be measured and reported, whereas the GHG Protocol applies to
the six Kyoto GHGs. This variance must be reported.
FREQUENTLY ASKED QUESTIONS

Below is a list of frequently asked questions, with directions to the relevant
chapters:
 What goals should I consider when setting out to account for and
report emissions? Chapter 2
 How do I deal with complex organizational structures and shared GHG

emissions ownership? Chapter 3
 What is the difference between direct and indirect emissions and what
is their relevance? Chapter 4
 Which indirect emissions should I report? Chapter 4
 How do I account for and report outsourced and leased operations?

Chapter 4, Appendix E
 What is a base year and why do I need one? Chapter 5
 My emissions change with alterations to agency structure. How do I

account for these? Chapter 5
 How do I identify and calculate my organization’s emission sources?

Chapter 6
vii
 What kinds of tools are there to help me calculate emissions? Chapter
6
 What data collection activities and data management issues do my

facilities have to deal with? Chapter 6
 What determines the quality and credibility of my emissions

information? Chapter 7
 How should I account for and report GHG offsets that I sell or
purchase? Chapter 8
 What information should be included in a GHG public emissions

report? Chapter 9
 What data must be available to obtain external verification of the

inventory data? Chapter 10
 What is involved in setting an emissions target and how do I report

performance in relation to my target? Chapter 11
viii
Chapter 1
GHG Accounting and Reporting Principles
STANDARD
As with financial accounting and reporting, generally accepted greenhouse gas
(GHG) accounting principles are intended to underpin and guide GHG
accounting and reporting to ensure that the reported information represents a
faithful, true, and fair account of an organization’s GHG emissions. These
principles also permit data to be accurately compared from year to year, and
across multiple entities—which is particularly critical for departments or sub-
agencies or rolling up or aggregating their inventories to higher organizational
units (division, bureau. etc.)
GHG accounting and reporting practices are evolving and are new to many
organizations; however, the principles listed below from the Corporate
Standard are derived in part from generally accepted financial accounting and
reporting principles. They also reflect the outcome of a collaborative process
involving stakeholders from a wide range of technical, environmental, and
accounting disciplines.
GHG accounting and reporting shall be based on the following principles:
 Relevance: Ensure the GHG inventory appropriately reflects the GHG

emissions of the organization and serves the decision-making needs of
users—both internal and external to the organization.
 Completeness: Account for and report on all GHG emission sources

and activities within the chosen inventory boundary. Disclose and
justify any specific exclusions.
 Consistency: Use consistent methodologies to allow for meaningful

comparisons of emissions over time. Transparently document any
changes to the data, inventory boundary, methods, or any other
relevant factors in the time series.
 Transparency: Address all relevant issues in a factual and coherent

manner, based on a clear audit trail. Disclose any relevant assumptions
and make appropriate references to the accounting and calculation
methodologies and data sources used.
 Accuracy: Ensure that the quantification of GHG emissions is

systematically neither over nor under actual emissions, as far as can be
REVISED DRAFT #1 1-1
The Public Sector Protocol is a joint LMI-WRI product.
judged, and that uncertainties are reduced as far as practicable.
Achieve sufficient accuracy to enable users to make decisions with
reasonable assurance as to the integrity of the reported information.
GUIDANCE
These principles are intended to underpin all aspects of GHG accounting and
reporting. Their application will ensure that the GHG inventory constitutes a
true and fair representation of the organization’s GHG emissions. Their
primary function is to guide the implementation of the Public Sector GHG
Accounting and Reporting Protocol (Public Sector Protocol), particularly
when the application of the standards to specific issues or situations is
ambiguous.
Relevance
For a public organization’s GHG report to be relevant means that it contains
the information that users—both internal and external to the organization—
need for their decision making. An important aspect of relevance is the
selection of an appropriate inventory boundary, or the selection of what
activities fall under a given agency’s responsibility. Relevance may also be
dictated by regulatory requirements stipulate the information to be included or
reporting frequency. The choice of the inventory boundary is dependent on the
characteristics of the organization, the intended purpose of information, and
the needs of the users. When choosing the inventory boundary, a number of
factors should be considered:
 Organizational structures: Control (operational and financial),

ownership, legal agreements, public-private partnerships, government
owned-contractor operated, etc.
 Operational boundaries: On-site and off-site activities, shared

facilities, processes, services, and impacts
 Operational context: Nature of activities, geographic locations,

sector(s), purposes of information, and users of information.
More information on defining an appropriate inventory boundary is provided

in Chapters 2 (Inventory Goals), 3 (Organizational Boundaries), and 4
(Operational Boundaries).
Completeness
All relevant emissions sources within the chosen inventory boundary need to
be accounted for so that a comprehensive and meaningful inventory is
compiled. In practice, a lack of data or the cost of gathering data may be a
limiting factor. Sometimes it is tempting to define a minimum emissions
accounting threshold (often referred to as a de minimis threshold) stating that a
source not exceeding a certain size can be omitted from the inventory.
Technically, such a threshold is simply a predefined and accepted negative
bias in estimates (i.e., an underestimate). Although it appears useful in theory,
and multiple established GHG programs allow for de minimis thresholds, the
practical implementation of such a threshold is not compatible with the
completeness principle. In order to utilize a de minimis threshold, the
emissions from a particular source or activity would have to be quantified to
ensure they were under the threshold. But once emissions are quantified, most
of the benefit of having a threshold is lost.
In the context of verification, a “materiality threshold” is often used to

determine whether an error or omission is a material discrepancy or not—that
is, whether it significantly impacts the final emissions reported in the
inventory. This is not the same as a de minimis threshold for defining a
complete inventory. Instead, organizations need to make a good faith effort to
provide a complete, accurate, and consistent accounting of their GHG
emissions. For cases where certain emissions have been excluded, or
estimated at an insufficient level of quality (e.g., due to insufficient data), it is
important that this is transparently documented and justified. Verifiers can
determine the potential impact and relevance of the exclusion, or lack of
quality, on the overall inventory report.
More information on completeness is provided in Chapters 7(Managing

Inventory Quality) and 10 (Verification of GHG Emissions).
Volkswagen:
Maintaining completeness over time
Volkswagen is a global auto manufacturer and the largest automaker in Europe. While
working on its GHG inventory, Volkswagen realized that the structure of its emission
sources had undergone considerable changes over the last 7 years. Emissions from
production processes, which were considered to be irrelevant at a corporate level in
1996, today constitute almost 20 percent of aggregated GHG emissions at the
relevant plant sites. Examples of growing emissions sources are new sites for engine
testing or the investment into magnesium die-casting equipment at certain production
sites. This example shows that emissions sources have to be regularly re-assessed to
maintain a complete inventory over time.
Consistency
Users of GHG information will want to track and compare GHG emissions
information over time in order to identify trends and to assess the performance
of the reporting organization. The consistent application of accounting
approaches, inventory boundary, and calculation methodologies is essential to
producing comparable GHG emissions data over time, and among inventories
from other reporting organizations. The GHG information for all operations
within an organization’s inventory boundary needs to be compiled in a
manner that ensures that the aggregate information is internally consistent and
comparable over time. If there are changes in the inventory boundary,
methods, data, or any other factors affecting emission estimates, they need to
be transparently justified, documented, and disclosed.
More information on consistency is provided in Chapters 5 (Tracking

Emissions Over Time) and 9 (Reporting Emissions).
Transparency
Transparency relates to the degree to which information on the processes,
procedures, assumptions, and limitations of the GHG inventory are disclosed
in a clear, factual, neutral, and understandable manner based on clear
documentation and archives (i.e., an audit trail). Information needs to be
recorded, compiled, and analyzed in a way that enables internal reviewers and
external verifiers to attest to its credibility. Specific exclusions or inclusions
need to be clearly identified and justified, assumptions disclosed, and
appropriate references provided for the methodologies applied and the data
sources used. The information should be sufficient to enable a third party to
derive the same results if provided with the same source data. A transparent
report will provide a clear understanding of the issues in the context of the
reporting organization and a meaningful assessment of performance. An
independent external verification is a good way of ensuring transparency and
determining that an appropriate audit trail has been established and
documentation provided.
More information on transparency is provided in Chapters 9 (Reporting

Emissions) and 10 (Verification of GHG Emissions).
Accuracy
Data should be sufficiently precise to enable intended users to make decisions
with reasonable assurance that the reported information is credible. GHG
measurements, estimates, or calculations should be systemically neither over
nor under the actual emissions value, as far as can be judged, and that
uncertainties are reduced as far as practicable. The quantification process
should be conducted in a manner that minimizes uncertainty. Reporting on
measures taken to ensure accuracy in the accounting of emissions can help
promote credibility while enhancing transparency.
More information on accuracy is provided in Chapter 7 (Managing Inventory

Quality).

Chapter 2
Organizational Goals and Inventory Design
GUIDANCE
While public agencies at a local/city, state and federal level may have various
reasons for compiling a GHG inventory, public sector managers frequently
cite the following four goals:
1. Demonstrating leadership
2. Identifying energy and cost reduction opportunities
3. Participating in mandatory reporting programs
4. Gaining relevant GHG inventory experience to inform public policy

design
Public organizations generally want their GHG inventory to be capable of

serving multiple goals. It therefore makes sense to design the process from the
outset to provide information for a variety of different users and uses—both
current and future. The Public Sector Protocol has been designed as a
comprehensive GHG accounting and reporting framework to provide the
information building blocks capable of serving most organizational goals (see
Table 2-1). Thus the inventory data collected according to the Public Sector
Protocol can be aggregated and disaggregated for various organizational and
operational boundaries and for different geographic scales (country, state,
facility, bureau, field office, etc.).
Public sector managers should be aware that many government organizations

may already be collecting, managing, and reporting data and other information
that is essential for GHG accounting. For example, federal agencies track and
report energy and fuel use and reductions as required by Executive Order
13423. It is important that such existing efforts be leveraged to maximize
efficient reporting and to avoid duplication of effort, overlaps, gaps, or
conflicts in reporting requirements.

Table 0-1. Organizational Goals Served by GHG Inventories
Demonstrating leadership
 Voluntary public reporting of GHG emissions and setting GHG reduction
targets
 Participation in GHG reporting programs (ex: The Climate Registry)
 Green procurement policies (ex: Energy Star)
Identifying energy and cost reduction opportunities
 Identifying energy and resource reduction opportunities
 future
Identifying risks associated with GHG constraints in the future
 Participating in external cap and trade allowance trading programs
Participating in mandatory reporting programs
 Preparing for implementation of mandatory reporting programs
 Participating in government reporting programs at the national, regional,
state, or local level
 Providing information to support “baseline protection” and/or credit for early
action
 Building experience that allows informed participation in rule-making and
standards development
Gaining relevant GHG inventory experience to inform public policy design
 Developing nuanced, fair regulations through in-house understanding
 Acting as a demonstration laboratory for citizens and other organizations
 Acting as a resource for other organizations
Appendix C provides an overview of various GHG programs—many of which

are based on the Corporate Standard. The guidance sections of Chapters 3
and 4 provide additional information on how to design an inventory for
different goals and uses.
Identifying GHG Reduction Focus Areas at the National Aeronautics and Space
Administration (NASA)
When NASA took on the task of conducting a GHG emissions inventory in 2005, they
determined GHG emissions by using existing NASA information systems for: 1)
transportation, 2) energy, and 3) materials-chemicals. NASA’s GHG emissions
inventory indicated that the major GHG sources were from transportation and energy.
But because NASA works with material-chemical sources with high global warming
potentials (GWP), they conducted a “what if” analysis to see how large the GHG
emissions from such sources would have to be to contribute at least 1 percent of its
total emissions.
Theoretical calculations were made using SF 6 (which is used in the production and
testing of semiconductors, and is the most potent GHG with a GWP 23,900 times that
of CO 2 ). The “what if” analysis reveled that it would be highly unlikely that NASA’s
material-chemical GHG sources would be greater than 1 percent of its total GHG
emissions. From this, NASA determined that the best use of NASA’s resources would
be to apply them to reduce emissions from transportation and energy sources.
Further, applying additional substantial NASA resources toward reducing material-
chemical GHG sources would be an unwise use of limited NASA resources.

Demonstrating Leadership
As concerns over climate change grow, NGOs, taxpayers, and other
stakeholders are increasingly calling for greater disclosure of GHG
information. In response, a growing number of public sector organizations are
demonstrating leadership and “walking the talk” by tracking and reporting
their performance across a wide range of environmental issues, including
GHG emissions.
Some countries, regions, and states have established GHG registries where
government agencies operating within the jurisdiction can report GHG
emissions in a public database. Cities and states may report to these programs
representing city or state-wide emissions, or only those emissions from
government operations. (Note: this Public Sector Protocol offers guidance for
creating agency-specific inventories, not city or state-wide inventories).
Registries may be administered by governments (e.g., the U.S. Environmental
Protection Agency’s (EPA) Climate Leaders Program, and U.S. Department
of Energy (DOE) 1605b Voluntary Reporting Program), NGOs (e.g., The
Climate Registry), or industry groups (e.g., World Economic Forum Global
GHG Registry). Many GHG programs also provide help to organizations
setting voluntary GHG targets. Several government organizations, such as the
Washington State Department of Ecology, the City of Greenville, SC, and the
US Postal Service are members of The Climate Registry, while National
Renewable Energy Laboratory is a Climate Leader’s Partner.
Most voluntary GHG programs permit or require the reporting of direct

emissions from operations (including all six GHGs), as well as indirect GHG
emissions from purchased electricity. A GHG inventory prepared in
accordance with the Public Sector Protocol will usually be compatible with
most requirements (Appendix C provides an overview of the reporting
requirements of some GHG programs). However, since the accounting
guidelines of many voluntary programs are periodically updated,
organizations planning to participate are advised to contact the program
administrator to check the current requirements.
In addition to voluntary reporting, some public sector organizations have

begun to participate in or purchase offsets from voluntary trading programs, as
a means to meet citizens’ demands and to demonstrate leadership. Several
municipalities, such as Boulder, CO, Chicago, IL, and Fargo, ND, as well as
states such as Illinois and New Mexico are members of the CCX and have
committed to making specific emissions reductions. Similarly, the U.S. House
of Representatives is purchasing offsets from the CCX to achieve a carbon
neutral emissions status. In addition internal GHG trading programs, such as
the one implemented by BP across its 150 operating units to meet an
organization-wide emissions cap on emissions, are being considered as a cost-
effective option for meeting agency or organization-wide goals.

Denver, Colorado: The balanced energy capital of the west
Denver is transitioning to an energy mix that is dominated by cleaner fuels such as

natural gas, wind and solar, and implementing higher energy efficiency standards
which will reduce GHG emissions and bring many additional benefits, including
improved air quality, lower energy bills, and reduced dependence on foreign oil
supplies. The local economic strategy focuses on both the supply and demand sides
of a complex energy challenge.
On the supply side, Denver continues to be a world leader in solar research and the
hub of natural gas exploration and development throughout the Rockies. With an
average of 300 sunny days per year, Denver has the 5th best solar potential in the
country. The city is doing its part to overcome barriers to widespread solar technology
adoption. Through its “Solar Cities Partnership,” Denver will fundamentally change the
energy market in the city by establishing solar as a mainstream energy resource
option.
More recently, Denver added wind energy and incentives for individual applications
through legislation passed by Colorado voters that requires 10 percent of all electricity
produced to come from renewable sources by 2015. On the demand side, Denver's
Portland,
busin Oregonis beginning to pursue more aggressive energy management
ess community
and efficiency programs.
Portland is a city of 500,000 people set in a broader metropolitan area of 1.3 million.
In 1993, the city became the first local government in the United States to adopt a
A co
plrnerstone of Denver's
an to address climate energy
change.management and energy
In 2001, Multnomah efficiency
County joined goals includes
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evelopment and implementation of an updated Greenhouse Gas Reduction
in adopting the Local Action Plan on Global Warming; the plan identifies Plan.
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below
Portland has inventoried GHG emissions since 1990, allowing careful tracking of
emissions trends. The city collects available data—primarily from emissions
associated with energy consumption and landfills.
Despite rapid population and economic growth, the synergistic efforts of public
agencies, local businesses, nonprofit organizations, and citizens led to a local
emissions level just 0.1 percent above 1990 levels in 2007.
Public organizations may be limited in their ability to sell or purchase Comment [W1]: Add expanded
discussion of how market participation is
emissions reduction credits that are generated through a market-based specifically present, or limited, for public
program, and specific legislation may be required to clarify these issues or agency activity as it relates to their GHG
inventory.
authorize public organizations to fully participate in a trading program.
GHG trading and offset programs are likely to impose additional layers of
accounting specificity relating to which approach is used for setting
organizational boundaries; which GHGs and sources are addressed; how base
years are established; the type of calculation methodology used; the choice of
emission factors; and the monitoring and verification approaches employed.
The broad participation and best practices incorporated into the Corporate
Standard and Public Sector Protocol are likely to inform the accounting
requirements of emerging programs, and have indeed done so in the past.

Identifying Energy and Cost Reduction Opportunities
Compiling a comprehensive GHG inventory improves a public sector
organization’s understanding of its emissions profile and an indication of
energy use. Many public agencies have found a comprehensive GHG
inventory to be a valuable means of evaluating their environmental impact and
identifying which emissions (and related energy use) sources are most cost-
effective to target for reductions.
In addition to the direct energy and cost savings that are revealed in a GHG
inventory, public sector organization may influence GHG emissions upstream
(its purchase of supplies and services) and downstream from its activities. In
the context of future regulations, significant GHG emissions from these
activities may result in increased upstream and downstream costs, prompting
backlash from taxpayers and other stakeholders (e.g., Congress, suppliers,
regulated entities, partnering public sector agencies). These stakeholders may
view significant indirect emissions upstream or downstream of an
organization’s operations as potential liabilities that need to be managed and
reduced. A limited focus on direct emissions from an organization’s internal
operations may miss major GHG risks and opportunities, while leading to a
misinterpretation of the organization’s actual GHG exposure.
Environmental Protection Agency (EPA): GHG implications of public services

In addition to the devastating toll on human life, in 2005 Hurricane Katrina left in its
wake a wasteland of debris and building materials. To rebuild New Orleans and the
surrounding areas, large volumes of materials must be cleared to make way for new
construction. However, concerns over landfill capacity and propagation of the
aggressive and invasive Formosa termite have lead recovery planners to investigate
waste management options other than landfill disposal. The two leading candidates
were on-site combustion and mechanical grinding (to reduce volume). Because each
option releases a range of harmful particles and pollutants, the EPA is in the process
of modeling the impacts of large scale implementation to determine which option is
least harmful to human health and the environment. The analysis will cover 65
pollutants, but will not include the operations’ GHG emissions. Although GHG impact
should not be the primary criteria for this decision, the EPA could factor it in as part of
a more robust decision. Further, GHG concerns could spur the development of a
modified solution, such as adding energy recovery to the combustion option.
On a more positive note, what gets measured gets managed. Accounting for
emissions can help identify the most effective reduction opportunities. This
can drive increased materials and energy efficiency as well as the
development of new products and services that reduce the GHG impacts of
suppliers, public sector customers, and others. This in turn can reduce
operational costs, enable more effective use of limited agency budgets, and
help distinguish the organization in an increasingly environmentally conscious
marketplace. Conducting a rigorous GHG inventory is also a prerequisite for

setting an internal or public GHG target and for subsequently measuring and
reporting progress.
Participating in Mandatory Reporting Programs

Most mandatory GHG reporting programs established in North America and
Europe have thus far targeted facilities in the energy sector above a certain
threshold of size (eg, 10,000 metric tons GHGs emitted per year). For
example, in Europe, facilities falling under the requirements of the Integrated
Pollution Prevention and Control (IPPC) Directive must report emissions
exceeding a specified threshold for each of the six Kyoto-regulated GHGs The
reported emissions are included in a European Pollutant Emissions Register, a
publicly accessible internet-based database that permits comparisons of
emissions from individual facilities or industrial sectors in different countries
(European Commission Directorate-General for Environment, 2000).
In the United States, similar reporting requirements are currently underway at

the state and regional level applying to significant industrial and energy
facilities. Upcoming national legislation will seek to gather GHG reports from
many of these same facilities, in addition to other sources. For instance, Comment [W2]: Contribute state and
federal reporting examples here and for
reporting and reduction goals set for the 24 states covered under either the potential appendix or other resource?.
Regional Greenhouse Gas Initiative, the Western Climate Initiative, or the
Midwestern Greenhouse Gas Reduction Accord apply primarily to large
electricity generating facilities.
In the cases where public agencies own these facilities, they may already be
conducting specific GHG emission reports. But increasingly, state governors
and federal authorities have issued executive orders (EOs) requiring GHG
reporting for state and federal agencies .These orders frequently call on public
agencies to demonstrate leadership by reporting emissions and setting
reduction goals that have not yet been required of private-sector emitters. For
example EO 134232 sets energy and water use reduction goals for federal
operations, EO S-20-04 sets energy efficiency goals for California state
buildings and EO 07-126 obligates Florida’s state government to reduce GHG
emissions. EOs may be the initial mechanisms through which many public
organizations are required to develop comprehensive GHG inventories.
A credible inventory may help ensure that an organization’s early, voluntary

emissions reductions are recognized in future regulatory programs. To
illustrate, suppose that in 2000 an agency started reducing its GHG emissions
by purchasing RECs for wind-generated electricity. If a mandatory GHG
reduction program is later established in 2005 and it sets 2003 as the base
against which reductions are to be measured, the program might not allow the
emissions reductions achieved by the green power purchase prior to 2003 to
count toward its target.
However, if an organization’s voluntary emissions reductions have been

accounted for and registered, they are more likely to be recognized and taken
into account when regulations requiring reductions go into effect. For
instance, the state of California has stated that it will use its best efforts to

ensure that organizations that register certified emission reports with the
CCAR receive appropriate consideration under any future international,
federal, or state regulatory program relating to GHG emissions.
Gaining Relevant GHG Experience to Inform Public Policy

Design
Certain government organizations with policy-making authority may find
themselves in a unique role as concerns about GHG emissions arise. The
private sector, as well as taxpayers, may find it inconsistent for a public
agency to impose regulations for GHG reporting if the public sector (itself a
significant emitter) is not participating. To the extent that such organizations
have developed in-house understanding and experience with operation under
GHG reporting programs, they may be in a better position to influence wise
and meaningful rules.
Furthermore, by participating in a reporting regime, the public sector can also

act as a demonstration laboratory for developing new methods and efficient
procedures that later may be adopted by other organizations. These agencies
may be the only ones with sufficient latitude to experiment with different
methods. They also are not constrained by the same profit motives and
intellectual property concerns as the private sector, so that the experiences
gained can be more widely shared.
Taking a lead in public reporting and target setting also serves the additional
purpose of being a “testing ground” for policy responses to new scientific
advancements. In working for the public good, public agencies may respond
to known scientific guidance more readily and may be freer to respond to
advances in knowledge of the challenges and opportunities for GHG
mitigation ahead of public demands or regulation.This may include producing
tools and techniques through research and development funding which are
then available broadly. Expertise can also be shared through public forums or
open contact with those who request it. Such a broad base of knowledge is
rarely available elsewhere. Public sector experience may be subject to vetting
that ensures its reliability.
Tata Steel: Development of institutional capacity in GHG accounting and reporting

For Tata Steel, Asia’s first and India’s largest integrated private sector steel company,
reducing its GHG emissions through energy efficiency is a key element of its primary
business goal: the acceptability of its product in international markets. Each year, in
pursuit of this goal, the company launches several energy efficiency projects and
introduces less-GHG-intensive processes. The company is also actively pursuing GHG
trading markets as a means of further improving its GHG performance. To succeed in
these efforts and be eligible for emerging trading schemes, Tata Steel must have an
accurate GHG inventory that includes all processes and activities, allows for meaningful
benchmarking, measures improvements, and promotes credible reporting.
Tata Steel has developed the capacity to measure its progress in reducing GHG
emissions. Tata Steel’s managers have access to online information on energy usage,
material usage, waste and byproduct generation, and other material streams. Using this
data and the GHG Protocol calculation tools, Tata Steel generates two key long-term,
strategic performance indicators: specific energy consumption (Giga calorie/tonne of
crude steel) and GHG intensity (tonne of CO 2 equivalent/tonne of crude steel). These
indicT
REVISED DRAF #1 are key sustainability metrics in the steel
ators 2-7sector worldwide, and help ensure
market acceptability and competitiveness.
The Public Sector Protocol Since
is a the company
joint LMI-WRI adopted the GHG Protocol
product.
Corporate Standard, tracking performance has become more structured and streamlined.
This system allows Tata Steel quick and easy access to its GHG inventory and helps the
company maximize process and material flow efficiencies.
Chapter 3
Setting Organizational Boundaries
STANDARD
Public sector operations vary in their legal and organizational structures; they
include those fully owned and operated by the government, those owned by
the government but operated by a contractor or private entity, and public-
private partnerships, among others. Table 3-1 demonstrates the range of
organizational structures and relationships for public sector organizations,
indicating the complexity involved in assigning ownership of GHGs. The
complexity of these arrangements means that particular care must be taken
when setting boundaries, and thorough documentation is required to ensure
transparency.
For the purposes of financial accounting, these organizations are treated

according to established rules that depend on the structure of the organization
and the relationships among the parties involved. For the purpose of
accounting and reporting GHG emissions, when setting organizational
boundaries, parent or partner organizations select an approach for
consolidating GHG emissions and then consistently apply the selected
approach to define the sub-operations that constitute the entire organization.
Two distinct approaches can be used to consolidate GHG emissions for

organizational reporting: control and equity share. The control approach can
be further subdivided into financial control and operational control.
Organizations shall account for and report their consolidated GHG data
according to either one of the control approaches or the equity share approach,
as presented below. Only one approach can be used to prepare an inventory
and that approach must be applied consistently across an organization’s
operations. If the reporting organization wholly owns all its operations, its
organizational boundary will be the same whichever approach is used. 1 For
organizations with joint operations, the organizational boundary and the
resulting emissions may differ depending on the approach used. In both
wholly owned and joint operations, the choice of approach may change how
emissions are categorized when operational boundaries are set (see Chapter
4). In such cases, organizations may choose to develop multiple inventories
using different consolidation approaches.
The Public Sector Protocol recommends operational control as the most

generally relevant approach for GHG accounting by the public sector.
1
The term “operations” is used here as a generic term to denote any kind of
organizational activity, irrespective of its organizational, governance, or legal structures.

However, financial control and equity share may have particular value under
certain circumstances, as discussed below.
Control Approach
Under the control approach, an organization accounts for 100 percent of the
GHG emissions from operations over which it has control. It does not account
for GHG emissions from operations in which it owns an interest but has no
control. Control can be defined in either financial or operational terms. When
using the control approach to consolidate GHG emissions, organizations shall
choose between either operational control or financial control criteria.
In most cases, whether an operation is controlled by the organization or not

does not vary based on whether the financial control or operational control
criteria are used. In making the choice between the two, organizations should
take into account how GHG emissions accounting and reporting can best be
geared to the requirements of emissions reporting and trading schemes, how it
can be aligned with financial and environmental reporting, and which criterion
best reflects the organization’s actual ability to control emissions.
Operational control.
An organization has operational control over an operation if the former or one

of its sub-organizations (see Table 3-1 for organizational types and
relationships) has the full authority to introduce and implement operating
policies at the operation. This criterion is consistent with the current
accounting and reporting practice of many organizations that report on
emissions from facilities they operate (i.e., for which they hold the operating
license). It is expected that except in very rare circumstances, if the
organization or one of its sub-organizations is the operator of a facility, it will
have the full authority to introduce and implement its operating policies and
thus has operational control.
Under the operational control approach, an organization accounts for 100

percent of emissions from operations over which it or one of its sub-
organizations has operational control.
It should be emphasized that having operational control does not mean that an
organization necessarily has authority to make all decisions concerning an
operation. For example, big capital investments will likely require the
approval of organizations within the hierarchical structure who have joint
financial control. Operational control does mean that an organization has the
authority to introduce and implement its operating policies.
Many criteria can be used to define operational control over a operation,

facility or source. Depending on the organization, the following criteria may
be used:

 The reporting organization wholly owns the source.
 The reporting organization has the full authority to introduce and
implement operational and health, safety and environmental policies
(including both GHG- and non-GHG- related policies). In many
instances, the authority to introduce and implement operational and
health, safety, and environmental (HSE) policies is explicitly conveyed
in the contractual or legal structure of the partnership or joint venture.
In most cases, holding an operator’s license is an indication of the
authority to implement operational and HSE policies. However, this
may not always be the case.
 The reporting organization has already been directed to report energy
consumption data from the operation, facility or source.
 Anything else? Comment [W1]: What do you think
of these criteria? Can you suggest others?
Do you think a universal definition of
operational control is possible?
Financial control.
The organization has financial control over the operation if the former has the
ability to direct the financial and operating policies of the latter with a view to
gaining economic or other benefits from its activities. 2 For example, financial
control usually exists if the organization has the right to the majority of
benefits of the operation, however these rights are conveyed. Similarly, an
organization is considered to financially control an operation if it retains the
majority risks and rewards of ownership of the operation’s assets.
Under this criterion, the economic substance of the relationship between the
organization and the operation takes precedence over the legal ownership
status, so that the organization may have financial control over the operation
even if it has less than a 50 percent interest in that operation. In assessing the
economic substance of the relationship, the impact of potential voting rights,
including both those held by the organization and those held by other parties,
is also taken into account. This criterion is consistent with international
financial accounting standards; therefore, an organization has financial control
over an operation for GHG accounting purposes if the operation is fully
consolidated in the organization’s financial accounts. If this criterion is chosen
to determine control, emissions from joint ventures where partners have joint
financial control and joint reporting requirements are accounted for based on
the equity share approach (see Table 3-1).
Importantly, having financial control does not automatically mean that a

public sector organization also exerts operational control. There may be
situations where an organization owns an asset (e.g. a transit fleet), but does
not maintain operational control of that asset if, for example, that asset’s
operations and maintenance have been contracted out.
2
Financial accounting standards use the generic term “control” for what is denoted as
“financial control” in this chapter.

Finally, sometimes an organization can have joint financial control over an
operation, but not operational control. In such cases, the organization would
need to look at the contractual arrangements to determine whether any one of
the partners has the authority to introduce and implement its operating policies
at the operation and thus has the responsibility to report emissions under
operational control. If the operation itself will introduce and implement its
own operating policies, the partners with joint financial control over the
operation will not report any emissions under operational control.
Equity Share Approach

Under the equity share approach, an organization accounts for GHG emissions
from operations according to its share of equity in the operation. The equity
share reflects economic interest, which is the extent of rights an organization
has to the risks and rewards flowing from an operation. Typically, the share of
economic risks and rewards in an operation is aligned with the organization’s
percentage ownership of that operation, and equity share will normally be the
same as the ownership percentage. Where this is not the case, the economic
substance of the relationship the organization has with the operation always
overrides the legal ownership form to ensure that equity share reflects the
percentage of economic interest. The principle of economic substance taking
precedent over legal form is consistent with international financial reporting
standards. The staff preparing the inventory may therefore need to consult
with the organization’s accounting or legal staff to ensure that the appropriate
equity share percentage is applied for each joint operation.
Consolidation at Multiple Levels

The consolidation of GHG emissions data will only be consistent if all levels
of the organization follow the same consolidation policy. In the first step, the
management of the headquarters organization or overarching governing body
has to decide on a consolidation approach (i.e., the financial or operational
control, or the equity share approach). Once an organization-wide
consolidation policy has been selected, it shall be applied to all levels of the
organization.
Applications of the Consolidation Approaches

Table 3-1a shows how different types of public sector organizations should
account for GHG emissions depending on the consolidation approach chosen.
Notably, various mechanisms exist for transferring land rights to or from
public sector organizations, and Table 3-1b shows how these transfers should Comment [W2]: We would like to
be accounted for. present several visual diagrams
illustrating the application of different
consolidation approaches for different
types of public sector organizations. If
necessary, we will provide generic
examples, but we would prefer some real-
life examples too.

