Climate Change & GHGs

Overview

The Earth’s climate is changing. We already experience the effects of climate change on human and natural systems. Temperatures are rising, snow and rainfall patterns are shifting, and more extreme weather events are happening. Many of these observed changes are linked to rising levels of carbon dioxide and other greenhouse gas (GHG) emissions in our atmosphere that are caused by human activities.

As climate change continues, the effects will neither be uniform nor at the same pace. Temperature highs and lows will become more extreme. As large weather systems tend to transport heat toward the poles, there will be a more rapid rate of warming at higher latitudes, such as the arctic, compared to lower latitudes. Extreme weather patterns such as heavy snowstorms, hurricanes, and tornadoes will increase in number, duration, and intensity in some locations Sea levels will rise and, in some locations, coastal flooding will become more pronounced and prolonged. Droughts will occur in more places and last longer; there will be food and water shortages. And we will experience longer and more intense wildfire seasons.

Despite the wealth of scientific evidence, climate change can be an uncomfortable subject in some business settings. Until recently, it was still considered controversial and political in many companies. Fewer and fewer businesses hold this view as the scientific evidence has accumulated, investor pressure on businesses to take action has mounted, and the increasing physical and economic effects of climate change has been felt in communities in the US and abroad.

The IPCC recognizes that it is crucial to make changes that will limit global warming. In its recent Fifth Assessment Report (AR5) the IPCC set a carbon budget that requires the world to cut greenhouse gas emissions by 40-70% of 2010 levels before 2050. The IPCC estimate for this amount is about 1 trillion metric tons of CO2e. As of 2011, we had already burned through about half of this budget.

Resources

• Short Answers to Hard Questions About Climate Change
• Why Carbon Pricing Matters: A guide for implementation

Business risks

There’s a lot of work to do. Businesses have ample reasons to be a part of how we meet the challenge of climate change. Maintaining business continuity in a climate-changing world means understanding potential disruptions. These will occur in the environmental, social, and economic systems in which businesses operate. In present day terms, for example, companies are at risk if they fail to account for potential extreme weather events related to climate change, civil unrest related to social discord, and economic stresses based on supply chain disruptions.

Physical damage from storms, flooding, droughts, and heat waves are already costing local economies billions of dollars. Severe weather, flooding, and wildfires can devalue or destroy business assets as well as disrupt supply chains and increase costs. The risks are wide-ranging and not always obvious.

Regardless of where a business is located, these types of physical changes present risks to buildings, fleet, and equipment. On one end of the spectrum, businesses can lose whole facilities and millions of dollars in assets. On the other, facilities can be temporarily shut down and productivity diminished.

All businesses are responsible, to some degree, for the increased greenhouse gases that are contributing to climate change. An organization that does nothing, particularly if it has a large carbon footprint, risks being viewed as an uncaring freeloader at society’s expense with a negative effect on its social license to operate. There can also be direct financial impacts, particularly as governments come under increasing pressure to place a price on GHG emissions. When that happens, businesses that have not worked to reduce or eliminate these emissions will face increased costs greater than those who act now.

Climate change has significant near- and long-term consequences for business operations and profitability. These include increased physical, regulatory, and reputational risks. Some of the business impacts already recorded include:

• Physical property/asset damage
• Reduced labor productivity due to heat and other bad weather
• Changes to regulate GHG emissions and energy usage
• Increased expense of fossil fuels and carbon intensive inputs
• Devaluation of investments with climate change risks

Ignoring these trends can result in loss of current and future business. They translate into significant business risks such as:

• Revenue and/or asset losses
• Increased costs
• Resource scarcity
• Business interruption
• Harm to reputation and brand equity

Between 2012 and 2013 the United States experienced 25 climate- and weather-related disasters that claimed 1,141 lives and each event exceeded $1 billion in damages ($175 billion total). In 2013, companies reporting to the CDP listed bottom line impacts ranging from tens of thousands to hundreds of millions of dollars.

What can businesses do?

We have the power, and responsibility, to take action now to limit global warming and climate change in the future. There are many ways to do this work.

Every business has a carbon footprint and can benefit from doing carbon accounting. Tracking and reducing carbon emissions can result in a market advantage, protecting reputation and delivering cost savings. And when companies expand their carbon footprint accounting to include Scope 3 emissions, they begin to use the influence they wield on their value chain to battle climate change.

