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Carbon Accounting
and Credits
CA Prakhar Gupta
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Is Climate Change Real?
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Is Climate Change Real?
Global Sea Level on the
Temperature on Rise
the Rise
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Is Climate Change Real?
In Jan-Sep 2023, 26 of 36 States and UTs had a higher
number of extreme weather occurrences than in the same
period in 2022.
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Impact of Climate Change
Extreme Heat
Changing Rainfall Patterns
Water Stress and Droughts
Depletion of Groundwater
Flooding due to Himalayan
Melts
Sea Level Rise
Agri and Food Patterns
Energy Demands and
Security
Health Issue
Migration and Conflict in
Borders
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Commitments Toward Climate
Change
India is a signatory to the Paris Agreement
under the UN Framework Convention on
Climate Change.
India has three quantitative climate change
goals
1. Reduction in the emissions intensity of GDP
by 33 to 35 percent by 2030 from 2005 level,
2. Achieving about 40 percent cumulative
Effective Date: 4 November electric power from renewable resources by
2016 2030.
Signatories: 195 Countries
3. Create additional carbon sink of 2.5 to 3
billion tonnes of CO2 equivalent by 2030
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Why are we discussing?
BRSR, GRI, Carbon
TCFD, SASB…. Accounting
Carbon
Third Party
Reduction
Assurance
Strategies
Carbon Credit
Carbon Taxation
and Listings
Only One
Earth
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Believe Me!! Extended Hat of
Accountants What is Carbon Footprint
What are various categories of emission
What is carbon accounting
Process and Methodology of carbon
accounting
Decarbonisation and net zero
Carbon Offsetting and Credits
Carbon Taxation
Let's Deep
Dive
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CARBON (GHG)
FOOTPRINT
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Carbon - Biggest Factor of Climate
Change
Human
Activity Industrial Revolution
Burning of
Fossil Fuel
Increased
Green
House
Gases
(GHG)
CO2 equivalent
Climate Change
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What is Carbon Footprint ?
A carbon footprint measures:
the amount of carbon dioxide and other
greenhouse gasses (GHG) produced
by an individual or organization or event
during a given timeframe.
These gasses trap heat in the Earth's atmosphere
and result in climate change.
A carbon footprint is typically measured in units of
carbon dioxide equivalent (CO2e), the most
common greenhouse gas.
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Top Emitters of GHG
The Top 10 GHG Emitters Contribute Over Two-Thirds of
Global Emissions
https://www.wri.org/insights/interactive-chart-shows-changes-worlds-top-10-
emitters
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Categories of Emission
Direct Emission direct occur from sources controlled or
owned by an organization
Emission
Stationery Sources includes fuel consumed in
machineries which are installed at a specific location.
Direct Indirect Like Diesel consumed in DG Set
Emission Emission
Non-Stationery sources such as fuel used in vehicles
Scope 1 Scope 2 Scope 3
Indirect Emission is generated from sources not owned
by organization
Non-
Stationery Energy Ancillary
Stationery
Scope 2 – emission resulting from purchased
electricity, steam, heat, or cooling.
Scope 3 - sources not already included in an
organization's scope 1 and scope 2 boundaries
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Emission in Value Chain
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Fact Check!!
1. Boiler consuming coal 1 7. LPG used in office canteen 1
2. Electricity purchased from GRID 2 8. Cooling gas filled in Air Conditioners 1
3. Electricity generated using own DG set 1 9. Steam purchase from third party 2
4. Fuel reimbursement paid to employee 1 10. Freight paid for raw material 3
5. Flight booking for employees 3 11. Hotel booking for employees 3
6. Renting of Shuttle buses for employee 12. Electricity Generated by coal in coal power
office travel 3 plant 1
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Carbon
Accounting
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GHG Protocol
Greenhouse Gas Protocol provides standards,
guidance, tools and training for business and
government to measure and manage climate-
warming emissions.
GHG Protocol establishes comprehensive global
standardized frameworks to measure and manage
greenhouse gas (GHG) emissions
Partnership between World Resources Institute
(WRI) and the World Business Council for Every 9 out of 10
Sustainable Development (WBCSD) companies reporting
emission use GHG
GHG Protocol has published detailed corporate Protocol
standard for calculation and accounting of emission
https://ghgprotocol.org/
https://ghgprotocol.org/sites/default/files/standards/ghg-protocol-revised.pdf
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Process of Emission Accounting
Boundary Setting
• Organisational Boundary Selection of
• Operational Boundary Define the Base Identification of
approach of
Year Emission Sources
calculation
Conducting Consolidate the
Determination of Emission calculation
Collection of Data
emission factors Calculation (Organisational
(operational level) Level)
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Classic example of electricity
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Identifying GHG Emission
GHG emissions typically occur from the following source categories:
Stationary combustion: combustion of fuels in stationary equipment such as boilers,
furnaces, burners, turbines, heaters, incinerators, engines, flares, etc.
Mobile combustion: combustion of fuels in transportation devices such as automobiles,
trucks, buses, trains, etc.
