Learn
Emissions

An overview of carbon emissions, net-zero and decarbonisation

Written by
August 3, 2022
5 min read
Contents
This is a headingThis is a heading

What are carbon emissions?

Carbon emissions are the release of climate-potent carbon dioxide gases (CO2) into the atmosphere. CO2 is the greenhouse gas which is released the most in terms of quantity, usually through the burning of fossil fuels. CO2 emissions from human activity is the single biggest major contributor to rising CO2 levels, primarily from the energy production and industry sectors. Emissions of carbon dioxide and other greenhouse gases (GHGs) are the leading cause of climate change and global warming. Over the last century, global temperatures have increased by 1oc on average, and are set to continue rising at the current trajectory.

Greenhouse gas emissions vs carbon emissions

Greenhouse gases refer to a number of gases that when released, trap heat in the atmosphere, leading to increasing global temperatures. This phenomenon is referred to as the 'greenhouse effect'. Greenhouse gases include carbon dioxide, methane, and nitrous oxide among others. Carbon dioxide makes up the majority of greenhouse gases in the atmosphere.

CO2 vs CO2-e

Different GHG gases have different effects on the earth's atmosphere. For example, a ton of methane in the atmosphere is a lot more climate-potent than a ton of CO2, but it only lasts in the atmosphere for about 12-15 years. CO2 however can last in the atmosphere for 300-1000 years. As such, CO2 emissions of today can contribute to rising temperatures for centuries to come.  In order to be able to compare the warming that is caused by the different gases, emissions of any GHG gas are often reported in CO2-equivalent quantities. These CO2-e emissions state how much CO2 would have to be emitted to cause the same global warming effects as the emissions of a specific greenhouse gas. In order to convert the emissions of any greenhouse gas into CO2-e emissions, so-called global warming potential (GWP) factors are used. GWPs are subject to on-going scientific research. For example, over the years, the IPCC has adjusted the GWP of methane from 21 in the second assessment report to 28 in the fifth assessment report. This means that one ton of methane causes the same amount of global warming as 28 tons of CO2 would. Each greenhouse gas has its own GWP, with Sulfur hexafluoride (SF6) having the largest GWP of currently 23,500.

It is common practice that all emissions are translated into their CO2-equivalent. This allows for using carbon emissions as the umbrella concept for all human-induced emissions.  In 2020, the total global CO2e emissions were estimated to be approximately 50 billion tonnes. The total amount of CO2e that can be emitted before global warming passes the 1.5 degree target were approximately 400 billion tonnes in 2020. For the 2 degree target, the remaining carbon budget was approx. 1100 billion tonnes.

What makes carbon emissions so bad?

Carbon and other GHG emissions lead to increased temperatures on land and in the ocean. The 1 degree C increase over the past century is an average increase across land and sea, north and south hemispheres, and regions. Global temperatures on land have increased twice as much as the ocean, while the Poles have increased by 3 to 5oc. Temperatures in the Northern Hemisphere have increased more than the South due to the greater land mass. Increased temperatures have devastating environmental and social effects, causing increased frequency and severity of extreme weather events such as droughts, floods, storms, and heatwaves. There is also a human cost of GHG emissions, such as forced migration due to rising sea levels, respiratory diseases, and famine. The IPCC (2022) states that “natural and human systems are pushed beyond their ability to adapt” to the extreme climate changes post industrialisation.

Where do carbon emissions come from?

Carbon is emitted into the atmosphere through both natural and human activities. Carbon emissions have increased by over 40% post-Industrialisation due to human activities such as burning fossil fuels, producing cement, and increased agricultural production. According to the International Energy Agency, the energy sector is responsible for approximately 75% of GHG emissions.

What is Scope 1, 2 and 3?

The Greenhouse Gas Protocol is the primary GHG emissions reporting standard. The GHG protocol sets the basic guidelines on how companies should assess the carbon emissions associated with their own operations, as well as their upstream and downstream value chains. Emissions are divided into three scopes:

     
  1. Scope 1 emissions are generated directly from an organisation's operations, for example through the combustion of fuel in vehicles, the use of fertilisers in farming, or the combustion of other energy-carriers by the organisation itself.
    2.  
  2. Scope 2 emissions are the emissions associated with the production of energy that the organisation consumes. This main component is often the combustion of coal at the power station for the production of electricity that the organisation consumes, but it also includes the production of fuels and steam that the organisation consumes.
    3.  
  3. Scope 3 emissions include upstream and downstream indirect emissions in an organisation’s value chain that are not covered by scope 1 and 2, including all supply-chain emissions associated with the consumption of goods and services, commercial air travel, waste disposal and leased assets etc.