Working on a climate action plan can reveal opportunities for new product or service development and market differentiation. For example, these might include low carbon alternatives to existing products, low emissions fuels, or products and services related to the production and distribution of renewable energy. Or they can be adaptive in nature, providing solutions for the changing and emergency conditions of a warming climate that will continue to occur based on current levels of CO2e in the atmosphere.

There could be opportunities for action that is adaptive in nature, providing solutions for the changing and emergency conditions of a warming climate that will continue to occur based on current levels of CO2e in the atmosphere.

Looking at disclosures of companies in a given industry can provide a sense of what to include in the risk assessment and planning processes. All these actions could help to ensure business continuity, mitigating impacts by being better prepared for various types of business disruptions.

More and more stakeholders are interested in understanding how businesses are managing climate change risks and opportunities. Having a climate action plan is increasingly seen as a sign of a forward-thinking company, making the business more appealing to customers and investors.

Measuring a carbon footprint

A company is able to calculate what is referred to as its GHG or carbon footprint by compiling an inventory of greenhouse gases emissions that are attributable to its business activities.

A variety of business activities result in the release of greenhouse gases. Some of the most common sources of greenhouse gas emissions include the production of electricity or steam, stationary combustion of fuel (for boilers, heaters, etc.), the mobile combustion of fuel (to run company fleets or for business travel), refrigerants from chillers, gases in fire suppression equipment, any gas used in or produced during manufacturing processes, and methane from manure and landfills, and off-gassing from refineries.

To determine what your greenhouse gas emissions are, you will need to identify and keep track of each source of emissions within the organization. Unless an organization has special equipment that monitors gas emissions (which is rare), measuring exactly what was emitted over a given year is not possible. Therefore, in most cases, a greenhouse gas inventory is a very detailed estimate of the actual emissions. This estimate is calculated in a certain way that is governed by various standards.

Which gases are measured in a carbon footprint?

There are seven primary greenhouse gases included in most greenhouse gas inventories. They include:

• Carbon Dioxide (CO2),
• Methane (CH4),
• Nitrous Oxide (N2O),
• Sulfur Hexafluoride (SF6),
• Hydrofluorocarbons (HFCs),
• Perfluorocarbons (PFCs), and
• Nitrogen trifluoride (NF3).

Depending on industry and the activities your organization engages in, your carbon footprint will include different amounts of various types of these gases. For some industries, your direct activities may not result in any emissions of some of these gases.

Resources

• GHG Protocol Corporate Accounting and Reporting Standard
• Simplified GHG Emissions Calculator

GHGs reduction areas

A greenhouse gas inventory highlights which aspects of the business create the most emissions. These areas are the best place to start looking for opportunities to reduce emissions. Look at each of the scopes of emissions.

Scope 1 emissions

Scope 1 emissions include emissions from vehicles and equipment owned by the business, on-site landfills or wastewater treatment, and releases from production, processing, and storage of materials. Reduction opportunities in Scope 1 emissions can be found by looking at all owned assets, including owned vehicles. Fleets can be converted to lower emission fuels and/or companies can look to improve logistics to burn less fuel when using vehicles.

Heating buildings can also be big contributors to Scope 1 emissions. Maintaining and upgrading boilers can have a relatively short payback in addition to reducing emissions. For manufacturing companies, upgrading and better maintenance practices for equipment can make substantial differences.

Scope 2 emissions

Scope 2 emissions include purchased electricity, heating, and cooling. This is often the area with a substantial opportunity for reduction. Similar to opportunities in Scope 1, a lot can be done by maintaining and upgrading equipment so that it uses less energy in the first place. Other changes can be made to building systems, such as the installation of motion sensors or programmable thermostats. Behavior changes, which cost little to implement, can result in substantial reductions. And purchases of renewable energy can be used to reduce Scope 2 emissions.

Scope 3 emissions

Scope 3 emissions upstream are those that are associated with the supply chain activities, such as the extraction of raw materials, the shipment of supplies, and employee travel and commute. Downstream emissions are related to the distribution, utilization, and disposal of products and services consumed.