Table 3-1a. Organization Types and Consolidation Approaches
Comment [W3]: Could the group
Example Accounting for GHG emissions please identify examples for these types
of organizations?
Based Based Based
on financial on on equity
Type of control operational share
organization Definition control
GOGO Government- 100% 100% n/a
owned/government operated
facility where the government
owns and operates all activitiesa
GOCO Government- 100% 0% n/a
owned/contractor-operated
facility owned by a government
agency, but operated in whole or
part by private contractorsa
GOPO Government- 100% 0% n/a
owned/privately-operated facility
where the government has
leased all or part of its facility to
a private operator for its
operation and profita
COCO Contractor owned/contractor 0% 0% n/a
operated facility that provides
goods and/or services to a
federal agency under contract
COCO(E) Same as COCO. However, 100% 0% n/a
the contractor may be furnished of
government equipment to emissions
manufacture a product or from
provide a service equipment
POGO Privately- 0% 100% n/a
owned/government-operated
facility where the government
leases buildings or space for its
operationsa
Jointly Government facilities owned % Variesb %
operated and operated by multiple Ownership Ownership
government government entities
operations
Quasi- A hybrid organization % Variesb %
governmental assigned attributes of both Ownership Ownership
governmental and private
entitiesc
Public-Private Partnerships in which a % Variesb %
Partnership government organization and Ownership Ownership
private entity contribute various
amounts of real property,
financial capital, and borrowing
ability for the purpose of
establishing operating capacity
Other

Example Accounting for GHG emissions please identify examples for these types
of organizations?
Based Based Based
organization Definition control
Public sector organizations may be responsible 0% 100% n/a
for the environmental remediation of private sites,
particularly if the site owner cannot be identified or
compelled to undertake the remediation. GHG
emissions from fuel and electricity use at these sites
may be substantial.
Source: Adapted from “The Yellow Book: Guide to Environmental Enforcement and
Compliance at Federal Facilities,” EPA 315-B-98-001, February 1999.
a
Here, “government” means the distinct organization within a governmental structure
conducting a GHG inventory.
b
The percentage would depend on contractual or operational arrangements between the
partners, or on legislative directives.
c
In the quasi-governmental designation, the Congressional Research Service (CRS)
includes: Quasi Official Agencies, Government Sponsored Entities, Federally Funded
Research and Development Centers, Agency-Related Nonprofit Organizations, Venture
Capital Funds, and Congressionally Chartered Nonprofit Organizations among others.
See “The Quasi Government: Hybrid Organizations with Both Government and Private
Sector Legal Characteristics,” CRS, February 2007.
Table 3-1b. Accounting for the Transfer of Land Use Rights.

Example How the GHG emissions from the please identify examples for these
land concerned are accounted for by arrangements.
the public sector organization
Based Based Based

arrangement Definition control
Permit The public sector See 100% 0% n/a Comment [W5]: Could the Forest
organization grants a permit to a Box… Service facilities and recreation divisions
offer case studies on permits for land use
private party for the use of
by private parties?
government land
Withdrawal The public sector 0% 100% n/a
from Public Use organization receives a permit to
use land of another government
agency for up to 20 years
administratively, as long as the
intended use does not involve
destruction of the land (i.e.,
military uses, dams)
Grant The public sector 0% 0% n/a
organization bestows a grant
permanently authorizing the use
of a given right-of-way. Grants
usually involve a single payment
for the land or transfer of land
use rights.

GUIDANCE
When planning the consolidation of GHG data, it is important to distinguish
between GHG accounting and GHG reporting. GHG accounting concerns the
development of GHG inventories -- that is, the consolidation of GHG
emissions from operations for which an organization is responsible and
linking the data to specific operations, sites, geographic locations, processes,
and owners. GHG reporting, on the other hand, concerns the presentation of
GHG data in formats tailored to the needs of various reporting uses and users.
An organization must consider its reporting objectives carefully before

designing its GHG accounting and reporting systems. For instance, achieving
emissions reductions frequently depends on an understanding of GHG
emissions at a finely disaggregated level, so GHG reports would need to be
sufficiently detailed to allow the identification of emission reduction
opportunities. In addition, public organizations may have several goals for
GHG reporting, e.g., regulation-based reporting requirements, demonstrating
leadership or responsibility for the public interest, or emissions trading
programs (see Chapter 2). Therefore, it is important to ensure that GHG
accounting systems are capable of meeting a range of reporting requirements.
Ensuring that data are collected and recorded at a sufficiently disaggregated
level, and capable of being consolidated in various forms will provide
organizations with maximum flexibility to meet a range of reporting
requirements.
Which approach is most suitable?

The Public Sector Protocol recommends operational control as the most
appropriate consolidation approach for public sector activities. This is because
the approach will most accurately represent the emission sources that public
sector organizations can influence. Similarly, it provides a more transparent
basis for the design of government policies that hold individual organizations
accountable for their emissions and that mandate emissions reductions.
Nonetheless, the financial control and equity share approaches may be

applicable to certain public sector organizations, such as public-private
partnerships, quasi-governmental agencies, or joint international partnerships
where ownership boundaries can be clearly delineated. Examples may
include:
 Port authorities?
Comment [W6]: The draft would still
 Others? benefit from clear examples of when the
financial control or equity share
approaches should be used in addition to
In such circumstances, inventory reporting goals may require different data or instead of the operational control
approach. Can the group identify any?
sets, and the reporting organization may need to account for its GHG
emissions using both the equity share and a control approach.

In general, organizations should choose a consolidation approach that is best
suited to their operational activities, organizational goals, and GHG
accounting and reporting requirements. Examples of how such considerations
may drive the selection of an approach include the following:
 Reflection of commercial reality. An organization that derives an

economic profit from a certain activity arguably should take ownership
for any GHG emissions generated by the activity. This is achieved by
using the equity share approach, which assigns ownership for GHG
emissions on the basis of economic interest in a business activity. The
control approaches do not always reflect the full GHG emissions
portfolio of an organization’s business activities, but have the
advantage that an organization takes full ownership of all GHG
emissions that it can directly influence and reduce.
 Government reporting and emissions trading programs. Government

regulatory programs need to monitor and enforce compliance. Since
compliance responsibility generally falls to the operator (not equity
holders or the organization that has financial control), governments
usually require reporting on the basis of operational control, either
through a facility-level-based system or involving the consolidation of
data within certain geographical boundaries (e.g., RGGI allocates
emission permits to the operators of certain installations).
 Liability and risk management. While reporting and compliance with

regulations will most likely continue to be based directly on
operational control, the ultimate financial liability will often rest with
the organization that has financial control over the operation, or in rare
circumstances holds an equity share in it. Hence, for assessing risk,
GHG reporting on the basis of the equity share and financial control
approaches provides a more complete picture. The equity share
approach is likely to result in the most comprehensive coverage of
liability and risks. In the future, organizations might incur liabilities
for GHG emissions produced by joint operations in which they have
an interest, but over which they do not have financial control. For
example, an organization that is an equity shareholder in an operation
but has no financial control might face demands by the organizations
with a controlling share to cover its requisite share of GHG
compliance costs.
 Alignment with financial accounting. Future financial accounting

standards may treat GHG emissions as liabilities and emissions
allowances/
credits as assets. To assess the assets and liabilities an organization
creates through joint operations, the same consolidation rules used in
financial accounting should be applied in GHG accounting. The equity
share and financial control approaches result in closer alignment
between GHG accounting and financial accounting.

 Management information and performance tracking. For the purpose
of performance tracking, the control approaches are more appropriate
because managers can only be held accountable for activities under
their control.
 Cost of administration and data access. The equity share approach can
result in higher administrative costs than the control approach because
it can be difficult and time consuming to collect GHG emissions data
from joint operations not under the control of the reporting
organization. Organizations are likely to have better access to
operational data and therefore greater ability to ensure that it meets
minimum quality standards when reporting on the basis of control.
 Completeness of reporting. Organizations might find it difficult to

demonstrate completeness of reporting when the operational control
criterion is adopted because there are unlikely to be any matching
records or lists of financial assets to verify the operations.
Reporting Goals and Level of Consolidation

Reporting requirements for GHG data exist at various levels, from a specific
local facility level to an aggregated organization-wide level. Examples of Comment [W7]: Add definition of
drivers for various levels of reporting include: facility to glossary: “Any property, plant,
building, structure, stationary source,
stationary equipment or grouping of
 Official government reporting programs or certain emissions trading stationary equipment or stationary
sources located on one or more
programs which require GHG data to be reported at a facility level. In contiguous or adjacent properties, in
these cases, consolidation of organizational GHG data is not relevant. actual physical contact or separated solely
by a public roadway or other public right-
of way, and under common operational or
 Government reporting and trading programs which require that data be financial control, that emits or may emit
any greenhouse gas.”
consolidated within certain geographic and operational boundaries
(e.g., the National Parks Service conducts inventories for all activities Comment [W8]: Would be good to
highlight all terms found in the glossary
within park boundaries). This can become complex when
organizations are required to report to multiple entities (e.g., emissions
data from one site may need to feed into accounts for state, national, or
organization-level reports).
 The organization’s own willingness to publicly account for its

emissions to a wide array of stakeholders through voluntary public
reporting; this may involve consolidating organization-wide GHG data
to show the emissions of its entire scope of activities, or consolidating
function-specific emissions such as those related to transportation. It
may also involve consolidating emissions from within a fence line to
demonstrate site-level emissions.
Developing inventories and managing data to facilitate consolidation at these

various levels may be particularly important for entities from different parent
organizations that share facilities and for organizations that are geographically
dispersed. For example, military installations may host activities from
multiple departments, such as the Army and Air Force; organizational

boundaries may need to be selected and emissions accounted for to allow for
consolidation at both the installation and department level.
Double Counting
When two or more organizations hold interests in the same joint operation and
use different consolidation approaches (e.g., in a public-private partnership
where Government Agency A follows the financial control approach while
Company B uses the equity approach), emissions from that joint operation
could be double counted or not counted at all. This may not matter for
voluntary reporting as long as there is adequate disclosure from the company
on its consolidation approach. However, double counting or omitting
emissions needs to be avoided in trading schemes and mandatory government
reporting programs. Entities developing GHG reporting programs must
address this issue.
Contracts That Cover GHG Emissions

To clarify ownership (rights) and responsibility (obligations) issues,
organizations involved in joint operations may draw up contracts that specify
how the ownership of emissions or the responsibility for managing emissions
and associated risk is distributed between the parties. Where such
arrangements exist, organizations may opt to describe the contractual
arrangement and include information on allocation of GHG related risks and
obligations in their GHG accounts (see Chapter 9). In some situations, public
sector organizations may choose to include language that clarifies ownership
and responsibilities regarding GHG emissions and accounting in the contracts
they develop with private businesses.
Treatment of Exceptional, Multi-agency Activities

What about multi-agency responses to unplanned, complex operations
undertaken in response to emergencies (e.g., fires and other natural disasters)?
Can the PSP sensibly define the implications of these events for
organizational and operational boundaries? What are the implications? Do you Comment [W9]: Does the group have
have case studies? any comments here?
Leasing Arrangements
How GHG emissions associated with leased assets are accounted for depends
on which consolidation approach is utilized and the lease type. The particular
combination of consolidation approach and lease type may impact whether
emissions are considered to be direct or indirect, and thus required or optional
for reporting purposes. Chapter 4 defines direct and indirect emissions.
Appendix E provides detailed guidance for categorizing emissions associated
with leased assets.

Chapter 4
Setting Operational Boundaries
STANDARD
Once an organization has established its organizational boundaries it then sets
its operational boundaries. The established organizational and operational
boundaries together constitute an organization’s inventory boundary.
Setting operational boundaries involves identifying emission sources and then

categorizing these sources in two steps:
1. Categorization as either direct or indirect. Direct GHG emissions come

from sources that are owned or controlled by the reporting
organization. Indirect GHG emissions are those that are a consequence
of the activities of the organization, but that occur at sources owned or
controlled by another organization or company. 1 What is classified as
direct or indirect depends on the consolidation approach (equity share
or control) selected for setting the organizational boundary (see
Chapter 3). Figure 4-1 shows the relationship between the
organizational and operational boundaries of an organization.
2. Categorization by scope. All direct emission sources are classified as

scope 1, but indirect emission sources are classified as either scope 2
or scope 3. Public sector organizations shall separately account for and
report on scopes 1 and 2 at a minimum.
Such categorization improves transparency, reduces the risk of double

counting and facilitates the more effective management of GHG risks and
opportunities along an organization’s value chain. Even without any policy
drivers, accounting for GHG emissions along the value chain may reveal
potential for greater efficiency and lower costs. Indeed, indirect emissions Comment [W1]: Can the group think
of a good example of this from the Public
reductions may be more cost-effective than scope 1 reductions, and so Sector?
accounting for indirect emissions can help identify where to allocate limited
resources in a way that maximizes GHG reductions and reduces operational
costs. Finally, emissions reductions along the value chain support public
1
The terms “direct” and “indirect” as used in this document should not be confused with
their use in national GHG inventories where “direct” refers to the six Kyoto gases and
“indirect” refers to the precursors nitrogen oxide (NO x ), non-methane volatile organic
compound, and carbon monoxide.

sector organizations’ efforts to protect the public good by reducing overall
GHG emissions.
Figure 4-2 provides an overview of the relationship between the scopes and
the activities that generate direct and indirect emissions along an
organization’s value chain.
Figure 0-1. Organizational and Operational Boundaries of an Organization
Parent Agency
Department A Department B Department C Department D Organizational

Boundaries
Car Fleet Power Car Fleet Leased Owned/Controlled

Generation Unit Laboratory Building
Operational
Boundaries
Leased
Building Direct and indirect emissions
Figure 0-2. Overview of Scopes and Emissions across Activities
Adopted from NZBCSD, 2002.

Scope 1: Direct GHG Emissions
Direct GHG emissions come from sources owned or controlled by the
organization. For example, emissions from combustion in owned or controlled
boilers, furnaces, vehicles, or emergency generators, and emissions from
chemical production in owned or controlled process equipment are scope 1
emissions.
Direct CO 2 emissions from the combustion of biomass or biofuels shall not be

included in scope 1 but shall be reported separately. This is because these
emissions are assumed to be climate neutral, as the CO 2 will eventually be
taken up by vegetation through photosynthesis (see Chapter 9 and Appendix
B).
GHG emissions not covered by the Kyoto Protocol, e.g., chlorofluorocarbons

(CFCs) and NO x , shall not be included in scope 1 but may be reported
separately (see Chapter 9).
Scope 2: Electricity Indirect GHG Emissions

Scope 2 accounts for GHG emissions from the generation of purchased
electricity 2 consumed by the organization. Purchased electricity is electricity
purchased or otherwise brought into the organizational boundary of the
organization. Scope 2 emissions physically occur at the facility where
electricity is generated.
Scope 3: Other Indirect GHG Emissions

Scope 3 is an optional reporting category that allows for the treatment of all
other indirect emissions. Scope 3 emissions are a consequence of the activities
of the organization, but come from sources not owned or controlled by the
organization. Some examples of scope 3 activities are extraction and
production of purchased materials, transportation of purchased fuels and
employee commuter travel.
GUIDANCE
The operational boundary is decided at the administrative headquarters level,
and it is then uniformly applied to identify and categorize direct and indirect
emissions at each operational level.
2
The term “electricity” is used in this chapter as shorthand for electricity, steam, and
heating/cooling.

Organizations may further subdivide emissions data within scopes where this
aids transparency or facilitates comparability over time. For example, they
may subdivide data by agency office, program, facility, region, country,
routine versus non-routine operations, source type (stationary combustion,
process, fugitive, etc.), and activity type (production of electricity,
consumption of electricity, generation or purchased electricity that is sold to
end users, etc.).
Scope 1: Direct GHG Emissions

Organizations report GHG emissions from sources they own or control as
scope 1. Direct GHG emissions are principally the result of the following
types of activities undertaken by the organization:
 Generation of electricity, heat, or steam. These emissions result from

combustion of fuels in stationary sources, e.g., boilers, furnaces,
turbines, and emergency generators.
 Physical or chemical processing. 3 Most of these emissions result from

the manufacture or processing of chemicals and materials, e.g.,
cement, aluminum, adipic acid, ammonia manufacture, and waste
processing.
 Transportation of materials, products, waste, and employees. These

emissions result from the combustion of fuels (other than biofuels, see
Chapter 9) in organization-owned/controlled mobile combustion
sources (e.g., trucks, trains, ships, airplanes, buses, and cars).
 Fugitive emissions. These emissions result from intentional or

unintentional releases, e.g., equipment leaks from joints, seals,
packing, and gaskets; methane emissions from coal mines and venting;
HFC emissions from the use of refrigeration and air conditioning
equipment; and methane leakages from gas transport.
 Less common but still significant, direct emissions may include those
from on-site landfills and incinerators, laboratory activities, munitions
firing, and organization-specific activities (such as space shuttle
launches).
3
For some integrated manufacturing processes, such as ammonia manufacture, it may not
be possible to distinguish between GHG emissions from the process and those from the
production of electricity, heat, or steam.

 Public sector organizations frequently operate their own equipment,
such as remedial systems or emergency equipment, on privately-
owned facilities. In these cases, the associated GHG emissions are
direct.
Again, CO 2 emissions from the combustion of biomass or biofuels are not

accounted for as direct, even though they may come from sources that are
owned by the reporting organization. Instead, these emissions are accounted
for and reported outside of the scopes. However, the CH 4 and N 2 O emissions
from biomass or biofuel combustion are accounted for as direct.
SALE OF OWN-GENERATED ELECTRICITY

Emissions associated with the sale of own-generated electricity to another
organization are not deducted or netted from scope 1. This treatment of sold
electricity is consistent with how other sold GHG intensive products are
accounted for, e.g., emissions from the production of sold clinker by a cement
company or the production of scrap steel by an iron and steel company are not
subtracted from their scope 1 emissions. Emissions associated with the sale or
transfer of own-generated electricity may additionally be reported in optional
information (see Chapter 9).
Scope 2: Electricity Indirect GHG Emissions

Organizations report the emissions from the generation of purchased
electricity that is consumed in their owned or controlled equipment or
operations as scope 2. Scope 2 emissions are a special category of indirect
emissions. For many organizations, purchased electricity represents one of the
largest sources of GHG emissions and the most significant opportunity to
reduce these emissions. Accounting for scope 2 emissions allows
organizations to assess the risks and opportunities associated with changing
electricity and GHG emissions costs. Another important reason for
organizations to track these emissions is that the information may be needed
for some GHG programs.
Organizations can reduce their use of electricity by investing in energy

efficient technologies and energy conservation. Additionally, emerging green
power markets provide opportunities for some organizations to switch to less
GHG-intensive sources of electricity. 4 Organizations can also install an
efficient on-site co-generation plant, particularly if it replaces the purchase of
4
Green power includes renewable energy sources and specific clean energy technologies
that reduce GHG emissions relative to other sources of energy that supply the electric grid,
e.g., solar photovoltaic panels, geothermal energy, landfill gas, and wind turbines.

more GHG-intensive electricity from the grid or electricity supplier. Reporting
of scope 2 emissions allows transparent accounting of GHG emissions and
reductions associated with such opportunities.
INDIRECT EMISSIONS ASSOCIATED WITH TRANSMISSION AND DISTRIBUTION

Electric utility companies often purchase electricity from independent power
generators or the grid and resell it to end-consumers through a transmission
and distribution (T&D) system. 5 A portion of the electricity purchased by a
utility company is consumed (T&D loss) during its transmission and
distribution to end-consumers (see Table 4-2).
Table 0-1. Electricity Balance
Purchased electricity consumed

by the utility company during T&D
GENERATED
+
ELECTRICITY
Purchased electricity consumed
by end-consumers
Consistent with the scope 2 definition, emissions from the generation of

purchased electricity consumed during T&D are reported in scope 2 by the
organization that owns or controls the T&D operation. End consumers of the
purchased electricity do not report indirect emissions associated with T&D
losses in scope 2 because they do not own or control the T&D operation
where the electricity is consumed.
This approach ensures that there is no double counting within scope 2 since
only the T&D utility company accounts for indirect emissions associated with
T&D losses in scope 2. Another advantage is that it adds simplicity to the
reporting of scope 2 emissions by allowing the use of commonly available
emission factors that in most cases do not include T&D losses. End consumers
may, however, report their indirect emissions associated with T&D losses in
scope 3 under the category “generation of electricity consumed in a T&D
system.” Appendix A provides more guidance on accounting for emissions
associated with T&D losses.
OTHER ELECTRICITY-RELATED INDIRECT EMISSIONS

Indirect emissions from activities upstream of an organization’s electricity
provider (e.g., exploration, drilling, flaring, and transportation) are reported
under scope 3. Emissions from the generation of electricity that has been
purchased for resale to end-users are reported in scope 3 under the category
“generation of electricity that is purchased and then resold to end users.”
5
A T&D system includes T&D lines and other T&D equipment (e.g., transformers).

Emissions from the generation of purchased electricity for resale to non-end
users (e.g., electricity traders) may be reported separately from scope 3 in
“optional information.”
The following two examples illustrate how GHG emissions from the
generation, sale, and purchase of electricity are accounted for.
Example one (Figure 4-3): Company A is an independent power generator

that owns a power generation plant. The power plant produces 100 megawatts
per hour (MWh) of electricity and releases 20 tonnes of emissions per year.
Company B is an electricity trader and has a supply contract with company A
to purchase all its electricity. Company B resells the purchased electricity (100
MWh) to organization C, a public utility that owns or controls the T&D
system. Organization C consumes 5 MWh of electricity in its T&D system
and sells the remaining 95 MWh to organization D. Public sector organization
D is an end user who consumes the purchased electricity (95 MWh) in its own
operations. Company A reports its direct emissions from power generation
under scope 1. Company B reports emissions from the purchased electricity
sold to a non-end user as optional information separately from scope 3.
Organization C reports the indirect emissions from the generation of the part
of the purchased electricity that is sold to the end user under scope 3 and the
part of the purchased electricity that it consumes in its T&D system under
scope 2. End user D reports the indirect emissions associated with its own
consumption of purchased electricity under scope 2 and can optionally report
emissions associated with upstream T&D losses in scope 3. Figure 4-3 shows
the accounting of emissions associated with these transactions.
Figure 0-3. GHG Accounting from the Sale and Purchase of Electricity
Example two: Public sector organization D installs a co-generation unit and

sells surplus electricity to a neighboring Organization E for its consumption.
Organization D reports all direct emissions from the co-generation unit under
scope 1. Indirect emissions from the generation of electricity for export to E
are reported by D under optional information separately from scope 3.
Company E reports indirect emissions associated with the consumption of
electricity purchased from the company D’s co-generation unit under scope 2.

For more guidance, see Appendix A on accounting for indirect emissions from
purchased electricity.
Seattle City Light (SCL): Accounting for the purchase of electricity sold to end
users
SCL, Seattle’s municipal utility company, sells electricity to its end-use customers that
is produced at its own hydropower facilities, purchased through long-term contracts,
or purchased on the short-term market. SCL used the first edition of the Corporate
Standard to estimate its year 2000 and year 2002 GHG emissions, and emissions
associated with generation of net purchased electricity sold to end users was an
important component of that inventory. SCL tracks and reports the amount of
electricity sold to end users on a monthly and annual basis.
SCL calculates net purchases from the market (brokers and other utility companies)
by subtracting sales to the market from purchases from the market, measured in
MWh. This allows a complete accounting of all emissions impacts from its entire
operation, including interactions with the market and end users. On an annual basis,
SCL produces more electricity than there is end-use demand, but the production does
not match load in all months. So SCL accounts for both purchases from the market
and sales into the market. SCL also includes the scope 3 upstream emissions from
natural gas production and delivery, operation of SCL facilities, vehicle fuel use, and
airline travel.
SCL believes that sales to end users are a critical part of the emissions profile for an
electric utility company. Utility companies need to provide information on their
emissions profile to educate end users and adequately represent the impact of their
business, the providing of electricity. End-use customers need to rely on their utility
company to provide electricity, and except in some instances (green power
programs), do not have a choice in where their electricity is purchased. SCL meets a
customer need by providing emissions information to customers that are doing their
own emissions inventory.
Scope 3: Other Indirect GHG Emissions

Scope 3 is optional, but provides an opportunity to be innovative in GHG
management. Organizations may want to focus on accounting for and
reporting activities that are relevant to their organizational mission and goals,
and for which they have reliable information. Because public sector
organizations make extensive use of contractors to conduct work for them,
scope 3 emissions for the public sector may be quite significant. The public
sector has opportunities to influence its scope 3 emissions, so accounting for
them will highlight opportunities to reduce overall GHG emissions.
Since organizations have discretion over which categories they choose to

report, scope 3 may not be comparable across organizations. This section
provides an indicative list of scope 3 categories and includes case studies on
some of the categories.
Some of these activities are included under scope 1 if the pertinent emission
sources are owned or controlled by the organization (e.g., if employee
transportation is done in vehicles owned or controlled by the organization). To

determine whether an activity falls within scope 1 or scope 3, the organization
should refer to the selected consolidation approach (equity or one of the two
control approaches) used in setting its organizational boundaries.
 Extraction and production associated with purchased materials and

fuels. 6
 Transport-related activities
 Transportation of purchased materials or goods
 Upstream transportation of purchased fuels
 Employee business travel (not in the organization’s vehicle)
 Employee commuting to and from work
 Transportation of waste (by a contracted service).
 Electricity-related activities not included in scope 2 (see Appendix A)
 Extraction, production, and transportation of fuels consumed in the

generation of electricity (either purchased or own-generated by the
reporting company)
 Purchase of electricity that is sold to an end user (reported by a

utility)
 Generation of electricity that is consumed in a T&D system

(reported by end user).
 Leased assets and outsourced activities—emissions from such

contractual arrangements are only classified as scope 3 if the selected
consolidation approach (equity, operational control, or financial
control) does not apply to them. Clarification on the classification of
leased assets should be obtained from the organization’s accountant
(see the subsection on leases below).
 Waste disposal
 Disposal of waste generated in operations
 Disposal of waste generated in the production of purchased

materials and fuels
6
“Purchased materials and fuels” are those purchased or otherwise brought into the
organizational boundary.

 Disposal of purchased or sold products at the end of their life.
ACCOUNTING FOR SCOPE 3 EMISSIONS

Accounting for scope 3 emissions need not involve a full-blown GHG life-
cycle analysis of all products and operations. Usually it is valuable to focus on
one or two major GHG-generating activities. Although it is difficult to provide
generic guidance on which scope 3 emissions to include in an inventory, four
general steps can be articulated:
1. Describe the value chain. Because the assessment of scope 3 emissions

does not require a full life-cycle assessment, it is important for the sake of
transparency to provide a general description of the value chain and the
associated GHG sources. For this step, the scope 3 categories listed can be
used as a checklist. Organizations usually face choices on how many
levels upstream and downstream to include in scope 3. Consideration of
the organization’s inventory or mission, and relevance of the various
scope 3 categories guides these choices.
2. Determine which scope 3 categories are relevant. Only some types of

upstream or downstream emissions categories might be relevant to the
organization. They may be relevant for several reasons:
 They are large (or believed to be large) relative to the

organization’s scope 1 and scope 2 emissions
 They contribute to the organization’s GHG risk exposure
 They are deemed critical by key stakeholders (e.g., feedback from

constituents, suppliers, taxpayers, or legislators)
 Potential emissions reductions could be undertaken or influenced

by the organization.
The following examples may help decide which scope 3 categories are
relevant to the organization:
 Outsourced or contracted activities are often candidates for scope 3

emissions assessments. It may be particularly important to include
these when an activity which previously contributed significantly
to an organization’s scope 1 or scope 2 emissions is outsourced.
 If GHG-intensive materials are involved in the production of a

significant amount of the supplies and materials used for an
organization’s activities, it may want to examine whether there are
opportunities to reduce consumption of the product or to substitute
with less GHG-intensive materials.

 Organizations whose work involves a significant amount of
employee business travel may want to report on related emissions.
3. Identify partners along the value chain. Identify any partners that
contribute potentially significant amounts of GHGs along the value chain
(e.g., constituents, suppliers and manufacturers, energy providers, etc.).
This is important when trying to identify sources, obtain relevant data, and
calculate emissions.
4. Quantify scope 3 emissions. While data availability and reliability may

influence which scope 3 activities are included in the inventory, it is
accepted that data accuracy may be lower. It may be more important to
understand the relative magnitude of and possible changes to scope 3
activities. Emission estimates are acceptable as long as there is
transparency with regard to the estimation approach, and the data used for
the analysis are adequate to support the objectives of the inventory.
Verification of scope 3 emissions is often difficult and may only be
considered if data are of reliable quality.
Scope 3 Emissions at National Parks

The National Parks collectively receive over 250 million visitors each year. In most
cases, these visitors travel within the park in their vehicle. For parks participating in
the Climate Friendly Parks (CFP) Program—a joint program between EPA and the
National Park Service—this means that a significant amount (often greater than 90
percent) of the GHG emissions that occur within park boundaries result from visitor
vehicle travel. Emissions from visitor vehicle travel are considered scope 3 emissions
because they occur as a consequence of the activities of the park, but are not from
sources directly owned or controlled by the park. In addition to visitor vehicle travel,
significant scope 3 emissions also occur inside park boundaries through a range of
activities from contractors to concessions, from commercial aircraft to cruise ships.
National Parks have the direct ability to affect emissions from their own facilities and
equipment, as well as considerable ability to affect emissions from their visitors,
concessions, etc., both within park boundaries and beyond. Because of this, parks
that participate in the CFP Program account not only for their own scope 1 and scope
2 sources, but also for many scope 3 sources, such as off-site landfilled solid waste
and wastewater treatment, visitor vehicle and other travel, and concession operations,
among others. CFP parks work with their surrounding communities, concessions, and
contractors to plan ways to reduce emissions, set emission reduction targets, and
implement mitigation actions. Through these efforts, CFP parks have found that
accounting for, and seeking to reduce, scope 3 emissions provides opportunities for
resource sharing, knowledge sharing, and community action.

Emissions Accounting from Employee Business Travel
When calculating the emissions of an organization, it can be easy to overlook the day-
to-day activities of office workers as a significant contribution to the total GHG
inventory. However, many of those workers are not just sitting behind a desk; they are
traveling across town for a meeting, around the country on an investigation, or maybe
even around the world on business. Employee business travel can be a significant
source of an organization’s GHG emissions.
As an example, one section in a federal agency has about 600 employees who take
around 3,000 trips per year. If we estimate that each trip involves about 2,000 miles
of air travel, we can determine that this section’s annual GHG contribution from air
business travel alone is over 1,000 metric tons of CO 2 . This is the equivalent amount
of carbon sequestered from more than 27,000 tree seedlings grown for 10 years.
The transportation sector accounted for 29 percent of the total US energy
consumption in 2007, with air travel responsible for over 3 percent of the total. The
U.S. Government, projected to spend nearly $15 billion on travel and transport of
persons in 2008, has significant purchasing power in this sector. Reporting emissions
related to the government employees’ travel could provide important data and impetus
to modify activities in an effort to reduce overall emissions.
Comment [W2]: Public agencies must

comply carefully with privacy laws while
Emissions Accounting for Employee Commuting collecting data for some scope 3 sources
(e.g., employee commuting). This box is
intended to describe this issue, as well as
work-a-rounds involving generic
employee commuting estimates. Does the
group have any experience here?
Leased Assets and Outsourcing

The selected consolidation approach (equity share or one of the control
approaches) is also applied to account for and categorize direct and indirect
GHG emissions from contractual arrangements such as leased assets,
outsourcing, or contracting. If the selected consolidation approach does not
apply, the organization may account for emissions from the leased assets,
outsourcing, or contracting under scope 3. Specific guidance on leased assets
is provided below:
 Using operational control. The lessee or lessor only accounts for

emissions from leased assets that it operates (i.e., if the operational
control criterion applies).

 Using equity share or financial control. The lessee or lessor only
accounts for emissions from leased assets that are treated as wholly
owned assets in financial accounting and are recorded as such on the
balance sheet (i.e., finance or capital leases).
Guidance on which leased assets are operating and which are finance leases
should be obtained from the organization’s accountant. In general, in a finance
lease, an organization assumes all benefits and risks from the leased asset, and
the asset is treated as wholly owned and is recorded as such on the balance
sheet. All leased assets that do not meet those criteria are operating leases.
Figure 4-4 illustrates the application of consolidation criteria to account for
emissions from leased assets, and Appendix E provides further guidance on Comment [W3]: We also intend that
accounting for emissions from leased assets. this Appendix will provide a range of
examples covering the types of leasing
arrangements agencies enter into with
Figure 0-4. Accounting of Emissions from Leased Assets GSA-type organizations, and how GHG
emissions can be accounted for by both
parties under these circumstances. Can
Parent Agency the group provide examples? Example:
full-service lease.
Organizational
Department A Department B Boundaries
Leased car fleet Leased building Leased car fleet

(selected consolidation (selected consolidation (selected consolidation
criterion applies) criterion applies) criterion applies) Operational
Boundaries
Scope 1 Scope 1 Scope 2 Scope 3
Double Counting
Concern is often expressed that accounting for indirect emissions will lead to
double counting when two different organizations include the same emissions
in their respective inventories. Whether or not double counting occurs
depends on whether GHG reporting program administrators choose the same
approach (equity or control) to set the organizational boundaries. Whether or
not double counting matters depends on how the reported information is used.
Double counting needs to be avoided when compiling national (country)

inventories under the Kyoto Protocol, but these are usually compiled via a
top-down exercise using national economic data, rather than aggregation of
bottom-up organizational data. Compliance regimes are more likely to focus
on the “point of release” of emissions (i.e., direct emissions) and/or indirect
emissions from use of electricity. For GHG risk management and voluntary
reporting, double counting is less important.

