The application of consequential methods to corporate greenhouse gas accounting.
Lead Research Organisation:
University of Edinburgh
Department Name: Business School
Abstract
The title of the research is "The application of consequential methods to corporate greenhouse gas accounting". Carbon accounting involves measuring the amount of greenhouse gases emitted to the atmosphere, or estimating the effectiveness of decisions aimed at reducing emissions. There is a growing interest in carbon accounting as governments, companies, and consumers seek to understand their contribution to climate change, and look for ways of reducing that impact. Carbon accounting is important for understanding how much we are emitting, and how effective we are at reducing emissions.
Companies undertaking carbon accounting currently use what can be described as an "attributional" approach. This approach aims to quantify the emissions from a company's own operations, and from its supply chain. However, such methods do not always capture the total greenhouse gas impacts caused by a company's decisions or actions, and because of this it is possible that businesses will make poor decisions (i.e. they may undertake an action with the intention of reducing emissions, but may actually increase emissions).
An alternative form of carbon accounting is called "consequential" accounting, which aims to estimate the total change in greenhouse gas emissions caused by a decision or action. At present consequential methods have not been widely recognised or applied for informing corporate decision-making as corporate carbon accounting is dominated by attributional methods. This research project aims to explore the applicability consequential methods for corporate decision-making by applying a number of different consequential methods to business decision case studies.
The research will also explore the difference between attributional and consequential results in order to see if attributional methods give a reasonable estimate of total changes in emissions, or whether there are large changes in emissions which are not captured by conventional attributional carbon accounting practices (and therefore whether current practice is not sufficient for supporting effective decision-making).
Companies undertaking carbon accounting currently use what can be described as an "attributional" approach. This approach aims to quantify the emissions from a company's own operations, and from its supply chain. However, such methods do not always capture the total greenhouse gas impacts caused by a company's decisions or actions, and because of this it is possible that businesses will make poor decisions (i.e. they may undertake an action with the intention of reducing emissions, but may actually increase emissions).
An alternative form of carbon accounting is called "consequential" accounting, which aims to estimate the total change in greenhouse gas emissions caused by a decision or action. At present consequential methods have not been widely recognised or applied for informing corporate decision-making as corporate carbon accounting is dominated by attributional methods. This research project aims to explore the applicability consequential methods for corporate decision-making by applying a number of different consequential methods to business decision case studies.
The research will also explore the difference between attributional and consequential results in order to see if attributional methods give a reasonable estimate of total changes in emissions, or whether there are large changes in emissions which are not captured by conventional attributional carbon accounting practices (and therefore whether current practice is not sufficient for supporting effective decision-making).
Planned Impact
Who will benefit from the research? The principal academic beneficiaries will be researchers involved in the study of corporate carbon accounting, and carbon accounting more generally. The research may also benefit researchers involved in the study of financial accounting, and also other forms of social and environmental accounting.
Other beneficiaries are likely to include: business managers involved in decision-making related to corporate climate change mitigation policies; institutional investors; environmental non-governmental organisations involved in campaigning for responsible corporate behaviour in relation to climate change; carbon accounting standard developers (such as the World Resources Institute, ISO, BSi, and Climate Disclosure Standards Board); and sustainability consultancies and service providers.
How will they benefit from the research? It is anticipated that academic beneficiaries will benefit from the introduction of new concepts which capture a fundamental distinction between different forms of carbon accounting. This should allow a new understanding of the different forms of carbon accounting, and the uses for which they are appropriate. This distinction should also open up new areas of research related to quantifying the total greenhouse gas impacts of business-decisions.
Other beneficiaries should benefit from a greater awareness of the choice of consequential carbon accounting methods that are available for informing business decisions. There will also be benefits from greater awareness of the limitations of purely attributional accounting, and the need for consideration of system-wide impacts. Ultimately there should be benefits through improved business decision-making, in terms of selecting options which most effectively reduce or avoid greenhouse gas emissions.
Other beneficiaries are likely to include: business managers involved in decision-making related to corporate climate change mitigation policies; institutional investors; environmental non-governmental organisations involved in campaigning for responsible corporate behaviour in relation to climate change; carbon accounting standard developers (such as the World Resources Institute, ISO, BSi, and Climate Disclosure Standards Board); and sustainability consultancies and service providers.
How will they benefit from the research? It is anticipated that academic beneficiaries will benefit from the introduction of new concepts which capture a fundamental distinction between different forms of carbon accounting. This should allow a new understanding of the different forms of carbon accounting, and the uses for which they are appropriate. This distinction should also open up new areas of research related to quantifying the total greenhouse gas impacts of business-decisions.