Many companies find early opportunities for reductions in the areas of business travel and employee commute. These areas are often the easiest to assess and manage. You will find additional opportunities if you are able to evaluate emissions in each of the fifteen Scope 3 categories.

Once you have a good idea of where greenhouse gas emission reductions can happen, the next step is to create targets.

Setting targets

Setting GHG emissions reduction targets has many benefits. Targets serve to:

• Help minimize and manage GHG emissions risks
• Achieve cost savings
• Stimulate innovation
• Prepare for future regulation
• Keep climate change issues “on the radar”
• Demonstrate leadership

Targets and types of metrics

There is no one way to decide on targets. Reduction targets depend on many factors and will be different for every company. The first step is to understand the types of metrics that are used to measure progress toward a target. This will help you pick realistic and meaningful targets. Some companies set more than one target, each based on a different metric. This allows for increased transparency, demonstrates commitment, communicates the level of efficiency of the organization, and enables ranking in the marketplace.

The most common metrics are intensity and absolute.

An absolute metric for GHG emissions measures a reduction in metric tons of carbon dioxide equivalents or MTCO2e. An example is “By 2010 we will decrease emissions by 1,000 metric tonnes (or 10%) compared to 2009 levels.” Absolute targets help companies to define a reduction rate.

An intensity metric would measure GHG emissions reductions in relation to production, number of employees, or revenue. An example would be, “Reduce CO2 produced per unit produced,” or “decrease emissions per employee by 2%.”

Intensity targets allow companies to demonstrate progress while they grow. A company can experience GHG emissions growth in absolute terms based on business expansion, while still reducing the intensity of its emissions. Intensity-based targets are also useful in benchmarking one company’s efforts against another.

The most meaningful metric, in terms of climate change impact, is context-based. Setting a target using this metric is the most challenging and the most socially responsible. This is referred to as a science-based target, as more fully described below.

Questions to ask

Here are some useful questions to answer before delving further into setting targets:

• How aggressive do you want to be? Do you want only to comply with market regulations, or do you want to become a leader in carbon emissions reduction?
• How much control do you have over carbon emissions and their sources? The degree of control over carbon creation will also affect your target. The more you can affect how much fuel, electricity, etc. used in your operations, the higher your target can be.
• Are there any current or pending government regulations? Consider markets you are currently in, as well as those you might potentially want to enter. If you find a regulation, evaluate whether you meet or exceed this target.
• What are my target boundaries? A target boundary covers the activities, geographic locations, and sources that are included in your target. If your company is global, consider choosing a specific region to start with. It is also important to define the scopes of emissions you will include in your target.

Approaches to setting carbon targets

Feasibility based – This approach is focused on what the organization can most realistically achieve. It begins with listing all possible energy/emissions reduction projects. Then an estimate of the associated energy and/or emissions reductions is calculated. Projects are prioritized and totaled, generating an estimated reduction level.

Science based – Targets that are science or context based are grounded in how we may be able to limit warming to 2°C. Using estimates of the amount of greenhouse gases we can emit and still keep warming to that level, companies can use a % of GDP or other method to extrapolate how much they will need to limit their own emissions by in order to “do their part.”

Stretch targets – Stretch targets can be based on either of the above, but they are increased by some percentage to go beyond what seems achievable. The intention is to push the envelope and to drive innovation or significant changes in behavior.

Other parameters

After considering what type of target to set and how aggressive to be, you will need to define the parameters of the target, such as the boundaries (division, domestic only, global, etc.). If it is an intensity target, you will have to decide what unit of measure to use (unit of production, revenue, square feet, etc.).

You will also need to choose a base year, over which you will measure your reductions, and a completion date. Long-term targets (greater than 5 years) can be more aggressive and tend to create a better strategic advantage. However, it can be more difficult to maintain engagement and momentum over the life of the project.

Setting targets and reducing GHG emissions requires focused attention. But by investing in GHG emissions reduction, you are protecting your business and investing in Earth’s future climate. Working to maintain livability of the planet for your business and for the future generations it will serve is a win for everyone.

Physical assets

Climate change can affect physical assets including buildings, equipment, inventory, and real estate, depending on the location of these assets and their vulnerability to common climate change impacts, such as increased intensity of storms, floods, or wildfires and changes in the temperature ranges and lengths of seasons.