For participating in GHG markets or obtaining GHG credits when acceptable
for public sector organizations, it would be unacceptable for two organizations
to claim ownership of the same emissions commodity. It is therefore
necessary to make sufficient provisions to ensure that this does not occur
between participating organizations (see Chapter 11).
Scopes and Double Counting

The Corporate Standard and this Public Sector Protocol are designed to
prevent double counting of emissions between different organizations within
scope 1 and 2. For example, the scope 1 emissions of organization A
(generator of electricity) can be counted as the scope 2 emissions of
organization B (end user of electricity), but organization A’s scope 1
emissions cannot be counted as scope 1 emissions by company C (a partner
organization of A) as long as organization A and company C consistently
apply the same control or equity share approach when consolidating
emissions.
Similarly, the definition of scope 2 does not allow double counting of

emissions within scope 2, i.e., two different organizations cannot both count
scope 2 emissions from the purchase of the same electricity. Avoiding this
type of double counting within scope 2 emissions makes it a useful accounting
category for GHG trading programs that regulate end users of electricity.
Organizations do, however, need to ensure that emissions are not double
counted when emissions from multiple entities are consolidated within a
single GHG inventory. For instance, a public agency may generate electrical
power that is then consumed by another agency. The scope 2 emissions of the
latter agency should be excluded from the consolidated inventory; otherwise
they would be double counted.
In general, the robustness of the scope 1 and 2 definitions, combined with the
consistent application of either the control or equity share approach for
defining organizational boundaries, allows only one organization to exercise
ownership of scope 1 or scope 2 emissions.

Chapter 5
Tracking Emissions Over Time
STANDARD
Public sector organizations often undergo significant reorganizations, including
the acquisition, elimination, reassignment, and merging of existing programs or
subordinate organizations. These changes can alter an organization’s
fundamental structure, making meaningful comparisons over time difficult. To
maintain consistency over time—in other words, to keep comparing “like with
like”—historic emission data may have to be recalculated.
Public sector organizations may need to track emissions over time in response
to a variety of organizational goals, including:
 Legislative, regulatory, or EO reporting requirements
 Voluntary public reporting
 Establishing GHG targets
 Managing risks and opportunities
 Addressing the needs of taxpayers and other stakeholders.
A meaningful and consistent comparison of emissions over time requires that

public organizations set a performance datum with which to compare current
emissions. This performance datum is referred to as the base year emissions. 1
For consistent tracking of emissions over time, the base year emissions may
need to be recalculated if a public organization undergoes significant structural
changes such as reorganization, merger, division, or consolidation where
operations are reassigned from one reporting organization to another. The first
step in tracking emissions, however, is the selection of a base year.
Choosing a Base Year

Public organizations shall choose and report a base year for which verifiable
emissions data are available and specify their reasons for choosing that
particular year. Most public organizations select a single year as their base year.
However, it is also possible to choose an average of annual emissions over
1
Terminology for this topic can be confusing. “Base year” differs from “baseline,” which is
mostly used in the context of project-based accounting. The term base year focuses on a
comparison of emissions over time, while a baseline is a hypothetical scenario for what GHG
emissions would have been in the absence of a GHG reduction project or activity.
REVISED DRAFT #1 5- 1
several consecutive years. For example, the CCX Phase I members use average
emissions from 1998–2001 as the baseline for tracking reductions. A multiyear
average may help smooth out unusual fluctuations in GHG emissions that would
make a single year’s data unrepresentative of the organization’s typical
emissions profile.
The inventory base year can also be used as a basis for setting and tracking
progress towards a GHG target, in which case it is referred to as a target base
year (see Chapter 11).
Recalculating Base Year Emissions

Public organizations shall develop a base year emissions recalculation policy,
and clearly articulate the basis and context for any recalculations. If applicable,
the policy shall state any “significance threshold” applied for deciding on
historic emissions recalculation. “Significance threshold” is a qualitative or
quantitative criterion used to define any significant change to the data, inventory
boundary, methods, or any other relevant factors. The organization is
responsible for determining the “significance threshold” that triggers base year
emissions recalculation and to disclose it. The verifier is responsible for
confirming the organization’s adherence to its threshold policy. The following
cases shall trigger recalculation of base year emissions:
 Structural changes in the reporting organization that significantly impact

its base year emissions. A structural change involves the transfer of
control of emissions-generating activities or operations from one
organization to another. While a single structural change might not
significantly impact the base year emissions, the cumulative effect of a
number of minor structural changes can. Structural changes include the
following:
 Reorganization, division, or consolidation of subordinate

organization’s emitting activities
 Outsourcing and insourcing of emitting activities.
 Changes in calculation method or improvements in the accuracy of

emission factors or activity data that significantly impact the base year
emissions data.
 Discovery of significant errors, or a number of cumulative errors, that

are collectively significant.
In summary, base year emissions shall be retroactively recalculated to reflect

changes in the organization that would otherwise compromise the consistency
and relevance of the reported GHG emissions information. Once an
organization has determined its policy on how it will recalculate base year
emissions, it shall apply this policy in a consistent manner. For example, it shall
recalculate for both GHG emissions increases and decreases.
GUIDANCE
Selection and recalculation of a base year should relate to the organizational
goals and the particular context of the organization:
 For the purpose of reporting progress toward voluntary public GHG

targets, public organizations may follow the standards and guidance in
this chapter.
 A public organization subject to an external GHG program may face

external rules governing the choice and recalculation of base year
emissions.
 For internal management goals, the organization may follow the rules
and guidelines recommended in this document, or it may develop its
own approach, which should be followed consistently.
Choosing a Base Year

Public organizations should choose as a base year the earliest relevant point in
time for which they have reliable data. Some organizations have adopted 1990
as a base year to be consistent with the Kyoto Protocol. However, obtaining
reliable and verifiable data for historical base years such as 1990 can be very
challenging. Some organizations will have to use a base year prescribed through
legislation, regulation, or executive order. For example, EO 13423 specifies
2003 as the base year for its energy reduction goals for federal agencies.
Some public organizations may require multiple base years due to the cyclical
nature of their operations. For example, a government census bureau may
acquire GHG-emitting resources (e.g., vehicle fleets and offices) to undertake a
periodic census, but then relinquish these resources following the completion of
the census. This bureau may therefore need two base years -- one with and one
without the census. Other organizations with noncyclical, but highly variable
emissions may require the use of an average of emissions over multiple but
consecutive years. For example, an emergency response organization may want
to create a base year using an average emissions rate across multiple
consecutive years to account for unusually large and non-routine activities in
any given year. However, most emissions trading and registry programs require
a fixed base year policy to be implemented.
In choosing a base year and, more generally, in designing a GHG accounting

system, public organizations should chose between fiscal years or calendar
years as the basis for reporting. While using the same reporting period for both
financial and GHG emissions accounting will reduce the reporting burden,
doing so may not be possible. For instance, public sector organizations may
have to report their GHG emissions to voluntary or mandatory reporting
programs on a calendar year basis, and their financial data on a fiscal year basis.
Such issues would need to be addressed early on in the design of a GHG
accounting system.
Significance Thresholds for Recalculations
Whether base year emissions are recalculated depends on the significance of the
changes. The determination of a significant change may require considering the
cumulative effect on base year emissions of a number of small reorganizations
(consolidations or divisions). The Public Sector Protocol makes no specific
recommendations as to what constitutes “significant.” However, some GHG
reporting programs do specify numerical significance thresholds, e.g., for the
CCAR, the change threshold is 10 percent of the base year emissions,
determined on a cumulative basis from the time the base year is established.
Base Year Emissions Recalculation for Structural Changes

Structural changes trigger recalculation because they merely transfer emissions
from one organization to another without any change of emissions released to
the atmosphere. For instance, a consolidation or division of subordinate
organizations only transfers existing GHG emissions from one public
organization’s inventory to another. Examples of structural changes that would
require the recalculation of base year emissions include:
 The consolidation of school districts.

Comment [W1]: Can the group
 Others? suggest further examples here?
Figures 5-1 and 5-2 illustrate the effect of structural changes and the application
of this standard on recalculation of base year emissions.
Figure 0-1. Base Year Emissions Recalculation for Consolidation
Unit C 15 20 20
Figures reported in respective years Recalculated figures

80 80
20 20 20
Gamma Emissions
Gamma Emissions
60 60
15
30 30 30 30
40 40
25 25
20 20
25 30 30 25 30 30
0 0
Year 1 Year 2 Year 3 Year 1 Year 2 Year 3

[Base Year] [Increase in [Gamma [Base Year]
Production] Acquires C]
Department Gamma consists of two operating units (A and B). In its base year (year one), each operating
unit emits 25 tons CO2. In year two, the department undergoes “organic growth,” leading to an increase in
emissions to 30 tons CO2 per business unit, i.e., 60 tons CO2 in total. The base year emissions are not
recalculated in this case. At the beginning of year three, the department is reorganized and acquires
operating Unit C from another department. The annual emissions of Unit C in year one were 15 tons CO2, Unit A
and 20 tons CO2 in years two and three. The total emissions of department Gamma in year three, including Unit B
Unit C, are therefore 80 tons CO2. To maintain consistency over time, the department recalculates its base
Unit C
year emissions to take into account the acquisition of Unit C. The base year emissions increase by 15 tons
CO 2—the quantity of emissions produced by Unit C in Gamma’s base year. The recalculated base year
emissions are 65 tons CO2. Gamma also (optionally) reports 80 tons CO 2 as the recalculated emissions for
year t wo.
Figure 0-2. Base Year Emissions Recalculation for Realignment of Operations
30
Figures reported in respective years Recalculated figures

80
90
Beta Emissions
30 30 60
Beta Emissions
60 25 20
30 30 30
40
30 30 25
25
30
20
30 30 25 30 30
25
0 0

[Base Year] [Increase in [Beta
Production] Divests C]
Department Beta consists of three operating units (A,B, and C). Each operating unit emits 25 tons CO 2 and
the total emissions for the department are 75 tons CO2 in the base year (year one). In year two, the output of
the department grows, leading to an increase in emissions to 30 tons CO 2 per operating unit, i.e., 90 tons
CO 2 in total. At the beginning of year three, the Department Beta is reorganized and ‘loses’ operating unit C
to another Department. The Department Beta annual emissions are now 60 tons, representing an apparent
Unit A
reduction of 15 tons relative to its base year emissions. However, to maintain consistency over time, the
department recalculates is base year emissions to take into account the divestment of operating unit C. The Unit B
base year emissions are lowered by 25 tons CO2—the quantity of emissions produced by the operating unit Unit C
C in t he base year. The recalculated base year emissions are 50 tons CO2, and the emissions of department
Beta are seen to have risen by 10 tons CO 2 over the three years. Beta (optionally) reports 60 tons CO 2 as
the recalculated emissions for year two.
Timing of Recalculations for Structural Changes
When significant structural changes occur during the middle of the reporting
year (fiscal or calendar), the base year emissions should be recalculated for the
entire year, rather than only for the remainder of the reporting period after the
structural change occurred. This avoids having to recalculate base year
emissions again in the succeeding year. Similarly, current year emissions should
be recalculated for the entire year to maintain consistency with the base year
recalculation. If it is not possible to recalculate in the year of the structural
change (e.g., due to lack of data for an acquired organization), it may be done
the following year. 2
Recalculations for Changes in Calculation Method

or Improvements in Data Accuracy
A public organization might report the same sources of GHG emissions as in
previous years, but measure or calculate emissions differently. For example, an
organization might have used a national electric power generation emissions
factor to estimate scope 2 emissions in year one of reporting. In later years, it
may obtain more accurate region-specific emission factors (for the current as
well as past years) that better reflect the GHG emissions associated with the
electricity that it has purchased. If the differences in emissions resulting from
such a change are significant, historic data are recalculated applying the new
data or method.
Sometimes the more accurate data input may not reasonably be applied to all
past years, or new data points may not be available for past years. The
organization may then have to backcast these data points, or the change in data
source may simply be acknowledged without recalculation. This
acknowledgment should be made in the report each year to enhance
transparency; otherwise, new users of the report in years after the change may
make incorrect assumptions about the performance of the organization.
Any changes in emission factor or activity data that reflect real changes in
emissions (i.e., changes in fuel type or technology) do not trigger a
recalculation.
2
For more information on the timing of base year emissions recalculations, see the
guidance document “Base year recalculation methodologies for structural changes” on the GHG
Protocol website (www.ghgprotocol.org).
New York City: Recalculation of base year emissions because of
methodological improvements
After producing an initial baseline, New York City has now categorized its emissions
into scopes based on the WRI/World Business Council for Sustainable Development’s
(WBCSD’s) Corporate Standard, and has revised its methodology for calculating
emissions from solid waste. Due to improvements in available data, the City has also
updated its emissions coefficients for electricity and steam and its base year for on-
road transportation emissions. These various changes have been applied to the City
government base year GHG inventory, resulting in adjusted base year figures for the
fiscal year 2006 City government analysis. As a result of the adjustments, the City
government fiscal year 2006 GHG base year inventory increased 5.9 percent from 3.8
million metric tons (MMT) CO 2 -e to 4.1 MMTCO 2 -e, an in crease of 0.23 MMT.
Source: Inventory of New York City Greenhouse Gas Emissions, September 17,
2008.
Base Year Anomalies

In tracking GHG emissions from year-to-year, there might be some anomalies
that occur and require explanation. Table 5-1 provides three examples of such
anomalies, which will be familiar to public sector managers. Appropriate base
years in these cases may be difficult to define. Although none of these examples
would allow for a recalculation of the base year emissions, they should be
considered when determining how to initially select the base. One alternative
may be multi-year average base years based on analogous anomalies, but these
may be misleading in nearly every year. The justification for selecting the
chosen base year and explanation for anomalies such as these should be detailed
within the GHG emissions report.
Table 0-1. Anomalous Conditions and Base Year Decisions
 Type of  Potential
anomaly  Definition  Example solution and implication
Discontinuous Significant and NASA’s transitional Use original base
sudden change (either shift from the “Space year and recognize that
up or down) in GHG Shuttle Program” to the the new mission has
emissions due to a “Constellation Program lead to increased (or
major change in the for Human Space decreased) emissions.
agency’s mission. Exploration.”
Periodic Temporary U.S. Census Base year consists
(repeating) increase in Bureau’s acquiring new of two years, one with
GHG emissions due to temporary office space and one without
a foreseen activity and vehicles to conduct census. Comparison to
change within an the U.S. nation-wide the appropriate
agency mission. census every 10 years. baseline year shows
real increases or
decreases.
Table 0-1. Anomalous Conditions and Base Year Decisions
 Type of  Potential
anomaly  Definition  Example solution and implication
Episodic Temporary U.S. National Use original base
increase in GHG Forest Service reporting year and recognize that
emission due to an of GHG emissions from the increase is real,
unforeseen events wildfires that are larger even if temporary. If
outside the agency’s or greater in number base year is an
control. than normal. anomalously large fire
year, this produces
apparent decreases
that are misleading.
Optional Reporting for Recalculations

Optional information that public organizations may report on recalculations
includes the following:
 The recalculated GHG emissions data for all years between the base year
and the reporting year
 All actual emissions as reported in respective years in the past, i.e., the
figures that have not been recalculated. Reporting the original figures in
addition to the recalculated figures contributes to transparency because it
illustrates the evolution of the organization’s structure over time.
No Base Year Emissions Recalculations for Facilities That

Did Not Exist in the Base Year
Base year emissions are not recalculated if the organization makes an
acquisition of—or takes back (insources) previously outsourced—operations
that did not exist in its base year. There may only be a recalculation of historic
data back to the year in which the acquired operations came into existence. The
same applies to cases where the organization loses ownership of (or outsources)
operations that did not exist in the base year.
Figure 5-3 illustrates a situation where no recalculation of base year emissions

is required because the acquired facility came into existence after the base year
was set.
Figure 0-3. Acquisition of Operations That Came Into Existence after Base Year Set
15 20
Figures reported in respective years

Recalculated figures
Omega Emissions (Tons CO2)

Omega Emissions (Tons CO2)
80 80
20 20
15
60 60
30 30 30 30
40 40
25 25
20 20
25 30 30 30 30
25
0 0

[Base Year] [Increase in [Teta [Base Year]
Production] Acquires C]
Department Omega consists of two operating units (A and B). In its base year (year one), the organization
emits 50 tons CO2. In year two, the organization undergoes organic growth, leading to an increase in
emissions to 30 tons CO2 per operating unit, i.e., 60 tons CO2 in total. The base year emissions are not
recalculated in this case. At the beginning of year three, Omega acquires a facility C from another Unit A
department. Facility C came into existence in year two, its emissions being 15 tons CO2 in year two and 20 Unit B
tons CO2 in year three. The total emissions of department Omega in year three, including facility C, are
Unit C
therefore 80 tons CO2. In this acquisition case, the base year emissions of department Omega do not
change because the acquired facility C did not exist in year one when the base year of Omega was set. The
base year emissions of Omega therefore remain at 50 tons CO2. Omega (optionally) reports 75 tons as the
recalculated figure for year two emissions.
No Recalculation for “Outsourcing or Insourcing” If

Previously Reported under Scope 2 or Scope 3
Structural changes due to “outsourcing” or “insourcing” do not trigger base year
emissions recalculation if the organization is reporting its indirect emissions
from relevant outsourced or insourced activities. For example, outsourcing
production of electricity, heat, or steam does not trigger base year emissions
recalculation because the Public Sector Protocol requires scope 2 reporting.
However, outsourcing or insourcing that shifts significant emissions between
scope 1 and scope 3 when scope 3 is not reported does trigger a base year
emissions recalculation (e.g., when an organization outsources the
transportation of products).
In case an organization decides to track emissions over time separately for

different scopes, and has separate base years for each scope, base year
emissions recalculation for outsourcing or insourcing is made.
Recalculating Base Year Due to Outsourcing
If your organization contracts out activities previously included in your base year
emissions estimate, you may need to adjust your base year report to reflect the
outsourcing. If you continue to include the emissions associated with the outsourced
activities as part of your indirect (scope 2 or scope 3) emissions, you should not adjust
your base year emissions. If the emissions associated with the outsourced activities are
classified as scope 2, you are required to report these emissions. In meeting this
requirement, you avoid the need to adjust your base year emissions to reflect the
outsourcing.
If, on the other hand, the outsourced activities are considered to be scope 3 emissions,
you can either report these emissions or exclude them from your report. If you choose to
exclude them, you must adjust your base year emissions to reflect the outsourcing.
Specifically, you should subtract the base year emissions caused by the activities now
being outsourced from your previously reported base year emissions to obtain an
adjusted base year emissions total. You should not adjust your base year report if the
outsourced activities did not exist during your base year.
For example, suppose a government agency outsourced waste management services
that were previously included in that agency’s base year emissions. This agency could
then chose to either exclude the scope 3 emissions entirely from its current inventory (and
adjust its base year emissions), or report these scope 3 emissions (and not adjust the
base year emissions).
Source: The Climate Registry General Reporting Protocol (Version 1.1, May 2008) available on
the web at http://www.theclimateregistry.org/downloads/GRP.pdf.
Recalculating Base Year Due to Insourcing Comment [W2]: Is the group aware of
a common instance of insourcing activity
Insourcing is the converse of outsourcing. If you did not include the emissions associated that would clarify when base years should
be recalculated for insourcing?
with insourced activities as indirect emissions in your base year report, you must adjust
your base year emissions to reflect the insourced activities. To adjust for insourcing, you
add the base year emissions for the insourced activities to your previously reported base
year emissions. If the activities you are insourcing did not occur in the base year, you
should not adjust your base year emissions. Base year emissions should not be adjusted
for the insourcing of activities that did not occur in the base year.
For example, suppose that in the base year your organization hired a private delivery
service to hand deliver proposals and deliverables to government offices located throughout
Washington, DC. Suppose further that you included the delivery service’s emissions
associated with the delivery of your organization’s packages as indirect (scope 3) emissions
in your base year report. If, in a subsequent year, your organization terminated its contract
with the delivery service and used its own employees and vehicles to make the deliveries,
no change in your base year report would be required because the emissions you
”insourced” were already included (as indirect emissions) in your base year report.
Alternatively, if you did not include the delivery company’s emissions in your base year
report, upon insourcing the delivery activities you would have to revise your base year
report to include the indirect emissions that were subsequently insourced.
However, if in the base year you did not submit any proposals or deliverables to clients in
the Washington, DC, area, but you subsequently hired the delivery service and then
brought the delivery activities in house, you would not need to adjust your base year report
because the insourced activities were not undertaken, either by your organization or the
delivery service, in the base year.
Source: The Climate Registry General Reporting Protocol (Version 1.1) available on the web at
http://www.theclimateregistry.org/downloads/GRP.pdf.
No Recalculation for Organic Growth, Decline, or Closure
Base year emissions and any historic data are not recalculated for organic
growth, decline, or closure. Organic growth includes new or increased
emissions from new regulatory responsibilities or increased operations. Organic
growth does not include subsuming another organization’s existing emissions
through reorganization. Closures should be considered as reductions in
emissions against a baseline. The rationale for this is that organic growth or
decline results in an actual change of emissions to the atmosphere and therefore
needs to be counted as an increase or decrease in the organization’s emissions Comment [W3]: We would like to use
profile over time BRACs as an example of when:
1.Base year emissions should be
recalculated (when a base formerly
administered by a single agency is now
realigned amongst several agencies)
Base Realignment and Closure (BRAC) 2.Base year emissions should not be
recalculated (when a base is simply
closed).
BRAC is a process of the United States federal government to close excess
military installations. … Can the group think of examples here?
We would also be interested in examples
from non-military contexts.
Chapter 6
Identifying and Calculating GHG Emissions
GUIDANCE
Once the inventory boundary has been established, public organizations
generally calculate GHG emissions using the following five steps:
1. Identify GHG emissions sources.
2. Select a GHG emissions calculation approach.
3. Collect activity data and choose emission factors.
4. Apply calculation tools.
5. Roll up GHG emissions data to the organizational or headquarters

level.
This chapter describes these steps and provides a list of calculation tools
commonly used by public sector agencies, including those developed by the
GHG Protocol (available on the GHG Protocol Initiative website at
www.ghgprotocol.org). This is not a comprehensive list, and government
agencies may be directed to use specific calculation tools or reporting
programs.
Figure 0-1. Steps in Identifying and Calculating GHG Emissions
Identify Sources
Select Calculation Approach
Collect Data and Choose Emission Factors
Apply Calculation Tools
Roll-up Data to Organizational or Headquarters Level

Identify GHG Emissions Sources from Government
Operations
The first of the five steps in identifying and calculating an organization’s
emissions as outlined in Figure 6-1 is to identify GHG sources within the
organization’s boundaries. Direct (Scope 1) GHG emissions from government
operations typically occur from the following source categories:
 Stationary combustion: combustion of fuels in stationary equipment

such as boilers, furnaces, burners, turbines, heaters, incinerators,
engines, and flares.
 Mobile combustion: combustion of fuels in transportation devices such

as automobiles, trucks, buses, trains, airplanes, boats, ships, barges,
and vessels.
 Process emissions: emissions from physical or chemical processes

such as CO 2 from the calcination step in cement manufacturing, CO 2
from catalytic cracking in petrochemical processing, and PFC
emissions from aluminum smelting.
 Fugitive emissions: intentional and unintentional releases, such as

equipment leaks from joints, seals, packing, and gaskets, as well as
fugitive emissions from detonation and firing of munitions, rocket
firing, coal piles, wastewater treatment, cooling towers, and gas
processing facilities.
The GHG Protocol calculation tools are organized on the basis of these
categories. Table 6-1 shows a sample of GHG emissions from typical public
sector operations. Since most of these are directly related to energy use,
organizations may be able to base emissions information on existing energy
management system data sets. Such synergies can make GHG reporting less
onerous and more cost effective. Appendix D provides an overview of direct
and indirect GHG emission sources organized by scopes and industry sectors
that may be used as an initial guide to identify major GHG emission sources
in public organizations.

Table 0-1. Illustrative Emissions Sources Associated with Public Sector Operations
Potential data
Emission source Type Possible data needs source
Buildings S, P, 1) For stationary combustion sources: Utility provider that
(Government- F amounts of natural gas and other fuels transmits the power
owned, operated or consumed (CO 2 , CH 4 , and N 2 O). source (e.g., investor-
occupied facilities) 2) For electricity consumption: amount of owned utility, municipal
electricity purchased from the grid (CO 2 , utility)
CH 4 , and N 2 O). Accounts payable
3) Amount of imported steam or district Property
heating or cooling (CO 2 , CH 4 , and N 2 O). management
4) For refrigeration and heating, HVAC maintenance
ventilation, and air conditioning (HVAC) contract manager
systems: type of refrigerants, type and
quantities of air conditioning (A/C)
equipment, total refrigerant charge, and
annual leak rates (HFCs and PFCs).
Road and marine M, F 1) Fuel consumption or mileage data by Fleet management
vehicle and aircraft vehicle, vehicle type, and vehicle year (CO 2 , Accounts payable
fleets CH 4 , and N 2 O).
(Vehicles in agency- 2) For vehicle A/C systems: type of
managed fleet) refrigerants, number and type of vehicles in
fleet, total refrigerant charge, and annual
leak rates (HFCs).
Water and Sewage S,P, 1) See buildings. Utility provider that
(Treatment and F 2) Information on the volume and transmits the power
pumping) composition of water/sewage treated at source (e.g., investor-
water/sewage treatment plants (CH 4 and owned utility, municipal
N 2 O). utility)
Accounts Payable
Public Works Dept
Municipal Utility
District (Water District)
Landfill S Comment [W1]: Need more
information here
Management
Stationary S 1) Amount of fuel consumed (CO 2 , CH 4 , Bulk Fuel Purchases
combustion equipment and N 2 O). Maintenance/testing
(including power plants records
and generators)
Fire Protection S, 1) See buildings. Maintenance
(Vehicles, fire M, F 2) See fleets. records
suppression systems) 3) For fire suppression systems: type of Coolant purchase
suppressants, number and type of vehicles records
in fleet, total charge, and annual leak rates
(HFCs).

Table 0-1. Illustrative Emissions Sources Associated with Public Sector Operations
Potential data
Emission source Type Possible data needs source
Road Construction S, 1) See buildings.
(Vehicles, cement, M, P 2) See fleets.
and asphalt production) 3) Data on cement production.
4) See parks and lands (soils and
forests)
5) Traffic lights and other signal/lighting
equipment.
Laboratories S, F 1) See buildings. Bulk Fuel Records
2) Gases for testing: N 2 O, HFCs, PFCs.
Universities S, 1) See buildings.
M, F 2) See fleets.
3) See generators.
Parks and lands S, F 1) See buildings.
2) See fleets.
3) Fish hatcheries: potential N 2 O and
potential CH 4 from fish food.
4) Soils: CO 2 emissions (and removals)
and N 2 O emissions.
5) Forests: CO 2 emissions and removals
associated with changes in above-ground
forest stocks
Fleet management
6) Off-road mobile sources
(snowmobiles, lawnmowers, ATVs)
Other S, Examples include portable equipment, Dependent on

(Emissions that may M, F lawnmowers, weed-whackers, leaf-blowers, emissions source
not be captured in above and scissor lifts): fuel consumption, hours of Maintenance
categories) use, and, for fire suppression systems, data records
necessary to calculate emissions of PFCs. Air permits
Source: Adapted from http://www.theclimateregistry.org/downloads/State_Government_GHG_Sources.pdf.
Note: S = stationary emissions; M = mobile emissions; P = process emissions; F = fugitive emissions.
IDENTIFY SCOPE 1 EMISSIONS

As a first step, a public organization should undertake an exercise to identify
its direct (scope 1) emission sources in each of the four source categories
listed above. Process emissions are usually only relevant to certain industry
sectors like oil and gas, aluminum, and cement. Public organizations, such as
defense facilities, that generate process emissions, or that own or control a
power production facility, will likely have direct emissions from all the main
source categories. Office-based public organizations may not have any direct
GHG emissions except in cases where they own or operate a vehicle,
combustion device, or refrigeration and air-conditioning equipment. Often,

organizations are surprised to realize that significant emissions come from
sources that are not initially obvious (see United Technologies case study).

The next step is to identify indirect emission sources from the consumption of
purchased electricity, heat, or steam. Almost all public organizations generate
indirect emissions due to the purchase of electricity for use in their processes
or services.

This optional step involves identification of other indirect emissions from an
organization’s upstream and downstream activities; for government agencies,
these can include emissions from leased assets and outsourced services that
were not included in scope 1 or scope 2.
The inclusion of scope 3 emissions allows public agencies to expand their

inventory boundary along their value chain, providing a broad overview of
linkages (such as inter-agency management of shared resources) which offer
opportunities for significant GHG emission reductions (see Chapter 4 for an
overview of activities that can generate GHG emissions along an
organization’s value chain).
Select a Calculation Approach

The IPCC guidelines (IPCC, 2006) refer to a hierarchy of calculation
approaches and techniques, ranging from the application of generic emission
factors to direct monitoring. The most accurate GHG emission data can be
obtained through direct measurement by monitoring concentration and flow
rate, but this approach is not commonly available or practical for most
organizations. Emissions can also be calculated on a mass balance or
stoichiometric basis specific to a facility or process. However, the most
common approach for calculating GHG emissions is through the application
of documented emission factors. These factors are calculated ratios relating
GHG emissions to a measure of activity (for example, electricity emission
factors are expressed in tons of CO2 equivalent per kilowatt-hour).
In many cases, accurate emission data can be calculated from fuel use data.
Even small users usually know the amount of fuel consumed and have access
to data on the carbon content of the fuel through default carbon content
coefficients or through more accurate periodic fuel sampling. Public
organizations should use the most accurate calculation approach available to
them and appropriate for their reporting context, and should consult the tools
available through voluntary reporting programs like The Climate Registry or
ICLEI.

United Technologies Corporation (UTC): More than meets the eye
In 1996, UTC, a global aerospace and building systems technology corporation,
appointed a team to set boundaries for the company’s new Natural Resource
Conservation, Energy and Water Use Reporting Program. The team focused on the
sources of energy that should be included in the program's annual report of energy
consumption. The team decided jet fuel needed to be reported in the annual report, as
jet fuel was used by a number of UTC divisions for engine and flight hardware testing
and for test firing. Although the amount of jet fuel used in any given year was subject
to wide variation due to changing test schedules, the total amount consumed in an
average year was believed to be small and potentially small enough to be specifically
excluded. However, jet fuel consumption reports proved that initial belief incorrect. Jet
fuel has accounted for between 9 and 13 percent of the corporation's total annual use
of energy since the program commenced. Had UTC not included the use of jet fuel in
annual data collection efforts, a significant emissions source would have been
overlooked.
Collect Activity Data and Choose Emission Factors

For most small- to medium-sized public organizations and for many larger
public organizations, scope 1 GHG emissions are calculated on the basis of
the purchased (or consumed) quantities of commercial fuels (such as natural
gas, vehicle fuels, and heating oil) using published emission factors. Much of
the information required to complete the inventory may already be available
in other data bases maintained by the agency. 1 Coordinating with the parties
responsible for such data may simplify reporting and avoid unnecessary
duplication of effort. However, some organizations may have difficulty
gathering sufficiently disaggregated data to allow for inventory calculations at
the appropriate level; in these cases, organizations must clearly identify
limitations on data in the inventory report.
Some public organizations (e.g., DoD and NASA) have unique industrial
operations and operate their own power generation facilities. Organizations
have to ensure that they develop appropriate emissions factors from these
unique emission sources. Scope 2 GHG emissions are primarily calculated
from metered electricity consumption and supplier-specific, local grid, or
other published emission factors. Scope 3 GHG emissions are primarily
calculated from activity data such as fuel use or passenger miles and published
or third-party emission factors. In most cases, if source- or facility-specific
emission factors are available, they are preferable to more generic or general
emission factors.
Public organizations that undertake industrial-type work may be faced with a

wider range of approaches and methods. They should seek guidance from the
1
U.S. federal agencies are required to measure and report annually their facility and
vehicle fleet energy use to the Federal Energy Management Program to satisfy Energy Policy
Act 2005 and EO 13423 requirements.
sector-specific guidelines on the GHG Protocol website (if available) or from
agency protocols and studies.
Comment [W2]: Would like to
include list of calculation and inventory
Apply Calculation Tools management tools currently available to
public agencies (including tools from
EPA, ICLEI, The Climate Registry, and
This section provides an overview of the GHG calculation tools and guidance other programs).
available on the GHG Protocol Initiative website (www.ghgprotocol.org). Use
of these tools is encouraged as they have been peer reviewed by experts and
industry leaders, are regularly updated, and are believed to be the best
available. The tools, however, are optional. Public organizations may
substitute their own GHG calculation methods, provided they are more
accurate than or are at least consistent with the approaches in the Public
Sector Protocol.
There are two main categories of calculation tools:
 Cross-sector tools that can be applied to different sectors. These

include stationary combustion, mobile combustion, HFC and PFC use
in refrigeration and air conditioning, and measurement and estimation
uncertainty.
 Sector-specific tools that are designed to calculate emissions in

specific sectors such as aluminum, iron and steel, cement, oil and gas,
pulp and paper, and office-based organizations.
Many public organizations may need to use more than one calculation tool to
cover all their GHG emission sources. Table 6-2 lists the tools available.
Table 0-2. Overview of GHG Calculation Tools Available on GHG Protocol Website
Calculation tools Main features

Cross-sector tools
Stationary Calculates direct and indirect CO 2 emissions from fuel combustion in stationary
combustion equipment.
Provides two options for allocating GHG emissions from a cogeneration facility.
Provides default fuel and national average electricity emission factors.
Mobile combustion Calculates direct and indirect CO 2 emissions from fuel combustion in mobile
sources.
Provides calculations and emission factors for road, air, water, and rail transport.
HFC from air Calculates direct HFC emissions during manufacture, use, and disposal of
conditioning and refrigeration and A/C equipment in commercial applications.
refrigeration use Provides three calculation methods based on sales, life-cycle stage, and
emission factors.

