CIVL4450 Final

Module 2.1 Cooperate Carbon Audit

Why Measure: You cannot manage what you cannot measure→ Baseline,
emission hotspot, reduction strategy
What Measure: Reporting Kyoto Gases: CO2, CH4, NH2⇒ will generate from
combustion, PFCs, SF6, NF3

1. Organizational Boundaries(base on %): the boundaries that define the

operations owned or controlled by the reporting company

Equity Share Approach: by % of ownership/ % of economic interest

Control Approach(100%)

Operational Approach: has fully authority to introduce or implement

operating policy/ hold the operation license

Financial Approach

2. Operational Boundaries

Identify the emission sources→catagorize the emissions into direct and indirect
→ choose the scope of accounting and reporting the indirect emission

Scope 1

Definition:

Scope 1 emission are direct emissions from sources that a company

owns or control

Example:

generation of electricity, heat or steam

Transportation of materials, products, waste and employee

Fugitive emissions: GHGs leakage

Under EPD:

1. Stationary Combustion

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 2. Mobile Combustion

3. GHG removal from newly planted trees

4. HFC and PFC emissions for refrigerator/ AC →fugitive emission

Scope 2

Definition:

Scope 2 emissions are the indirect emissions that occur when the
electricity, heat or steam that a company purchased or consumed.
(generated at a source that is not owned/ controlled by the
company)

Under EPD:

1. Purchased Electricity

2. Purchased Towngas

Scope3(~90% of the total emissions)

Definition: Scope 3 emissions included all others indirect GHGs

emissions

Example:

Business Travel

Commuter Travel

Leased assets

waste disposal

Under EPD:

1. Paper waste disposal at landfill (EF=4.8)

2. processing fresh water

3. processing sewage

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 Value Chain: All stages or activities that create value related to your business

Reporting Options

1. GHG Protocol Corporates Standard: Only Scope 1 and 2 are required,

Scope3 is optional

2. GHG Protocol Corporates Standard Scope 3 Standard: All 3 are required for
relevant categories for 3

→ why people would choose second option?

1. Transparency = Trust

2. Higher ESG Rating and Access to green Capital

3. Supply Chain pressure like many global brand request for report of full
emissions

4. Net zero commitment→ SBTi (science base target initiative): full scope3
disclosure if it covers over 40% of Total emissions

Emissions Tracking
1. Base Year

Importance

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 A benchmark(reflection point) which a company’s emissions are
compared over time

help to evaluate progress

fair and consistence adjustments can be made for merge/ acquisition/

divestment

Choose a base year

The earliest reporting year with the submission of a complete emission

report

Pick the first year when you finished a full carbon audit with all
required data — not just electricity, but also fuel, water,
refrigerants, etc.

A historical year when the company submit complete data and all
subsequent years

Choose a year when you not only had good data, but you’ve
also kept recording data every year since.

Both should be fit their own reporting cycle: fiscal year/ calendar year +
normal business growth(no too small/ too big)

Updating base year

Why?
Significant Threshold (Quantitative/ Qualitative: a reason)

Merge/ Acquisition emission structure changed

Divestment emission dropped due to assets disposal

Change in emission
/
scope

mistake /

US The Climate Registry: 5%

California Climate Registry: 10% (→ changes exceeded 10% of the total
emissions)

Not recalculating base year

1. Opening new branches(acquires operation that doesn't exit in base

year)

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 it was not existing during the base year

just include in the report from acquisition year onwards

2. Switching between outsourcing/ insourcing if it has already reported

under scope2/3

already reported in scope2/3 just switch to 1 maybe

3. Organic growth/ decline

natural variation in operation not structural changes to

organizational boundaries

Module 2.2 Carbon Measurement

Value Chain:

All of the upstream and downstream activities associated with the operations of
the reporting company, including the purchased goods and services and use of
sold products by consumers.