Process emissions: emissions from physical or chemical processes such as CO2 from the
calcination step in cement manufacturing, etc.
Fugitive emissions: intentional and unintentional releases such as equipment leaks from
joints, seals, packing, gaskets, as well as fugitive emissions from cooling towers etc.
Office-based organizations may not have any direct GHG emissions except in cases where
they own or operate a vehicle, combustion device, or refrigeration and air-conditioning
equipment
Almost all businesses generate indirect emissions due to the purchase of electricity for use
in their processes or services.
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Method to Calculate Emission
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Sample Calculation
Assume 1000 Liters of diesel are consumed in the DG set. Calculate emission for fuel
consumed.
Type of Emission Ch4 Emission N2O
Emission Total
fuel Fuel factor Emission factor (g Emission
factor(TCo2/Gall Emissions(tons) Emissions(TC Emissions(TCo2 Emissions
consume Sources Combusted(Gallon) (gch4/Gallo s GWP(ch4) N2O/Gallon s GWP(N2o)
on) O2e) e) (TCO2e)
d n) (Tonnes) ) (Tonnes)
CO2 CH4 N2O
Diesel DG set 264.17 10.21 28.00 0.01 0.87 265.00 0.06
2.70 0.93 0.00 0.00 2.76
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Emission Reporting – AXA
Sustainability Report
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Emission Reporting – Shell GHG
Report
Shell GHG Report
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Decarbonisatio
n and
Offsetting
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Decarbonization
Decarbonization mean
s reducing the amount
of greenhouse gas
emissions that a
society produces, as well
as increasing the
amount that is being
absorbed.
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Carbon Neutral and Net Zero
Carbon-neutral
refers to balancing
Define a base line out the total amount
for reduction of carbon emissions,
Maximum Carbon
Emission In- Neutrality
tensity
Decarboniza- Carbon Reduc-
tion Strategy tion Target Net
Zero
Target to reduce
emission by x% Net-zero carbon means no
carbon was emitted from
the get-go, so no carbon
needs to be captured or
offset
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Example of Net Zero Road Maps
India’s Net Zero Road Map
Enhance non-fossil fuel
energy capacity to 500 GW
by 2030
Meet 50% of energy
requirements from renewable
energy by 2030
Reduce carbon intensity of its
economy by less than 45% by
2030
Reduce total projected
carbon emissions by 1 billion
tonnes from now onwards till
2030
Achieve net zero by 2070
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Optimize, Replace and Offset
Step towards This can include upgrading to energy-
decarbonisatio Improving efficient lighting and HVAC systems,
and implementing best practices for
n Efficiency energy conservation.
Switching to alternative resources and
Emission options – Renewable energy, switching
to EVs etc
Reduction
Investments in projects that reduce
Offsetting greenhouse gas emissions, such as
carbon sink , renewable energy or
forestry projects
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Fact Check!!
Company A installed a solar energy plant on the factory terrace. The electricity generated is
send back to grid and the company was purchasing non-renewable energy back from the grid.
The total energy consumption during the year was 500MW. The solar energy generated send
to grid amounts to 240 MW.
• How much electricity to be considered for Scope 2 emission?
____________
• How much electricity to be considered for Offset?
____________
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Examples of Optimisation
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Examples of Reduction
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Examples of Offsetting
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Carbon
Credit
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Carbon Credits
What Are Carbon Credits
Carbon credits, also known as carbon
offsets, are permits that allow the
owner to emit a certain amount of
carbon dioxide or other greenhouse gases.
Units of Credits
One credit permits the emission of one ton
of carbon dioxide or the equivalent in
other greenhouse gases.
Process of Generation of Credits
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Carbon Credits
Carbon Credit Trading Scheme (CCTS), the
scheme was brought into effect through
the Energy Conservation (Amendment) Bill,
2022, empowers the central government to
establish a carbon trading framework.
Key constituents of the scheme include the
India Carbon Market Governing Board,
the administrator, the registry, the
trading administrator, and more
Alongside the CCTS, the Indian government
has also introduced the ‘Draft Green Credit
Programme Implementation Rules, 2023’.
The Green Credits Programme extends its focus beyond greenhouse gas emissions
reduction or removal, encompassing activities such as tree plantation, water conservation,
sustainable agriculture, and more
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Carbon Taxes
What is Carbon Tax?
Under a carbon tax, the government sets a price that emitters must pay for each ton of
greenhouse gas emissions they emit.
Concept of CBAM?
The EU’s Carbon Border Adjustment Mechanism (CBAM) is a tool devised to put a fair price on
the carbon emitted during the production of carbon intensive goods that are entering the EU,
and to encourage cleaner industrial production in non-EU countries.
Currently sectors such as cement, Iron and Steel, Aluminium, Fertilizers, Electricity and
Hydrogen are covered.
Carbon Tax in India: Currently, India does not have a uniform system of carbon taxation
across the country; One a compensation cess on coal production at Rs.400 per tonne was
introduced in 2017.