Under Australia's voluntary National Greenhouse and Energy Reporting (NGER) Scheme, only Scope 1 and 2 are reported. However, Scope 3 (value chain emissions) can account for up to roughly 90% of company emissions, making Scope 3 emissions essential for accurate emissions reduction strategies.

How are carbon emissions measured?

Carbon emissions are incredibly difficult to measure with any sort of accuracy. There are a number of calculation tools to measure a company's emissions, though they require a significant level of detail to generate a reliable result; information that most people don't have. A variety of factors such as the type of coal, gas or oil used, efficiency of energy production, and efficiency of emissions filtration systems affects the quantity of carbon emitted into the atmosphere. Whether or not Scope 3 emissions (upstream and downstream emissions) are included in the measurement significantly changes the results. All of these factors and more make measuring emissions a challenging task for any company.  Fair Supply can take the complexity out of measuring carbon emissions by calculating your Scope 1, 2 and 3 emissions for you. Click here to find out more.

How can carbon emissions be reduced?

There are two core actions to reduce carbon emissions: switching to low-carbon alternatives and improving the efficiency of current systems. Low-carbon alternatives include transitioning to renewable energy, electric vehicles, and producing lower-carbon foods (such as vegetables, poultry and fish). Carbon emissions can also be reduced by improving the efficiency of agriculture through improved crop yields, streamlining supply chains to reduce transportation of goods, and utilising energy efficient technologies.

What are negative emissions?

'Negative emissions' involves removing carbon from the atmosphere to reduce current emission levels. 'Positive emissions' refer to carbon emissions that are released into the atmosphere. Negative emissions are a promising area for overall emissions reduction, however current methods of 'capturing' carbon are not efficient enough to compete with emissions production.

What is Net-zero?

Net-zero is the goal of balancing GHG emissions produced and removed from the atmosphere to achieve a net zero emissions. Net-zero does not mean that no more emissions can be produced, but rather that new emissions are offset by carbon sequestration. Currently, over 136 countries have set or are considering setting a target for net-zero emissions. Of those countries, 44 countries and the European Union have implemented policies to meet this target, with 10 countries making the pledge legally binding. Net zero pledges cover around 70% of global GDP and carbon emissions. The majority of participating countries have pledged to achieve net-zero by 2050.

Corporate Net-zero pledges

An increasing number of companies have made net-zero pledges, including those in high emission sectors such as energy, transportation, and technology. In the technology sector, approximately 60% of gross revenue is generated by companies with net-zero emissions targets. Although a public commitment to lowering emissions is a good first step, around 40% of companies with a net-zero pledge do not have a plan on how they intend to achieve them. Investors and reporting bodies have called out 'greenwashing' by companies who pledge net-zero emissions for the sake of publicity. The Corporate Climate Responsibility Monitor found that the majority of global companies assessed with a net-zero pledge in fact only planned to reduce their emissions by 20% on average.

What is carbon capture and how does it work?

Carbon capture and storage is the process of 'capturing' atmospheric carbon dioxide and storing it in carbon 'sinks'. Carbon capture is incredibly important, not only to balance future emissions, but more crucially, to reduce carbon from past emissions. The capturing of carbon in natural sinks such as forests and soils has always existed. However, human activity has destroyed many natural sinks (through activities such as logging) while increasing carbon emissions. Efforts being made to restore natural carbon sinks by revegetating cleared land, replanting forests, and increasing the cultivation of crops that capture high levels of carbon such as seaweed.  Carbon can also be stored by transforming carbon dioxide gas into a liquid form and storing it underground.

Carbon emissions in the supply chain

Due to the diverse nature of supply chains, the sources and intensity of carbon emissions in supply chains are equally diverse. One thing that is universal however, is that supply chains are resource intensive and thus represent a significant portion of global carbon emissions. Research from the CDP shows that there are 11.4x more emissions in a company's supply chains compared to their direct operations. Action taken by the private sector to reduce carbon emissions is critical if global temperature increases are to be kept below 2℃. For example, consumer-packaged-goods companies will need to reduce emissions by 90% by 2050 if global climate targets such as the Paris Agreement are to be met.  According to Climate Watch, the sectors with the greatest GHG emissions are:

     
  • Energy (electricity and heat) 31.9%
  • Transportation 14.2%
  • Manufacturing and Construction 12.6%
  • Agriculture 11.9%
  • Addressing carbon emissions in supply chains is a critical component of any emissions reduction strategy. Scope 3 (value chain emissions) account for roughly 90% of company emissions, making Scope 3 emissions essential for accurate emissions reduction strategies.