Table 0-2. Overview of GHG Calculation Tools Available on GHG Protocol Website
Calculation tools Main features

Measurement and Introduces the fundamentals of uncertainty analysis and quantification.
estimation uncertainty for Calculates statistical parameter uncertainties due to random errors related to
GHG emissions calculation of GHG emissions.
Automates the aggregation steps involved in developing a basic uncertainty
assessment for GHG inventory data.
Sector-specific tools
Aluminum and other Calculates direct GHG emissions from aluminum production (CO 2 from anode
nonferrous metals oxidation, PFC emissions from the “anode effect,” and SF 6 used in nonferrous
production metals production as a cover gas).
Iron and steel Calculates direct GHG emissions (CO 2 ) from oxidation of the reducing agent,
calcination of the flux used in steel production, and removal of carbon from the iron
ore and scrap steel used.
Nitric acid Calculates direct GHG emissions (N 2 O) from the production of nitric acid.
manufacture
Ammonia Calculates direct GHG emissions (CO 2 ) from ammonia production. This is for
manufacture the removal of carbon from the feedstock stream only; combustion emissions are
calculated with the stationary combustion module.
Adipic acid Calculates direct GHG emissions (N 2 O) from adipic acid production.
manufacture
Cement Calculates direct CO 2 emissions from the calcination process in cement
manufacturing (WBCSD tool also calculates combustion emissions).
Provides two calculation methods: one cement based and the other clinker
based.
Lime Calculates direct GHG emissions from lime manufacturing (CO 2 from the
calcination process).
HFC-23 from Calculates direct HFC-23 emissions from production of HCFC-22.
hydrochlorofluorocarbons
(HCFC)-22 production
Pulp and paper Calculates direct CO 2 , CH 4 , and N 2 O emissions from production of pulp and
paper. This includes calculation of direct and indirect CO 2 emissions from
combustion of fossil fuels, biofuels, and waste products in stationary equipment.
Guide for small Calculates direct CO 2 emissions from fuel use, indirect CO 2 emissions from
office-based electricity consumption, and other indirect CO 2 emissions from public organization
organizations travel and commuting.
STRUCTURE OF GHG PROTOCOL CALCULATION TOOLS.

Each of the cross-sector and sector-specific calculation tools on the website
share a common format and include step-by-step guidance on measuring and
calculating emissions data. Each tool consists of a guidance section and
automated worksheets with explanations on how to use them.
The guidance for each calculation tool includes the following sections:

 Overview: provides an overview of the purpose and content of the
tool, the calculation method used, and a process description.
 Choosing activity data and emission factors: provides sector-specific

good practice guidance and references for default emission factors.
 Calculation methods: describes different calculation methods

depending on the availability of site-specific activity data and emission
factors.
 Quality control: provides good practice guidance.
 Internal reporting and documentation: provides guidance on internal

documentation to support emissions calculations.
In the automated worksheet section, it is only necessary to insert activity data

into the worksheets and to select an appropriate emission factor or factors.
Default emission factors are provided for the sectors covered, but inserting
customized emission factors more representative of the reporting
organization’s operations or more up to date is also possible. 2 The emissions
of each GHG (CO 2 , CH 4 , N 2 O, etc.) are calculated separately and then
converted to CO 2 equivalents on the basis of their global warming potential.
Some tools, such as the Refrigeration and Air-Conditioning cross-sector tool,

take a tiered approach, offering a choice between a simple and a more
advanced calculation method. The more advanced methods are expected to
produce more accurate emissions estimates but usually require collection of
more detailed data and a more thorough understanding of an organization’s
technologies.
2
Emissions factors from various sources, such as the IPCC may be updated
independently from the Public Sector Protocol. Organizations should consider updating
calculation tools as necessary based on reporting requirements.
Climate Leadership In Parks (CLIP): Greenhouse Gas Emissions Inventory Tool
The Climate Friendly Parks (CFP) program stems from a partnership between the
U.S. EPA and NPS and works to educate, communicate, and mitigate climate change
by:
– Educating every park employee about climate change and what role each can
take in addressing the problem.
– Identifying a strategy for each CFP to reduce their GHG emissions in order to
help mitigate the effects of climate change.
– Empowering every park employee to communicate to the public how climate
change is affecting their park’s natural resources, how the park is dealing with
these effects, and the difference each person can make in being stewards of
our climate and other natural resources.
The CFP program created the CLIP Tool in order to help National Parks conduct
emission inventories, develop action plans, and communicate about climate change.
The emissions inventory has been designed to assist park employees to approximate
emissions that occur within park boundaries. This is done by looking at both GHGs
and criteria air pollutants (CAPs). It will also pinpoint how employees,
concessionaires, and visitors each impact climate change.
The emissions inventory module estimates emissions of GHGs and CAPs. While both
types of emissions often result from similar activities, there are some differences in
how these emissions are estimated.
The Emissions Inventory Tool is broken into four key sections: control, background,
GHG sources, and CAP sources. The control section is the main interface of the
inventory tool, where users insert all key information about a park. The background
component provides users with directions and assistance on how to make use of the
tool. It specifically focuses on what data needs to be collected and how to go about
obtaining that information. The next two sections focus on calculations. They are
broken into GHG calculations and CAP calculations. Both calculators are separated
into the individual emission sources that are relevant to each park. At the end the user
is presented with a summary sheet.
Source: http://www.nps.gov/climatefriendlyparks/CLIPtool/emissioninventory.htm.
Roll Up GHG Emissions Data to Organizational

or Headquarters Level
To report an organization’s total GHG emissions, public organizations will
usually need to gather and summarize data from multiple facilities, across
different subordinate agencies or divisions, and possibly in different countries.
Planning this process carefully minimizes the reporting burden, reduces the
risk of errors that might occur while compiling data, and ensures that all
facilities are collecting information on an approved, consistent basis. Ideally,
organizations integrate GHG reporting with their existing reporting tools and
processes, and take advantage of any relevant data already collected and
reported by facilities to division or headquarters offices, regulators, or other
stakeholders.

The tools and processes chosen to report data depend upon the information
and communication infrastructure already in place (i.e., how easy it is to
include new data categories in headquarters databases). It also depends on the
amount of detail headquarters wishes to be reported from facilities. Data
collection and management tools could include the following:
 Secure databases available over the organizations intranet or internet,

for direct data entry by facilities
 Spreadsheet templates filled out and e-mailed to a headquarters or

division office, where data are processed further
 Paper reporting forms faxed to a headquarters or division office where

data is reentered in a headquarters database. However, this method
may increase the likelihood of errors if sufficient checks are not in
place to ensure the accurate transfer of the data.
BP: A standardized system for internal reporting of GHGs

BP, a global energy company, has been collecting GHG data from the different parts
of its operations since 1997 and has consolidated its internal reporting processes into
one central database system. The responsibility for reporting environmental emissions
lies with about 320 individual BP facilities and business departments, which are
termed “reporting units.” All reporting units have to complete a standard Excel pro
forma spreadsheet every quarter, stating actual emissions for the preceding 3 months
and updates to forecasts for the current year and the next 2 years. In addition,
reporting units are asked to account for all significant variances, including sustainable
reductions. The reporting units all use the same BP GHG Reporting Guidelines
“Protocol” (BP, 2000) for quantifying their emissions of CO 2 and CH 4 .
All pro forma spreadsheets are e-mailed automatically by the central database to the
reporting units, and the completed e-mail returns are uploaded into the database by a
corporate team, which checks the quality of the incoming data. The data are then
compiled, by the end of the month following each quarter end, to provide the total
emission inventory and forecasts for analysis against BP’s GHG target. Finally, the
inventory is reviewed by a team of independent external auditors to ensure the quality
and accuracy of the data.
For internal reporting up to the headquarters level, the use of standardized

reporting formats is recommended to ensure that data received from different
public organization units and facilities are comparable and that internal
reporting rules are observed (see BP case study). Standardized formats can
significantly reduce the risk of errors.
Approaches for rolling up GHG Emissions data to headquarters

level
There are two basic approaches for gathering data on GHG emissions from a
public organization’s subordinate facilities (Table 6-3):

The Public Sector
or Protocol is a joint LMI-WRI product.
 Centralized. Individual facilities report activity and fuel use data (such
as quantity of fuel used) to the headquarters level, where GHG
emissions are calculated.
 Decentralized. Individual facilities collect activity and fuel use data,

directly calculate their GHG emissions using approved methods, and
report this data to the headquarters level.
Table 0-3. Approaches to Gathering GHG Data
Approach Site Level Headquarters level

Centralized Activity data Site report activity data (GHG
emissions calculated at headquarters level:
activity data × emissions factor = GHG
emissions)
Decentralized Activity data × emission Sites report GHG emissions
factor = GHG emissions
The difference between these two approaches is in where the emissions

calculations occur (i.e., where activity data are multiplied by the appropriate
emission factors) and in what type of quality management procedures must be
put in place at each level of the organization. Facility-level staff members are
generally responsible for initial data collection under both approaches. When
deciding on an approach, public organizations also need to consider how other
related data are collected across the organization such as energy use, fuel use,
air emissions, and toxic release inventories.
CENTRALIZED APPROACH: INDIVIDUAL FACILITIES REPORT ACTIVITY AND

FUEL USE DATA
This approach may be particularly suitable for office-based organizations.
Requesting that facilities report their activity and fuel use data may be the
preferred option if
 The staff at the headquarters or division level can calculate emissions

data in a straightforward manner on the basis of activity or fuel use
data, and
 Emissions calculations are standard across a number of facilities.
DECENTRALIZED APPROACH: INDIVIDUAL FACILITIES CALCULATE GHG

EMISSIONS DATA
Asking facilities to calculate GHG emissions themselves helps to increase
their awareness and understanding of the issue. However, it may also lead to
resistance, increased training needs, an increase in calculation errors, and a

greater need for auditing of calculations. Requesting that facilities calculate
GHG emissions themselves may be the preferred option if:
 GHG emission calculations require detailed knowledge of the kind of

equipment being used at facilities,
 GHG emission calculation methods vary across a number of facilities,
 Process emissions (in contrast to emissions from burning fossil fuels)

make up an important share of total GHG emissions,
 Resources are available to train the facility staff to conduct these

calculations and to audit them,
 A user-friendly tool is available to simplify the calculation and

reporting task for the facility-level staff, or
 Local regulations require reporting of GHG emissions at a facility

level.
The choice of collection approach depends on the needs and characteristics of

the reporting organization. To maximize accuracy and minimize reporting
burdens, some public organizations use a combination of the two approaches.
Complex facilities with process emissions calculate their emissions at the
facility level, while facilities with uniform emissions from standard sources
only report fuel use, electricity consumption, and travel activity. The
headquarters database or reporting tool then calculates total GHG emissions
for each of these standard activities.
The two approaches are not mutually exclusive and should produce the same
result. Thus, public organizations desiring a consistency check on facility-
level calculations can follow both approaches and compare the results. Even
when facilities calculate their own GHG emissions, the headquarters staff may
still wish to gather activity and fuel use data to double-check calculations and
explore opportunities for emissions reductions. These data should be available
and transparent to staff at all headquarters levels. The headquarters staff
should also verify that facility-reported data are based on well defined,
consistent, and approved inventory boundaries, reporting periods, calculation
methodologies, etc.
Common Guidance on Reporting to Headquarters Level

Reports from facility level to headquarters or division offices should include
all relevant information as specified in Chapter 9. Some reporting categories
are common to both the centralized and decentralized approaches and should
be reported by facilities to their headquarters offices, including the following:

 A brief description of the emission sources
 A list and justification of specific exclusion or inclusion of sources
 Comparative information from previous years
 The reporting period covered
 Any trends evident in the data
 Progress toward any public organization targets
 A discussion of uncertainties in activity/fuel use or emissions data

reported, their likely cause, and recommendations for how data can be
improved
 A description of events and changes that have an impact on reported

data (acquisitions, restructuring, closures, technology upgrades,
changes of reporting boundaries or calculation methods applied, etc.).
REPORTING FOR THE CENTRALIZED APPROACH

In addition to the activity/fuel use data and aforementioned common
categories of reporting data, facilities following the centralized approach by
reporting activity/fuel use data to the headquarters level should also report the
following:
 Activity data for freight and passenger transport activities (e.g., freight
transport in ton-miles)
 Activity data for process emissions (e.g., tons of waste in landfills)
 Clear records of any calculations undertaken to derive activity/fuel use

data
 Local emission factors necessary to translate fuel use and/or electricity

consumption into CO 2 emissions.
REPORTING FOR THE DECENTRALIZED APPROACH

In addition to the GHG emissions data and aforementioned common
categories of reporting data, individual facilities following the decentralized
approach by reporting calculated GHG emissions to the headquarters level
should also report the following:
 A description of GHG calculation methods and any changes made to

those methods relative to previous reporting periods

 Ratio indicators (see Chapters 9 and 11)
 Details on any data references used for the calculations, in particular

information on emission factors used.
Clear records of calculations undertaken to derive emissions data should be

kept for any future internal or external verification.

Chapter 7
Managing Inventory Quality
GUIDANCE
An organization’s GHG reporting objectives should guide the design of an
inventory quality management system, as well as the treatment of uncertainty
within its inventory.
In addition to the Public Sector Protocol, public organizations can use the
EPA Program Guide for Climate Leaders (Program Guide) to develop a
practical framework, or inventory management plan (IMP), for the quality
management of a GHG accounting system. 1 An IMP describes the steps a
public organization is taking in developing a GHG inventory, including GHG
accounting procedures, and data collection and reporting. An IMP should also
describe the implementation of steps to manage the quality of the inventory.
An IMP provides a systematic process for preventing and correcting errors,
and identifies areas where investments will likely lead to the greatest
improvement in overall inventory quality. However, the primary objective of
an IMP is ensuring the credibility of an organization’s GHG inventory
information. 2
Defining inventory quality

Chapter 1 outlines five accounting principles that set an implicit standard for
the faithful representation of an organization’s GHG emissions through its
technical, accounting, and reporting efforts. Putting these principles into
practice will result in a credible and unbiased treatment and presentation of
issues and data. The goal of an IMP is to ensure that these principles are put
into practice.
This chapter addresses the steps a public organization can take to implement
an IMP, practical inventory quality measures for implementation, and
inventory quality and inventory uncertainty (i.e., types and limitations of
uncertainty estimates).
1
The Corporate Standard calls this framework an Inventory Quality Management
System, and the Program Guide calls it an Inventory Management Plan (IMP). We use the
latter term in this Chapter of the Public Sector Protocol. See EPA, Program Guide for
Climate Leaders, March 2007, http://www.epa.gov/.
2
Although the term “emissions inventory” is used throughout this chapter, the guidance
applies equally to estimates of removals due to sink categories (e.g., forest carbon
sequestration).
The Corporate Standard recognizes that public organizations have limited
resources and, unlike financial accounting, organizational GHG inventories
involve a level of scientific and engineering complexity. Therefore, public
organizations should develop their IMP as a cumulative effort in keeping with
their resources, the broader evolution of policy, and their own organizational
vision.
An inventory program framework

A practical framework is needed to help public organizations conceptualize
and design a quality management system and plan, or IMP, for future
improvements. The IMP focuses on the following institutional, managerial,
and technical components of an inventory (Table 7-1):
 Methods. These are the technical aspects of inventory preparation.

Public organizations should select or develop methods for estimating
emissions that accurately represent the characteristics of their source
categories. The GHG Protocol provides many default methods and
calculation tools to help with this effort. The design of an inventory
program and quality management system should provide for the
selection, application, and updating of inventory methods as new
research becomes available, changes are made to organizational
operations, or the importance of inventory reporting is elevated.
 Data. Data are the basic information on activity levels, emission

factors, processes, and operations. Although methods need to be
appropriately rigorous and detailed, data quality is more important. No
method can compensate for poor quality input data. The design of an
organization’s inventory program should facilitate the collection of
high-quality inventory data and the maintenance and improvement of
collection procedures.
 Inventory Processes and Systems. These are the institutional,

managerial, and technical procedures for preparing GHG inventories.
They include the team and processes charged with the goal of
producing a high-quality inventory. To streamline GHG inventory
quality management, these processes and systems should be integrated,
where appropriate, with other organizational processes related to
quality.
 Documentation. This is the record of methods, data, processes,

systems, assumptions, and estimates used to prepare an inventory. It
includes everything employees need to prepare and improve an
organization’s inventory. Because estimating GHG emissions is
inherently technical (involving engineering and science), high-quality,
transparent documentation is particularly important for credibility. If
information is not credible, or fails to be effectively communicated to
internal or external stakeholders, it will not have value.
Table 0-1. IMP Fundamentals
Inventory component Details

Methods—the technical aspects of Define inventory boundaries and treatment of joint ventures and identify
inventory preparation sources, etc. (see Chapters 3, 4, and 6).
Identify methods for estimating emissions; the GHG Protocol website
(http://www.ghgprotocol.org/) provides many default methods and
protocols to help organizations with this effort.
Establish procedures for applying and updating inventory methods in
response to new organization activities, new technical information, or
new reporting requirements.
Data—the basic information on Develop the approach and assign roles and responsibilities to facilitate
activity levels, emission factors, collection of high-quality inventory data.
processes, and operations Create a process for the maintenance and improvement of data
collection procedures.
Inventory processes and systems— Define all institutional, managerial, and formal procedural aspects
the institutional, managerial, and required to develop and maintain a GHG inventory that meets the Public
technical procedures for preparing Sector Protocol accounting and reporting standards.
GHG inventories Whenever reasonable, integrate these processes with other organization
processes.
Documentation—the record of Identify internal and external audiences and develop procedures to
methods, data, processes, systems, document information intended for their use.
assumptions, and estimates used to Establish documentation sufficient for an inventory development team to
prepare an inventory accurately and efficiently continue preparing and improving all four
fundamentals in the organization’s inventory.
Ensure that documentation provides sufficient transparency to facilitate
potential internal or external verification.
Source: EPA, Program Guide for Climate Leaders, March 2007, http://www.epa.gov/.
Figure 0-1. Inventory Management Plan
Implementing an IMP
An organization’s IMP should address all four of the inventory components
described above. To implement the IMP, an organization should take the
following seven steps (see Figure 7-1):
1. Establish an inventory team. This team is responsible for

implementing a quality management system and continually
improving inventory quality. The team or manager should coordinate
interactions between relevant operational units, facilities, and external
entities such as government programs, research institutions, verifiers,
or consulting firms.
2. Develop an IMP. This plan describes the steps an organization is

taking to develop a GHG inventory, which should be incorporated into
the design of its inventory program from the beginning, although
further rigor and coverage of certain procedures may be phased in over
multiple years. The IMP should include procedures for all
organizational levels and inventory development processes—from
initial data collection to final reporting of accounts. For efficiency and
comprehensiveness, public organizations should integrate (and extend
as appropriate) existing quality systems to cover GHG management
and reporting, such as any ISO 9000 (Quality Management) and ISO
14001 (Environmental Management) procedures. To ensure accuracy,
the bulk of the plan should focus on practical measures for ensuring
quality, as described in steps 3 and 4.
3. Perform generic quality checks. These apply to data and processes
across the entire inventory, focusing on appropriately rigorous quality
checks on data handling, documentation, and emission calculation
activities (e.g., ensuring that the correct unit conversions are used).
Guidance on quality checking procedures is provided in the section on
implementation below (see Table 7-2).
Table 0-2. Generic Quality Management Measures
Data gathering, input, and handling activities

Check a sample of input data for transcription errors.
Validate input data prior to calculating GHG emissions to check for outliers (e.g., impossibly high fuel
economy rates for vehicles)
Identify spreadsheet modifications that could provide additional controls for data protection or checks on
quality.
Ensure that adequate version control procedures for electronic files have been implemented.
Data documentation
Confirm that bibliographical data references are included in spreadsheets for all primary data.
Check that copies of cited references have been archived.
Check that assumptions and criteria for selection of boundaries, base years, methods, activity data,
emission factors, and other parameters are documented.
Check that changes in data or methods are documented.
Calculating emissions and checking calculations
Check whether emission units, parameters, and conversion factors are appropriately labeled.
Check whether units are properly labeled and correctly carried through from the beginning to the end of
calculations.
Check that conversion factors are correct.
Check the data processing steps (e.g., equations) in the spreadsheets.
Check that spreadsheet input data and calculated data are clearly differentiated.
Check a representative sample of calculations, by hand or electronically.
Check some calculations with abbreviated calculations (i.e., back-of-the-envelope calculations).
Check the aggregation of data across source categories, operational units, etc.
Check consistency of time series inputs and calculations.
Get staff not involved in inventory development to spot check data handling and calculations
4. Perform source-category-specific quality checks. This includes more

rigorous investigations into the appropriate application of boundaries,
recalculation procedures, and adherence to accounting and reporting
principles for specific source categories, as well as the quality of the
data input used (e.g., whether electricity bills or meter readings are the
best source of consumption data) and a qualitative description of the
major causes of uncertainty in the data. The information from these
investigations can also be used to support a quantitative assessment of
uncertainty. Guidance on these investigations is provided in the section
below on implementation.
5. Review final inventory estimates and reports. After the inventory is
completed, an internal technical review should focus on its
engineering, scientific, and other technical aspects. Subsequently, an
internal managerial review should focus on securing official
organizational approval of and support for the inventory. Chapter 10
addresses a third type of review involving experts external to the
organization’s inventory program.
6. Institutionalize formal feedback loops. The results of the reviews in

step 5, as well as the results of every other component of an
organization’s quality management system, should be fed back via
formal feedback procedures to the person or team identified in step 1.
Errors should be corrected and improvements implemented based on
this feedback.
7. Establish reporting, documentation, and archiving procedures. The

system should contain record-keeping procedures that specify the
information to be documented for internal purposes, how that
information should be archived, and the information to be reported to
external stakeholders. Like internal and external reviews, these record-
keeping procedures include formal feedback mechanisms.
An organization’s IMP and overall inventory program should be treated as

evolving, in keeping with an organization’s reasons for preparing an
inventory. The plan should address the organization’s strategy for a multiyear
implementation (i.e., recognize that inventories are a long-term effort),
including steps to ensure that all quality control findings from previous years
are adequately addressed.
Practical Measures for Implementation

Although principles and broad program design guidelines are important, any
guidance on inventory management would be incomplete without a discussion
of practical inventory management measures. An organization should
implement these measures at multiple levels, from the point of primary data
collection to the final headquarters inventory approval process. Implementing
these measures at points in the inventory program where errors are most likely
to occur—such as the initial data collection phase and during calculation and
data aggregation—is important. Although headquarters-level inventory quality
may initially be emphasized, ensuring quality measures are implemented at all
levels of disaggregation (e.g., facility, process, geographical, according to a
particular scope, etc.) better prepares the organization for GHG markets or
regulation in the future.
Public organizations also need to ensure the quality of their historical

emission estimates and trend data. They can do so by employing inventory
quality measures to minimize biases that can arise from changes in the
characteristics of the data or methods used to calculate historical emission
estimates and by following the standards and guidance of Chapter 5.
The third step of a quality management system, as described above, is to
implement generic quality checking measures. These measures apply to all
source categories and all levels of inventory preparation. Table 7-2 lists such
measures.
The fourth step of an IMP is source-category-specific data quality

investigations. The information gathered from these investigations can also be
used for the quantitative and qualitative assessment of data uncertainty (see
the section on uncertainty). Addressed below are the types of source-specific
quality measures that can be employed for emission factors, activity data, and
emission estimates.
EMISSION FACTORS AND OTHER PARAMETERS

For a particular source category, emissions calculations generally rely on
emission factors and other parameters (e.g., utilization factors, oxidation rates,
and methane conversion factors). 3 These factors and parameters may be
published or default factors based on organization-specific data, site-specific
data, or direct emission or other measurements. For fuel consumption,
published emission factors based on fuel energy content are generally more
accurate than those based on mass or volume, except when mass- or volume-
based factors have been measured at the organization- or site-specific level.
Quality investigations need to assess the representativeness and applicability
of emission factors and other parameters to the specific characteristics of an
organization. Differences between measured and default values need to be
qualitatively explained and justified on the basis of the organization’s
operational characteristics.
ACTIVITY DATA
The collection of high-quality activity data is often the most significant
limitation for organization GHG inventories. Therefore, establishing robust
data collection procedures takes priority in the design of any organization’s
inventory program. The following are useful measures for ensuring the quality
of activity data:
 Develop data collection procedures that allow the same data to be

efficiently collected in future years.
 Convert fuel consumption data to energy units before applying carbon

content emission factors, which may better correlate to a fuel’s energy
content than its mass.
3
Some emission estimates may be derived using mass or energy balances, engineering
calculations, or computer simulation models. In addition to investigating the input data to
these models, organizations should consider whether the internal assumptions (including
assumed parameters in the model) are appropriate to the nature of their operations.
 Compare current year data with historical trends. If data do not exhibit
relatively consistent changes from year to year, the causes for these
patterns should be investigated (e.g., changes of more than 10 percent
from year to year may warrant further investigation).
 Compare activity data from multiple reference sources (e.g.,

government survey data or data compiled by trade associations) with
organization data when possible. Such checks can ensure that
consistent data are being reported to all parties. Data can also be
compared among facilities within an organization.
Interface: Integration of emissions and business data systems

Interface, Inc., is the world’s largest manufacturer of carpet tiles and upholstery
fabrics for commercial interiors. The company has established an environmental data
system that mirrors its corporate financial data reporting. The Interface EcoMetrics
system is designed to provide activity and material flow data from business units in a
number of countries (the United States, Canada, Australia, the United Kingdom,
Thailand, and throughout Europe) and provides metrics for measuring progress on
environmental issues such as GHG emissions. Using company-wide accounting
guidelines and standards, energy and material input data are reported to a central
database each quarter and made available to sustainability personnel. These data are
the foundation of Interface’s annual inventory and enable data comparison over time
in the pursuit of improved quality.
Basing emissions data systems on financial reporting helps Interface improve its data
quality. Just as financial data need to be documented and defensible, Interface’s
emissions data are held to standards that promote an increasingly transparent,
accurate, and high-quality inventory. Integrating its financial and emissions data
systems has made Interface’s GHG accounting and reporting more useful as it strives
to be a “completely sustainable company” by 2020.
 Investigate activity data that are generated for purposes other than
preparing a GHG inventory. In doing so, public organizations need to
check the applicability of these data to inventory purposes, including
completeness, consistency with the source category definition, and
consistency with the emission factors used. For example, data from
different facilities may be examined for inconsistent measurement
techniques, operating conditions, or technologies. Quality control
measures (e.g., ISO) may have already been conducted during the
data’s original preparation. These measures can be integrated with the
organization’s IMP.
 When sufficient activity data are not available to allow for reliable
calculations, ensure that this lack of information is transparently
conveyed in the inventory report. Note the shortcoming, attempt to
estimate the missing data based on comparable activities, and work to
implement corrective measures for subsequent inventories.
 Check that base year recalculation procedures have been followed

consistently and correctly (see Chapter 5).
 Check that operational and organizational boundary decisions have
been applied correctly and consistently to the collection of activity
data (see Chapters 3 and 4).
 Investigate whether biases or other characteristics that could affect

data quality have been previously identified (e.g., by communicating
with experts at a particular facility or elsewhere). For example, a bias
could be the unintentional exclusion of operations at smaller facilities
or data that do not correspond exactly with organizational boundaries.
 Extend quality management measures to cover any additional data

(sales, production, etc.) used to estimate emission intensities or other
ratios.
 Use and compare to data used for reporting for other purposes, such as
the U.S. federal agency energy or fuel use reporting to DOE under the
Energy Independence and Security Act, or reporting to EPA under
Title IV of the Clean Air Act. Title IV of the Clean Air Act requires
owners or operators of regulated facilities to measure and report sulfur
dioxide, NO x , and CO 2 emissions under the EPA’s Acid Rain
Program. Data on CO 2 emissions reported can be used directly in an
organization’s GHG inventory.
EMISSION ESTIMATES
Estimated emissions for a source category can be compared with historical
data or other estimates to ensure they fall within a reasonable range.
Potentially unreasonable estimates are cause for checking emission factors or
activity data and determining whether changes in method, market forces, or
other events are sufficient reasons for the change. In situations where actual
emission monitoring occurs (e.g., power plant CO 2 emissions), the data from
monitors can be compared with calculated emissions using activity data and
emission factors.
If any of the above emission factor, activity data, emission estimate, or other
parameter checks indicate a problem, more detailed investigations into the
accuracy of the data or appropriateness of the methods may be required. These
more detailed investigations can also be utilized to better assess the quality of
data. One potential measure of data quality is a quantitative and qualitative
assessment of their uncertainty.
USDA Forest Service: The importance of accuracy checks
The experience of the USDA Forest Service illustrates the importance of attention to
detail in setting up GHG information collection systems. The company wished to
calculate the GHG emissions from its leased vehicles, and the leasing agency
provided data on fuel consumption and vehicle miles traveled. However, when
performing a quality control check on these data, the Forest Service determined that
these data implied impossibly high vehicle fuel economies. Had the Forest Service not
performed these checks, it would have based its GHG mitigation strategies on
incorrect data.
Inventory Quality and Inventory Uncertainty

Preparing a GHG inventory is inherently both an accounting and a scientific
exercise. Most applications for organization-level emissions and removal
estimates require that these data be reported in a format similar to financial
accounting data. In financial accounting, it is standard practice to report
individual point estimates (i.e., single values rather than a range of possible
values). In contrast, the standard practice for most scientific studies of GHG
and other emissions is to report quantitative data with estimated error bounds
(i.e., uncertainty). Just like financial figures in a profit and loss or bank
account statement, point estimates in an organization emission inventory have
obvious uses. However, how would or should the addition of some
quantitative measure of uncertainty to an emission inventory be used?
In an ideal situation, in which an organization had perfect quantitative

information on the uncertainty of its emission estimates at all levels, the
primary use of this information would almost certainly be comparative. Such
comparisons might be made across public organizations, operational units, or
source categories or through time. In this situation, inventory estimates could
even be rated or discounted on the basis of their quality before they were used,
with uncertainty being the objective quantitative metric for quality.
Unfortunately, such objective uncertainty estimates rarely exist.
TYPES OF UNCERTAINTIES
Uncertainties associated with GHG inventories can be broadly categorized
into scientific uncertainty and estimation uncertainty. Scientific uncertainty
arises when the science of the actual emission or removal process is not
completely understood. For example, many direct and indirect factors
associated with GWP values that are used to combine emission estimates for
various GHGs involve significant scientific uncertainty. Analyzing and
quantifying such scientific uncertainty is extremely problematic and is likely
to be beyond the capacity of most organization inventory programs.
Estimation uncertainty arises any time GHG emissions are quantified.