Resources

• Smart Growth and Climate Change

Value chain

Depending on the location and vulnerability of stakeholders who contribute to an organization’s value chain, climate change can affect a value chain in a variety of ways, such as disrupting supply chains, destroying resources, displacing customers, or causing customers’ resources and needs to change.

ISSUE

Scope 1 & 2 emissions

Creating and managing an inventory of Scope 1 and Scope 2 greenhouse gas emissions is the most common way that organizations begin to quantify and reduce their carbon footprint to mitigate global warming. Reduction strategies include energy management, with a focus on reduced consumption and switching from fossil fuels to renewables, and better management to avoid releases of refrigerants and other gases with high global warming potential.

Resources

• Preparing for Stronger Refrigerant Regulations

Scope 3 emissions

Creating and managing an inventory of Scope 3 greenhouse gas emissions is the most advanced way that organizations quantify and reduce their carbon footprint to mitigate global warming. This requires engagement with suppliers to collect data and collaborate on GHG reduction strategies, as well as focusing on product use phase contributions to greenhouse gas emissions.

Resources

• Scope 3 Inventory Guidance

Workforce

Climate change can affect a workforce, depending on the location of workers and their vulnerability to common climate change impacts, such as an increase and spread of vector-borne diseases and workforce displacement or lost work time as a result of natural disasters.

Transportation

Transportation is a central pillar of our economy and society. It enables people and goods to move around the world. It has become essential for societal growth and development.

Despite the substantial socioeconomic benefits, transport systems pose serious environmental and societal costs. The challenge for sustainability is not to do away with transport, but to make it sustainable, energy-efficient, and less dependent on fossil fuels.

Air pollution

Air pollution poses significant risks to human health and the environment. Vehicles produce air pollution during manufacturing, operation, and disposal processes. These pollutants can lead to health problems like respiratory illness such as asthma, as well as other problems like smog and acid rain.

Climate change and GHGs

Transportation also has a significant impact on climate change through greenhouse gas (GHG) emissions. The majority of GHG emissions from transportation come from the combustion of fossil fuel based products, like gasoline and diesel fuel, in internal combustion engines. Over half of the emissions created by the transportation sector are a result of passenger cars and light-weight trucks. The remainder of greenhouse gas emissions from transportation comes from other modes, including freight trucks, commercial aircraft, ships, boats, and trains as well as from leak in pipelines and lubricants used in the transportation industry.

According to the EPA, transportation is one of the largest sources of GHG emissions in the US. In 2014, transportation accounted for roughly 26% of total US GHG emissions, as shown in the graphic below.

For every kilometer traveled, there is a large disparity in the amount of emissions produced by the different modes of transport. For each metric ton moved one kilometer the following emissions are produced:

• Plane (air cargo): 500g
• Truck: 60-150g
• Train/Rail: 30-100g
• Ship: 10-40g

To put those measurements in perspective, a one-ton shipment from Bangladesh to the United States by air emits 6,609,500 grams of CO2. The same shipment by waterway, using the highest estimated emissions figure, emits 528,760 grams of CO2.

Biodiversity and land impacts

In addition to the impacts from pollution, transportation has other social and environmental costs such as road crashes, traffic congestion, and damage to natural habitats and biodiversity. Water runoff from roadways is polluted by oil, rubber residue, and road salts. Roads dissect wildlife habitats, causing habitat fragmentation, which leads to a decrease in biodiversity among species.

Transportation management

Approaches to managing the energy and environmental impacts of transportation include:

• Reducing the number of miles traveled
• Operating vehicles more efficiently
• Using low-carbon fuels
• Creating or adopting new and improving existing vehicle technologies

The approaches to transportation management listed above cover a range of activities. To get an idea of what’s involved, take a look at a few examples of transportation-related projects:

1. Managing transportation logistics to reduce fuel requirements. Use logistics to plan and create more efficient routes (speed caps and routing to minimize driving through city traffic) to reduce fuel requirements and emissions.
2. Selecting a building site near public transportation. Identify and consider transportation distances when selecting office or distribution sites.
3. Encourage environmentally friendly or reduced travel. Educate the workforce to prioritize modes of transportation to have the least environmental impact. Encourage employees to rideshare and carpool.
4. Incentivizing use of public transportation. Adopt benefit programs that provide employees with incentives to use public transportation and reduce individual car travel such as pre-tax flex-spending or subsidy benefits public transportation and free transit passes. Provide incentives for use of local car/bicycle share programs and companies to enable public transportation commuting by making cars and bicycles readily available for transportation requirements during the workday.