Business Goals for scope 3 reporting]

1. Identify and understand risks and opportunities in the value chain

GHG-related Risk: carbon intensive supplier/ inefficient logistics

New market opportunity: new low-carbon business development/ better

investment and procurement decisions

2. Identify GHG reduction opportunities, set targets, and track performance

identify GHG hotspots, prioritize reduction effort

set scope 3 reduction target- aligns with net-zero/ SBTi

3. Engage value chain partners in GHG management

Most Scope 3 emissions lie outside the company’s direct control, so

reduction depends on supplier and customer cooperation.

Encourages accountability and transparency within the supply chain.

Improves supply chain efficiency and helps lower energy/resource

costs.

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 Builds stronger relationships and avoids future risks from high-emission
partners.

4. Enhance stakeholder information and corporate reputation through

public reporting

ESG rating

Transparency

Scope 3 Catagories

Upstream (Before You)

1. Purchased goods and services – raw materials, outsourced services

emissions from the production of products purchased or acquired by

the reporting company in the reporting year

Product can be both tangible goods or intangible services

2. Capital goods – equipment, machinery, buildings

as fixed assets or as plant, property, and equipment (PP&E)

Companies should account for the total cradle-to-gate emissions of

purchased capital goods in the year of acquisition

3. Fuel- and energy-related activities – not included in Scope 1 or 2

accounts for indirect GHG emissions related to the extraction,

production, and transportation of fuels and energy you purchase and
consume, but which are not already counted in Scope 1 or Scope 2.

4. Upstream transportation and distribution – inbound logistics

Inbound logistics refers to the transportation, handling, and storage

of materials, components, or goods that are coming into your company

5. Waste generated in operations

Emissions from third-party treatment of waste your operations

produce

6. Business travel

7. Employee commuting (transport to get to work)

8. Upstream leased assets – assets you lease from others

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 Do not have operational control

not reported in scope 1 and 2

Downstream (After You)

9. Downstream transportation and distribution – customer delivery

10. Processing of sold products

11. Use of sold products

a. Direct Use-Phase emission

i. product that directly consume energy during use

ii. fuel and feedstocks

iii. Product that emit GHGs during use

b. Indirect Use-phase emission

i. product that indirectly consume energy during use (eg. Soap,

food…)

12. End-of-life treatment of sold products

13. Downstream leased assets – assets you lease to others

14. Franchises 特許經營權

A franchise is a business operating under a license to sell or distribute
another company’s goods or services within a certain location

15. Investments – emissions financed by banks, funds, etc.

a. Equity investments

b. Debt investments

c. Project finance

d. Managed investments and client services

Cat 9↔Cat4, Cat13↔Cat11

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 Organizational Boundary and Scope 3 Emissions

1. Assets (e.g., facilities, vehicles)

If you use the operational control approach, assets you operate (e.g.
rented offices you control) go into Scope 1 and 2.

If you're using the equity share approach, or if you lease assets but don’t
control them, those emissions fall under Scope 3 Category 8.

2. Entities (e.g., subsidiaries 子公司, joint ventures合資公司)

You only report direct emissions (Scope 1 & 2) from entities (like
subsidiaries) that are inside your organizational boundary. +scope 3 for
their value chain emission

For entities outside your boundary (like joint ventures), you report them in
Scope 3 → Cat15

3. Two Scope 3 categories depend directly on Scope 1/2 boundaries

a. Category 3: Covers fuel production and T&D losses only for energy
used in assets already counted in Scope 1 and 2

b. Category 5: Covers waste generated only in operations that are

included in Scope 1 and 2

Screening Criteria for Scope 3 Reporting

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 Primary Data: direct data collected from a specific activity inside the
company’s value chain

Product-level: Cradle-to-gate GHG emissions for a specific product.

Process/Activity-level: GHG emissions for specific operations like a

production line.

Facility-level: Emissions from a plant or building.

Business-unit-level: Covers the emissions of an entire business unit.

Corporate-level: Total emissions from the company as a whole.

Secondary Data: data that is not specific activities within the company’s value
chain

Product Carbon Footprint

1. Product Carbon Footprint (PCF/CFP)

Def: Total GHGs emissions associated with a product throughout its

lifecycle

Purpose:

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 a. Identify carbon hotspots in the supply chain. → Reduction throughout
the supply chain

b. Compare products or design low-carbon alternatives.

c. Provide data for carbon labels, ESG reporting, or customer disclosure.