Other beneficiaries should benefit from a greater awareness of the choice of consequential carbon accounting methods that are available for informing business decisions. There will also be benefits from greater awareness of the limitations of purely attributional accounting, and the need for consideration of system-wide impacts. Ultimately there should be benefits through improved business decision-making, in terms of selecting options which most effectively reduce or avoid greenhouse gas emissions.
Publications
Brander M
(2015)
Response to "Attributional life cycle assessment: is a land-use baseline necessary?"-appreciation, renouncement, and further discussion
in The International Journal of Life Cycle Assessment
Brander M
(2019)
Coupling attributional and consequential life cycle assessment: A matter of social responsibility
in Journal of Cleaner Production
Brander M
(2016)
Conceptualising attributional LCA is necessary for resolving methodological issues such as the appropriate form of land use baseline
in The International Journal of Life Cycle Assessment
Brander M
(2015)
Corporate Carbon and Climate Accounting
Brander M
(2016)
Transposing lessons between different forms of consequential greenhouse gas accounting: lessons for consequential life cycle assessment, project-level accounting, and policy-level accounting
in Journal of Cleaner Production
Brander M
(2017)
Comparative analysis of attributional corporate greenhouse gas accounting, consequential life cycle assessment, and project/policy level accounting: A bioenergy case study
in Journal of Cleaner Production
Brander M
(2018)
Creative accounting: A critical perspective on the market-based method for reporting purchased electricity (scope 2) emissions
in Energy Policy
Brander M
(2013)
Global protocol for community scale greenhouse gas emissions: a trial application in the West Highlands of Scotland
in Greenhouse Gas Measurement and Management
Chalmers N
(2015)
The implications of empirical and 1:1 substitution ratios for consequential LCA: using a 1 % tax on whole milk as an illustrative example
in The International Journal of Life Cycle Assessment
Description | The key findings from the work funded through this award are: 1. The attributional-consequential distinction, which is a distinction within the field of life cycle assessment, can be used more widely to understand the nature and appropriate use of other types of greenhouse gas accounting methods, such as corporate GHG inventories and national-level GHG inventories; 2. The GHG reductions from using bioenergy are highly uncertain and any benefits may take decades to materialise, if they are achieved at all; 3. The market-based method for reporting electricity emissions is highly unlikely to help reduce GHG emissions, and using the method undermines the accuracy of GHG accounting information. |
Exploitation Route | The attributional-consequential distinction may be applicable more broadly to understand other types of environmental accounting methods. The research on the market-based method can be extended to look at whether there are any circumstances in which contractual arrangements for purchasing renewable electricity can help to increase the amount of renewable generation. |
Sectors | Energy Environment Government Democracy and Justice Other |
URL | https://cbcc.business-school.ed.ac.uk/impact-and-collaboration/renewable-energy-purchasing/ |
Description | My findings have been used by the Department for Food, Environment and Rural Affairs (Defra) in drafting their updated guidance for corporate greenhouse gas accounting. The research has also been used in the Department for Business, Energy and Industrial Strategy's guidance for Streamlined Energy and Carbon Reported (published in January 2019 and updated in March 2019). The findings are also being used in the revision of three international standards for GHG accounting, ISO 14064-1 for organisational-level accounting, ISO 14064-2 for project-level accounting, and ISO 14067 for product carbon footprinting. One of the key issues addressed by the research is how companies and organisations measure their GHG emissions associated with electricity consumption. This is an extremely important issue as ~25% of global GHG emissions are from electricity generation, and misreporting these emissions undermines efforts to mitigate climate change. The research shows that current GHG accounting practice is not accurate or relevant for optimal decision-making, and provides recommendations for improving current international GHG accounting standards and practice. The revised ISO standards are now published (ISO 14064-1 was published in January 2019), and the research is therefore expected to influence the real-world practice/actions of companies and organisations from that point onwards. |
First Year Of Impact | 2014 |
Sector | Environment,Other |
Impact Types | Societal Policy & public services |
Description | Member of Advisory Committee for the Woodland Carbon Code |
Geographic Reach | National |
Policy Influence Type | Participation in a guidance/advisory committee |
Impact | Member of the Advisory Committee for the Woodland Carbon Code (WCC), which is a voluntary code for woodland creation projects. The WCC sets out requirements and methods for projects to make claims about the amount of carbon dioxide they sequester. |
URL | http://www.forestry.gov.uk/carboncode |
Description | Member of peer review panel for Defra/DECC conversion factors for corporate GHG reporting |
Geographic Reach | National |
Policy Influence Type | Membership of a guideline committee |
