Measuring emissions is difficult. At present, only large companies, especially those subject to emission trading systems – such as the European Emission Trading System (EU ETS) – have protocols for measuring them. Most smaller companies do not measure them. Just as we use estimates, not direct measurements, for emissions from transport, housing, agriculture, and so on.
The practice currently divides emissions into three categories:
Scope 1: those produced directly by a production process;
Scope 2: those related to the energy used by the same production process;
Scope 3: all other emissions related to intermediate inputs, their transport, the transport of goods produced by the production process in question and their use.
For example, for a plant producing plastic parts, Scope 1 emissions are those related to the production process of the plastic parts, Scope 2 emissions are those related to the production of the energy purchased and used in the plant, and Scope 3 emissions are those necessary to produce the intermediate inputs to the production process, as well as for transport upstream and downstream of that process. There is a risk of counting Scope 3 emissions twice, once in the plant that produces them directly and once in the plant that uses that product as an intermediate input.
In the taxonomy of emissions, there are also so-called Scope 4 emissions, i.e. “avoided emissions”. Companies may develop new products or processes that produce fewer emissions than their predecessors throughout the production chain but may be reluctant to do so if the new product still leads to emissions. Hence the need to assess whether the new product or process leads to a reduction in emissions, compared to the status quo, throughout the value chain. It is important that “avoided emissions” are recognized and evaluated, so that companies have the right incentives to introduce innovations that in net terms lead to a reduction in emissions.
The possibility of increasing emissions now to diminish them later is also an issue worth considering. Initiatives such as constructing solar and wind energy facilities, bolstering electric grids, or advancing battery production may indeed intensify emissions and investment needs briefly.