Therefore, all emissions or removal estimates are associated with estimation
uncertainty. Estimation uncertainty can be further classified into two types:
model uncertainty and parameter uncertainty. 4
Model uncertainty refers to the uncertainty associated with the mathematical

equations (i.e., models) used to characterize the relationships between various
parameters and emission processes. For example, model uncertainty may arise
either due to the use of an incorrect mathematical model or inappropriate input
into the model. As with scientific uncertainty, estimating model uncertainty is
likely to be beyond most organization’s inventory efforts; however, some
public organizations may wish to utilize their unique scientific and
engineering expertise to evaluate the uncertainty in their emission estimation
models.
Parameter uncertainty refers to the uncertainty associated with quantifying

the parameters used as inputs (e.g., activity data and emission factors) into
estimation models. Parameter uncertainties can be evaluated through
statistical analysis, measurement equipment precision determinations, and
expert judgment. Quantifying parameter uncertainties and then estimating
source category uncertainties on the basis of these parameter uncertainties will
be the primary focus of public organizations that choose to investigate the
uncertainty in their emission inventories.
LIMITATIONS OF UNCERTAINTY ESTIMATES

Given that only parameter uncertainties are within the feasible scope of most
public organizations, uncertainty estimates for organization GHG inventories
are, of necessity, imperfect. Complete and robust sample data are not always
available to assess the statistical uncertainty in every parameter. 5 For most
parameters (e.g., gallons of gasoline purchased or tons of limestone
consumed), only a single data point may be available. In some cases, public
organizations can utilize instrument precision or calibration information to
inform their assessment of statistical uncertainty. However, to quantify some
of the systematic uncertainties associated with parameters and to supplement
statistical uncertainty estimates, 6 public organizations usually have to rely on
4
Emissions estimated from direct emissions monitoring generally only involve parameter
uncertainty (e.g., equipment measurement error).
5
Statistical uncertainty results from natural variations (e.g., random human errors in the
measurement process and fluctuations in measurement equipment). Statistical uncertainty can
be detected through repeated experiments or sampling of data.
6
Systematic parameter uncertainty occurs if data are systematically biased. In other
words, the average of the measured or estimated value is always less or greater than the true
value. Biases arise, for example, because emission factors are constructed from non-
representative samples, all relevant source activities or categories have not been identified, or
incorrect or incomplete estimation methods or faulty measurement equipment have been used.
Because the true value is unknown, such systematic biases cannot be detected through
repeated experiments and, therefore, cannot be quantified through statistical analysis.
However, identifying biases (and, sometimes, quantifying them) through data quality
investigations and expert judgments is possible.
expert judgment. 7 The problem with expert judgment, though, is that it is
difficult to obtain in a comparable (i.e., unbiased) and consistent manner
across parameters, source categories, or different public organizations.
For these reasons, almost all comprehensive estimates of uncertainty for GHG
inventories are not only imperfect but also have a subjective component and,
despite the most thorough efforts, are themselves considered highly uncertain.
In most cases, uncertainty estimates cannot be interpreted as an objective
measure of quality, nor can they be used to compare the quality of emission
estimates between source categories or public organizations.
The following cases—which assume that either statistical or instrument

precision data are available to objectively estimate each parameter’s statistical
uncertainty (i.e., expert judgment is not needed)—are exceptions:
 When two operationally similar facilities use identical emission

estimation methods, the differences in scientific or model uncertainties
can, for the most part, be ignored. Quantified estimates of statistical
uncertainty can be treated as being comparable between facilities.
Some trading programs that prescribe specific monitoring, estimation,
and measurement requirements aim for this type of comparability.
However, even in this situation, the degree of comparability depends
on the flexibility that participants are given for estimating emissions,
homogeneity across facilities, and level of enforcement and review of
the methods used.
 Similarly, when a single facility uses the same estimation method each
year, the systematic parameter uncertainties—in addition to scientific
and model uncertainties—in a source’s emission estimates for 2 years
are, for the most part, identical. 8 Because the systematic parameter
uncertainties then cancel out, the uncertainty in an emission trend (e.g.,
the difference between the estimates for 2 years) is generally less than
the uncertainty in total emissions for a single year. In such a situation,
quantified uncertainty estimates can be treated as being comparable
over time and used to track relative changes in the quality of a
facility’s emission estimates for that source category. Such estimates
of uncertainty in emission trends can also be used as a guide for setting
a facility’s emissions reduction target. Trend uncertainty estimates are
likely to be less useful for setting broader (e.g., organization-wide)
7
The role of expert judgment can be twofold: first, it can provide the data necessary to
estimate the parameter, and second, it can help (in combination with data quality
investigations) identify, explain, and quantify both statistical and systematic uncertainties.
8
Biases may not be constant from year to year, instead exhibiting a pattern over time
(e.g., growing or falling). For example, an organization that continues to disinvest in
collecting high-quality data may create a situation in which the biases in its data get worse
each year. These types of data quality issues are extremely problematic because of the effect
they can have on calculated emission trends. In such cases, systematic parameter uncertainties
cannot be ignored.
targets (see Chapter 11) because of the general problems with
comparability between uncertainty estimates across gases, sources, and
facilities.
Given these limitations, the role of qualitative and quantitative uncertainty

assessments in developing GHG inventories includes the following:
 Promoting a broader learning and quality feedback process.
 Supporting efforts to qualitatively understand and document the causes

of uncertainty and help identify ways of improving inventory quality.
For example, collecting the information needed to determine the
statistical properties of activity data and emission factors forces one to
ask hard questions and to carefully and systematically investigate data
quality.
 Establishing lines of communication and feedback with data suppliers

to identify specific opportunities to improve the quality of the data and
methods used.
 Providing valuable information to reviewers, verifiers, and managers

for setting priorities for investments into improving data sources and
methods.
The Corporate Standard has a supplementary guidance document on

uncertainty assessments (“Guidance on uncertainty assessment in GHG
inventories and calculating statistical parameter uncertainty”) along with an
uncertainty calculation tool, both of which are available on the GHG Protocol
website. The guidance document describes how to use the calculation tool in
aggregating uncertainties. It also discusses in more depth different types of
uncertainties, the limitations of quantitative uncertainty assessment, and how
uncertainty estimates should be properly interpreted.
Additional guidance and information on assessing uncertainty—including

optional approaches to developing quantitative uncertainty estimates and
eliciting judgments from experts—can also be found in EPA’s Emissions
Inventory Improvement Program, Volume VI: Quality Assurance/Quality
Control (1999) and in Chapter 6 of the IPCC’s Good Practice Guidance and
Uncertainty Management in National Greenhouse Gas Inventories. (2000a).
Chapter 8
Accounting for Organizational GHG Reductions
GUIDANCE
As voluntary reporting, external GHG programs, and emission trading systems
evolve, organizations need to understand the implications of accounting for offsets
or credits that result from GHG reduction projects. This chapter elaborates on the
different issues associated with the term “GHG reductions.”
The Corporate Standard and Public Sector Protocol focus on accounting for and
reporting GHG emissions at the company or organizational level. Reductions in
organization emissions are calculated by comparing changes in the organization’s
actual emissions inventory over time relative to a base year. Focusing on overall
organizational level emissions has the advantage of helping organizations manage
their aggregate GHG risks and opportunities more effectively. It also helps focus
resources on activities that result in the most cost-effective GHG reductions.
In contrast to corporate and organizational accounting, the GHG Protocol Project

Quantification Standard (Project Standard) focuses on the quantification of GHG
reductions from GHG mitigation projects that will be used as offsets. Offsets are
discrete GHG reductions used to compensate for (i.e., offset) GHG emissions
elsewhere, for example, to meet a voluntary or mandatory GHG target or cap.
Offsets are calculated relative to a baseline that represents a hypothetical scenario
for what emissions would have been in the absence of the project. However, it is
important to note that offsets are a policy issue and that strict standards for the
offset market have not been fully established.
Organization-Wide GHG Reductions at Facility, State, Region,

or Country Level
From the perspective of the earth’s atmosphere, where GHG emissions or
reductions occur does not matter. From the perspective of national and international
policymakers addressing global warming, the location where GHG is reduced is
relevant because policies usually focus on achieving reductions within specific
countries or regions, as spelled out, for example, in the Kyoto Protocol. Thus,
public organizations with multistate, multinational, or multiregional operations have
to respond to an array of state, national, or regional regulations and requirements
that address GHGs from operations or facilities within a specific geographic area.
The Corporate Standard and Public Sector Protocol calculate GHG emissions
using a bottom-up approach, which involves calculating emissions at the individual
source or facility level and rolling them up to the headquarters level. Thus, an
organization’s overall emissions may decrease, even if increases occur at specific
sources, facilities, or operations, and vice-versa. This bottom-up approach enables
public organizations to report GHG emissions information at different scales, e.g.,
by individual sources or facilities, or by a collection of facilities within a given
country. Public organizations can meet an array of regulatory requirements or
voluntary commitments by comparing actual emissions over time for the relevant
scale. On an organization-wide scale, this information can also be used when setting
and reporting progress toward an organization-wide GHG target (see Chapter 11).
To track and explain changes in GHG emissions over time, organizations may find
it useful to provide information on the nature of these changes. For example, the
private company BP asks each of its reporting units to provide such information in
an accounting movement format using the following categories (BP 2000):
Comment [W1]: Better public sector
 Acquisitions and divestments wording examples/wording of this?
 Closure
 Real reductions (e.g., efficiency improvements, material or fuel substitution)
 Change in production level
 Changes in estimation method
 Other.
BP then can summarize this type of information at the corporate level to provide an
overview of the company’s performance over time.
Reductions in Indirect Emissions

Reductions in indirect emissions (changes in scope 2 or 3 emissions over time) may
not always capture the actual emissions reduction accurately. This is because the
activity of the reporting organization does not always have a direct cause-effect
relationship with the resulting GHG emissions. For example, a reduction in air
travel would reduce an organization’s scope 3 emissions. This reduction is usually
quantified on the basis of an average emission factor of fuel use per passenger.
However, how this reduction actually translates into a change in GHG emissions to
the atmosphere depends on a number of factors, including whether another person
takes the “empty seat” or whether this unused seat contributes to reduced air traffic
over the longer term. Similarly, reductions in scope 2 emissions calculated with an
average grid emissions factor may overestimate or underestimate the actual
reduction, depending on the nature of the grid.
Generally, so long as the accounting of indirect emissions over time recognizes

activities that in aggregate change global emissions, any such concerns over
accuracy should not inhibit organizations from reporting their indirect emissions. In
cases where accuracy is more important, undertaking a more detailed assessment of
the actual reduction using a project quantification method may be appropriate.

Project-Based Reductions and Offsets/Credits
Project reductions that are to be used as offsets should be quantified using a project
quantification method, such as the Project Standard, which addresses the following
accounting issues:
 Selection of a baseline scenario and emission. The baseline scenario

represents what would have happened in the absence of the project. Baseline
emissions are the hypothetical emissions associated with this scenario. The
selection of a baseline scenario always involves uncertainty because it
represents a hypothetical scenario for what would have happened without
the project. The project reduction is calculated as the difference between the
baseline and project emissions. This differs from the way corporate or
organizational reductions are measured in this document, i.e., in relation to
an actual historical base year.
 Demonstration of additionality. This relates to whether the project has

resulted in emission reductions or removals in addition to what would have
happened in the absence of the project. If the project reduction is used as an
offset, the quantification procedure should address additionality and
demonstrate that the project itself is not the baseline and that project
emissions are less than baseline emissions. Additionality ensures the
integrity of the fixed cap or target for which the offset is used. Each
reduction unit from a project used as an offset allows the organization or
facility with a cap or target one additional unit of emissions. If the project
were going to happen anyway (i.e., is non-additional), global emissions will
be higher by the number of reduction units issued to the project.
 Identification and quantification of relevant secondary effects. These are

GHG emissions changes resulting from the project not captured by the
primary effects. 1 Secondary effects are typically the small, unintended GHG
consequences of a project and include leakage (shifting GHG producing
activities from a regulated entity or location to an unregulated entity or
location) as well as changes in GHG emissions upstream and downstream of
the project. If relevant, secondary effects should be incorporated into the
calculation of the project reduction.
 Consideration of reversibility. Some projects achieve reductions in

atmospheric CO 2 levels by capturing, removing, or storing carbon or GHGs
in biological or non-biological sinks (e.g., forestry, land-use management,
underground reservoirs). These reductions may be temporary in that the
removed CO 2 may be returned to the atmosphere at some point in the future
through intentional activities or accidental occurrences—such as harvesting
1
Primary effects are the specific GHG reducing elements or activities (reducing GHG
emissions, carbon storage, or enhancing GHG removals) that the project is intended to achieve.
of forestland or forest fires.2 The risk of reversibility should be assessed,
together with any mitigation or compensation measures included in the
project design.
 Avoidance of double counting. To avoid double counting, the reductions

giving rise to the offset must occur at sources or sinks not included in the
target or cap for which the offset is used. Also, if the reductions occur at
sources or sinks owned or controlled by someone other than the parties to
the project (i.e., they are indirect), the ownership of the reduction should be
clarified to avoid double counting.
Offsets may be converted into credits when used to meet an externally imposed
target. Credits are convertible and transferable instruments usually bestowed by an
external GHG program. They are typically generated from an activity such as an
emissions reduction project and then used to meet a target in an otherwise closed
system, such as a group of facilities with an absolute emissions cap placed across
them. Although a credit is usually based on the underlying reduction calculation,
the conversion of an offset into a credit is usually subject to strict rules, which may
differ from program to program. For example, a Certified Emission Reduction
(CER) is a credit issued by the Kyoto Protocol Clean Development Mechanism.
Once issued, this credit can be traded and ultimately used to meet Kyoto Protocol
targets. Experience from the “precompliance” market in GHG credits highlights the
importance of delineating project reductions that are to be used as offsets with a
credible quantification method capable of providing verifiable data.
Public sector organizations may not have the same opportunities as private
companies to participate in market-based mandatory or voluntary GHG trading
programs. Regulations often limit the ability of public sector organizations to keep
revenue that may be generated from the sale of GHG credits. Taxpayers and
legislators may also be hesitant to allow government budgets to be used to purchase
offsets, for which guidelines and regulations are only beginning to emerge. Indeed,
government agencies are often specifically excluded from participating in various
GHG market activities (e.g. the California cap and trade program which is currently
being developed). Specific legislation may be required to allow for public sector
organizations to buy or sell offsets, as was the case when the U.S. House of
Representatives purchased carbon offsets through the Chicago Climate Exchange
for the Greening the Capitol Initiative.
2
This problem with the temporary nature of GHG reductions is sometimes referred to as the
“permanence” issue.
Trading GHG Emissions Reductions: Selling and buying at the federal level
Public sector managers are faced with a scarcity of funds available to implement
efforts to reduce GHG emissions, and are more and more frequently looking towards
the market place and business sector for innovative funding approaches. The NASA-
Johnson Space Center (NASA-JSC) has capitalized on the market for NOx emission
reduction credits to generate credits with a market value of $7-million (39 credits,
each credit worth $180,000). These credits are linked to NASA-JSC’s air pollution
control permits. But to reap the benefits and make use of similar opportunities related
to reducing their GHG emissions, clear authority must be granted to government
managers.
What is necessary to trade in GHG emission reductions by the federal government
sector? Ideally, there should be a specific authorizing statute with clear and
unambiguous language that gives federal agencies the ability to trade (sell and buy)
GHG emissions reductions. Additionally, specific and detailed regulations that define
the scope and process would simplify and streamline federal efforts. Further, it would
be preferable to have a General Counsel’s written legal opinion or alternatively a U.S.
Department of Justice – Attorney General’s written legal opinion supporting federal
action. Without the clarity provided by an authorizing statute, regulation, and a legal
opinion, the participation of federal managers in market-based GHG emissions
reductions programs will be limited.
Reporting Project-Based Reductions

Organizations should report their physical inventory emissions for their chosen
inventory boundaries separately and independently from any GHG trades they
undertake. GHG trades should be reported in an organization’s public GHG report
under optional information—either in relation to a target (see Chapter 11) or
organization inventory (see Chapter 9). 3 Appropriate information addressing the
credibility of purchased or sold offsets or credits should be included.
When organizations implement internal projects that reduce GHGs from their
operations, the resulting reductions are usually captured in their inventory’s
boundaries. These reductions need not be reported separately unless they are sold,
traded externally, or otherwise used as an offset or credit. However, some
organizations may be able to make changes to their own operations that result in
GHG emissions changes at sources not included in their own inventory boundary or Comment [W2]: Examples of how
not captured by comparing emissions changes over time. Examples include: these reductions could be revealed with
rigorous Scope 3 accounting?
 Substituting fossil fuel with waste-derived fuel that might otherwise be used
as landfill or incinerated without energy recovery. Such substitution may
have no direct effect on (or may even increase) an organization’s own GHG
emissions. However, it could result in emissions reductions elsewhere by
another organization, e.g., through avoiding landfill gas and fossil fuel use.
 Installing an on-site power generation plant (e.g., a combined heat and

power, or CHP, plant) that provides surplus electricity to other organizations
may increase an organization’s direct emissions while displacing the
3
The term “GHG trades” refers to all purchases or sales of allowances, offsets, and credits.
consumption of grid electricity by the organizations supplied. Any resulting
emissions reductions at the plants where this electricity would have
otherwise been produced will not be captured in the inventory of the
organization installing the on-site plant.
 Substituting purchased grid electricity with an on-site power generation

plant (e.g., CHP) may increase an organization’s direct GHG emissions
while reducing the GHG emissions associated with the generation of grid
electricity. Depending on the GHG intensity and the supply structure of the
electricity grid, this reduction may be overestimated or underestimated when
merely comparing scope 2 emissions over time, if the latter are quantified
using an average grid emission factor.
These reductions may be separately quantified, for example, using the processes
described in the Project Standard, and reported in an organization’s public GHG
report under optional information in the same way as the GHG trades described
above.
Pennsylvania: Taking advantage of renewable energy certificates

The Commonwealth of Pennsylvania is working with the Governors Green
Government Council to implement a variety of strategies to reduce its GHG
emissions. One approach has been to purchase renewable energy certificates, or
RECs, to offset some of the Commonwealth’s GHG emissions. RECs are an
innovative method of providing renewable energy to individual customers; they also
represent environmental benefits, such as avoided CO 2 emissions generated by
producing electricity from renewable rather than fossil fuel sources. RECs can be sold
bundled with the electricity (as green power) or separately to customers interested in
supporting renewable energy initiatives.
The Commonwealth of Pennsylvania found that RECs offer a variety of advantages,
including direct access to the benefits of renewable energy for facilities that may have
limited renewable energy procurement options. Pennsylvania purchases a
combination of wind and biomass RECs equivalent to 30 percent of the annual
electricity use of its state facilities.
For more information on RECs, see the Green Power Market Development Group’s
Corporate Guide to Green Power Markets: Installment #5 (WRI, 2003).

Chapter 9
Reporting GHG Emissions
STANDARD
A credible GHG emissions report presents relevant information that is
complete, consistent, accurate, and transparent. While it takes time to develop
a rigorous and complete organizational inventory of GHG emissions,
knowledge will improve with experience in calculating and reporting data.
Therefore, a public GHG report should:
 Be based on the best data available at the time of publication, while

being transparent about its limitations;
 Communicate any material discrepancies identified in previous years;

and
 Include the organization’s gross emissions for its chosen inventory

boundary separate from and independent of any GHG trades or
reductions in which it might engage.
The standards and guidance here are designed to be an overview of essential

components in a GHG report. However, many agencies will develop their
GHG reports according to requirements specified in legislation or internal
management systems. Appendix C summarizes the requirements of various
GHG programs. For those agencies that are currently developing reporting
policies, the key components listed here can serve as a foundation for
inventory information.
Required Information
This Public Sector Protocol requires reporting scope 1 and scope 2 emissions
at a minimum. A public GHG emissions report that is in accordance with the
Public Sector Protocol shall include the information in the following
subsections:
DESCRIPTION OF ORGANIZATION AND INVENTORY BOUNDARIES

This description includes the following:
 An outline of the organizational boundaries chosen, including the

chosen consolidation approach
 An outline of the operational boundaries chosen, and if scope 3 is

included, a list specifying the types of activities covered
 The reporting period covered.
INFORMATION ON EMISSIONS
This information includes the following:
 Emissions data for all six GHGs separately (CO 2 , CH 4 , N 2 O, HFCs,

PFCs, and SF 6 ) in metric tons, and also in tons of carbon dioxide
equivalent (CO 2 -eq)
 Emissions data separately for each scope (Scope 1 and 2 required,

Scope 3 is optional)
 Total scope 1 and 2 emissions, independent of any GHG trades such as

sales, purchases, transfers, or banking of allowances
 Emissions data for direct CO 2 emissions from the combustion of

biologically sequestered carbon (e.g., CO 2 from burning biomass or
biofuels), reported separately from the scopes
 Year chosen as base year (designated as calendar year or fiscal year),

and an emissions profile over time that is consistent with and clarifies
the chosen policy for making base-year emissions recalculations
 Appropriate context for any significant emissions changes that trigger

base-year emissions recalculation (subsuming or shedding resources
and responsibilities, outsourcing or insourcing, changes in reporting
boundaries or calculation methods, etc.)
 Methods used to calculate or measure emissions, providing a reference

or link to any calculation tools used
 Any specific exclusion of sources, facilities, programs, or operations

(for example, for exemptions required for national security).

Calculating Emissions from Bio-Diesel
Bio-diesel is an alternative, a non-petroleum diesel made from renewable resources
like vegetable oil and animal fats. Pure biodiesel, also known as B100, is commonly
combined with various amounts of petro-diesel to create a blended product. A
common blend, B20, consists of 20 percent bio-diesel and 80 percent petro-diesel.
Such intermingling of fuels complicates the accounting of GHG emissions. In order to
calculate B20’s combustion emissions, a percentage breakdown into its fuel
constituents (i.e., Petro-diesel & B100) is required. The 80% petro-diesel within the
B20 blend is considered a non-renewable, anthropogenic fossil fuel; its emissions of
N 2 0, CH 4 , and CO 2 should all be reported under scope 1 within the appropriate
organizational boundaries. However, combustion of the 20% bio-diesel contained in
the B20 blend is accounted for in two places: both in scope 1, and in the separately
reported “biogenic” emissions category.a Because the CO 2 released from the B100
component of the blend is “recycled” during the growth phase of B100’s life cycle, it is
reported separately. But he NO 2 and CH 4 released from that same B100 fraction are
not recycled in the same way, and they are reported as scope 1.
Scope 1 Biogenic
Emissions Emissions
CO2
B100 (20%) N2 0
CH4
B20
Petro-diesel
N2 0
(80%)
CH4
CO2
a
Biogenic emissions are those that result from the combustion of materials that naturally sequester CO 2 ,
such as biomass, or biofuels derived from vegetable oils or animal fats.
Optional Information
A public GHG emissions report should include, when applicable, the
following additional information.
INFORMATION ON EMISSIONS AND PERFORMANCE

This information includes the following:
 Emissions data from relevant scope 3 emissions activities for which

reliable data can be obtained
 Emissions data further subdivided, where this aids transparency, by

program, facilities, location, source types (stationary combustion,
process, fugitive, etc.), and activity types (production of electricity,
transportation, generation of purchased electricity that is sold to end
users, etc.)
 Emissions attributable to own generation of electricity, heat, or steam
that is sold or transferred to another organization (see Chapter 4)
 Emissions attributable to the generation of electricity, heat, or steam

that is purchased for resale to non-end users (see Chapter 4)
 A description of performance measured against internal and external

benchmarks
 Emissions from GHGs not covered by the Kyoto Protocol (e.g., CFCs,
NOx), reported separately from scopes
 Relevant ratio performance indicators (e.g., emissions per kilowatt-

hour or emissions per unit of service provided) (see Chapter 11)
 An outline of any GHG management or reduction programs or

strategies
 Information on any contractual provisions addressing GHG-related

risks and obligations
 An outline of any external assurance provided and a copy of any

verification statement, if applicable, of the reported emissions data
 Information on the causes of emissions changes that did not trigger a

base-year emissions recalculation (e.g., process changes, efficiency
improvements, plant closures)
 GHG emissions data for all years between the base year and the
reporting year (including details of and reasons for recalculations, if
appropriate)
 Information on the quality of the inventory (e.g., information on the

causes and magnitude of uncertainties in emission estimates) and an
outline of policies in place to improve inventory quality (see Chapter
7)
 Information on any GHG sequestration
 A list of facilities included in the inventory
 A contact person.
INFORMATION ON OFFSETS
This information should include the following:
 Information on allowable offsets that have been purchased or

developed outside the inventory boundary, subdivided by GHG
storage or removals and emissions reduction projects, including
specification whether the offsets are verified or certified (see Chapter
8) or approved by an external GHG program (e.g., the Clean
Development Mechanism, Joint Implementation)
 Information on reductions at sources inside the inventory boundary

that have been sold or transferred as offsets to a third party, when
allowed, including specification whether the reduction has been
verified or certified or approved by an external GHG program (see
Chapter 8).
GUIDANCE
By following the Public Sector Protocol reporting requirements, users adopt a
comprehensive standard with the necessary detail and transparency for
credible public reporting. The reporting of optional information can be
determined by the objectives and intended audience for the report.
Not every circulated report must contain all information as specified by this
standard, but a link or reference should be made to a publicly available full
report where all information is available. For some organizations, providing
emissions data for specific GHGs or facilities or programs, or reporting ratio
indicators, may compromise confidentiality or national security. If this is the
case, the data need not be publicly reported, but can be made available to
those auditing the GHG emissions data, assuming confidentiality and security
are assured. In contrast, other agencies have found that exposing their raw,
disaggragated data as well as their final reports to multiple audiences provided
critical cross-fact checking and feedback.
All organizations should strive to create a report that is as transparent,

accurate, consistent, and as complete as possible. Structurally, this may be
achieved by adopting the reporting categories of the standard (e.g., required
description of the organization and inventory boundary, required information
on organization emissions, optional information on emissions and
performance, and optional information on offsets) as a basis of the report.
Qualitatively, including a discussion of the reporting organization’s strategy
and goals for GHG accounting, any particular challenges or tradeoffs faced,
the context of decisions on boundaries and other accounting parameters, and
an analysis of emissions trends may help provide a complete picture of the
organization’s inventory efforts.
Use of Ratio Indicators

Two principal aspects of GHG performance are of interest to management and
stakeholders. One concerns the overall GHG impact of an organization—that
is, the absolute quantity of GHG emissions released to the atmosphere. The
other concerns the organization’s GHG emissions normalized by some
operational metric that results in a “ratio indicator.” The Public Sector
Protocol requires reporting of absolute emissions; reporting of ratio indicators
is optional. Ratio indicators provide information on performance relative to
operational activities, and can facilitate comparisons between similar
organizations and processes over time. Organizations may choose to report
GHG ratio indicators in order to:
 Evaluate performance over time, e.g., relate figures from different

years, identify trends in the data, and show performance in relation to
targets and base years (see Chapter 11);
 Establish a relationship between data from different categories, for

example, an organization may want to establish a relationship between
its organizational goals (e.g., tons of mail delivered) and its impact on
society or on the environment (e.g., emissions from mail distribution);
and
 Improve comparability between different sizes of operations by

normalizing figures (e.g., by assessing the impact of different sized
organizations on the same scale).
The public sector is inherently diverse, and the circumstances of individual

organizations can result in misleading indicators. Organizations should
develop ratios that make sense for their activities and are relevant to their
decision-making needs, and that best capture the benefits and impacts of their
work, i.e., its operations, services, and effects on the marketplace and on the
entire economy. s Sub-units within an agency or division should coordinate
the reporting of ratio indicators to ensure the indicator’s relevance and
consistency where possible.
Some examples of different ratio indicators are provided here and in Chapter
11.
PRODUCTIVITY OR EFFICIENCY RATIOS

Productivity or efficiency ratios express the value or achievement of an
organization divided by its GHG impact. Increasing efficiency ratios reflect a
positive performance improvement. Examples of productivity ratios include
resource productivity (e.g., unit of service provided per GHG) and process
eco-efficiency (e.g., production volume per amount of GHG).
INTENSITY RATIOS
Intensity ratios express GHG impact per unit of physical activity or unit of
productivity. A physical intensity ratio is suitable when aggregating or
comparing across organizations that have similar output or missions. An
economic intensity ratio is suitable when aggregating or comparing across
organizations that have differing operations. A declining intensity ratio
reflects a positive performance improvement. Many track environmental
performance with intensity ratios, often called “normalized” environmental
impact data. Examples of intensity ratios include product emission intensity
(e.g., tons of CO 2 emissions per electricity generated) and service intensity
(e.g., GHG emissions per function or per service).
PERCENTAGES
A percentage indicator is a ratio between two similar issues (with the same
physical unit in the numerator and the denominator). Examples of percentages
that can be meaningful in performance reports include current GHG emissions
expressed as a percentage of base year GHG emissions.
For further guidance on ratio indicators, refer to CCAR, 2003; GRI, 2002; and
Verfaillie and Bidwell, 2000.

Chapter 10
Verification of GHG Emissions
GUIDANCE
Verification is an objective assessment of the accuracy and completeness of
reported GHG information and its conformance to pre-established GHG
accounting and reporting principles. Although the practice of verifying
organization GHG inventories is still evolving, the emergence of widely
accepted standards, such as the Corporate Standard, this Public Sector
Protocol, and the GHG Protocol for Project Accounting, should help GHG
verification become more uniform, credible, and widely accepted.
This chapter provides an overview of the key elements of a GHG verification

process. It is relevant to organizations that are developing GHG inventories
and have planned for, or are considering, obtaining an independent
verification of their results and systems. It is critical for public sector
organizations that face potential conflict of interest issues when selecting
contractors to provide inventory and verification services. This chapter is also
important for government agencies that may be charged with the verification,
auditing, or compliance enforcement. Furthermore, as the process of
developing a verifiable inventory is largely the same as that for obtaining
reliable and defensible data, this chapter is also relevant to all organizations
regardless of any intention to commission a GHG verification.
Verification involves an assessment of the risks of material discrepancies in

reported data. Discrepancies relate to differences between reported data and
data generated from the proper application of the relevant standards and
methods. In practice, verification involves the prioritization of effort by the
verifier toward the data and associated systems that have the greatest impact
on overall data quality.
Relevance of GHG Principles

The primary aim of verification is to provide confidence to users that the
reported information and associated statements represent a faithful, true, and
fair account of an organization’s GHG emissions. Ensuring transparency and
verifiability of the inventory data is crucial for verification. The more
transparent, well controlled, and well documented an organization’s emissions
data and systems are, the more efficient it will be to verify. As outlined in
Chapter 1, a number of GHG accounting and reporting principles need to be
followed when compiling a GHG inventory. Adherence to these principles
and the presence of a transparent, well-documented system (sometimes
referred to as an audit trail) are the basis of a successful verification. While
transparency is essential, some organizations and agencies may need to
restrict the release of some information due to state or national security
concerns with its release.
Goals
Before commissioning an independent verification, an organization should
clearly define its goals and decide whether they are best met by an external
verification. Common reasons for undertaking a verification include the
following:
 Increased credibility of publicly reported emissions information and

progress toward GHG targets, leading to enhanced stakeholder trust
 Increased senior management confidence in reported information on

which to base investment and target-setting decisions
 Improvement of internal accounting and reporting practices (e.g.,

calculation, recording, and internal reporting systems and the
application of GHG accounting and reporting principles) and
facilitating learning and knowledge transfer within the organization
 Preparation for mandatory verification requirements of GHG programs
 Responding to reporting requests or mandates from other sectors (e.g.,

states reporting to the federal government).
Internal Assurance
As noted in Chapter 7, a quality GHG inventory requires a thorough “first
party” review of data and procedures as a basic level of verification.
Verification is often, but not always, also undertaken by an independent,
external “third party” verifier. For external stakeholders, external third-party
verification is likely to significantly increase the credibility of the GHG
inventory. Third-party reviews bring unbiased expert analysis to bear,
providing a level of confidence to stakeholders that formal procedures and
reliable data have been utilized and reported.
Many organizations interested in improving their GHG inventories may also

subject their information to internal verification by personnel independent of
the GHG accounting and reporting process through a “second party”
verification process. Both internal and external verification should follow
similar procedures and processes. However, independent internal verifications
can also provide valuable assurance over the reliability of information.
Internal verification can be a worthwhile learning experience for an
organization prior to commissioning an external verification by a third party.
It can also provide external verifiers with useful information to begin their
work.