GHGs & CO2e

It would be difficult to report the numerous types of greenhouse gases as one meaningful metric. So the standard for reporting on total greenhouse emissions is to convert all greenhouse gases into metric tons of carbon dioxide equivalents or CO2e.

Having a single metric allows emissions to be totaled and reported as one number. This makes the data easier to track, understand, and compare one organization’s emissions to another’s. This conversion is also why we often refer to a complete inventory of GHG emissions as a carbon footprint.

CO2e calculations

Each metric ton of a greenhouse gas has a global warming potential (GWP). This common factor enables each to be converted to a carbon dioxide equivalent.

Since all gases are converted to the potency of carbon dioxide, carbon dioxide’s GWP is set at 1. The GWP heat trapping potency of other greenhouse gases is then expressed relative to carbon dioxide’s GWP. By multiplying the emissions of a gas by its GWP, those emissions are converted to the equivalent amount of carbon dioxide.

Any software used to calculate a carbon footprint should include functionality that will convert greenhouse emissions to tons of CO2e.

GWPs and sources of GHGs

The table below identifies the potency and some of the more common sources of each of the greenhouse gases that are included in a carbon footprint.

The science

Climate change is not new. In fact, the Earth’s climate has been changing since its formation. What makes climate change a significant sustainability issue is the fast rate and degree to which our climate has been changing around the world in recent decades.

Scientists have known for nearly two centuries that carbon dioxide in the atmosphere traps heat, and results in what is known as the greenhouse effect. Much as a greenhouse’s interior is warmed by absorbed sunlight, the earth stays warm because a layer of gases in our atmosphere prevents some of the sun’s heat from escaping. Heat trapping gases – greenhouse gases – act as a blanket around Earth, trapping and radiating heat to the planet surface. Here’s how it works:

The greenhouse effect makes life on Earth possible, but only when combined with the Goldilocks effect! With too few greenhouse gasses in the atmosphere, Earth would be a frozen rock unable to sustain life. If concentrations of greenhouse gases get too high, Earth will also be unable to sustain life.

Here’s another a picture that captures what moving away from the Goldilocks effect looks like:

Did you notice the “human enhanced” part of the picture? Over the last 250 years, human activity has resulted in a dramatic and unprecedented increase in the amount of greenhouse gases emitted into our atmosphere. The activities we have introduced in the process of industrialization generate large amounts of greenhouse gases. These activities include, for example, burning of fossil fuels, deforestation, industrial agriculture and land use, waste decomposition, cement manufacturing, and mining.

As these activities have grown and continue to grow in scale and scope, greenhouse gas emissions grow and accumulate in the atmosphere. As a result, more heat gets trapped in the atmosphere than would without these human activities. And GHGs stay in the atmosphere for very long periods. Even if we stopped all emissions of GHGs today, we will still experience the changes that have already been set in motion. The delicate balance has been upset.

Over the past 100 years, Earth’s average temperature has risen by 1.4°F. A National Oceanic and Atmospheric Administration chart shows the steady rise in atmospheric carbon dioxide and surface temperatures:

Resources

• Short Answers to Hard Questions About Climate Change

What do we know and how?

The Earth’s overall global average temperature is warming at a rate unprecedented in the past 1,300 years. Here are the key ways that we know this:

• Direct measurement: Averaging regular, periodic measurements of atmospheric and sea surface temperatures around the world shows that the global average temperature anomaly has increased by about 1.5°F since the late 1800’s (IPCC, 2013, see image below). Some regions of the world have warmed by more than twice this amount.
• Proxy measurements: There are several types of materials – antarctic ice cores, tree cores, and ocean sediment – that provide data over long periods of time and can be used to extrapolate changing temperature conditions.

