Carbon Accounting

Carbon accounting is the systematic measurement and reporting of greenhouse gas (GHG) emissions associated with an organisation's activities. As carbon costs become a real financial variable, through carbon taxes, cap-and-trade systems, customer requirements, and investor pressure, understanding how to measure and interpret emissions data is increasingly a core analytical skill.

The GHG Protocol, developed by WRI and WBCSD, is the globally dominant standard for corporate carbon accounting. It classifies emissions into three scopes: direct emissions from owned operations, indirect emissions from purchased energy, and all other value chain emissions (the largest and most complex category).

For India, the National Action Plan on Climate Change and India's NDC (Nationally Determined Contribution) commitments under the Paris Agreement are driving both regulatory expectations and voluntary corporate action on emissions reduction.

Three emission scopes (GHG Protocol):

Scope 1, Direct emissions From sources owned or controlled by the company:

• Combustion in owned boilers, furnaces, vehicles
• Process emissions (e.g., cement production releases CO₂)
• Fugitive emissions (refrigerants, methane leaks from pipelines)

Scope 2, Indirect energy emissions From purchased electricity, steam, heat, or cooling:

• Market-based method: uses emission factors from energy attribute certificates (RECs)
• Location-based method: uses average grid emission factors

Scope 3, Value chain emissions 15 categories including: purchased goods and services (upstream), capital goods, transportation, business travel, employee commuting, use of sold products, end-of-life treatment

• Typically the largest source (often > 70% of total)
• Most difficult to measure, requires supplier data or spend-based estimation

Carbon intensity metrics:

• Absolute emissions (tonnes of CO₂e, CO₂ equivalent)
• Revenue intensity (tCO₂e / ₹ Cr revenue)
• Production intensity (tCO₂e / tonne of output), used for industrial benchmarking

India context: Bureau of Energy Efficiency (BEE) manages the Perform, Achieve and Trade (PAT) scheme for energy efficiency in large industrial units. Carbon Credit Trading Scheme (CCTS) is being developed under the Energy Conservation Act 2022.