What is carbon trading?

Carbon trading is the marketisation of carbon emissions. Carbon is traded via two avenues: carbon credits and carbon offsets. Carbon credits are permits or certificates that are issued by a government to allow an entity to produce a certain quantity of carbon. This is known as the 'compliance carbon market'. Carbon offsets are sold on the 'voluntary carbon market' to an entity who wants to 'offset' their emissions. Each carbon credit is equivalent to one metric tonne of carbon or carbon-equivalent emissions.

Carbon Credits

'Cap and trade' schemes or Emissions Trading Schemes (ETS) set a limit (or 'cap') on the quantity of carbon emissions that can be released each year. Governments issue permits (also known as credits or certificates) to companies in high emissions sectors. If the company does not 'use up' their permitted emissions quota, they can sell their remaining permits. Companies may also buy extra permits if they have exceeded their initial quota. Under Article 6 of the Paris Agreement, countries can also trade carbon emissions credits with other countries to help them meet their emission targets. The ability to sell unused carbon credits creates an incentive for companies to lower their carbon emissions. According to the World Bank, approximately 21.5% of global GHG emissions are covered by carbon pricing initiatives.

Carbon Offsets

Carbon offsetting is when companies voluntarily purchase carbon offset credits to lower their net carbon emissions. Carbon offset credits allow companies to lower their net emissions without actually reducing the amount of carbon they emit. Offset credits are purchased from carbon offset projects. These projects may involve planting trees, renewable energy projects, or directly capturing emissions from the air. The World Bank warns that while carbon offsets can be useful as a supplementary measure, they should not be used in the place of direct emissions reduction strategies. The Next Climate Institute and Climate Watch have reported that the voluntary carbon offset credit market currently lacks credible and verifiable credits due to a lack of international offsetting standards. This means that carbon offset credits may not offset the quantity of carbon that they are claiming to.

Share
Related articles
ISSB Sustainability Disclosure Standards usher in new era of global corporate reporting
Read Article
Challenges with assessing and calculating Scope 3 emissions
Read Article
Learn
Emissions

An overview of carbon emissions, net-zero and decarbonisation

Unlock Report

Fill out the form to access the full report.
Overview

What are carbon emissions?

Carbon emissions are the release of climate-potent carbon dioxide gases (CO2) into the atmosphere. CO2 is the greenhouse gas which is released the most in terms of quantity, usually through the burning of fossil fuels. CO2 emissions from human activity is the single biggest major contributor to rising CO2 levels, primarily from the energy production and industry sectors. Emissions of carbon dioxide and other greenhouse gases (GHGs) are the leading cause of climate change and global warming. Over the last century, global temperatures have increased by 1oc on average, and are set to continue rising at the current trajectory.

Greenhouse gas emissions vs carbon emissions

Greenhouse gases refer to a number of gases that when released, trap heat in the atmosphere, leading to increasing global temperatures. This phenomenon is referred to as the 'greenhouse effect'. Greenhouse gases include carbon dioxide, methane, and nitrous oxide among others. Carbon dioxide makes up the majority of greenhouse gases in the atmosphere.

CO2 vs CO2-e

Different GHG gases have different effects on the earth's atmosphere. For example, a ton of methane in the atmosphere is a lot more climate-potent than a ton of CO2, but it only lasts in the atmosphere for about 12-15 years. CO2 however can last in the atmosphere for 300-1000 years. As such, CO2 emissions of today can contribute to rising temperatures for centuries to come.  In order to be able to compare the warming that is caused by the different gases, emissions of any GHG gas are often reported in CO2-equivalent quantities. These CO2-e emissions state how much CO2 would have to be emitted to cause the same global warming effects as the emissions of a specific greenhouse gas. In order to convert the emissions of any greenhouse gas into CO2-e emissions, so-called global warming potential (GWP) factors are used. GWPs are subject to on-going scientific research. For example, over the years, the IPCC has adjusted the GWP of methane from 21 in the second assessment report to 28 in the fifth assessment report. This means that one ton of methane causes the same amount of global warming as 28 tons of CO2 would. Each greenhouse gas has its own GWP, with Sulfur hexafluoride (SF6) having the largest GWP of currently 23,500.