Concept of Materiality
The concept of “materiality” is essential to understanding the process of
verification. Chapter 1 provides a useful interpretation of the relationship
between the principle of completeness and the concept of materiality.
Information is considered to be material if, by its inclusion or exclusion, it can
be seen to influence any decisions or actions taken by users of it. A material
discrepancy is an error (for example, from an oversight, omission, or
miscalculation) that results in a reported quantity or statement significantly
differing from the true value or meaning. To express an opinion on data or
information, a verifier would need to form a view on the materiality of all
identified errors or uncertainties.
While the concept of materiality involves a value judgment, the point at which
a discrepancy becomes material (materiality threshold) is usually predefined.
As a rule of thumb, an error is considered to be materially misleading if its
value exceeds 5 percent of the total inventory for the part of the organization
being verified.
The verifier needs to assess an error or omission in the full context in which
information is presented. For example, if a 2 percent error prevents an
organization from achieving its organizational target, this would most likely
be considered material. Understanding how verifiers apply a materiality
threshold enables companies to more readily establish whether the omission of
an individual source or activity from their inventory is likely to raise questions
of materiality.
Materiality thresholds may also be outlined in the requirements of a specific

GHG program or determined by a national verification standard, depending on
the entity requiring the verification and the reasons. A materiality threshold
provides guidance to verifiers on what may be an immaterial discrepancy so
that they can concentrate their work on areas that are more likely to lead to
materially misleading errors. A materiality threshold is not the same as de
minimis emissions, or a permissible quantity of emissions that an organization
can leave out of its inventory.
Assessing Risk of Material Discrepancy

Verifiers need to assess the risk of material discrepancy of each component of
the GHG information collection and reporting process. This assessment is
used to plan and direct the verification process. In assessing this risk, they
consider a number of factors, including the following:
 The structure of the organization and the approach used to assign

responsibility for monitoring and reporting GHG emissions
 The approach and commitment of management to GHG monitoring

and reporting

 Development and implementation of policies and processes for
monitoring and reporting (including documented methods explaining
how data are generated and evaluated)
 Processes used to check and review calculation methods
 The complexity and nature of operations
 The complexity of the computer information system used to process

the information
 The type, state of calibration, and maintenance of meters used
 The reliability and availability of input data
 Assumptions and estimations applied
 Aggregation of data from different sources
 Other assurance processes to which the systems and data are subjected
(e.g., internal audit and external reviews and certifications).
Establishing Verification Parameters

The scope of an independent verification and the level of assurance it provides
are influenced by the organization’s goals or any specific jurisdictional
requirements. This scope may be predefined by legislation or guidance for
public agencies. The verification provider may also be determined by law or
regulation.
Verifying the entire GHG inventory or specific parts is possible. Discrete parts
may be specified in terms of geographic location, operating units, facilities,
and type of emissions. The verification process may also examine more
general managerial issues, such as quality management procedures,
managerial awareness, availability of resources, clearly defined
responsibilities, segregation of duties, and internal review procedures.
The organization and verifier should reach an agreement upfront on the scope,
level, and objective of the verification. This agreement (often referred to as
the scope of work) will address issues such as the information to be included
in the verification (e.g., head office consolidation only or information from all
sites), the level of scrutiny to which selected data will be subjected (e.g., desk
top review or on-site review), and the intended use of the results of the
verification. The materiality threshold is another item to be considered in the
scope of work. It is a key consideration for both the verifier and the
organization and is linked to the objectives of the verification.
The scope of work is influenced by what the verifier actually finds once the
verification commences and, as a result, the scope of work must remain

sufficiently flexible to enable the verifier to adequately complete the
verification.
A clearly defined scope of work is not only important to the organization and
verifier, but also for external stakeholders to be able to make informed and
appropriate decisions. Verifiers ensure that specific exclusions have not been
made solely to improve the organization’s performance. To enhance
transparency and credibility, organizations should make the scope of work
publicly available.
Site Visits
Depending on the level of assurance required from verification, verifiers may
need to visit a number of sites to enable them to obtain sufficient, appropriate
evidence over the completeness, accuracy, and reliability of reported
information. The sites visited should be representative of the organization as a
whole. The selection of sites to be visited is based on consideration of a
number of factors, including the following:
 Nature of the operations and GHG sources at each site
 Complexity of the emissions data collection and calculation process
 Percentage contribution to total GHG emissions from each site
 The risk that the data from sites are materially misstated
 Security requirements of sites (e.g., restrictions)
 Competencies and training of key personnel
 Results of previous reviews, verifications, and uncertainty analyses.
Timing of the Verification

A verifier can be engaged at various points during the GHG preparation and
reporting process. Some organizations may establish a semipermanent internal
verification team to ensure that GHG data standards are continuously met and
improved.
Verification during a reporting period allows for any reporting deficiencies or

data issues to be addressed before the final report is prepared. This may be
particularly useful for organizations preparing high-profile public reports.
However, some GHG programs may require, often on a random selection
basis, an independent verification of the GHG inventory following the
submission of a report (e.g., World Economic Forum Global GHG Registry,
Greenhouse Challenge program in Australia, EU ETS). Verification timing
may also be established by government regulation, law, or EO. In all cases,

the verification cannot be closed out until the final data for the period has been
submitted.
PricewaterhouseCoopers (PWC): GHG inventory verification—lessons from the

field
PwC, a global services company, has been conducting GHG emissions verifications
for the past 10 years in various sectors, including energy, chemicals, metals,
semiconductors, and pulp and paper. PwC’s verification process involves two key
steps:
1. An evaluation of whether the GHG accounting and reporting method (e.g., the
Corporate Standard) has been correctly implemented.
2. Identification of any material discrepancies.
The Corporate Standard has been crucial in helping PwC design an effective GHG
verification method. Since the publication of the first edition, PwC has witnessed rapid
improvements in the quality and verifiability of GHG data reported. In particular the
quantification on non-CO 2 GHGs and combustion emissions has dramatically
improved. Cement sector emissions verification has been made easier by the release
of the WBCSD cement sector tool. GHG emissions from purchased electricity are also
easy to verify since most companies have reliable data on MWh consumed and
emission factors are publicly available.
However, experience has shown that for most companies, GHG data for 1990 is too
unreliable to provide a verifiable base year for the purposes of tracking emissions
over time or setting a GHG target. Challenges also remain in auditing GHG emissions
embedded in waste fuels, cogeneration, passenger travel, and shipping.
Over the past 3 years, PwC has noticed a gradual evolution of GHG verification
practices from “customized” and “voluntary” to “standardized” and “mandatory.” The
CCAR, World Economic Forum Global GHG Registry, and the EU ETS (covering
12,000 industrial sites in Europe) require some form of emissions verification. In the
EU ETS, GHG verifiers have to be accredited by a national body. GHG verifier
accreditation processes have already been established in the United Kingdom for its
Selecting a Verifier
Factors to consider when selecting a verifier include their
 previous experience and competence in undertaking GHG

verifications;
 understanding of GHG issues, including calculation methods;
 understanding of the organization’s operations and industry; and
 objectivity, credibility, and independence.
The knowledge and qualifications of the individuals conducting the

verification can be more important than those of the organizations from which
they come. Large organizations may actually have a predefined internal
verifier established by a regulation, law, or EO. In cases where the verifier is
not pre-defined, organizations should select groups on the basis of the
knowledge and qualifications of their actual verifiers and ensure that the lead
verifier assigned is appropriately experienced. Effective verification of GHG
inventories often requires a mix of specialized skills, not only at a technical
level (e.g., engineering experience, industry specialists), but also at an
operational level (e.g., verification and industry specialists).
Preparing for GHG Verification

The internal processes described in Chapter 7 are likely to be similar to those
followed by an independent verifier. Therefore, the materials that the verifiers
need are similar. Some of these records may be maintained by agencies or
groups within the same government. Information required by an external
verifier is likely to include the following:
 Information about the organization’s main activities and GHG

emissions (types of GHG produced, description of activity that causes
GHG emissions)
 Information about the organization and groups (list of subsidiaries and

their geographic location, ownership structure, financial entities within
the organization)
 Details of any changes to organizational boundaries or processes

during the period, including justification for the effects of these
changes on emissions data
 Details of joint venture agreements, outsourcing and contractor

agreements, production sharing agreements, emissions rights and other
legal or contractual documents that determine the organizational and
operational boundaries
 Documented procedures for identifying sources of emissions within

the organizational and operational boundaries
 Information on other assurance processes to which the systems and

data are subjected (e.g., internal audit, external reviews and
certifications)
 Data used for calculating GHG emissions. This might, for example,
include the following:
 Energy consumption data (invoices, delivery notes, weighbridge

tickets, meter readings: electricity, as pipes, steam, and hot water,
etc.)
 Production data (tons of material produced, kilowatts per hour of

electricity produced, etc.)
 Raw material consumption data for mass balance calculations

(invoices, delivery notes, weighbridge tickets, etc.)

 Emission factors (laboratory analysis, etc.)
 Description of how GHG emissions data have been calculated:
 Emission factors and other parameters used and their justification
 Assumptions on which estimations are based
 Information on the measurement accuracy of meters and weigh-

bridges (e.g., calibration records) and other measurement
techniques
 Equity share allocations and their alignment with financial

reporting
 Documentation on any GHG sources or activities excluded due to,

for example, technical or cost reasons
 Information gathering process
 Description of the procedures and systems used to collect,

document, and process GHG emissions data at the facility and
organization level
 A roadmap documenting files (including filenames) containing the

raw activity data, intermediate processed data and final
calculations
 Description of quality control procedures applied (internal audits,

comparison with last year’s data, recalculation by second person,
etc.)
 Other information
 Selected consolidation approach as defined in Chapter 3
 List of (and access to) persons responsible for collecting GHG

emissions data at each site and at the organizational level (name,
title, e-mail, and telephone numbers)
 Information on uncertainties, qualitative and, if available,

quantitative.
Appropriate documentation needs to be available to support the GHG

inventory being subjected to external verification. Statements made by
management for which no supporting documentation is available cannot be
verified. When a reporting organization has not yet implemented systems for
routinely accounting and recording GHG emissions data, an external
verification is difficult and may result in the verifier being unable to issue an
opinion. Under these circumstances, the verifiers may make recommendations
on how current data collection and collation process should be improved so
that an opinion can be obtained in future years.
Organizations are responsible for ensuring the existence, quality, and retention
of documentation to create an audit trail of how the inventory was compiled.
If an organization issues a specific base year against which it assesses its
GHG performance, it should retain all relevant historical records to support
the base-year data. These issues should be born in mind when designing and
implementing GHG data processes and procedures.
Using the Verification Findings

Before the verifiers verify that an inventory has met the relevant quality
standard, they may require the organization to adjust any material errors that
they identified during the course of the verification. If the verifiers and the
organization cannot agree on the adjustments, the verifier may not be able to
provide the organization with an unqualified opinion. All material errors
(individually or in aggregate) need to be amended prior to the final
verification sign off.
As well as issuing an opinion on whether the reported information is free from

material discrepancy, the verifiers may, depending on the agreed upon scope
of work, also issue a verification report containing a number of
recommendations for future improvements. The process of verification should
be viewed as a valuable input to the process of continual improvement. Other
agencies, outside of the organization, may have responsibilities for improving
the recording and reporting process as well. Whether verification is
undertaken for the purposes of internal review, public reporting, or certifying
compliance with a particular GHG program, it is likely to contain useful
information and guidance on how to improve and enhance an organization’s
GHG accounting and reporting system.
Similar to the selected verifiers, those selected to assess and implement

responses to the verification findings should also have the appropriate skills
and understanding of GHG accounting and reporting issues.

Chapter 11
Setting a GHG Target
GUIDANCE
Setting targets is a routine practice that helps ensure that an issue has senior
management’s attention and is factored into relevant decisions about the
services provided, and the materials and technologies to use. Often, an
organizational GHG emission reduction target is the logical follow-up to
developing a GHG inventory.
Within an organization’s target, there may be operating unit goals. Further,

within an operating unit, goals can be set for specific operations or locations.
While setting targets may be within the authority of many organizations, the
targets may also be imposed on an organization from a higher public-sector
organization.
This chapter provides guidance on the process of setting and reporting on an

organizational GHG target. Although the chapter focuses on emissions, many
of the considerations equally apply to GHG sequestration (see Appendix B).
This chapter does not prescribe an organization’s target, but focuses on the
steps involved, choices to be made, and implications of those choices.
Why Set a GHG Target?

Any robust public sector performance strategy requires setting targets for
productivity, mission accomplishment, and other core indicators, as well as
tracking performance against those targets. Likewise, effective GHG
management involves setting a GHG target. As organizations develop
strategies to reduce the GHG emissions of their products and operations,
organization-wide GHG targets are often key elements of these efforts, even if
some parts of the organization are or will be subject to mandatory GHG limits.
Common drivers for setting a GHG target include the following:
 Minimizing and managing GHG risks. While developing a GHG

inventory is an important step toward identifying GHG risks and
opportunities, a GHG target is a planning tool that can drive GHG
reductions. A GHG target helps raise internal awareness about the
risks and opportunities presented by climate change, and ensures the
issue is on the operational agenda. This can serve to minimize and
more effectively manage the risks associated with climate change.
 Saving costs and stimulating innovation. Implementing a GHG target

can result in cost savings by driving improvements in process
innovation and resource efficiency. Targets that apply to products can
drive research and development, which in turn creates products and
services that can improve services and reduce emissions associated
with the use of facilities.
 Preparing for future regulations. Internal accountability and incentive

mechanisms established to support a target’s implementation can also
equip organizations to respond more effectively to future GHG
regulations. For example, some companies have found that
experimenting with internal GHG trading programs has allowed them
to better understand the possible impacts of future trading programs on
the organization. Similar initiatives could be undertaken in the public
sector.
 Demonstrating leadership and organizational responsibility. With the

emergence of GHG regulations in many parts of the world, as well as
growing concern about the effects of climate change, publicizing a
GHG target demonstrates leadership and organizational responsibility.
This can improve an organization’s standing and enhance reputation
with taxpayers, employees, stakeholders, partners, and the general
public.
 Participating in voluntary programs. A growing number of voluntary

GHG programs are emerging to encourage and assist organizations in
setting, implementing, and tracking progress toward GHG targets.
Participation in voluntary programs can result in public recognition,
may facilitate recognition of early action under future regulations, and
enhance an organization’s GHG accounting and reporting capacity and
understanding.
Steps in Setting a Target

Setting a GHG target involves making choices among various strategies for
defining and achieving a GHG reduction. The organizational goals, any
relevant policy context, and stakeholder discussions should inform these
choices.
The following sections outline the 10 steps involved. Although presented

sequentially, in practice target setting involves cycling back and forth between
the steps. The organization is assumed to have developed a GHG inventory
before implementing these steps. However, due to the nature of public-sector
management, an EO or legislation could impose both simultaneously. Figure
11-1 summarizes the steps.

Figure 0-1. Steps in Setting a GHG Target
1. Obtain senior management commitment
2. Decide on the target type

Set an absolute or intensity target?
3. Decide on the target boundary

Which GHGs to include?
Which direct and indirect emissions?
Which geographical operations?
Treat operating unit types separately?
4. Choose the target base year

Use a fixed or rolling approach?
Use a single or multi-year approach?
5. Define the target completion date

Set a long- or short-term target?
6. Define the length of the target commitment period

Set a one-year or multi-year commitment period?
7. Decide on the use of offsets or credits
8. Establish a target double counting policy

How to deal with double counting of reductions across organizations?
How does GHG trading affect target performance?
9. Decide on the target level

What is business-as-usual? How far to go beyond that?
How do all the above steps influence decisions?
10. Track and report progress

Make regular performance checks
Report information in relation to the target
1. OBTAIN SENIOR MANAGEMENT COMMITMENT

As with any organization-wide target, senior management buy-in and
commitment, particularly at the highest level, are prerequisites for a successful
GHG reduction program. Implementing a reduction target is likely to
necessitate changes in behavior and decision making throughout the
organization. It also requires establishing an internal accountability and
incentive system and providing adequate resources to achieve the target. This
will be difficult, if not impossible, without senior management commitment.
If a target is imposed, it may be necessary for a senior manager to understand

the intricacies of an organization’s GHG management plan. For example, the
boundaries set (see Chapters 3 and 4) may carry legal implications. Some
elements of the program may be prescribed by regulations so adherence to
these regulations will be part of official responsibilities. Delegation of
responsibilities and accountability must be agreed at the senior management
level.
Finally, while commitment from senior management is crucial, the setting and
successful attainment of emissions reduction goals requires buy-in at all levels
of an organization, as well as behavioral changes on the ground. Successful
GHG mitigation strategies are embedded within the fabric of an organization’s
day-to-day operations.
2. DECIDE ON THE TARGET TYPE

There are two broad types of GHG targets: absolute and intensity-based.
Targets can be imposed by external regulation or determined internally in an
organization. An absolute target is usually expressed in terms of a reduction
over time in a specified quantity of GHG emissions to the atmosphere, the unit
typically being ton of CO 2 -eq (such as reducing CO 2 by 25 percent below
1994 levels by 2010). An intensity target is usually expressed as a reduction in
the ratio of GHG emissions relative to another operational metric over time
(such as reducing CO 2 by 12 percent per hospital bed provided between 2000
and 2008). 1
The comparative metric should be carefully selected. The Government

Accounting Standards Board offers important guidance on the selection of
measures of productivity, effectiveness, quality, and timeliness. The metric
chosen can be the output of the organization (e.g., ton CO 2 -eq per blighted
home restored, per student educated, or per mile road paved) or some other
metric such as office space. To facilitate transparency, organizations using an
intensity target shall also report the absolute emissions from sources covered
by the target. Table 11-1 summarizes the advantages and disadvantages of
each type of target, and provides examples. Some organizations have both an
absolute and an intensity target.
1
Some organizations set GHG targets by formulating this ratio the other way around.
Table 0-1. Comparing Absolute and Intensity Targets
 Advantages  Disadvantages  Examples
 Absolute targets
Designed to achieve a reduction in Target base year recalculations for Tons CO 2
a specified quantity of GHGs significant structural changes to the
emitted to the atmosphere organization add complexity to Tons CH 4
Environmentally robust, entailing a tracking progress over time
commitment to reduce GHGs by a Do not allow comparisons of GHG Tons CO 2 -eq
specified amount intensity or efficiency
Transparently address potential Recognize an organization for
stakeholder concerns about the reducing GHGs by decreasing
need to manage absolute emissions production or output (organic decline,
see Chapter 5)
May be difficult to achieve if the
organization grows unexpectedly and
growth is linked to GHG emissions
 Intensity targets
Reflect GHG performance No guarantee that GHG emissions Tons CO 2 -eq/square foot of
improvements independent of to the atmosphere will be reduced— warehouse space
organic growth or decline absolute emissions may rise even if
Target base year recalculations intensity goes down and output Tons CO 2 -eq/tons of mail
for structural changes are usually increases delivered
not required (see step 4) Organizations with diverse
May increase the comparability of operations may find it difficult to define Tons CO 2 -eq/number of
GHG performance among a single common metric employees
organizations If a monetary variable is used for the
metric, it must be recalculated for Tons CO 2 -eq/square foot/person
changes in inflation, adding
complexity to the tracking process Tons CO 2 -eq/$ appropriated
Especially sensitive to inaccuracies
in the underlying data. Public Tons CO 2 -eq/megawatt hour of
organizations should take particular electricity produced
care to ensure that these data are
reliable, complete and accurate. CO 2 -eq/British thermal unit
Tons CO 2 -eq/park visitor
Tons CO 2 -eq/mile of highway

constructed
3. DECIDE ON THE TARGET BOUNDARY

The target boundary defines which GHGs, geographic operations, sources,
and activities are covered by the target. The target and inventory boundary can
be identical, or the target may address a specified subset of the sources
included in the organization inventory. The quality of the GHG inventory
should be

a key factor informing this choice. The questions to be addressed in this step
include the following:
 Which GHGs? Targets usually include one or more of the six major
GHGs covered by the Kyoto Protocol. For organizations with
significant non-CO 2 GHG sources, it usually makes sense to include
these to increase the range of reduction opportunities. However,
practical monitoring limitations may apply to smaller sources.
 Which direct and indirect emission sources? Including indirect GHG

emissions in a target will facilitate more cost-effective reductions by
increasing the reduction opportunities available. However, indirect
emissions are generally harder to measure accurately and verify than
direct emissions although some categories, such as scope 2 emissions
from purchased electricity, may be amenable to accurate measurement
and verification. Including indirect emissions can raise issues with
regard to ownership and double counting of reductions, as indirect
emissions are by definition someone else’s direct emissions (see step
8).
 Which geographical operations? Only country or regional operations

with reliable GHG inventory data should be included in the target. For
organizations with global operations, it makes sense to limit the
target’s geographical scope until a robust and reliable inventory has
been developed for all operations. Organizations that participate in
GHG programs involving trading need to decide whether or not to
include the emissions sources covered in the trading program in their
organizational target. 2 If common sources are included, i.e., if there is
overlap in sources covered between the organization target and the
trading program, organizations should consider how they will address
any double counting resulting from the trading of GHG reductions in
the trading program (see step 8).
 Separate targets for different types of operations? For organizations

with diverse operations, it may make more sense to define separate
GHG targets for different core activities, especially when using an
intensity target, where the most meaningful metric for defining the
target varies across operating units (e.g., GHGs per ton of cement
produced or barrel of oil refined).
4. CHOOSE THE TARGET BASE YEAR

For a target to be credible, how target emissions are defined in relation to past
emissions has to be transparent. Two general approaches are available: a fixed
target base year or a rolling target base year.
2
Examples include the UK ETS, the CCX, and the EU ETS.
 Using a fixed target base year. Most GHG targets are defined as a
percentage reduction in emissions below a fixed target base year (e.g.,
reduce CO 2 emissions 25 percent below 1994 levels by 2010). Chapter
5 describes how organizations should track emissions in their
inventory over time in reference to a fixed base year. Although using
different years for the inventory base year and the target base year is
possible, to streamline the inventory and target reporting process, it
usually makes sense to use the same year for both. As with the
inventory base year, ensuring the emissions data for the target base
year are reliable and verifiable is important. Using a multiyear average
target base year is also possible, and the same considerations as
described for multiyear average base years in Chapter 5 apply.
Chapter 5 provides standards on when and how to recalculate base

year emissions to ensure like-with-like comparisons over time when
structural changes (e.g., acquisitions or divestitures) or changes in
measurement and calculation methods alter the emissions profile over
time. In most cases, this will also be an appropriate approach for
recalculating data for a fixed target base year.
 Using a rolling target base year. Organizations may consider using a

rolling target base year if obtaining and maintaining reliable and
verifiable data for a fixed target base year is likely to be challenging
(for example, due to frequent acquisitions). With a rolling target base
year, the base year rolls forward at regular intervals, usually 1 year, so
that emissions are always compared with the previous year. 3 However,
emission reductions can still be collectively stated over several years.
An example would be “from 2001 through 2012, emissions will be
reduced by 1 percent every year, compared to the previous year.”
When the structure or method changes, recalculations only need to be
made to the previous year. 4 As a result, the emission inventories in the
“target starting year” (2001 in the example) are not comparable with
those of the “target completion year” (2012 in the example), because
the former have not been corrected for structural or methodological
changes, whereas the latter have been. In contrast, the current
inventory is always comparable with the inventory for the preceding
inventory period (the base year).
The definition of what triggers a base-year emissions recalculation is the

same as under the fixed base year approach. The difference lies in how far
back emissions are recalculated. Table 11-2 compares targets using the
3
Using an interval other than 1 year is possible, but the longer the interval at which the
base year rolls forward, the more this approach becomes like a fixed target base year. This
discussion is based on a rolling target base year that moves forward at annual intervals.
4
For further details on different recalculation methods, see the guidance document “Base
year recalculation methodologies for structural changes” on the GHG Protocol website
(www.ghgprotocol.org).
rolling and fixed base year approaches, and Figure 11-2 illustrates one of
the key differences.
Table 0-2. Comparing Targets with Rolling and Fixed Base Years
 Question  Fixed target base year  Rolling target base year

How might the target be A target might take the form “we will A target might take the form of “over
stated? emit X% less in year B than in year A” the next X years we will reduce
emissions every year by Y% compared
to the previous year”a
What is the target base A fixed reference year in the past The previous year
year?
How far back is like-with-like The time series of absolute emissions If there have been significant structural
comparison possible? will compare like with like changes, the time series of absolute
emissions will not compare like with like
over more than 2 years at a time
What is the basis for The comparison over time is based on The comparison over time is based on
comparing emissions what is owned/controlled by the what was owned/controlled by the
between the target base year organization in the target completion organization in the years the
and completion year? (See year information was reportedb
Figure 11-2)
How far back are Emissions are recalculated for all years Emissions are recalculated only for the
recalculations made? back to the fixed target base year year prior to the structural change, or
ex-post for the year of the structural
change which then becomes the base
year
How reliable are the target If an organization with a target acquires Data from an acquired organization’s
base year emissions? an agency that did not have reliable GHG emissions are only necessary for
GHG data in the target base year; the year before the acquisition (or even
backcasting of emissions becomes only from the acquisition onwards),
necessary, reducing the reliability of the reducing or eliminating the need for
base year back-casting
When are recalculations The circumstances which trigger recalculations for structural changes, etc., (see
made? Chapter 5) are the same under both approaches
a
Simply adding the yearly emissions changes under the rolling base year yields a different result from the
comparison over time made with a fixed base year, even without structural changes. In absolute terms, an X%
reduction every year over 5 years (compared with the previous year) is not the same as an (X times 5) reduction in
year 5 compared to year 1.
b
Depending on which recalculation method is used when applying the rolling base year, the comparison over time
can include emissions that occurred when the organization did not own or control the emission sources. However, the
inclusion of this type of information is minimized. See the guidance document “Base year recalculation methods for
structural changes” on the GHG Protocol website (www.ghgprotocol.org).

Figure 0-2. Comparing Stabilization Target under Fixed
and Rolling Target Base Year Approach
Department
A
Department
B
Department
A
Department
A
A stabilization target is one that aims to keep emissions constant over time. In this example, department A
merges with and subsumes department B, which has experienced organic GHG growth since the target base
year (or “starting” year). Under the rolling approach, emissions growth in the subsumed department (B) from
year 1 to year 2 does not appear as an emissions increase in relation to the target of the acquiring
department (A). Thus department A would meet its stabilization target when using the rolling approach but
not when using the fixed approach. In parallel to the example in chapter 5, past GHG growth or decline in
divided organizations (GHG changes before the division) would affect the target performance under the
rolling approach, while it would not be counted under the fixed approach.
 Recalculations under intensity targets. While the standard in Chapter 5

applies to absolute inventory emissions of organizations using
intensity targets, recalculations for structural changes for the purposes
of the target are not usually needed unless the structural change results
in a significant change in the GHG intensity. However, if
recalculations for structural changes are made for the purposes of the
target, they should be made for both the absolute emissions and the
operational metric. If the target operational metric becomes irrelevant
through a structural change, a reformulation of the target might be
needed (e.g., when an organization refocuses on a different industry
but had used an industry-specific operational metric before).
5. DEFINE THE TARGET COMPLETION DATE

The target completion date determines whether the target is relatively short or
long term. Long-term targets (e.g., with a completion year 10 years from the
time the target is set) facilitate long-term planning for large capital
investments with GHG benefits. However, they might encourage later phase
outs of less efficient equipment. Generally, long-term targets depend on
uncertain future developments, which can have opportunities as well as risks,
as illustrated in Figure 11-3. A 5-year target period may be more practical for
organizations with shorter planning cycles. It is also possible that a target date
will be imposed by legislation. Some organizations will be faced with an
imposed date or series of dates, with tiered targets.

Figure 0-3. Defining Target Completion Date
6. DEFINE THE LENGTH OF THE COMMITMENT PERIOD

The target commitment period is the time during which emissions
performance is actually measured against the target. It ends with the target
completion date. Many organizations use single-year commitment periods,
whereas the Kyoto Protocol, for example, specifies a multiyear “first
commitment period” of 5 years (2008–12). The length of the target
commitment period is an important factor in determining an organization’s
level of commitment. In the public sector, legislation or higher authority can
impose target commitment periods. Generally, the longer the target
commitment period is, the longer the period during which emissions
performance counts towards the target.
 Example of a single-year commitment period. Organization Beta has a

target of reducing emissions by 10 percent compared with its target
base year 2000, by the commitment year 2010. For Beta to meet its
target, it is sufficient for its emissions to be, in the year 2010, no more
than 90 percent of year 2000 emissions.
 Example of a multiyear commitment period. Organization Gamma has

a target of reducing emissions by 10 percent, compared with its target
base year 2000, by the commitment period 2008–12. For Gamma to
meet its target, its sum total emissions from 2008–12 must not exceed
90 percent of year 2000 emissions times five (number of years in the
commitment period). In other words, its average emissions over those
5 years must not exceed 90 percent of year 2000 emissions.
Target commitment periods longer than 1 year can be used to mitigate the risk
of unpredictable events in one particular year influencing performance against

the target. Figure 11-4 shows that the length of the target commitment period
determines how many emissions are actually relevant for target performance.
Figure 0-4. Short and Long Commitment Periods
For a target using a rolling base year, the commitment period applies
throughout: emission performance is continuously being measured against the
target every year from when the target is set until the target completion date.
7. DECIDE ON THE USE OF GHG OFFSETS OR CREDITS 5

A GHG target can be met entirely from internal reductions at sources included
in the target boundary or through using offsets generated from GHG reduction
projects that reduce emissions at sources (or enhance sinks) external to the
target boundary. 6 The use of offsets may be appropriate when the cost of
internal reductions is high, opportunities for reductions are limited, or the
organization is unable to meet its target because of unexpected circumstances.
In the public sector, policy or guidance should be provided to clarify how
offsets will be handled and accounted for.
Reporting on the target should specify whether offsets are used and how much
of the target reduction was achieved using them.
Credibility of Offsets and Transparency
There are currently no generally accepted methods for quantifying GHG

offsets. The uncertainties that surround GHG project accounting make it
5
As noted in Chapter 8, offsets can be converted to credits. Credits are thus understood to
be a subset of offsets. This chapter uses the term offsets as a generic term.
6
For the purposes of this chapter, the terms “internal” and “external” refer to whether the
reductions occur at sources inside (internal) or outside (external) the target boundary.
difficult to establish that an offset is equivalent in magnitude to the internal
emissions it is offsetting. 7 This is why organizations should always report
their own internal emissions in separate accounts from offsets used to meet the
target, rather than providing a net figure (see step 10). It is also important to
carefully assess the credibility of offsets used to meet a target and to specify
the origin and nature of the offsets when reporting. Information needed
includes
 the type of project,
 geographic and organizational origin,
 how offsets have been quantified, and
 whether they have been recognized by external programs [Clean