→ attract the costumer

d. Help meet regulatory, procurement, or green building standards.

2. Life Cycle Assessment (LCA)

Def: a tool for the systematic evaluation of the environmental aspects of a

product or service system through all stages of its life cycle

4 Phases of LCA

Difference between LCA and PCF

Framework for LCA PCF

Step 1: Define Goal

defining the purpose and audience

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 Step 2: Define Inventory Scope

*6 kyoto gases

what products

Step 3: setting Boundaries

system boundaries: cradle-to-gate/ cradle-to-grave/ cardle-to-cradle

The system boundary of the product life cycle shall exclude the GHG
emissions associated with:
a) human energy inputs to processes and/or preprocessing (e.g. if fruit is
picked by hand rather than by machinery);

b) transport of consumers to and from the point of retail purchase;

c) transport of employees to and from their normal place of work;

d) animals providing transport services.

Step 4: Work out Process Map

raw materials acquistion → manufacturing → transport(distribution) → use

phase → disposal(end of life)

Step 5: Data Collecting

→collecting data both primary and secondary from each stages in the life
cycle:
→ EF

Step 6: Calculating

use 100 year GWP

CO2-e

Separate biogenic (biomass) and non-biogenic (fossil fuel)

Step 7: Reporting
Step 8: Assurance→ first-part/ Thrid-party

Allocation of Emissions

Def: When a single process produces more than one useful product (not
just waste), you need to “allocate” the emissions— meaning, you
must decide how much of the emissions belong to each output product.

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 Companies shall avoid allocation wherever possible by using process
subdivision, redefining the functional unit, or using system expansion.

Be consistent If you use a certain allocation method (e.g., mass-based) for

one product, use it similarly for other similar products.

Reflect contribution accurately

Allocation Methods:

1. Physical Allocation→ use phy unit like kg/L

2. Economic Allocation→ use $$ diff

3. Others

Construction Materials

Energy intensity(/m^2) for building sector need to reduce 30% by 2030 to

stay on track and meet the Paris agreement

Construction Sector is the 2nd largest contributor to HK carbon footprint (

in which 85% embodied in importing goods and services, from upstream
inputs to construction activities)

1. Embodied Carbon: the total greenhouse gas (GHG) emissions released

during the lifecycle stages before a building or material is used —
including extraction, processing, manufacturing, and transport.

It contributes a large share of total emissions, especially in the early

years. 2/3 initially, and 1/3 for total

Regional Specific system boundaries

2. Cement

5%of total anthropogenic CO2 emission

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 Clinker production is the most energy intensive stage(47%); consumes up to
90 % of the total energy use of cement production

(the process require > 1400C)

Calcination > coal combustion > electricity consumption

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 the carbonate will give CO2

CIC Green Product Certification: To provide verifiable and reliable information

on the carbon footprint of construction products for users to make informed
decision, thereby to reducing the carbon footprint of developments.

Module 3 Carbon Management Concepts

Module 3.1 Carbon Trading and Carbon Offsetting

1. Carbon Pricing

To put a price on carbon pollution as a means of bringing down

emissions and driving investment into cleaner options

Trade involves the transfer of the ownership of goods or services from

one person or entity to another in exchange for other goods or services
or for money

limited amount of CO2 can be admitted in order to limit warming to 1.5

degree

inequal emission among countries(developed VS developing)

Trading can lead to the benefits

1. effectiveness→ Emission trading helps actually reduce pollution even

when there aren’t many laws or strict rules.

2. Efficiency → reduce emissions at the lowest possible cost, Companies

that can reduce emissions cheaply will do so and sell their surplus
allowances, while those facing higher costs will buy credits instead as it
is harder to do the reduction

3. Integration → Emission trading facilitates the flow of finance and green

technology from developed to emerging markets → Global
Cooperations

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 2. Carbon Market

Types of carbon market:

1. Compliance Market: Emissions Trading System (ETS)

mandatory ，regulated by law

ETS is a system where regulated entities can trade emission units to
meet their emission targets. An ETS establishes a market price for
GHG emissions.