It is common practice that all emissions are translated into their CO2-equivalent. This allows for using carbon emissions as the umbrella concept for all human-induced emissions.  In 2020, the total global CO2e emissions were estimated to be approximately 50 billion tonnes. The total amount of CO2e that can be emitted before global warming passes the 1.5 degree target were approximately 400 billion tonnes in 2020. For the 2 degree target, the remaining carbon budget was approx. 1100 billion tonnes.

What makes carbon emissions so bad?

Carbon and other GHG emissions lead to increased temperatures on land and in the ocean. The 1 degree C increase over the past century is an average increase across land and sea, north and south hemispheres, and regions. Global temperatures on land have increased twice as much as the ocean, while the Poles have increased by 3 to 5oc. Temperatures in the Northern Hemisphere have increased more than the South due to the greater land mass. Increased temperatures have devastating environmental and social effects, causing increased frequency and severity of extreme weather events such as droughts, floods, storms, and heatwaves. There is also a human cost of GHG emissions, such as forced migration due to rising sea levels, respiratory diseases, and famine. The IPCC (2022) states that “natural and human systems are pushed beyond their ability to adapt” to the extreme climate changes post industrialisation.

Where do carbon emissions come from?

Carbon is emitted into the atmosphere through both natural and human activities. Carbon emissions have increased by over 40% post-Industrialisation due to human activities such as burning fossil fuels, producing cement, and increased agricultural production. According to the International Energy Agency, the energy sector is responsible for approximately 75% of GHG emissions.

What is Scope 1, 2 and 3?

The Greenhouse Gas Protocol is the primary GHG emissions reporting standard. The GHG protocol sets the basic guidelines on how companies should assess the carbon emissions associated with their own operations, as well as their upstream and downstream value chains. Emissions are divided into three scopes:

     
  1. Scope 1 emissions are generated directly from an organisation's operations, for example through the combustion of fuel in vehicles, the use of fertilisers in farming, or the combustion of other energy-carriers by the organisation itself.
    2.  
  2. Scope 2 emissions are the emissions associated with the production of energy that the organisation consumes. This main component is often the combustion of coal at the power station for the production of electricity that the organisation consumes, but it also includes the production of fuels and steam that the organisation consumes.
    3.  
  3. Scope 3 emissions include upstream and downstream indirect emissions in an organisation’s value chain that are not covered by scope 1 and 2, including all supply-chain emissions associated with the consumption of goods and services, commercial air travel, waste disposal and leased assets etc.

Under Australia's voluntary National Greenhouse and Energy Reporting (NGER) Scheme, only Scope 1 and 2 are reported. However, Scope 3 (value chain emissions) can account for up to roughly 90% of company emissions, making Scope 3 emissions essential for accurate emissions reduction strategies.

How are carbon emissions measured?

Carbon emissions are incredibly difficult to measure with any sort of accuracy. There are a number of calculation tools to measure a company's emissions, though they require a significant level of detail to generate a reliable result; information that most people don't have. A variety of factors such as the type of coal, gas or oil used, efficiency of energy production, and efficiency of emissions filtration systems affects the quantity of carbon emitted into the atmosphere. Whether or not Scope 3 emissions (upstream and downstream emissions) are included in the measurement significantly changes the results. All of these factors and more make measuring emissions a challenging task for any company.  Fair Supply can take the complexity out of measuring carbon emissions by calculating your Scope 1, 2 and 3 emissions for you. Click here to find out more.

How can carbon emissions be reduced?

There are two core actions to reduce carbon emissions: switching to low-carbon alternatives and improving the efficiency of current systems. Low-carbon alternatives include transitioning to renewable energy, electric vehicles, and producing lower-carbon foods (such as vegetables, poultry and fish). Carbon emissions can also be reduced by improving the efficiency of agriculture through improved crop yields, streamlining supply chains to reduce transportation of goods, and utilising energy efficient technologies.

What are negative emissions?

'Negative emissions' involves removing carbon from the atmosphere to reduce current emission levels. 'Positive emissions' refer to carbon emissions that are released into the atmosphere. Negative emissions are a promising area for overall emissions reduction, however current methods of 'capturing' carbon are not efficient enough to compete with emissions production.

What is Net-zero?