Here’s what Earth’s rising temperature looks like:

• As the atmospheric concentration of CO2 and other GHGs continues to rise, surface temperatures are increasing. The global warming potential of these gases has been known for over 100 years.
• Natural changes in the amount of solar radiation reaching the Earth are not sufficient to be a significant contributor to current warming, although it was likely a leading driver of climate change in our planet’s geological history.
• Since the industrial revolution and the increasing combustion of fossil fuels to power that revolution, there has been an increase in the atmospheric ratio of Carbon-12 (the carbon isotope released from burning fossil fuels) to Carbon-14 (an isotope of carbon that is naturally produced in the upper atmosphere), evidence that the increase in CO2 concentration is primarily due to burning fossil fuels.
• The vast majority of the scientific community has reached consensus that global warming and climate change are occurring and that human activity is a significant contributing factor.

What don’t we know?

Our planet’s climate system is extremely complex. There are some impacts and outcomes related to global warming and climate change that are unsettled science:

• The feedback loops that will evolve as the Earth warms and our climate changes are not clear. Scientists are not sure what will be more influential: negative forcing due to greater cloud cover as ocean water evaporates or positive forcing due to lowered albedo as ice sheets and ice caps melt.
• The type of clouds that will form from evaporated water in a warming atmosphere is not fully understood. Cloud types have a direct impact on the type and severity of weather we will experience and on the ability of clouds to reflect solar radiation.
• Although we know that land and ocean can store carbon, and the deep ocean can store heat, we do not yet have a good way of estimating the limits of these ecosystems’ abilities to store carbon and heat, and still function normally.
• Scientists cannot predict the impact of atmospheric aerosols with certainty. Aerosols pollution concentration is expected to increase in magnitude comparable to that of increasing concentrations of atmospheric greenhouse gases, but the effect of most aerosols will be to cool the atmosphere (with the exception of soot from fossil fuel combustion which due to its black color will absorb heat and thus contribute to warming). Warming is expected to take place everywhere, while the cooling impact of most aerosols will be somewhat regionally dependent, such as near and downwind of industrial areas. No one knows what the outcome will be of atmospheric warming in some regions and cooling in others.
• The results of efforts to curb future GHG emissions cannot be predicted with reasonable certainty, making it very difficult to model climate change scenarios and outcomes.

What are the impacts?

Over the last hundred years, scientists have come to understand a lot more about our relationship with the most basic element in our midst: carbon. The ability for Earth to sustain life is dependent on the carbon cycle – a delicate balance of carbon that is emitted by living things in the process of respiration and absorbed by oceans and vegetation in photosynthesis processes.

Although atmospheric conditions have fluctuated significantly over the past half million years, until the modern era, the concentration of CO2e has never exceeded 300 parts per million. Human activity has resulted in excess carbon dioxide, beyond what the Earth can absorb and store in our oceans and forests. Carbon dioxide and a host of other greenhouse gases are accumulating in our atmosphere.

The impacts on our climate from the increases in carbon dioxide and other greenhouse gases in our atmosphere are significant. Global temperature increases lead to increases in heat-related illness and death, insect-borne illnesses, heavy precipitation, tropical cyclones, river flooding, coastal flooding, ocean heat, sea surface temperatures, sea-level rise, drought, growing season, and longer wildfire seasons. Global temperature increases also lead to decreases in snowpack. The EPA tracks these impacts annually under several broad categories of indicators:

• Greenhouse gases
• Weather and climate
• Oceans
• Snow and ice
• Health and society
• Ecosystems

When these indicators worsen, significant impacts on humans and other species that live on earth follow. Here’s an infographic to help you understand the effects of increased greenhouse gases and the resulting impacts:

What are the options?

Managing the risks from future human-induced climate change will likely be based on some combination of four broad strategies:

• Emissions reduction: limiting climate change by reducing greenhouse gas emissions.
• Sequestration: removing carbon dioxide (CO2) from the atmosphere into permanent geological, biological, or oceanic reservoirs.
• Adaptation: responding to and coping with climate change as it occurs, in either a planned or unplanned way.
• Solar geo-engineering: large-scale engineered modifications to limit the amount of sunlight reaching the Earth, in an attempt to offset the effects of ongoing greenhouse gas emissions.

Each of these strategies embodies a large suite of specific options, with associated risks, costs, and benefits. And they can affect each other. For example, doing nothing to reduce GHG emissions would require increased expenditure to adapt to climate change, and increase chances of needing to resort to geo-engineering in the future.