Development Mechanism (CDM), joint implementation (JI), etc.].
One important way to ensure the credibility of offsets is to demonstrate that

the quantification method adequately addresses all of the key project
accounting challenges in Chapter 8. Taking these challenges into account, the
forthcoming quantification standard aims to improve the consistency,
credibility, and rigor of project accounting.
The EPA’s Climate Leaders Program provides some guidance for using
offsets. Consult the program’s technical resources for assistance:
http://www.epa.gov/climateleaders/resources/index.html.
Additionally, it is important to check that offsets have not also been counted
toward another organization’s GHG target. This might involve a contract
between the buyer and seller that transfers ownership of the offset. Step 8
provides more information on accounting for GHG trades in relation to an
organizational target, including establishing a policy on double counting.
Offsets and Intensity Targets
When using offsets under intensity targets, all the above considerations apply.
To determine compliance with the target, the offsets can be subtracted from
the figure used for absolute emissions (the numerator); the resulting difference
is then divided by the corresponding metric. Absolute emissions are still
reported separately both from offsets and the operational metric (see step 9
below).
7
This equivalence is sometimes referred to as “fungibility.” Fungibility can also refer to
equivalence in terms of the value of reductions in meeting a target; for instance, two fungible
offsets have the same value in meeting a target, i.e., they can both be applied to the same
target.
8. ESTABLISH A TARGET DOUBLE-COUNTING POLICY
This step addresses double counting of GHG reductions and offsets, as well as
allowances issued by external trading programs. It applies only to
organizations that engage in trading (sale or purchase) of GHG offsets or
whose organizational target boundaries interface with other organizations’
targets or external programs. This can be particularly relevant for public-
sector organizations because many programs can overlap at times.
Given that there is currently no consensus on how such double-counting

issues should be addressed, organizations should develop their own “target
double-counting policy.” This should specify how reductions and trades
related to other targets and programs are reconciled with their organization
target and, accordingly, which types of double-counting situations are
regarded as relevant. The following are some examples of double counting
that might need to be addressed in the policy:
 Double counting of offsets. This can occur when a GHG offset is

counted toward the target by both the selling and purchasing
organizations. For example, organization A undertakes an internal
reduction project that reduces GHGs at sources included in its own
target. Organization A then sells this project reduction to organization
B to use as an offset toward its target, while still counting it toward its
own target. In this case, reductions are counted by two different
organizations against targets that cover different emissions sources.
Trading programs address this by using registries that allocate a serial
number to all traded offsets or credits and ensuring the serial numbers
are retired once they are used. In the absence of registries this could be
addressed by a contract between seller and buyer.
 Double counting due to target overlap. 8 This can occur when sources
included under an organization’s target are also subject to limits by an
external program or another organization’s target. Two examples
follow:
 Organization A has a target that includes GHG sources that are

also regulated under a trading program. In this case, reductions at
the common sources are used by organization A to meet both its
organizational target and the trading program target.
 Organization B has a target to reduce its direct emissions from the

generation of electricity. 9 Organization C who purchases
8
Overlap here refers to a situation when two or more targets include the same sources in
their target boundaries.
9
Similarly, organization A in this example could be subject to a mandatory cap on its
direct emissions under a trading program and engage in trading allowances covering the
common sources it shares with organization B. In this case, the example in the section
“Double counting of allowances traded in external programs” is more relevant.
electricity directly from organization B also has a target that
includes indirect emissions from the purchase of electricity (scope
2). Organization C undertakes energy efficiency measures to
reduce its indirect emissions from the use of the electricity. These
will usually show up as reductions in both organizations’ targets. 10
These two examples illustrate that double counting is inherent when

the GHG sources where the reductions occur are included in more than
one target of the same or different organizations. Without limiting the
scope of targets, it may be difficult to avoid this type of double
counting and it probably does not matter if the double counting is
restricted to the organizations sharing the same sources in their targets
(i.e., when the two targets overlap).
 Double counting of allowances traded in external programs. This

occurs when an organizational target overlaps with an external trading
program, and allowances that cover the common sources are sold in
the trading program for use by another organization and reconciled
with the regulatory target, but not reconciled with the organizational
target. This example differs from the previous example in that double
counting occurs across two targets that are not overlapping (i.e., they
do not cover the same sources). This type of double counting could be
avoided if the organization selling the allowances reconciles the trade
with its target (see Holcim case study). Whatever the organization
decides to do in this situation, to maintain credibility, it should address
buying and selling of allowances in trading programs in a consistent
way. For example, if it decides not to reconcile allowances that it sells
in a trading program with its target, it should also not count any
allowances of the same type that it purchases to meet its target.
Ideally, an organization should try to avoid double counting in its

organizational target if this undermines the environmental integrity of the
target. Also, any prevented double counting between two organizations
provides an additional incentive for one of these organizations to further
reduce emissions. However, in practice, the avoidance of double counting can
be quite challenging, particularly for organizations subject to multiple external
programs and when indirect GHG emissions are included in the target.
Organizations should therefore be transparent about their double-counting
policy and state any reasons for choosing not to address some double-counting
situations. A national or state registry could help prevent double counting in
the future, but would require participation and transparency from all
government organizations.
10
The energy efficiency measures implemented by organization C may not always result
in an actual reduction of organization B’s emissions. See Chapter 8 for further details on
reductions in indirect emissions.
9. DECIDE ON THE TARGET LEVEL
The decision on setting the target level should be informed by all the previous
steps. Other considerations to take into account include the following:
 Understanding the key drivers affecting GHG emissions by examining

the relationship between GHG emissions and other operational metrics
such as productivity, square footage of warehouse space, number of
employees, unit of service provided, and budget appropriations.
 Developing different reduction strategies on the basis of the major

reduction opportunities available and examining their effects on total
GHG emissions. Investigate how emissions projections change with
different mitigation strategies.
 Looking at the future of the organization as it relates to GHG

emissions.
 Considering whether there are any environmental or energy plans,

capital investments, product or service changes, or targets that will
affect GHG emissions. Are there plans already in place for fuel
switching, on-site power generation, or renewable energy investments
that affect the future GHG trajectory?
 Benchmarking GHG emissions with similar organizations. Generally,

organizations that have not previously invested in energy and other
GHG reductions should be capable of meeting more aggressive
reduction levels because they would have more cost-effective
reduction opportunities.
10. TRACK AND REPORT PROGRESS

Once the target has been set, it is necessary to track performance against it to
check compliance and—to maintain credibility—to report emissions and any
external reductions in a consistent, complete, and transparent manner:
 Carry out regular performance checks. To track performance against a

target, it is important to link the target to the annual GHG inventory
process and make regular checks of emissions in relation to the target.
Some organizations use interim targets for this purpose (a target using
a rolling target base year automatically includes interim targets every
year).
 Report information in relation to the target. Organizations should

include the following information when setting and reporting progress
in relation to a target:
1. Description of the target

 Provide an outline of the target boundaries chosen.
 Specify target type, target base year, target completion

date, and length of commitment period.
 Specify whether offsets can be used to meet the target; if

yes, specify the type and amount.
 Describe the target double-counting policy.
 Specify the target level.
2. Information on emissions and performance in relation to the

target
 Report emissions from sources inside the target boundary

separately from any GHG trades.
 If using an intensity target, report absolute emissions from

within the target boundary separately, both from any GHG
trades and the operational metric.
 Report GHG trades relevant to compliance with the target

(including how many offsets were used to meet the target).
 Report any internal project reductions sold or transferred to

another organization for use as an offset.
 Report overall performance in relation to the target.

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DRAFT Ref-3
Appendix A
Accounting for Indirect Emissions
from Purchased Electricity
This appendix provides guidance on how to account for and report indirect emis-
sions associated with the purchase of electricity. Figure A-1 provides an overview
of the transactions associated with purchased electricity and the corresponding
emissions.
PURCHASED ELECTRICITY FOR OWN CONSUMPTION

Emissions associated with the generation of purchased electricity that is con-
sumed by the reporting organization are reported in scope 2. Scope 2 only ac-
counts for the portion of the direct emissions from generating electricity that is
actually consumed by the organization. An organization that purchases electricity
and transports it in a T&D system that it owns or controls reports the emissions
associated with T&D losses under scope 2. However, if the reporting organization
owns or controls the T&D system but generates (rather than purchases) the elec-
tricity transmitted through its wires, the emissions associated with T&D losses are
not reported under scope 2, as they would already be accounted for under scope 1.
This is the case when generation, transmission, and distribution systems are verti-
cally integrated and owned or controlled by the same organization.
Figure A-1. Accounting for the Indirect GHG Emissions Associated

with Purchased Electricity
PURCHASED ELECTRICITY FOR RESALE

TO END USERS
Emissions from the generation of purchased electricity for resale to end users, for
example purchases by a public utility, may be reported under scope 3 in the
DRAFT A-1
category “generation of purchased electricity that is sold to end users.” This
reporting category is particularly relevant for utilities that purchase wholesale
electricity supplied by independent power producers for resale to their customers.
Since utilities and electricity suppliers often exercise choice over where they
purchase electricity, this provides them with an important GHG reduction
opportunity (see Seattle City Light case study in Chapter 4). Since scope 3 is
optional, organizations that are unable to track their electricity sales in terms of
end users and non-end users can choose not to report these emissions in scope 3.
Instead, they can report the total emissions associated with purchased electricity
that is sold to both end users and non-end users under optional information in the
category “generation of purchased electricity, heat, or steam for re-sale to non-end
users.”
PURCHASED ELECTRICITY FOR RESALE

TO INTERMEDIARIES
Emissions associated with the generation of purchased electricity that is resold to
an intermediary (e.g., trading transactions) may be reported under optional infor-
mation under the category “Generation of purchased electricity, heat, or steam for
re-sale to non-end users.” Examples of trading transactions include brokerage/
trading room transactions involving purchased electricity or any other transaction
in which electricity is purchased directly from one source or the spot market and
then resold to an intermediary (e.g., a non-end user). These emissions are reported
under optional information separately from scope 3 because there could be a
number of trading transactions before the electricity finally reaches the end user.
This may cause duplicative reporting of indirect emissions from a series of elec-
tricity trading transactions for the same electricity.
GHG EMISSIONS UPSTREAM OF THE GENERATION

OF ELECTRICITY
Emissions associated with the extraction and production of fuels consumed in the
generation of purchased electricity may be reported in scope 3 under the category
“extraction, production, and transportation of fuels consumed in the generation of
electricity.” These emissions occur upstream of the generation of electricity. Ex-
amples include emissions from mining of coal, refining of gasoline, extraction of
natural gas, and production of hydrogen (if used as a fuel).
CHOOSING ELECTRICITY EMISSION FACTORS

To quantify scope 2 emissions, the Corporate Standard and this Public Sector
Protocol recommends that organizations obtain source/supplier specific emission
factors for the electricity purchased. If these are not available, regional or grid
emission factors should be used. For more information on choosing emission fac-
DRAFT A-2
Accounting for Indirect Emissions from Purchased Electricity
tors, see the relevant GHG Protocol calculation tools available on the GHG Proto-
col website (www.ghgprotocol.org).
EMISSIONS ASSOCIATED WITH THE CONSUMPTION

OF ELECTRICITY IN T&D
Emissions from the generation of electricity that is consumed in a T&D system
may be reported in scope 3 under the category “generation of electricity that is
consumed in a T&D system” by end users. Published electricity grid emission
factors do not usually include T&D losses. To calculate these emissions, it may be
necessary to apply supplier or location specific T&D loss factors.
Organizations that purchase electricity and transport it in their own T&D systems
would report the portion of electricity consumed in T&D under scope 2.
ACCOUNTING FOR INDIRECT EMISSIONS

ASSOCIATED WITH T&D LOSSES
There are two types of electricity emission factors: emission factor at generation
(EFG) and emissions factor at consumption (EFC). EFG is calculated from CO 2
emissions from generation of electricity divided by amount of electricity gener-
ated. EFC is calculated from CO 2 emissions from generation divided by amount
of electricity consumed.
EFG = Total CO 2 Emissions From Generation

Electricity Generated
EFC = Total CO 2 Emissions From Generation

Electricity Consumed
EFC and EFG are related as shown below.
EFC × Electricity Consumed

=
EFG × (Electricity Consumed + T&D Losses)
T&D Losses
EFC = EFG × ( 1+
Electricity Consumed )
As these equations indicate, EFC multiplied by the amount of consumed electric-
ity yields the sum of emissions attributable to electricity consumed during end use
and transmission and distribution. In contrast, EFG multiplied by the amount of
consumed electricity yields emissions attributable to electricity consumed during
end use only.
DRAFT A-3
Consistent with the scope 2 definition (see Chapter 4), the Corporate Standard
requires the use of EFG to calculate scope 2 emissions. The use of EFG ensures
internal consistency in the treatment of electricity related upstream emissions
categories and avoids double counting in scope 2. Additionally, there are several
other advantages in using EFG:
 It is simpler to calculate and widely available in published regional, na-

tional, and international sources.
 It is based on a commonly used approach to calculate emissions intensity,

i.e., emissions per unit of production output.
 It ensures transparency in reporting of indirect emissions from T&D

losses.
The formula to account for emissions associated with T&D losses is the follow-
ing:
EFG × Indirect Emissions

Electricity Consumed = from Consumption of
during T&D Electricity during T&D
In some countries such as Japan, local regulations may require utility organiza-
tions to provide both EFG and EFC to its consumers, and consumers may be re-
quired to use EFC to calculate indirect emissions from the consumption of
purchased electricity. In this case, an organization still needs to use EFG to report
its scope 2 emissions for a GHG report prepared in accordance with Corporate
Standard and this Public Sector Protocol.
DRAFT A-4
Appendix B
Accounting for Sequestered Atmospheric
Carbon
A key purpose of the Corporate Standard and this Public Sector Protocol is to
provide organizations with guidance on how to develop inventories that provide
an accurate and complete picture of their GHG emissions both from their direct
operations as well as those along the value chain. 1 For some types of organiza-
tions, this is not possible without addressing the organization’s impacts on seques-
tered atmospheric carbon. 2
SEQUESTERED ATMOSPHERIC CARBON

During photosynthesis, plants remove carbon (as CO 2 ) from the atmosphere and
store it in plant tissue. Until this carbon is cycled back into the atmosphere, it re-
sides in one of a number of “carbon pools.” These pools include (a) above ground
biomass (e.g., vegetation) in forests, farmland, and other terrestrial environments,
(b) below ground biomass (e.g., roots), and (c) biomass-based products (e.g.,
wood products) both while in use and when stored in a landfill.
Carbon can remain in some of these pools for long periods of time, sometimes for
centuries. An increase in the stock of sequestered carbon stored in these pools
represents a net removal of carbon from the atmosphere; a decrease in the stock
represents a net addition of carbon to the atmosphere. In general, carbon seques-
tration in plants is recognized as an opportunity for organizations to offset GHG
emissions, but it should be noted that intact plants may also represent a liability in
that certain unplanned events such as fires can unexpectedly release GHGs into
the atmosphere.
WHY INCLUDE IMPACTS ON SEQUESTERED CARBON

IN ORGANIZATIONAL GHG INVENTORIES?
It is generally recognized that changes in stocks of sequestered carbon and the
associated exchanges of carbon with the atmosphere are important to national
1
In this appendix, “value chain” means a series of operations and entities, starting with the
forest and extending through end-of-life management, that (a) supply or add value to raw materials
and intermediate products to produce final products for the marketplace and (b) are involved in the
use and end-of-life management of these products.
2
In this appendix, the term “sequestered atmospheric carbon” refers exclusively to sequestra-
tion by biological sinks.
DRAFT B-1
level GHG emissions inventories, and consequently, these impacts on sequestered
carbon are commonly addressed in national inventories [United Nations Frame-
work Convention on Climate Change (UNFCCC), 2000]. Similarly, for organiza-
tions managing large stocks of biomass, such as the forest products industry and
parks agencies, some of the most significant aspects of an organization’s overall
impact on atmospheric CO 2 levels will occur as a result of impacts on sequestered
carbon in their direct operations as well as along their value chain. Some forest
product companies have begun to address this aspect of their GHG footprint
within their corporate GHG inventories (Georgia Pacific, 2002). Moreover, the
GHG Protocol has developed The Land Use, Land-Use Change, and Forestry
Guidance for GHG Project Accounting and WBCSD has produced The Sustain-
able Forest Products Industry, Carbon and Climate Change to address some car-
bon measurement, accounting, reporting, and ownership issues associated with
GHG reduction projects and the forest products value chain. These efforts for the
private sector will help to inform related public sector activities. Information on
an organization’s impacts on sequestered atmospheric carbon can be used for stra-
tegic planning, for educating stakeholders, and for identifying opportunities for
improving the organization’s GHG profile. Opportunities may also exist to create
value from reductions created along the value chain by organizations acting alone
or in partnership with private companies, constituents, or the public.
ACCOUNTING FOR SEQUESTERED CARBON

IN THE CONTEXT OF THE GHG PROTOCOL
CORPORATE STANDARD
Consensus methods have yet to be developed under the GHG Protocol Corporate
Standard for accounting of sequestered atmospheric carbon as it moves through
the entire value chain of biomass-based industries. Nonetheless, some issues that
would need to be addressed when addressing impacts on sequestered carbon in
organizations’ inventories can be examined in the context of existing guidance
provided by the GHG Protocol Corporate Standard as highlighted below.
Setting Organizational Boundaries

The GHG Protocol Corporate Standard outlines two approaches for consolidat-
ing GHG data—the equity share approach and the control approach. In some
cases, it may be possible to apply these approaches directly to emissions/removals
associated with sequestered atmospheric carbon. Among the issues that may need
to be examined is the ownership of sequestered carbon under the different types
of contractual arrangements involving land and wood ownership, harvesting
rights, and control of land management and harvesting decisions. This is particu-
larly important when logging rights for timber on publically owned lands are in-
volved; where disparate accounting practices are used by the parties involved,
explicit contractual agreements may be required to clarify the transfer of owner-
DRAFT B-2
Accounting for Sequestered Atmospheric Carbon
ship as carbon moves through the value chain. In some cases, as part of a risk
management program for instance, organizations may be interested in performing
value chain assessments of sequestered carbon without regard to ownership or
control just as they might do for scope 2 and 3 emissions.
Setting Operational Boundaries

As with GHG emissions accounting, setting operational boundaries for seques-
tered carbon inventories would help organizations transparently report their im-
pacts on sequestered carbon along their value chain. Organizations may, for
example, provide a description of the value chain capturing impacts that are mate-
rial to the results of the analysis. This should include which pools are included in
the analysis, which are not, and the rationale for the selections. Until consensus
methods are developed for characterizing impacts on sequestered atmospheric
carbon along the value chain, this information can be included in the “optional
information” section of a GHG inventory compiled using the Public Sector Pro-
tocol.
Tracking Removals Over Time

As is sometimes the case with accounting for GHG emissions, base-year data for
impacts on sequestered carbon may need to be averaged over multiple years to
accommodate the year-to-year variability expected of these systems. The temporal
scale used in sequestered carbon accounting will often be closely tied to the spa-
tial scale over which the accounting is done. The question of how to recalculate
base years to account for land acquisition and divestment, land use changes, and
other activities also needs to be addressed.
Identifying and Calculating GHG Removals

The Public Sector Protocol does not include consensus methods for sequestered
carbon quantification. Organizations should, therefore, explain the methods used.
In some instances, quantification methods used in national inventories can be
adapted for organization-level quantification of sequestered carbon. IPCC (1997;
2000b) provides useful information on how to do this. IPCC has issued Good
Practice Guidance for Land Use, Land Use Change and Forestry, with informa-
tion on methods for quantification of sequestered carbon in forests and forest
products. Organizations may also find it useful to consult the methods used to
prepare national inventories for those countries where significant parts of their
organization’s value chain reside.
In addition, although organizational inventory accounting differs from project-

based accounting (as discussed below), it may be possible to use some of the cal-
culation and monitoring methods derived from project level accounting of seques-
tration projects.
DRAFT B-3
Accounting for Removal Enhancements
An organizational inventory can be used to account for yearly removals within the
organizational boundary. In contrast, the GHG Protocol Project Quantification
Standard is designed to calculate project reductions that will be used as offsets,
relative to a hypothetical baseline scenario for what would have happened without
the project. In the forestry sector, projects take the form of removal enhance-
ments.
Chapter 8 in this document addresses some of the issues that must be addressed
when accounting for offsets from GHG reduction projects. Much of this guidance
is also applicable to removal enhancement projects. One example is the issue of
reversibility of removals—also briefly described in chapter 8.
Reporting GHG Removals

Until consensus methods are developed for characterizing impacts on sequestered
atmospheric carbon along the value chain, this information can be included in the
“optional information” section of the inventory (See chapter 9). Information on
sequestered carbon in the organization’s inventory boundary should be kept sepa-
rate from project-based reductions at sources that are not in the inventory bound-
ary. Where removal enhancement projects take place within an organization’s
inventory boundary they would normally show up as an increase in carbon re-
movals over time, but can also be reported in optional information. However, they
should also be identified separately to ensure that they are not double counted.
This is especially important when they are sold as offsets or credits to a third
party.
As organizations develop experience using various methods for characterizing

impacts on sequestered carbon, more information will become available on the
level of accuracy to expect from these methods. In the early stages of developing
this experience, however, organizations may find it difficult to assess the uncer-
tainty associated with the estimates and therefore may need to give special care to
how the estimates are represented to stakeholders.
DRAFT B-4
Appendix C
Overview of GHG Programs
Focus (organization, project, Organizational project Nature/purpose of

Name of program Type of program facility) Gases covered boundaries Operational boundaries program Base year Target Verification
California Climate Action Registry Voluntary registry Organization (Projects Organizations report CO 2 Equity share or control Scope 1 and 2 required, Baseline protection, Specific to each Encouraged but optional Required through
www.climateregisty.org possible in 2004) for first 3 years of for California or United scope 3 to be decided public reporting, possible organization, certified third party
participation, all six GHGs States operations future targets recalculation consistent verifier
thereafter. with GHG Protocol
Corporate Standard
required
U.S. EPA Climate Leaders Voluntary reduction Organization Six Equity share or control Scope 1 and 2 required, Public recognition, Year that organization Required, specific to Optional, provides
www.epa.gov/climateleaders program for US operations at a scope 3 optional assistance setting targets joins program, each organization guidance and checklist of
minimum and achieving reductions recalculation consistent components that should
with GHG Protocol be included if undertaken
Corporate Standard
required
World Wildlife Fund Climate Savers Voluntary registry Organization CO 2 Equity share or control Scope 1 and 2 required, Achieve targets, public Chosen year since 1990, Required, specific to Third party verifier
www.worldwildlife.org/climatesavers for worldwide operations scope 3 optional recognition, expert specific to each each organization
assistance organization,
recalculation consistent
with GHG Protocol
Corporate Standard
required
World Economic Forum Voluntary registry Organization Six Equity share or control Scope 1 and 2 required, Baseline protection, Chosen year since 1990, Encouraged but optional Third party verifier or spot
Global GHG Register for worldwide operations scope 3 optional public reporting, targets specific to each checks by the World
www.weforum.org encouraged but optional organization, Economic Forum
recalculation consistent
with GHG Protocol
Corporate Standard
required
European GHG Emissions Allowance Mandatory allowance Facility Six Facilities in selected Scope 1 Achieve annual caps Determined by member Annual compliance with Third party verifier
Trading Scheme trading scheme sectors through tradable country for allowance allocated and traded
http://ec.europa.eu/environment/index_en.htm allowance market, initial allocation allowances, European
period from 2005 to 2007 committed to 8% overall
reduction below 1990
European Pollutant Mandatory registry for Facility Six Kyoto gases as well as Facilities that fall under Scope 1 required Permit individual Not applicable Not applicable Local permitting authority
Emission Registry large industrial other pollutants European industrial facilities
www.europa.eu.int/comm/environment/ippc/e facilities Intergovernmental Panel
per/index.htm on Climate Change
directive
Chicago Climate Exchange Voluntary allowance Organization and project Six Equity share Direct combustion and Achieve annual targets Average of 1998 through 1% below its baseline in Third party verifier
www.chicagoclimateexchange.com trading scheme process emission through tradable 2001 2003, 2% below baseline
sources and indirect allowance market in 2004, 3% below
emissions optional. baseline in 2005 and 4%
below baseline in 2006
Respect Europe Business Leaders Initiative Voluntary reduction Organization Six Equity share or control Scope 1 and 2 required, Achieve targets, public Specific to each Mandatory, specific to Third party verifier
on Climate Change program for worldwide operations scope 3 strongly recognition, expert organization, each organization
http://www.respecteurope.com/start.aspx encouraged assistance recalculation consistent
with GHG Protocol
Corporate Standard
required
Energy Information Administration 1605B Voluntary reporting Organization and project Organizations have the Equity share or control Scope 1 required, scope Public recognition, assis- Recommended 1987 to Required, specific to None required
www.eia.doe.gov/oiaf/1605/1605b.html program option of reporting six for worldwide operations 2 and 3 optional tance measuring and 1990 each organization or
Kyoto gases plus others recording reductions project
International Council for Local Environmental Voluntary reduction Organization Six Control for local govern- Scope 1 and 2 required, Assistance setting targets Required, specific to Required, specific to None required
Initiatives Cities for Climate Protection program ment or geographic scope 3 optional and achieving reductions each local government each local government
Program operations for local governments
http://www.iclei.org/
DRAFT C-1
Appendix D
Industry Sectors and Scopes
Sector Scope 1 emission sources Scope 2 emission sources Scope 3 emission sourcesa
Energy
Energy Generation  Stationary combustion  Stationary combustion  Stationary combustion
(boilers and turbines used (consumption of pur- (mining and extraction of
in the production of elec- chased electricity, heat or fuels, energy for refining
tricity, heat or steam, fuel steam) or processing fuels)
pumps, fuel cells, flaring)  Process emissions (pro-
 Mobile combustion (trucks, duction of fuels, SF6
barges and trains for emissionsb)
transportation of fuels)  Mobile combustion
 Fugitive emissions (CH4 (transportation of fuels/
leakage from transmission waste, employee busi-
and storage facilities, HFC ness travel, employee
emissions from Liquid commuting)
Propane Gas (LPG) stor-  Fugitive emissions (CH4
age facilities, SF6 emis- and CO2 from waste
sions from transmission landfills, pipelines, SF6
and distribution equip- emissions)
ment)
Oil and Gasc  Stationary combustion  Stationary combustion  Stationary combustion
(process heaters, engines, (consumption of pur- (product use as fuel or
turbines, flares, incinera- chased electricity, heat or combustion for the pro-
tors, oxidizers, production steam) duction of purchased ma-
of electricity, heat and terials)
steam)  Mobile combustion
 Process emissions (proc- (transportation of raw
ess vents, equipment materials/products/waste,
vents, maintenance/ employee business
turnaround activities, non- travel, employee com-
routine activities) muting, product use as
 Mobile combustion (trans- fuel)
portation of raw materials/  Process emissions (prod-
products/waste; company uct use as feedstock or
owned vehicles) emissions from the pro-
 Fugitive emissions (leaks duction of purchased ma-
from pressurized equip- terials)
ment, wastewater treat-  Fugitive emissions (CH4
ment, surface and CO2 from waste
impoundments) landfills or from the pro-
duction of purchased ma-
terials)
DRAFT D-1
Coal Mining  Stationary combustion  Stationary combustion  Stationary combustion
(methane flaring and use, (consumption of pur- (product use as fuel)
use of explosives, mine chased electricity, heat or  Mobile combustion
fires) steam) (transportation of
 Mobile combustion (mining coal/waste, employee
equipment, transportation business travel, em-
of coal) ployee commuting)
 Fugitive emissions (CH4  Process emissions (gasi-
emissions from coal mines fication)
and coal piles)
Metals
Aluminumd  Stationary combustion  Stationary combustion  Stationary combustion
(bauxite to aluminum proc- (consumption of pur- (raw material processing
essing, coke baking, lime, chased electricity, heat or and coke production by
soda ash and fuel use, on- steam) second party suppliers,
site CHP) manufacture of produc-
 Process emissions (car- tion line machinery)
bon anode oxidation, elec-  Mobile combustion
trolysis, PFC) (transportation services,
 Mobile combustion (pre- business travel, em-
and post-smelting trans- ployee commuting)
portation, ore haulers)  Process emissions (dur-
 Fugitive emissions (fuel ing production of pur-
line CH4, HFC and PFC, chased materials)
SF6 cover gas)  Fugitive emissions (min-
ing and landfill CH4 and
CO2, outsourced process
emissions)
Iron and Steele  Stationary combustion  Stationary combustion  Stationary combustion
(coke, coal and carbonate (consumption of pur- (mining equipment, pro-
fluxes, boilers, flares) chased electricity, heat or duction of purchased ma-
 Process emissions (crude steam) terials)
iron oxidation, consump-  Process emissions (pro-
tion of reducing agent, duction of ferroalloys)
carbon content of crude  Mobile combustion
iron/ferroalloys) (transportation of raw
 Mobile combustion (on-site materials/products/waste
transportation) and intermediate prod-
 Fugitive emission (CH4, ucts)
N2O)  Fugitive emissions (CH4
and CO2 from waste
landfills)
DRAFT D-2
Chemicals
Nitric acid, Ammo-  Stationary combustion  Stationary combustion  Stationary combustion
nia, Adipic acid, (boilers, flaring, reductive (consumption of pur- (production of purchased
Urea, and Petro- furnaces, flame reactors, chased electricity, heat or materials, waste combus-
chemicals steam reformers) steam) tion)
 Process emissions (oxida-  Process emissions (pro-
tion/reduction of sub- duction of purchased ma-
strates, impurity removal, terials)
N2O byproducts, catalytic  Mobile combustion
cracking, myriad other (transportation of raw
emissions individual to materials/products/waste,
each process) employee business
 Mobile combustion (trans- travel, employee com-
portation of raw materials/ muting)
products/waste)  Fugitive emissions (CH4
 Fugitive emissions (HFC and CO2 from waste
use, storage tank leakage) landfills and pipelines)
Cement and Limef  Process emissions (calci-  Stationary combustion  Stationary combustion
nation of limestone) (consumption of pur- (production of purchased
 Stationary combustion chased electricity, heat or materials, waste combus-
(clinker kiln, drying of raw steam) tion)
materials, production of  Process emissions (pro-
electricity) duction of purchased
 Mobile combustion (quarry clinker and lime)
operations, on-site trans-  Mobile combustion
portation) (transportation of raw
materials/products/waste,
employee business
travel, employee com-
muting)
 Fugitive emissions (min-
ing and landfill CH 4 and
CO 2 , outsourced process
emissions)
Wasteg
Landfills, Waste  Stationary combustion  Stationary combustion  Stationary combus-
Combustion, Water (incinerators, boilers, flar- (consumption of pur- tion(recycled waste used
Services ing) chased electricity, heat or as a fuel)
 Process emissions (sew- steam)  Process emissions (recy-
age treatment, nitrogen cled waste used as a
loading) feedstock)
 Fugitive emissions (CH 4  Mobile combustion
and CO 2 emissions from (transportation of
waste and animal product waste/products, em-
decomposition) ployee business travel,
 Mobile combustion (trans- employee commuting)
portation of waste/
products)
DRAFT D-3
Pulp & Paper
Pulp and Paperh  Stationary combustion  Stationary combustion  Stationary combustion
(production of steam and (consumption of pur- (production of purchased
electricity, fossil fuel- chased electricity, heat or materials, waste combus-
derived emissions from steam) tion)
calcination of calcium car-  Process emissions (pro-
bonate in lime kilns, drying duction of purchased ma-
products with infrared dri- terials)
ers fired with fossil fuels)
 Mobile combustion
 Mobile combustion (trans- (transportation of raw
portation of raw materials, materials/products/waste,
products, and wastes, op- employee business
eration of harvesting travel, employee com-
equipment) muting)
 Fugitive emissions (CH 4  Fugitive emissions (land-
and CO 2 from waste) fill CH 4 and CO 2 emis-
sions)
HFC, PFC, SF 6 , and HCFC 22 Productioni
HCFC 22 produc-  Stationary combustion  Stationary combustion  Stationary combustion
tion (production of electricity, (consumption of pur- (production of purchased
heat or steam) chased electricity, heat or materials)
 Process emissions (HFC steam)  Process emissions (pro-
venting) duction of purchased ma-
 Mobile combustion (trans- terials)
portation of raw materials/  Mobile combustion
products/waste) (transportation of raw
 Fugitive emissions (HFC materials/products/waste,
use) employee business
muting)
 Fugitive emissions (fugi-
tive leaks in product use,
CH 4 and CO 2 from waste
landfills)
DRAFT D-4
Semiconductor Production
Semiconductor  Process emissions (C 2 F 6 ,  Stationary combustion  Stationary combustion
Production CH 4 , CHF 3 , SF 6 , NF 3 , (consumption of pur- (production of imported
C 3 F 8 , C 4 F 8 , N 2 O used in chased electricity, heat or materials, waste combus-
wafer fabrication, CF 4 cre- steam) tion, upstream T&D
ated from C 2 F 6 and C 3 F 8 losses of purchased elec-
processing) tricity)
 Stationary combustion  Process emissions (pro-
(oxidation of volatile or- duction of purchased ma-
ganic waste, production of terials, outsourced
electricity, heat or steam) disposal of returned
 Fugitive emissions (proc- process gases and con-
ess gas storage leaks, tainer remainder/heel)
container remainders/heel  Mobile combustion
leakage) (transportation of raw
 Mobile combustion (trans- materials/products/waste,
portation of raw materials/ employee business
products/waste) travel, employee com-
muting)
 Fugitive emissions (land-
fill CH 4 and CO 2 emis-
sions, downstream
process gas container
remainder/heel leakage
Other Sectorsj
Service Sector/  Stationary combustion  Stationary combustion  Stationary combustion
Office-based (production of electricity, (consumption of pur- (production of purchased
Organizationsk heat or steam) chased electricity, heat or materials)
 Mobile combustion (trans- steam)  Process emissions (pro-
portation of raw materials/ duction of purchased ma-
waste) terials)
 Fugitive emissions (mainly  Mobile combustion
HFC emissions during use (transportation of raw
of refrigeration and air- materials/products/waste,
conditioning equipment) employee business
muting)
a
Scope 3 activities of outsourcing, contract manufacturing, and franchises are not addressed in this table be-
cause the inclusion of specific GHG sources will depend on the nature of the outsourcing.
b
Guidelines on unintentional SF 6 process emissions are to be developed.
c
The American Petroleum Institute’s Compendium of Greenhouse Gas Emissions Methodologies for the Oil and
Gas Industry (2004) provides guidelines and calculation methodology for calculating GHG emissions from the oil and
gas sector.
d
The International Aluminum Institute’s Aluminum Sector Greenhouse Gas Protocol (2003), in cooperation with
WRI and WBCSD, provides guidelines and tools for calculating GHG emissions from the aluminum sector.
e
The International Iron and Steel Institute’s Iron and Steel sector guidelines, in cooperation with WRI and
WBCSD, are under development.
f
The WBCSD Working Group Cement: Toward a Sustainable Cement Industry has developed The Cement CO 2
Protocol: CO 2 Emissions Monitoring and Reporting Protocol for the Cement Industry (2002), which includes guide-
lines and tools to calculate GHG emissions from the cement sector.
g
Guidelines for waste sector are to be developed.
DRAFT D-5
h
The Climate Change Working Group of the International Council of Forest and Paper Associations has devel-
oped Calculation Tools for Estimating Greenhouse Gas Emissions from Pulp and Paper Mills (2002), which includes
guidelines and tools to calculate GHG emissions from the pulp and paper sector.
i
Guidelines for PFC and SF 6 production are to be developed.
j
Businesses in “other sectors” can estimate GHG emissions using cross-sectoral estimation tools—stationary
combustion, mobile (transportation) combustion, HFC use, measurement and estimation uncertainty, and waste.
k
WRI has developed Working 9 to 5 on Climate Change: An Office Guide (2002) and www.Safeclimate.net,
which include guidelines and calculation tools for calculating GHG emissions from office-based organizations.
DRAFT D-6
Appendix E
Categorizing GHG Emissions Associated with
Leased Assets
INTRODUCTION
Many organizations encounter leasing situations, both as a lessee and lessor of
building space, vehicles, or equipment as part of their operations, and must decide
how to account for and report GHG emissions associated with these assets. To do
so, you must first know the type of lease established by your organization and the
organizational boundary approach selected for creating the inventory (i.e., equity
share, financial control, or operational control).
The following leasing guidance should be used to determine:
 Whether emissions that would normally be categorized as scope 1 (direct)

in a non-leasing situation should be categorized as scope 1 (direct) or
scope 3 (indirect) 1 in a leasing situation.
 Whether emissions that would normally be categorized as scope 2 (indi-

rect) in a non-leasing situation should be categorized as scope 2 (indirect)
or scope 3 (indirect) in a leasing situation.
Emissions that are categorized as scope 3 (indirect) in non-leasing situations, such

as upstream and downstream emissions, would also be categorized as scope 3 (in-
direct) emissions in leasing situations and so are not discussed further in this ap-
pendix.
This guidance has been designed to ensure that the categorization of emissions
from leased assets by lessors and lessees does not lead to double counting of
emissions in scopes 1 and 2.
DIFFERENTIATING TYPES OF LEASED ASSETS