Net-zero is the goal of balancing GHG emissions produced and removed from the atmosphere to achieve a net zero emissions. Net-zero does not mean that no more emissions can be produced, but rather that new emissions are offset by carbon sequestration. Currently, over 136 countries have set or are considering setting a target for net-zero emissions. Of those countries, 44 countries and the European Union have implemented policies to meet this target, with 10 countries making the pledge legally binding. Net zero pledges cover around 70% of global GDP and carbon emissions. The majority of participating countries have pledged to achieve net-zero by 2050.

Corporate Net-zero pledges

An increasing number of companies have made net-zero pledges, including those in high emission sectors such as energy, transportation, and technology. In the technology sector, approximately 60% of gross revenue is generated by companies with net-zero emissions targets. Although a public commitment to lowering emissions is a good first step, around 40% of companies with a net-zero pledge do not have a plan on how they intend to achieve them. Investors and reporting bodies have called out 'greenwashing' by companies who pledge net-zero emissions for the sake of publicity. The Corporate Climate Responsibility Monitor found that the majority of global companies assessed with a net-zero pledge in fact only planned to reduce their emissions by 20% on average.

What is carbon capture and how does it work?

Carbon capture and storage is the process of 'capturing' atmospheric carbon dioxide and storing it in carbon 'sinks'. Carbon capture is incredibly important, not only to balance future emissions, but more crucially, to reduce carbon from past emissions. The capturing of carbon in natural sinks such as forests and soils has always existed. However, human activity has destroyed many natural sinks (through activities such as logging) while increasing carbon emissions. Efforts being made to restore natural carbon sinks by revegetating cleared land, replanting forests, and increasing the cultivation of crops that capture high levels of carbon such as seaweed.  Carbon can also be stored by transforming carbon dioxide gas into a liquid form and storing it underground.

Carbon emissions in the supply chain

Due to the diverse nature of supply chains, the sources and intensity of carbon emissions in supply chains are equally diverse. One thing that is universal however, is that supply chains are resource intensive and thus represent a significant portion of global carbon emissions. Research from the CDP shows that there are 11.4x more emissions in a company's supply chains compared to their direct operations. Action taken by the private sector to reduce carbon emissions is critical if global temperature increases are to be kept below 2℃. For example, consumer-packaged-goods companies will need to reduce emissions by 90% by 2050 if global climate targets such as the Paris Agreement are to be met.  According to Climate Watch, the sectors with the greatest GHG emissions are:

     
  • Energy (electricity and heat) 31.9%
  • Transportation 14.2%
  • Manufacturing and Construction 12.6%
  • Agriculture 11.9%
  • Addressing carbon emissions in supply chains is a critical component of any emissions reduction strategy. Scope 3 (value chain emissions) account for roughly 90% of company emissions, making Scope 3 emissions essential for accurate emissions reduction strategies.

What is carbon trading?

Carbon trading is the marketisation of carbon emissions. Carbon is traded via two avenues: carbon credits and carbon offsets. Carbon credits are permits or certificates that are issued by a government to allow an entity to produce a certain quantity of carbon. This is known as the 'compliance carbon market'. Carbon offsets are sold on the 'voluntary carbon market' to an entity who wants to 'offset' their emissions. Each carbon credit is equivalent to one metric tonne of carbon or carbon-equivalent emissions.

Carbon Credits

'Cap and trade' schemes or Emissions Trading Schemes (ETS) set a limit (or 'cap') on the quantity of carbon emissions that can be released each year. Governments issue permits (also known as credits or certificates) to companies in high emissions sectors. If the company does not 'use up' their permitted emissions quota, they can sell their remaining permits. Companies may also buy extra permits if they have exceeded their initial quota. Under Article 6 of the Paris Agreement, countries can also trade carbon emissions credits with other countries to help them meet their emission targets. The ability to sell unused carbon credits creates an incentive for companies to lower their carbon emissions. According to the World Bank, approximately 21.5% of global GHG emissions are covered by carbon pricing initiatives.

Carbon Offsets

Carbon offsetting is when companies voluntarily purchase carbon offset credits to lower their net carbon emissions. Carbon offset credits allow companies to lower their net emissions without actually reducing the amount of carbon they emit. Offset credits are purchased from carbon offset projects. These projects may involve planting trees, renewable energy projects, or directly capturing emissions from the air. The World Bank warns that while carbon offsets can be useful as a supplementary measure, they should not be used in the place of direct emissions reduction strategies. The Next Climate Institute and Climate Watch have reported that the voluntary carbon offset credit market currently lacks credible and verifiable credits due to a lack of international offsetting standards. This means that carbon offset credits may not offset the quantity of carbon that they are claiming to.

Share