→ SYSTEM 1: Cap-and-Trade System

Government sets a cap (limit) on total emissions.

Companies get a certain number of emission allowances.

If they emit less, they can sell allowances.

If they emit more, they must buy more.

→ SYSTEM 2: Baseline-and-Trade System

A baseline (starting level) is set for each company.

If a company reduces emissions below baseline, it earns credits.

These credits can be sold to others.

2. Voluntary Carbon Market (VCM)

In voluntary markets, companies or individuals buy credits from GHG

emission reductions from project or program-based activities to "cancel
out" their emissions. (eg: reforestation, renewable energy developing

Paris Agreement Article 6

Voluntary Cooperation with ITMOs: Countries can trade emissions

reductions

UN-Run Carbon Credit Mechanism: : A central UN system to

issue carbon credits for verified emissions reductions from specific
projects.

Non-Market Approaches: Countries can work together without

trading carbon credits→ Sharing green technology, Applying
carbon taxes, Setting regulations or subsidies

Trends in Carbon Market

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 1. Carbon prices on the rise

2. Climate ambition increase and so do the relevance of carbon trading

3. Investor are increasingly attracted by the carbon market

4. Green transition must also be just→ just transition: ensure worker and
communities will not be left behind

5. Carbon border adjustment are raising the stake→ Taxes base on

embodied carbon ⇒ cleaner supply chain

6. Rise of voluntary carbon market

3. Carbon Credit and Carbon Offset

Carbon Offset(credit)

A carbon offset allows a company or individual to compensate for their

GHG emissions by funding projects that reduce emissions elsewhere

Projects are usually outside the company’s direct operations — like

forest protection or renewable energy abroad

Verified Emissions Reductions (VERs) – for voluntary markets.

Certified Emission Reductions (CERs) – under CDM (Kyoto Protocol)

Type of Carbon Offset:

Purposes:

1. Avoidance/Reduction: Prevent emissions (e.g., avoiding

deforestation, replacing fossil fuel with renewables).

2. Sequestration/ Removal: Actively remove CO₂ (e.g.,

afforestation, direct air capture)

Approach:

Nature-based:

REDD+: Avoid deforestation.

Reforestation/Afforestation.

Soil carbon enhancement.

Technology-based:

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 Renewable energy.

CCUS (Carbon Capture, Utilization, and Storage).

BECCS, DACCS, mineralization.

Types of Carbon Offset Project

1. Biological Sequestration

LBS (Land Biological Sequestration): Photosynthesis-driven carbon

capture by trees and soil.

LULUCF – Land Use, Land Use Change, and Forestry:

Avoided deforestation (REDD+)

Afforestation: Planting on land that was never forested

Reforestation: Replanting previously forested land

Soil management: Storing more carbon in soil

Tree-planting offsets are not always effective:

Forward selling (selling future offsets that aren’t yet realized).

Permanence: Trees can die, burn, or decay → release carbon.

Biodiversity risk: Some use non-native fast-growing trees,

damaging ecosystems.

2. Industrial Gases

For High GWP gases like N2O, HCFs, PCFs, SF6

3. Methane Capture

4. Energy Efficiency

5. Renewable Energy

6. Carbon Capture and Storage (CCS)

Offsetting Standards

1. Accounting Standards: Must be accurate and ensure credits are real

and additional.

2. Verification: Projects must perform as predicted by monitoring,

verifying and citification.

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 3. Registration System: Prevents double-counting and tracks credit
ownership.

4. Enable Trading: Credits must be traceable and transferable.

5. Project Type

6. Co-benefits

4. Carbon Tax

A carbon tax is a government-imposed fee on greenhouse gas (GHG)

emissions.

Key Concepts:

What it does: Puts a direct price on each tonne of CO₂ emitted.

Who pays: Emitters like factories, energy producers, or even fuel

suppliers.

Effect: Increases the cost of carbon-intensive goods/services,

encouraging emission reductions.

Market signal: Helps businesses and consumers factor carbon costs

into decision-making.