The first step in determining how to categorize emissions from leased assets is to
understand the two different types of leases: capital leases and operating leases.
1
Organizations that have power-generating facilities and would normally categorize the fa-
cilities’ emissions as scope 1 (direct) in a non-leasing situation must determine whether these
emissions would be scope 2 (indirect) or scope 3 (indirect) in a leasing situation. For more guid-
ance, refer to the calculation tool on the GHG Protocol’s website, www.ghgprotocol.org, which
deals with indirect emissions from electricity.
DRAFT E-1
 Capital lease. This type of lease, often referred to as a finance lease in the
private sector, enables the lessee to operate an asset and also gives the les-
see all the risks and rewards of owning the asset. Assets leased under a
capital lease are considered wholly owned assets in financial accounting
and are recorded as such on the balance sheet.
 Operating lease. This type of lease enables the lessee to operate an asset,
like a building or vehicle, but does not give the lessee any of the risks or
rewards of owning the asset. Any lease that is not a capital lease is an op-
erating lease. 2
One way to determine whether an asset is leased under an operating or capital

lease is to check the company’s audited financial statements.
CATEGORIZING EMISSIONS FROM LEASED ASSETS

(LESSEE’S PERSPECTIVE)
Next you must determine whether the emissions associated with the leased assets
should be categorized as direct (scope 1) emissions or indirect (scope 2 or 3)
emissions in your organization’s operational boundary.
 Capital lease. Under a capital lease, the lessee is considered to have own-
ership and both financial and operational control of the leased asset.
Therefore, emissions associated with fuel combustion 3 should be catego-
rized as scope 1 (direct), and emissions associated with use of purchased
electricity should be categorized as scope 2 (indirect), regardless of the or-
ganizational boundary approach selected (see Table E-1).
 Operating lease. Under an operating lease, the lessee is considered not to

have ownership or financial control but to have operational control of the
leased asset. Therefore, the categorization of emissions as direct or
indirect depends on the organizational boundary approach selected. If the
lessee uses the equity share or a financial control approach, the emissions
associated with fuel combustion as well as with the use of purchased
electricity should always be categorized as scope 3 (indirect). But if the
lessee uses the operational control approach, emissions associated with
fuel combustion should be categorized as scope 1 (direct), and emissions
2
Financial Accounting Standards Board, Statement of Financial Accounting Standards, no.
13, “Accounting for Leases” (1976).
3
For this discussion, we assume that most emissions that could be categorized as direct emis-
sions are associated with fuel combustion. However, organizations may also have other sources of
emissions, such as emissions from industrial processes or HFC emissions from refrigeration and
air conditioning, which could also be categorized as direct emissions. For these other potential
sources of direct emissions, companies should follow the leasing guidance described for fuel com-
bustion. We have focused on fuel combustion in this appendix for simplicity in explaining the
leasing guidance.
DRAFT E-2
Categorizing GHG Emissions Associated with Leased Assets
associated with the use of purchased electricity should be categorized as

scope 2 (indirect) (see Table E-1).
If these guidelines for categorizing emissions from leased assets have been cor-
rectly applied, indirect emissions from the use of purchased electricity may some-
times be categorized as scope 3 instead of scope 2. This is the case when a leased
building is held under an operating lease and the organizational boundary ap-
proach used is either equity share or financial control.
Table E-1. Emissions from Leased Assets: Leasing Agreements and Boundaries
(Lessee’s Perspective)
Type of leasing arrangement
Capital lease Operating lease

Equity Share or Financial Lessee does have ownership Lessee does not have
Control Approach Used and financial control, therefore ownership or financial control,
emissions associated with fuel therefore emissions associated
combustion are scope 1 and with fuel combustion are scope
with use of purchased 3 and with use of purchased
electricity are scope 2. electricity are scope 3.
Operational Control Lessee does have operational Lessee does have operational
Approach Used control, therefore emissions control, therefore emissions
associated with fuel associated with fuel
combustion are scope 1 and combustion are scope 1 and
with use of purchased with use of purchased
electricity are scope 2. electricity are scope 2.a
a
Some organizations may be able to demonstrate that they do not have operational control
over a leased asset held under an operating lease. In these cases, the organization may report
emissions from the leased asset as scope 3 but must state clearly in its GHG inventory report the
reason(s) why they do not have operational control.
CATEGORIZING EMISSIONS FROM LEASED ASSETS

(LESSOR’S PERSPECTIVE)
Some organizations may lease assets to other public or private sector entities; for
example, the General Services Administration may lease office or retail space, or
vehicles to other federal agencies or private companies. Whether emissions from
these assets should be categorized by the lessor as direct (scope 1) or indirect
(scope 2 or 3) depends on the organizational boundary approach and the type of
leasing arrangement. In the case of capital leases, ownership and financial and
operational control is transferred to the lessee, while operational control is granted
to the lessee through an operating lease.
 Capital lease. The lessor does not have ownership or financial or opera-
tional control of these assets. Therefore, the associated emissions always
are scope 3 (indirect) for the lessor, regardless of the type of organiza-
tional boundary approach used (see Table E-2).
DRAFT E-3
 Operating lease. The lessor has ownership and financial control of these
assets but not operational control. Therefore, if the equity share or a finan-
cial control approach is used, the emissions associated with fuel combus-
tion should be categorized as scope 1 (direct), and the emissions
associated with the use of purchased electricity should be categorized as
scope 2 (indirect) for the lessor. However, if the operational control ap-
proach is used, emissions from fuel combustion and the use of purchased
electricity will always be scope 3 (indirect) for the lessor (see Table E-2).
Table E-2. Emissions from Leased Assets: Leasing Agreements and Boundaries
(Lessor’s Perspective)
Type of leasing arrangement
Capital lease Operating lease

Equity Share or Financial Lessor does not have Lessor does have ownership and
Control Approach Used ownership or financial financial control, therefore
control, therefore emissions emissions associated with fuel
associated with fuel combustion are scope 1 and with
combustion are scope 3 and use of purchased electricity are
with use of purchased scope 2.
electricity are scope 3.
Operational Control Lessor does not have Lessor does not have operational
Approach Used operational control, therefore control, therefore emissions
emissions associated with associated with fuel combustion
fuel combustion are scope 3 are scope 3 and with use of
and with use of purchased purchased electricity are scope 3.a
electricity are scope 3.
a
Some organizations may be able to demonstrate that they do have operational control over an
asset leased to another organization under an operating lease, especially when operational
control is not perceived by the lessee. In this case, the lessor may report emissions from fuel
combustion as scope 1 and emissions from the use of purchased electricity as scope 2. The
lessor must clearly state in the GHG inventory report why they do not have operational control.
Proper categorization of emissions from leased assets by lessors and lessees en-
sures that emissions in scopes 1 and 2 are not double counted. For example, if a
lessee categorizes emissions from the use of purchased electricity as scope 2, the
lessor should categorize the same emissions as scope 3, and vice versa.
DRAFT E-4
Appendix F
Abbreviations
A/C air conditioning

CaCO 3 calcium carbonate
CAP criteria air pollutant
CCAR California Climate Action Registry
CCX Chicago Climate Exchange
CDM clean development mechanism
CEM continuous emission monitoring
CFCs chlorofluorocarbons
CFP Climate Friendly Parks
CH 4 methane
CHP combined heat and power
CLIP Climate Leadership In Parks
CO 2 carbon dioxide
CO 2 -eq carbon dioxide equivalent
COCO contractor owned/contractor operated
CRS Congressional Research Service
DoD Department of Defense
DOE Department of Energy
EFC emissions factor at consumption
EFG emission factor at generation
EO executive order
EPA Environmental Protection Agency
ERU emission reduction unit
EU ETS European Union Emissions Allowance Trading Scheme
GHG greenhouse gas
GRI Global Reporting Initiative
GWP global warming potential
DRAFT F-1
HCFC hydrochlorofluorocarbons
HFCs hydrofluorocarbons
HVAC heating, ventilation, and air conditioning
IMP inventory management plan
IPCC Intergovernmental Panel on Climate Change
JI joint implementation
MMT million metric tons
MWh megawatts per hour
N2O nitrous oxide
NASA National Aeronautics and Space Administration
NASA-JSC National Aeronautics and Space Administration – Johnson
Space Center
NGO non-governmental organization
NO x nitrogen oxide
NPS National Park Service
PFCs perfluorocarbons
PwC PricewaterhouseCoopers
REC renewable energy certificate
RGGI Regional Greenhouse Gas Initiative
SCL Seattle City Light
SF 6 sulfur hexafluoride
T&D transmission and distribution
UK ETS United Kingdom Emission Trading Scheme
UNFCC United Nations Framework Convention on Climate Change
UTC United Technologies Corporation
WBCSD World Business Council for Sustainable Development
WRI World Resources Institute
DRAFT F-2
Appendix G
Glossary
Absolute target. A target defined by reduction in absolute emissions over time

e.g., reduces CO 2 emissions by 25 percent below 1994 levels by 2010.
Additionality. A criterion for assessing whether a project has resulted in GHG

emission reductions or removals in addition to what would have occurred in its
absence. This is an important criterion when the goal of the project is to offset
emissions elsewhere.
Allowance. A commodity giving its holder the right to emit a certain quantity of
GHG. Annex 1 countries defined in the International Climate Change Convention
as those countries taking on emissions reduction obligations: Australia, Austria,
Belgium, Belarus, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia,
Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Lat-
via, Liechtenstein, Lithuania, Luxembourg, Monaco, Netherlands, New Zealand,
Norway, Poland, Portugal, Romania, Russian Federation, Slovakia, Slovenia,
Spain, Sweden, Switzerland, Ukraine, United Kingdom, and United States of
America.
Associated/affiliated company. The parent company has significant influence over

the operating and financial policies of the associated/affiliated company, but not
financial control.
Audit trail. Well organized and transparent historical records documenting how an
inventory was compiled.
Baseline. A hypothetical scenario for what GHG emissions, removals, or storage

would have been in the absence of the GHG project or project activity.
Base year. A historic datum (a specific year or an average over multiple years)
against which a company’s emissions are tracked over time.
Base year emissions. GHG emissions in the base year.
Base year emissions recalculation. Recalculation of emissions in the base year to

reflect a change in the structure of the company, or to reflect a change in the ac-
counting methodology used. This ensures data consistency over time, i.e., com-
parisons of like with like over time.
Biofuels. Fuel made from plant material, e.g. wood, straw, and ethanol from plant
matter.
DRAFT G-1
Boundaries. GHG accounting and reporting boundaries can have several dimen-
sions, i.e. organizational, operational, geographic, business unit, and target
boundaries. The inventory boundary determines which emissions are accounted
and reported by the company.
Cap and trade system. A system that sets an overall emissions limit, allocates
emissions allowances to participants, and allows them to trade allowances and
emission credits with each other.
Capital lease. A lease which transfers substantially all the risks and rewards of
ownership to the lessee and is accounted for as an asset on the balance sheet of the
lessee. Also known as a financial or finance lease. Leases other than capital/
financial/finance leases are operating leases. Consult an accountant for further
detail as definitions of lease types differ between various accepted financial stan-
dards.
Carbon sequestration. The uptake of CO 2 and storage of carbon in biological

sinks.
Clean development mechanism. A mechanism established by Article 12 of the

Kyoto Protocol for project-based emission reduction activities in developing
countries. The CDM is designed to meet two main objectives: to address the sus-
tainability needs of the host country and to increase the opportunities available to
Annex 1 Parties to meet their GHG reduction commitments. The CDM allows for
the creation, acquisition, and transfer of CERs from climate change mitigation
projects undertaken in non-Annex 1 countries.
Certified emission reductions. A unit of emission reduction generated by a CDM

project. CERs are tradable commodities that can be used by Annex 1 countries to
meet their commitments under the Kyoto Protocol.
Co-generation unit/combined heat and power. A facility producing both electric-

ity and steam/heat using the same fuel supply.
Consolidation. Combination of GHG emissions data from separate operations that

form part of one company or group of companies.
Control. The ability of a company to direct the policies of another operation.

More specifically, it is defined as either operational control (the organization or
one of its subsidiaries has the full authority to introduce and implement its operat-
ing policies at the operation) or financial control (the organization has the ability
to direct the financial and operating policies of the operation with a view to gain-
ing economic benefits from its activities).
Corporate inventory program. A program to produce annual corporate inventories

that are in keeping with the principles, standards, and guidance of the GHG Pro-
tocol Corporate Standard. This includes all institutional, managerial and technical
DRAFT G-2
Glossary
arrangements made for the collection of data, preparation of a GHG inventory,

and implementation of the steps taken to manage the quality of their emission in-
ventory.
CO 2 equivalent. The universal unit of measurement to indicate the GWP of each

of the six GHGs, expressed in terms of the GWP of one unit of CO 2 . It is used to
evaluate releasing (or avoiding releasing) different GHGs against a common ba-
sis.
Cross-sector calculation tool. A GHG Protocol calculation tool that addresses

GHG sources common to various sectors, e.g., emissions from stationary or mo-
bile combustion. See also GHG Protocol calculation tools
(www.ghgprotocol.org).
De minimis. A level of emissions from a single source that is excluded from re-
porting. A predefined negative bias in estimates (i.e., an underestimate). Such a
threshold is not compatible with the completeness principle of the Corporate
Standard.
Direct GHG emissions. Emissions from sources that are owned or controlled by
the reporting company.
Direct monitoring. Direct monitoring of exhaust stream contents in the form of

continuous emissions monitoring or periodic sampling.
Double counting. Two or more reporting companies take ownership of the same
emissions or reductions.
Emissions. The release of GHG into the atmosphere.
Emission factor. A factor allowing GHG emissions to be estimated from a unit of

available activity data (e.g., tonnes of fuel consumed, tonnes of product produced)
and absolute GHG emissions.
Emission reduction unit (ERU). A unit of emission reduction generated by a JI

project. ERUs are tradable commodities which can be used by Annex 1 countries
to help them meet their commitment under the Kyoto Protocol.
Equity share. The equity share reflects economic interest, which is the extent of
rights a company has to the risks and rewards flowing from an operation. Typi-
cally, the share of economic risks and rewards in an operation is aligned with the
company’s percentage ownership of that operation, and equity share will normally
be the same as the ownership percentage.
Estimation uncertainty. Uncertainty that arises whenever GHG emissions are

quantified, due to uncertainty in data inputs and calculation methodologies used to
quantify GHG emissions.
DRAFT G-3
Finance lease. A lease which transfers substantially all the risks and rewards of
ownership to the lessee and is accounted for as an asset on the balance sheet of the
lessee. Also known as a capital or financial lease. Leases other than capital/
financial/finance leases are operating leases. Consult an accountant for further
detail as definitions of lease types differ between various accepted accounting
principles.
Fixed asset investment. Equipment, land, stocks, property, incorporated and non-
incorporated joint ventures, and partnerships over which the parent company has
neither significant influence nor control.
Fugitive emissions. Emissions that are not physically controlled but result from
the intentional or unintentional releases of GHGs. They commonly arise from the
production, processing transmission storage and use of fuels and other chemicals,
often through joints, seals, packing, gaskets, etc.
Green power. A generic term for renewable energy sources and specific clean en-
ergy technologies that emit fewer GHG emissions relative to other sources of en-
ergy that supply the electric grid. Includes solar photovoltaic panels, solar thermal
energy, geothermal energy, landfill gas, low-impact hydropower, and wind tur-
bines.
Greenhouse gases. For the purposes of this standard, GHGs are the six gases
listed in the Kyoto Protocol: CO 2 , CH 4 , N 2 O, HFCs, PFCs, and SF 6 .
GHG capture. Collection of GHG emissions from a GHG source for storage in a
sink.
GHG credit. GHG offsets can be converted into GHG credits when used to meet
an externally imposed target. A GHG credit is a convertible and transferable in-
strument usually bestowed by a GHG program.
GHG offset. Offsets are discrete GHG reductions used to compensate for (i.e., off-
set) GHG emissions elsewhere, for example to meet a voluntary or mandatory
GHG target or cap. Offsets are calculated relative to a baseline that represents a
hypothetical scenario for what emissions would have been in the absence of the
mitigation project that generates the offsets. To avoid double counting, the reduc-
tion giving rise to the offset must occur at sources or sinks not included in the tar-
get or cap for which it is used.
GHG program. A generic term used to refer to any voluntary or mandatory inter-
national, national, sub-national, government or non-governmental authority that
registers, certifies, or regulates GHG emissions or removals outside the company,
e.g., CDM, EU ETS, CCX, and CCAR.
GHG project. A specific project or activity designed to achieve GHG emission

reductions, storage of carbon, or enhancement of GHG removals from the atmos-
DRAFT G-4
Glossary
phere. GHG projects may be stand-alone projects, or specific activities or ele-

ments within a larger non-GHG related project.
GHG Protocol calculation tools. A number of cross-sector and sector-specific

tools that calculate GHG emissions on the basis of activity data and emission fac-
tors (available at www.ghgprotocol.org).
GHG Protocol Initiative. A multi-stakeholder collaboration convened by WRI

and WBCSD to design, develop, and promote the use of accounting and reporting
standards for business. It comprises of two separate but linked standards—the
GHG Protocol Corporate Accounting and Reporting Standard and the GHG Pro-
tocol Project Quantification Standard.
GHG Protocol Project Quantification Standard. An additional module of the

GHG Protocol Initiative addressing the quantification of GHG reduction projects.
This includes projects that will be used to offset emissions elsewhere and/or gen-
erate credits. More information available at www.ghgprotocol.org.
GHG Protocol sector specific calculation tools. A GHG calculation tool that ad-
dresses GHG sources that are unique to certain sectors, e.g., process emissions
from aluminum production (see also GHG Protocol Calculation tools).
GHG public report. Provides, among other details, the reporting company’s
physical emissions for its chosen inventory boundary.
GHG registry. A public database of organizational GHG emissions and/or project

reductions. For example, the DOE 1605b Voluntary GHG Reporting Program,
CCAR, World Economic Forum’s Global GHG Registry. Each registry has its
own rules regarding what and how information is reported.
GHG removal. Absorbtion or sequestration of GHGs from the atmosphere.
GHG sink. Any physical unit or process that stores GHGs; usually refers to forests
and underground/deep sea reservoirs of CO 2 .
GHG source. Any physical unit or process which releases GHG into the atmos-
phere.
GHG trades. All purchases or sales of GHG emission allowances, offsets, and
credits.
Global warming potential. A factor describing the radiative forcing impact (de-
gree of harm to the atmosphere) of one unit of a given GHG relative to one unit of
CO 2 .
Group company/subsidiary. The parent company has the ability to direct the fi-
nancial and operating policies of a group company/subsidiary with a view to gain-
ing economic benefits from its activities.
DRAFT G-5
Heating value. The amount of energy released when a fuel is burned completely.
Care must be taken not to confuse higher heating values, used in the United States
and Canada, and lower heating values, used in all other countries (for further de-
tails refer to the calculation tool for stationary combustion available at
www.ghgprotocol.org).
Indirect GHG emissions. Emissions that are a consequence of the operations of

the reporting company, but occur at sources owned or controlled by another com-
pany.
Insourcing. The administration of ancillary business activities, formally per-

formed outside of the company, using resources within a company.
Intensity ratios. Ratios that express GHG impact per unit of physical activity or
unit of economic value (e.g., tonnes of CO 2 emissions per unit of electricity gen-
erated). Intensity ratios are the inverse of productivity/efficiency ratios.
Intensity target. A target defined by reduction in the ratio of emissions and a busi-
ness metric over time e.g., reduce CO 2 per tonne of cement by 12 percent be-
tween 2000 and 2008.
Intergovernmental Panel on Climate Change.International body of climate

change scientists. The role of the IPCC is to assess the scientific, technical and
socio-economic information relevant to the understanding of the risk of human-
induced climate change (www.ipcc.ch).
Inventory. A quantified list of an organization’s GHG emissions and sources.
Inventory boundary. An imaginary line that encompasses the direct and indirect
emissions that are included in the inventory. It results from the chosen organiza-
tional and operational boundaries.
Inventory quality. The extent to which an inventory provides a faithful, true, and
fair account of an organization’s GHG emissions.
Joint Implementation. The JI mechanism was established in Article 6 of the Kyoto

Protocol and refers to climate change mitigation projects implemented between
two Annex 1 countries. JI allows for the creation, acquisition, and transfer of
“ERUs.”
Kyoto Protocol. A protocol to the UNFCCC. Once entered into force, it will re-
quire countries listed in its Annex B (developed nations) to meet reduction targets
of GHG emissions relative to their 1990 levels during the period of 2008–12.
Leakage (secondary effect). Leakage occurs when a project changes the availabil-
ity or quantity of a product or service that results in changes in GHG emissions
elsewhere.
DRAFT G-6
Glossary
Life-cycle analysis. Assessment of the sum of a product’s effects (e.g., GHG

emissions) at each step in its life cycle, including resource extraction, production,
use, and waste disposal.
Material discrepancy. An error (for example from an oversight, omission, or mis-

calculation) that results in the reported quantity being significantly different to the
true value to an extent that will influence performance or decisions. Also known
as material misstatement.
Materiality threshold. A concept employed in the process of verification. It is of-

ten used to determine whether an error or omission is a material discrepancy or
not. It should not be viewed as a de minimus for defining a complete inventory.
Mobile combustion. Burning of fuels by transportation devices such as cars,

trucks, trains, airplanes, ships, etc.
Model uncertainty. GHG quantification uncertainty associated with mathematical

equations used to characterize the relationship between various parameters and
emission processes.
Non-Annex 1 countries. Countries that have ratified or acceded to the UNFCC but
are not listed under Annex 1 and are therefore not under any emission reduction
obligation (see also Annex 1 countries).
Operation. A generic term used to denote any kind of business, irrespective of its
organizational, governance, or legal structures. An operation can be a facility,
subsidiary, affiliated company, or other form of joint venture.
Operating lease. A lease which does not transfer the risks and rewards of owner-
ship to the lessee and is not recorded as an asset in the balance sheet of the lessee.
Leases other than operating leases are capital/financial/finance leases. Consult an
accountant for further detail as definitions of lease types differ between various
accepted financial standards.
Operational boundaries. The boundaries that determine the direct and indirect
emissions associated with operations owned or controlled by the reporting com-
pany. This assessment allows a company to establish which operations and
sources cause direct and indirect emissions, and to decide which indirect emis-
sions to include that are a consequence of its operations.
Organic growth/decline. Increases or decreases in GHG emissions as a result of

changes in production output, product mix, plant closures, and the opening of new
plants.
Organizational boundaries. The boundaries that determine the operations owned

or controlled by the reporting company, depending on the consolidation approach
taken (equity or control approach).
DRAFT G-7
Outsourcing. The contracting out of activities to other businesses.
Parameter uncertainty. GHG quantification uncertainty associated with quantify-

ing the parameters used as inputs to estimation models.
Primary effects. The specific GHG reducing elements or activities (reducing GHG
emissions, carbon storage, or enhancing GHG removals) that the project is in-
tended to achieve.
Process emissions. Emissions generated from manufacturing processes, such as

the CO 2 that arises from the breakdown of CaCO 3 during cement manufacture.
Productivity/efficiency ratios. Ratios that express the value or achievement of a

business divided by its GHG impact. Increasing efficiency ratios reflect a positive
performance improvement, e.g., resource productivity (sales per tonne GHG).
Productivity/efficiency ratios are the inverse of intensity ratios.
Ratio indicator. Indicators providing information on relative performance such as

intensity ratios or productivity/efficiency ratios.
Renewable energy. Energy taken from sources that are inexhaustible, e.g., wind,
water, solar, geothermal energy, and biofuels.
Reporting. Presenting data to internal management and external users such as

regulators, shareholders, the general public, or specific stakeholder groups.
Reversibility of reductions. This occurs when reductions are temporary, or where

removed or stored carbon may be returned to the atmosphere at some point in the
future.
Rolling base year. The process of shifting or rolling the base year forward by a
certain number of years at regular intervals of time.
Scientific uncertainty. Uncertainty that arises when the science of the actual emis-
sion and/or removal process is not completely understood.
Scope. Defines the operational boundaries in relation to indirect and direct GHG
emissions.
Scope 1 inventory. A reporting organization’s direct GHG emissions.
Scope 2 inventory. A reporting organization’s emissions associated with the gen-

eration of electricity, heating/cooling, or steam purchased for own consumption.
Scope 3 inventory. A reporting organization’s indirect emissions other than those

covered in scope 2.
DRAFT G-8
Glossary
Scope of works. An up-front specification that indicates the type of verification to

be undertaken and the level of assurance to be provided between the reporting
company and the verifier during the verification process.
Secondary effects (leakage). GHG emissions changes resulting from the project
not captured by the primary effect(s). These are typically the small, unintended
GHG consequences of a project.
Sequestered atmospheric carbon. Carbon removed from the atmosphere by bio-

logical sinks and stored in plant tissue. Sequestered atmospheric carbon does not
include GHGs captured through carbon capture and storage.
Significance threshold. A qualitative or quantitative criteria used to define a sig-

nificant structural change. It is the responsibility of the company/verifier to de-
termine the “significance threshold” for considering base year emissions
recalculation. In most cases, the “significance threshold” depends on the use of
the information, the characteristics of the company, and the features of structural
changes.
Stationary combustion. Burning of fuels to generate electricity, steam, heat, or

power in stationary equipment such as boilers, furnaces, etc.
Structural change. A change in the organizational or operational boundaries of a

company that result in the transfer of ownership or control of emissions from one
company to another. Structural changes usually result from a transfer of owner-
ship of emissions, such as mergers, acquisitions, divestitures, but can also include
outsourcing/insourcing.
Target base year. The base year used for defining a GHG target, e.g., to reduce
CO 2 emissions 25 percent below the target base year levels by the target base year
2000 by the year 2010.
Target boundary. The boundary that defines which GHG’s, geographic opera-
tions, sources, and activities are covered by the target.
Target commitment period. The period of time during which emissions perform-
ance is actually measured against the target. It ends with the target completion
date.
Target completion date. The date that defines the end of the target commitment
period and determines whether the target is relatively short term or long term.
Target double counting policy. A policy that determines how double counting of
GHG reductions or other instruments, such as allowances issued by external trad-
ing programs, is dealt with under a GHG target. It applies only to companies that
engage in trading (sale or purchase) of offsets or whose corporate target bounda-
ries interface with other companies’ targets or external programs.
DRAFT G-9
Tonnes. One metric ton, with a mass equal to 1,000 kilograms, or 2,205 pounds.
Uncertainty.
1. Statistical definition: A parameter associated with the result of a meas-

urement that characterizes the dispersion of the values that could be rea-
sonably attributed to the measured quantity (e.g., the sample variance or
coefficient of variation).
2. Inventory definition: A general and imprecise term which refers to the

lack of certainty in emissions-related data resulting from any causal factor,
such as the application of non-representative factors or methods, incom-
plete data on sources and sinks, lack of transparency, etc. Reported uncer-
tainty information typically specifies a quantitative estimate of the likely
or perceived difference between a reported value and a qualitative descrip-
tion of the likely causes of the difference.
United Nations Framework Convention on Climate Change. Signed in 1992 at the

Rio Earth Summit, the UNFCCC is a milestone Convention on Climate Change
treaty that provides an overall framework for international efforts to (UNFCCC)
mitigate climate change. The Kyoto Protocol is a protocol to the UNFCCC.
Value chain emissions. Emissions from the upstream and downstream activities
associated with the operations of the reporting company.
Verification. An independent assessment of the reliability (considering complete-

ness and accuracy) of a GHG inventory.
DRAFT G-10

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Introduction

THE GREENHOUSE GAS PROTOCOL INITIATIVE

 GHG Protocol Corporate Accounting and Reporting Standard

 GHG Protocol Project Quantification Standard (Project Standard),

The first edition of the Corporate Standard, published in September 2001,

Widespread adoption of the Corporate Standard can be attributed to the

PUBLIC SECTOR PROTOCOL

 To help public organizations prepare a GHG inventory that represents

 To simplify and reduce the costs of compiling a GHG inventory

 To facilitate participation in voluntary and mandatory GHG reporting

All stakeholders benefit from converging on a common standard, which

GHG ACCOUNTING IN THE PUBLIC SECTOR

In short, public sector organizations may choose to conduct inventories to

 Identifying energy and cost reduction opportunities

 Gaining relevant GHG inventory experience to inform public policy

WHO SHOULD USE THIS STANDARD?

To provide relevant guidance for these situations, this document draws

This document also serves as a source of information for policymakers

For example, stakeholders often highlighted costs saved through the

However, the GHG Protocol Initiative encourages government agencies at the

Because GHG programs often have specific accounting and reporting

 Voluntary GHG reduction programs, e.g., the World Wildlife Fund

 GHG registries, e.g., The Climate Registry, the Eastern Climate

 National and regional industry initiatives, e.g., the New Zealand

 Sector-specific protocols developed by a number of industry

 Initiatives established in other countries such as Mexico, China, Brazil,

 Mandated compliance schemes, e.g., regional (RGGI, Western Climate

GHG CALCULATION TOOLS

To complement the standard and guidance provided here, WRI offers a

REPORTING IN ACCORDANCE WITH THE PUBLIC

However, when regulatory requirements are not consistent with GHG

FREQUENTLY ASKED QUESTIONS

 How do I deal with complex organizational structures and shared GHG

 Which indirect emissions should I report? Chapter 4

 How do I account for and report outsourced and leased operations?

 What is a base year and why do I need one? Chapter 5

 My emissions change with alterations to agency structure. How do I

 How do I identify and calculate my organization’s emission sources?

 What data collection activities and data management issues do my

 What determines the quality and credibility of my emissions

 What information should be included in a GHG public emissions

 What data must be available to obtain external verification of the

 What is involved in setting an emissions target and how do I report

GHG accounting and reporting shall be based on the following principles:

 Relevance: Ensure the GHG inventory appropriately reflects the GHG

 Completeness: Account for and report on all GHG emission sources

 Consistency: Use consistent methodologies to allow for meaningful

 Transparency: Address all relevant issues in a factual and coherent

 Accuracy: Ensure that the quantification of GHG emissions is

 Organizational structures: Control (operational and financial),

 Operational boundaries: On-site and off-site activities, shared

 Operational context: Nature of activities, geographic locations,

More information on defining an appropriate inventory boundary is provided

In the context of verification, a “materiality threshold” is often used to

More information on completeness is provided in Chapters 7(Managing

More information on consistency is provided in Chapters 5 (Tracking

More information on transparency is provided in Chapters 9 (Reporting

More information on accuracy is provided in Chapter 7 (Managing Inventory