Once and immediately: Why emissions are allocated in the first year

|  January 6, 2025

🕓 Reading time 8 minutes

Table of contents

1. The basics of one-time accounting under the GHG Protocol

2. Examples of one-off accounting

3. Advantages and challenges of one-time accounting

4. Conclusion: Balance sheet once for more practicality

1. The basics of one-time accounting under the GHG Protocol

The GHG Protocol (Greenhouse Gas Protocol) is the world's most widely used standard for GHG accounting. It classifies emissions into three categories (scopes):

• Scope 1: Direct emissions from own sources.
• Scope 2: Indirect emissions from energy consumption.
• Scope 3: Further indirect emissions along the value chain.

The principle of one-time accounting is particularly applicable in Scope 3 Widely used. It states that emissions occurring over the entire lifetime of a product or investment are fully accounted for in the first year.

Why are emissions allocated in the first year? This method reduces administrative effort This is significant, as proportional allocation over many years would be difficult to implement in practice. It also enables consistent and comprehensible reporting, providing stakeholders with a clear basis for decision-making.

2. Examples of one-off accounting

Capital goods (Category 2: Capital Goods)

Capital goods such as machinery or buildings that are used for several decades generate significant emissions during their production. These emissions are fully accounted for in the year of purchase, even though the goods are often depreciated over decades.

Example:
A company accounts for the emissions from the manufacture of new production machines in full in the year of purchase, even if they remain in operation for 20 years.

Transportation and distribution (Category 9: Downstream Transportation and Distribution)

Emissions from the delivery of products to customers are accounted for in the year of sale, regardless of how long the transport routes could continue in the future.

Example:
A furniture manufacturer accounts for the emissions generated by shipping products to end customers directly in the year of sale. This includes, for example, emissions from the use of trucks, ships, or aircraft.

Use emissions of sold products (Category 11: Use of Sold Products)

Emissions generated during the entire useful life of a product are attributed to the year of sale.

Example:
An automobile manufacturer calculates the total CO₂ emissions emitted by a vehicle during its lifetime in the year of delivery. Manufacturers of household appliances such as refrigerators or boilers follow a similar approach. Full responsibility for the use phase is transferred to the year of sale.

Disposal of sold products (Category 12: End-of-Life Treatment of Sold Products)

The disposal of sold products, e.g. recycling or landfilling, is also accounted for in the year of sale.

Example:
An electronics manufacturer calculates the total emissions generated by recycling batteries and other components of its products in the year of sale. This applies even though the products are often not disposed of until years later.

3. Advantages and challenges of one-time accounting

4. Conclusion: Balance sheet once for more practicality

The single-entry accounting under the GHG Protocol is a key principle to simplify the allocation of emissions. It provides a practical solution, which ensures efficiency in GHG accounting.

Despite the challenges, particularly the outliers caused by high values in the first year, the feasibility of this method clearly speaks in favor of this method. The effort required to allocate emissions pro rata over many years and to manage the associated data would be virtually impossible in practice.