Greenhouse gas (GHG)

DEFINITION: An atmospheric gas, such as water vapour, carbon dioxide, methane and nitrous oxide that absorbs and emits radiation produced by solar warming of the Earth’s surface. Human activities, primarily the burning of fossil fuels and clearing of forests, have led to a rise in greenhouse gas emissions, causing global warming.

See also: Carbon capture and storage (CCS)

See also: Carbon footprint

See also: Fossil fuels

What exactly are greenhouse gases?

Greenhouse gases (GHGs) refer to the compounds in the atmosphere that are capable of absorbing and trapping heat. While GHGs allow sunlight, or shortwave radiation, to pass through the atmosphere, any energy and heat that is reflected by the earth’s surface is captured by these gases, which in turn increases global temperatures.

GHGs are responsible for the greenhouse effect, which has led to the acceleration of global warming and climate change. As more GHGs enter the atmosphere, the impacts of global warming are accelerated.

There are numerous GHGs, but the most significant compounds in the atmosphere are water vapour (H2O), carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O). While water vapour has a short residence time and is removed from the atmosphere in a few days, the other gases can take many years to leave.

CO2 accounts for around three quarters of these gases present in the atmosphere, although methane is around 21 times more efficient at absorbing heat, and therefore has a much more potent “global-warming potential” (GWP).

Fluorinated gases, such as hydrofluorocarbons and perfluorocarbons, are created during industrial processes and are also considered GHGs. Although small in concentration, they also have high GWP. Gases once used as refrigerants or in aerosols, such as chlorofluorocarbons (CFCs), are also GHGs.

Where do greenhouse gases come from?

While some aspects of global warming occur through natural processes, human activity is widely acknowledged as the reason for almost all GHG increases in the last 150 years. The majority of GHGs are emitted through industrial process, with the burning of fossil fuels for energy, heat and transportation considered the primary factor.

The Industrial Revolution is viewed as key era for the increase in the amount of atmospheric CO2 released. Global concentrations of CO2 in the atmosphere have increased 100 times faster since the Industrial Revolution, doubling from less than 200 parts per million (ppm) during ice ages to more than 400 ppm today. It is believed that CO2 levels will not fall below the 400-ppm milestone in our lifetime.

Some GHGs like methane are predominantly produced through the agricultural process, such as livestock management and farming. But gases like CO2 can also be released through actions such as deforestation – the second largest cause of CO2 release.

In Europe, electricity, gas, steam and air conditioning supply activities were the largest cause of GHG emissions, accounting for 26% amongst industries and households. Manufacturing, water services, transport and agriculture were also large emitters.

It is worth noting the gases such as CFCs have largely been phased-out of use in refrigeration by an International Agreement.

Why are greenhouse gases important?

While the greenhouse effect is essential to safeguarding the survival of life on Earth, elevated numbers of GHGs in the atmosphere is contributing to sever climate change impacts.

Businesses have a sense of duty to help nations reduce GHGs in line with the goals of the Paris Agreement, the international climate treaty signed by nearly 200 nations. The Paris Agreement sets a target to keep global temperatures “well below” 2C above pre-industrial times and endeavour to limit them to 1.5C.

This would require nations to limit GHG emissions from human activity to natural levels, which would allow trees, soil and oceans to absorb them naturally. Current figures suggest that it will take just five years of CO2 emissions at current levels to use up the carbon budget for a 66% chance of keeping global temperature rise below 1.5C. In fact, research suggests that there is a 5% chance of actually reaching the goals of the Paris Agreement.

The aftermath of the ratification of the Paris Agreement has also changed how investors and stakeholders view company progress. A growing number of initiatives, such as the CDP, are showing that businesses that fail to reduce or at least disclose GHG levels, are likely to miss out on investor backing.

How can greenhouse gas emissions be measured?

Since October 2013 the Companies Act regulations has required all UK quoted companies to report on their greenhouse gas emissions as part of their annual Directors’ Report. In order to accurately report on emissions, businesses must convert “activity” data, covering aspects such as transport distance, energy and fuel use, and waste disposals into carbon emissions.

web based tool is available to help with conversion factors, and a number of private sector companies specialise in consulting on carbon reporting. It is also worth noting that GHG Protocol Scope guidance allows companies reporting on emissions to gain recognition for using renewables.

The majority of companies will report on operational emissions, otherwise known Scope 1 &2. This accounts for all of the emissions the occur within a company’s operations and practices.

However, some firms are beginning to report on the activities within their supply chains and consumers, which covers Scope 3 emissions. These are increasingly called for in voluntary schemes such as the GRI and CDP, and can help businesses uncover current and future risks and unlock cost savings.

How can a business reduce greenhouse gas emissions?

There are numerous ways for businesses to reduce emissions, many of which rely on reducing reliance on resources. Companies should start by running materiality tests to find the areas where they have the biggest scope to reduce emissions. For example, IT firms would most likely find reductions in energy consumption to contribute to GHG reductions.

Initiatives such as avoiding waste to landfill by recycling or reusing can avoid GHG emissions. Introducing energy-efficiency measures for electronic appliances and systems and switching to renewable energy contracts will also improve GHG intensity.

Reducing transport mileage, including amongst staff members, and efficient use of hot water systems can also provide benefits.

For companies attempting to reduce emissions during a period of forecasted business expansion, offsetting allows them to balance the emissions they produce, by funding equivalent CO2 savings elsewhere. Planting trees is the most popular offsetting method, but companies should seek third-party validation and assurances beforehand.

How should a business report on greenhouse gas emissions?

There is universal methodology for carbon reporting, but using recognised independent standards, such as the GHG Protocol Corporate Standard and being transparent with the data are desirable for effective footprint accounting.

Reporting on GHG emissions should cover emissions from all activities across the globe, in which they are responsible or accountable for. All relevant greenhouse gases should be included.

Regulation requires that companies add disclosed emissions data from the previous year alongside new emissions data for the present year.

Companies have a choice in how to express their GHG emissions. An intensity ratio can be used to highlight absolute emissions, or emissions can be reported relative to a unit such as sales revenue or floor space.

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