Impact | The main impact is the rejection of a market-based approach to reporting the emissions from electricity consumption in corporate inventories. The market-based approach creates highly inaccurate GHG accounts and would likely reduce the amount of corporate action that genuinely reduces GHG emissions (the main cause of climate change). |
URL | http://www.ukconversionfactorscarbonsmart.co.uk/ |
Description | Guardbridge Energy Centre Carbon Accounting and Reporting Project |
Organisation | University of St Andrews |
Country | United Kingdom |
Sector | Academic/University |
PI Contribution | I provided the technical quantification of the greenhouse gas emissions caused by a bioheat plant in Scotland. |
Collaborator Contribution | They studied the governance and institutional arrangements that led to the development of a bioheat plant in Scotland. |
Impact | The project will produce a report for the developer of the bioheat plant; a journal article (submitted) Comparative Analysis of Attributional Corporate Greenhouse Gas Accounting, Consequential Life Cycle Assessment, and Project/Policy Level Accounting: a Bioenergy Case Study; and is expected to result in further journal articles. |
Start Year | 2014 |
Description | Visiting scholarship at Macquarie University, Sydney |
Organisation | Macquarie University |
Country | Australia |
Sector | Academic/University |
PI Contribution | Collaborative research with academics at Macquarie University - focusing on social and environmental accounting methods, and ethical theory. Duration 4 months. |
Collaborator Contribution | Collaborative research with academics at Macquarie University - focusing on social and environmental accounting methods, and ethical theory. |
Impact | There are no outcomes so far, but we intend to publish at least one journal article. |
Start Year | 2016 |
Description | Development of a new consequential standard for greenhouse gas accounting |
Form Of Engagement Activity | A formal working group, expert panel or dialogue |
Part Of Official Scheme? | No |
Geographic Reach | International |
Primary Audience | Professional Practitioners |
Results and Impact | The draft standard has developed awareness across distinct fields of greenhouse gas accounting practice, e.g. life cycle assessment, project accounting, and policy assessment. Too early at this stage. |
Year(s) Of Engagement Activity | 2015 |
Description | Input to EU research project on sustainable bioenergy |
Form Of Engagement Activity | Participation in an activity, workshop or similar |
Part Of Official Scheme? | No |
Geographic Reach | International |
Primary Audience | Policymakers/politicians |
Results and Impact | I provided input to a EU-funded research project on the sustainability of biomass imported from the US. It is not yet known what the impact of the contribution is yet. |
Year(s) Of Engagement Activity | 2015 |
Description | International expert on ISO working groups for greenhouse gas accounting |
Form Of Engagement Activity | A formal working group, expert panel or dialogue |
Part Of Official Scheme? | Yes |
Geographic Reach | International |
Primary Audience | Professional Practitioners |
Results and Impact | My engagement has led to a number of revisions to the international standard, which should have wide-spread impacts on how project-level greenhouse gas accounting is undertaken. The revised standard is now applicable for assessing the impacts of projects, both before and after project implementation. |
Year(s) Of Engagement Activity | 2014,2015 |
Description | Peer Review Panel for Defra/DECC Company Emission Factors |
Form Of Engagement Activity | A formal working group, expert panel or dialogue |
Part Of Official Scheme? | Yes |
Geographic Reach | International |
Primary Audience | Professional Practitioners |
Results and Impact | Improved greenhouse gas accounting practice. As a result of my engagement Defra/DECC's guidance on company greenhouse gas reporting does not permit the use of contractual emissions factors, which would otherwise undermine the accuracy and robustness of corporate greenhouse gas accounts. |
Year(s) Of Engagement Activity | 2013,2014,2015 |
URL | http://www.ukconversionfactorscarbonsmart.co.uk/ |
Description | Teaching MSc course on carbon accounting |
Form Of Engagement Activity | A talk or presentation |
Part Of Official Scheme? | No |
Geographic Reach | International |
Primary Audience | Professional Practitioners |
Results and Impact | I have provided lectures on carbon accounting to postgraduate students on MSc programmes in Carbon Finance and Carbon Management. A large number of students have subsequently undertaken dissertations related to carbon accounting, and entered careers in industry with new knowledge and skills. |
Year(s) Of Engagement Activity | 2013 |
URL | http://www.drps.ed.ac.uk/15-16/dpt/cxcmse11151.htm |
Description | Technical Working Group , GHG Protocol Policy and Action Standard |
Form Of Engagement Activity | A formal working group, expert panel or dialogue |
Part Of Official Scheme? | Yes |
Geographic Reach | International |
Primary Audience | Policymakers/politicians |
Results and Impact | The development of a new international standard for quantifying the change in greenhouse gas emissions caused by policies and actions. The standard has been piloted by approximately 20 governments/organisations globally. Once the final version of the standard is published it should used extensively, and help to inform/appraise climate change policy decision-making. |
Year(s) Of Engagement Activity | 2013,2014 |
URL | http://www.ghgprotocol.org/policy-and-action-standard |