Pros:

Simple to implement

Predictable pricing

Encourages innovation to avoid the tax (green tech)

Cons:

Doesn’t guarantee emission levels (no firm cap, they can still pay to
emit) Vs Carbon trading: it has a total emission limit aka cap

Might impact low-income groups unless revenue is recycled fairly

5. Internal Carbon Pricing

Internal carbon pricing is when a company sets its own internal price on
carbon, often to guide investment decisions.

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 a. Shadow Pricing: Internal use only, no real financial exchange—used to
assess risks/costs

b. Internal Carbon Fee / Cap-and-trade system: Charges

departments/business units for their emissions to create a climate fund

Module 3.2 Carbon Management

1. WHY

Employee morale

Reputation→ better image for enhancing credibility, educate the related

public/people

Stakeholders Value→investor might prefer climate-conscious firm/

customer would prefer a greener choice

Carbon innovation

Competitive advantage → be proactive as a climate leader in the industry

Cost saving

Revenue Contribution→ charge for green/ attract green clients

Risk Reduction→ lower carbon taxes, and related supply chain shocks

2. Total Carbon Mangement

a. CF Measurement

b. CF Reporting

c. Carbon reduction

d. Carbon Offsetting

Stage 1: Company Footprint

Stage 2: Process Level

→ need to provide a mitigation (reduction) option (eg. financial bills to charge

for the GHGs emitted due to usage of the customers/ greener energy sources

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 Module 3.3 Net Zero and Carbon Neutrality
1. Business Align with Paris Agreement

Global Temperature Limit → Limit global warm to below 2 degree, aiming for
1.5

Mitigation → global GHGs emissions must peak as soon as possible and net
zero need to be reached in the second half of the century

Climate Finance → reaffirms the role of developed countries in supporting

the implementation efforts of developing countries, but also encourages
contributions from other countries.

Technology → strengthens international cooperation on climate technology

development and transfer, and capacity-building in developing countries.

2. Net Zero

All GHG emissions are balanced by removals, Emission reduction first,

then removal of residuals.

Vs Carbon Neutral →No net increase in emissions, achieved via offsets

(avoid in somewhere else)

Key elements of SBTi alignment

Set science-based targets covering Scope 1, 2, and 3 → Near Term(5-

10yrs) + Long term(by 2050)

In Transition to Net-Zero → removal for GHGs beyond their value chain

by purchasing carbon capture tech/ investing

At net-zero → Fulfilled the long term SBTs + neutralizing residual

emission by removal (those very hard to avoid)

Steps to Set Net Zero Target (SBTi)

1. Select base year

a. Scope 1, 2, and 3 emissions data should be accurate and verifiable

b. Base year emissions should be representative of a company’s typical

GHG profile (normal operation)

c. The base year should be chosen so that targets have sufficient

forward-looking ambition

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 d. no earlier than 2015

2. Calculate emissions: Must cover:

95% of Scope 1 & 2

67–90% of Scope 3 (if it’s significant)

3. Set boundary: Define what operations and emissions are included.

4. Choose a target year:

Near-term: 5–10 years

Scope 1+2 → Target: 1.5 degree below + Boundaries: 95%min

coverage

Scope 3 → Target: 2 degree below + Boundaries: 67%(if scope 3

account for over 40%)

Long-term: by 2050

Scope 1+2 → Target: 1.5 degree below + Boundaries: 95%min

coverage

Scope 3 → Target: 2 degree below + Boundaries: 90% min

coverage

5. Calculate targets:

Absolute reduction

Emissions intensity reduction

100% renewable electricity (Scope 2)

Scope 3 supplier engagement

Decarbonisation
1. Reduction > recycle: as avoid manufacture and disposal

2. Composting

For organic waste to avoid landfill

→ release CH4 during anaerobic respiration + transport emission

3. Combustion

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 energy recover and avoid fossil fuel used

→ release CO2 and N2O + transport

4. Landfills

CO2, CH4 and VOCs emitted + Pollutant Leachate

5. HK policy

a. IWMF(integrated waste management facility)

Generate electricity through steam in the incinerator, enough for

100000 household use for each 3000 tonnes of waste

b. Anaerobic Digestion

converting food into biogas and fertilizer

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