What the EPA Supply Chain Greenhouse Gas Emission Factors v1.2 update means for corporates

The recent release of Supply Chain Greenhouse Gas Emission Factors v1.2 by US EPA has improved the accuracy of GHG emissions reporting for corporates. In this article, we look at what the emissions factor database is used for, how it has evolved in the latest update, and how corporates can use the database to understand their emissions.

Earlier this year (12th April 2023), the US Environmental Protection Agency (EPA) released an updated version of the Supply Chain Greenhouse Gas Emission Factors v1.2. The factors were prepared using US Environmentally Extended Input-Output (USEEIO) models, which included a life cycle model of goods and services from the US economy. It is a spend-based database and is primarily used by corporates to screen and map scope 3 emissions and translate spend data into estimated emissions data for reporting purposes, so that businesses can understand which part of their value chain contributes the largest emissions.

Scope 3 emissions are the indirect emissions from a corporate’s value chain, including both upstream and downstream activities. Scope 3 emissions often represent the largest portion of a corporate’s carbon inventory, and as a result they are a crucial consideration for corporates to achieve their sustainable and environmental target.

Unlike scope 1 and 2 emissions, quantifying scope 3 emissions presents significant challenges. This difficulty arises from the complex structure of the value chain, and corporates tend to have less access to comprehensive activity data. As a first step, corporates typically apply a high-level screening method for scope 3 emissions using spend data. As a result, it is essential to source reliable emission factors based on spend.

The accuracy of emission factors may vary depending on the region, industry, and specific activities involved. But given the limitation of the availability for regional specific emission factors, corporates often need to rely on publicly available emission factor databases (EFDB) from other regions. In addition, EFDBs often undergo updates and revisions as new research and data becomes available, and thus it is necessary for corporates to regularly review and update their EFDBs used for emissions estimation. It is important for corporates to demonstrate due diligence and to source the most accurate EFDBs to ensure the credibility and transparency of their carbon footprint. The EFDBs that we use at RESET Carbon tend to be updated once a year, such as the Energy Agency (IEA) Emission Factor, the UK Department for Energy Security and Net Zero greenhouse gas reporting conversion factors; and the Higg Materials Sustainability Index (Higg MSI), which is updated bi-annually.

The supply chain greenhouse gas emission factors from EPA are the largest publicly available EFDB for corporates to check their scope 3 emissions, and this recent update was long overdue. Only minor updates have been made in recent years, and up until this latest release, the GHG data in the previous version was from 2010-2016. The new v1.2 update offers more accurate emissions data for corporates to report on as it is based on GHG data representing 2019. It has also been adjusted to purchase prices from 2021 in USD to reflect more recent inflation rates to help quantify emissions from spend. Additionally, the new v1.2 now follows the 2017 NAICS industry code, which also provides a more detailed and clearer breakdown of the commodities, covering all categories of goods and services in the US economy.

The previous v1.1 grouped GHG emissions into four categories for each commodity, including carbon dioxide, methane, nitrous oxide and others. While in v1.2, we are provided with two sets of factors for each commodity, one is the aggregated emissions factor for all GHGs combined in kgCO2e per dollar using the 100-year global warming potential (GWP); and the other lists the weight of each GHGs emitted per dollar without GWP conversion. This gives us the flexibility to convert the impact of GHG emissions based on the latest GWP (Global Warming Potential) from the IPCC (Intergovernmental Panel on Climate Change) assessment report.

At RESET Carbon, we advise corporates to keep their emissions data up to date based on the latest version, and to use an EFDB that is industry specific, as these databases will provide more accurate estimations compared to a database with general emission factors.

We support clients navigate the latest databases and always use the most recent and relevant databases to ensure accuracy and consistency in emission calculations and as the basis of better carbon management.

If you have a question about emission factor databases, drop our team a message here.