However, the disadvantage of this approach is that it would then be difficult for stakeholders to compare the Scope 2 and/or Scope 3 of different companies if one company uses an emission factor that comes from a life cycle analysis. If a company is not participating in a specific initiative that requires separating these two for reporting purposes, it may be sufficient to clearly report that the emission factors being used include sources that would normally be categorized in Scope 2 and Scope 3. It may be impossible to separate out Scope 2 and 3 emissions when the emission factors for purchased electricity come from a life cycle analysis. Unlike CO2 emissions, the combustion of biomass does in all cases result in net additions of CH4 and N2O to the atmosphere, and therefore emissions of these two greenhouse gases as a result of biomass combustion should be accounted for in emission inventories under Scope 1. When calculating emissions from the burning of biomass by electricity providers, the amount of CO2 emissions would reflect the amount of biomass they use, i.e., if they burn only biomass, their emission factor would be zero. Recognizing this situation, and considering the national inventory practices, the Corporate Standard requires that CO2 emissions from biomass combustion be reported separately from the other scopes in a memo item. When reporting corporate-level greenhouse gas inventories, the accounting of terrestrial carbon stock changes associated with harvesting and combustion of biomass may fall within the organizational boundaries of different companies, i.e., the wood being burned is not cut on land owned by the company. In other words, the “emissions” are counted when the trees are cut, not when they are burned. This is because any net additions of CO2 to the atmosphere resulting from biomass combustion should be captured by analyzing land-use, land-use change activities and their associated effects on terrestrial biomass carbon stocks. Emissions of CO2 from the combustion of biomass are reported for informational purposes, but not included in national totals. All leases not defined as finance or capital leases by the above terms are considered operating leases.ĭue to the biogenic differences between fossil fuels and biomass, they are categorized differently in national inventories. If a company is using the operational control approach to establish its organizational boundary, then leased assets would fall within a company’s organizational boundary if an operating lease exists. (Guidance document of the new Purchased Electricity Heat and Steam Tool) This would be the case with finance or capital leases, which by definition “transfer substantially all the risks and rewards of ownership to the lessee”. If a company is using the equity share or financial control approach to establish its organizational boundary, then leased assets would fall within a company’s organizational boundary if they are considered wholly owned assets in financial accounting and are recorded as such on the balance sheet. Leased assets that fall within a company’s organizational boundary should be classified as Scope 1 or 2 (depending on whether they are direct emissions or indirect emissions from electricity), while those that do not fall within a company’s organizational boundary should be classified as Scope 3. This issue is discussed in Appendix F to the Corporate Standard, ‘ Categorizing Emissions from Leased Assets‘.Įmissions from leased facilities and vehicles (leased assets) may be classified as Scope 1, Scope 2, or Scope 3, depending on the source of emissions, which approach a company uses to establish its organizational boundary, and which type of leasing arrangement is in place.
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