Scope 4 Emissions
Kaan Vatansever // 16.04.2024
Scope 4 emissions, also known as ‘Avoided Emissions’, are a new concept in the industry. In the evolving landscape of corporate sustainability, the concept of ‘avoided emissions’ or Scope 4 emissions is gaining importance alongside the traditional greenhouse gas emission categories defined by the Greenhouse Gas Protocol (GHG Protocol). So what are these scopes?
- Scope 1: These are direct emissions from sources owned or controlled by the company, such as emissions from company vehicles and production facilities.
- Scope 2: These emissions come from indirect sources, specifically the production of purchased electricity, steam, heating and cooling used by the company.
- Scope 3: This category includes all other indirect emissions occurring throughout the company’s value chain, both upstream (for example, from the production of purchased materials) and downstream (for example, from the use of sold products).
- Scope 4: These emissions are defined as reductions in greenhouse gas emissions that occur outside a product’s life cycle or value chain, but as a direct result of using that product/service.
Scope 1, 2 and 3 focus on emissions produced directly and indirectly by the company’s operations, while Scope 4 highlights the positive environmental impact of its products or services. Calculating Scope 4 emissions is not a one-time task. Continuous monitoring and updating is required.
Why ‘Avoid’ Over ‘Reduce’?
A grim reality that we are increasingly having to face is that even with our current optimistic Net Zero targets in place at both organizational and national levels, the rate at which we are burning through our carbon budget means that we are still on a trajectory above the 2 degrees Celsius warming scenario and have little chance of staying below 1.5 degrees.
We have lost the luxury of time and unfortunately cannot continue with our current ‘reduction’ mindset, from the ubiquitous “plant a tree” initiatives to the race to produce complicated carbon capture technologies. We now have to prioritize ‘avoidance’ over ‘reduction’ and ensure that we prevent emissions from being released from the outset. This additional layer of carbon reporting will encourage organisations to both use carbon-saving products and methodologies, as well as innovate them. When used in conjunction with the reduction of direct and indirect emissions, organizations can truly understand their impacts, undergo thorough scenario analysis, and effectively strategize their sustainable growth.
Why Should We Report Avoided Emissions?
The stark reality is that even with the achievement of the most optimistic net zero targets currently in place, we would still be above the 2 degrees warming scenario (and much higher than the 1.5 degrees scenario) required by 2030. Therefore, there’s a huge amount of innovation required to increase progress to achieve such targets.
The current reporting approach is focused on an organisation’s progress in reducing emissions. However, there may be situations where the development of new products or processes temporarily increases a company’s emissions but would reduce the emissions associated with the use of such products in the long term.
For example, let’s say a company that manufactures laundry machines decides to invest resources into research and development to improve the efficiency or sustainability of their products during the usage phase. While this innovation is likely to increase the company’s emissions during the time it is being developed through potentially the need to develop a new manufacturing plant or factory, there is likely to be a larger volume of emissions avoided during the usage phase due to the increased efficiency of the product.
Best Practices
- If a company produces an energy-efficient appliance, the emissions consumers save by using that appliance instead of a less efficient model are considered Scope 4 emissions.
- Low-temperature detergents, fuel-saving tires, or teleconferencing equipment and services may be provided. These products help reduce overall greenhouse gas emissions through their efficiency or functionality. Teleconferencing services reduce the need for travel and prevent emissions that would otherwise occur.
- If the company innovates to create a more energy-efficient packaging machine, the average CO2 emissions per unit of packaging will decrease. However, the company’s total Scope 3 emissions (category 11, which includes the use of products sold) may increase due to higher sales. In this scenario, reduced emissions per use of the packaging machine (due to increased efficiency) fall within Scope 4 emissions.
What Are the Main Challenges of Measuring Scope 4 Emissions?
- Measurement Difficulties:
Measuring avoided emissions requires many assumptions and complex calculations that may require additional market research. For example, companies will need to determine how many consumers were using the original product and if consumers are likely to replace it with a new product. Poor data can also lead to even bigger issues if it’s used for decision-making regarding products or other investments.
- Uncertainty:
For example, second-hand clothing sellers may assume that selling these clothes avoids the purchase of a new garment. However, consumers may still consume more second-hand clothes overall since they’re cheaper than buying new ones. Although second-hand clothes get more use in their overall life cycle, they may not last as long as new clothes.
- High Upfront Costs:
Creating and testing for more efficient products requires a lot of resources for research and development, testing, and other upfront costs.
- Lack of Standardization:
There is currently no universally accepted standard for calculating avoided emissions.
- Greenwashing Potential:
All of the above difficulties can result in inaccurate data and overestimations of a company’s impact. Although many companies have positive intentions, it’s highly likely for companies to make false claims as a result of erroneous or incomplete data. This reflects poorly on the company and can damage trust with investors, customers, employees, and other stakeholders.
Conslusion
The bottom line is, there’s no need to panic and start reporting on Scope 4 emissions tomorrow but given the fast pace of industry standards and best practices, it’s essential that you start thinking about how and when you can integrate Scope 4 emissions into your reporting structure. By considering all the facts about the emissions Scope 4 prevents, you can now take the necessary steps to accurately report the emissions under your control. The business environment is constantly evolving according to our global pressures, and we must adapt!
Resources
- https://www.rio.ai/blog/scope-4-emissions
- https://plana.earth/glossary/scope-4-emissions
- https://www.persefoni.com/blog/scope-4-emissions
- https://www.preoptima.com/the-carbon-source/scope-4-avoided-emissions
- https://net0.com/blog/scope-4
