Tag Archives: offsets

Frequently Asked Questions about embodied emissions [with video]

A significant part of our work is analysing our client’s emissions and developing carbon footprints. With more and more attention being put on value chain emissions, embodied emissions are fast becoming a focal point.

However, there is much confusion about what embodied emissions are and how to measure them, so we thought it would be a good idea to publish our clients’ most frequently asked questions and our answers.

What are embodied emissions?

Embodied emissions are all greenhouse gas emissions that are released as part of making a product or service ready for your consumption or use.

Imagine buying a car. Let’s take two key components of a vehicle, metals and plastics. The raw minerals have to be mined and processed to form the metal and transported to the factory where the car is produced. Similarly, plastic is made from oil, which has to be extracted, refined, processed into plastic and transported to the factory for assembly.

The car is made from these and other components and shipped to distribution centres, from where it is transported to the point of sale. All along the way, greenhouse gas emissions are being produced, from extracting materials, manufacturing, assembly, transport and retail. This means that products and services you buy come with an associated carbon footprint. The more greenhouse gases that are released to produce the good or service, and get it to you, the more embodied emissions it contains.

Is there a difference between embodied and embedded emissions?

Typically, these two terms are used interchangeably.

What is the difference between operational and embodied emissions?

Operational emissions are released when you are using a product or a service. If you use a natural gas boiler to heat water, burning the gas causes the release of greenhouse gas emissions. If you drive a car with an internal combustion engine, greenhouse gases are similarly released. If you operate a building, you consume electricity, which in most cases causes the release of emissions at the power plants that produce the electricity.

This contrasts with embodied emissions, which are released before you even start using or consuming a product or service. If you construct a building, greenhouse gases were emitted during the production and shipping of materials such as cement, steel and glass. When you buy those products, you also ‘buy’ the associated greenhouse gas emissions (which in the absence of any carbon price means no one has to pay for these emissions).

In most cases, organisations focus on operational emissions when developing a greenhouse gas inventory, but climate action leaders also factor in embodied emissions in goods and services they buy.

Who in the supply chain accounts for emissions – our suppliers or their suppliers, or us?

Scope 3, or supply chain emissions are, by definition, the direct emissions of another organisation, which means that your scope 3 emissions are someone else’s scope 1 and scope 2 emissions.

If everyone in your supply chain accounted for (and balanced) their scope 1 and scope 2 emissions, you wouldn’t need to address your scope 3 emissions. However, it will be a while yet before everyone accounts for their greenhouse gase emissions, so many leading organisations are electing to take responsibility for their most significant scope 3 emissions themselves, rather than wait for this to occur.

If it happens that both you and your upstream suppliers are accounting for emissions, then both you and your suppliers can work on reducing these emissions, with each of you having different abatement levers available.

There are many advantages of developing a supply chain greenhouse gas inventory because you will better understand your overall emissions profile, including from upstream and downstream activities. Understanding your scope 3 emissions can help you plan for potential carbon price regulations and guide your procurement decisions and product design. It also allows you to communicate to your stakeholders the potential impacts of these emissions and your planned actions to reduce your greenhouse gas emissions and risks.

If both our suppliers and our company account for emissions, isn’t this double counting?

Double counting is an inherent part of scope 3 accounting. For instance, if a steel producer accounts for natural gas consumption under their scope 1 and for electricity consumption under their scope 2 – you would also account for the same emissions attributable to you, but under your scope 3. If the steel producer offsets emissions relating to their product, your scope 3 emissions from using their product will be zero.

The only thing you must be mindful of when it comes to double-counting is that you don’t double-count the same emission between companies within the same scope. The GHG Protocol carefully defines scopes 1 and 2 to ensure that two or more companies will not account for emissions in the same scope. I recommend you follow the rules of the GHG Protocol to ensure you are not double-counting the same emission or emission reduction.

How can I measure embodied emissions?

There are many ways to calculate embodied emissions, with trade-offs between accuracy and ease of calculation.

In an ideal world, everyone accounts for their emissions, and so accounting for your embodied emissions of your scope 3 sources would be an easy exercise. Imagine you are using environmentally friendly paper for printing your organisation’s magazine. If your paper supplier has determined the carbon footprint of their product, you could easily account for the embedded emissions in that paper.

However, you may be procuring tens of thousands of individual products and services. Only a fraction of those suppliers will be able to provide you with information about the embedded emissions in their products and services. And engaging with each individual supplier or looking up supplier-specific greenhouse gas information will be too time-consuming and costly, so you need to find a way to estimate embedded emissions.

Going back to the example of paper. If you don’t know the embedded emissions of your paper, you will need to apply more generic emission factors that translate from your activity data to associated carbon emissions. When it comes to activity data, you can use the weight of the paper, or you can just use its cost. Using the weight of the paper may give you more accurate results in terms of carbon emissions, but it is a bit harder to calculate the weight of the paper, as opposed to just using the expenditure.

What I’ve illustrated here with paper is the same for other products and services you buy. Several software solutions and publicly available data sources exist that translate from activity data or expenditure to associated emissions. Some of these translations may apply global data or data from another region or country that has done this analysis. If you are looking to become carbon neutral in Australia, you can use emission factors provided by Climate Active.

When you start out with accounting for embedded emissions, your data collection processes and your methods may not be very sophisticated. However, it’s important that you start somewhere. You can then work on making your carbon footprint calculation processes more rigorous each time you update your scope 3 carbon footprint. Initially, you may start accounting for embedded emissions relying on relatively low-accuracy data such as expenditure. However, over time, you can improve data quality, perhaps focusing on your biggest sources of emissions and your tier 1 suppliers.

Why do I have to account for professional services that I buy?

When you buy the services of a company, your supplier is most likely running an office and might travel to your place of business, all of which causes greenhouse emissions. By accounting for these emission sources, you are taking responsibility for these emissions. You can work on a plan to reduce these emissions, such as by reducing travel and switching to virtual meetings or by engaging your suppliers to encourage them to procure renewable energy, use energy-efficient vehicles or become carbon neutral certified, potentially under a program such as Climate Active.

If your professional service providers are certified carbon neutral, then their input into your organisation is carbon neutral, meaning that your carbon footprint reduces.

Given that most of the professional services firms we engage are local, does this improve the associated carbon footprint?

You would only be able to demonstrate emissions reduction if you work with your professional service providers to obtain their individual carbon footprint. Assuming that this is probably not the case and that you are most likely translating from expenditure to emissions, you won’t be able to reflect the fact that they are local in your emissions inventory at this time.

Why do I have to account for the food that I buy?

Food accounts for around a quarter of all supply chain emissions globally. Most emissions from food come from deforestation and agriculture. Freight and food manufacturing cause fewer emissions by comparison.

So, given that food production causes so many emissions, it’s considered good practice to include this in your greenhouse gas inventory.

What products and services have the most embodied emissions?

Eight supply chains account for more than half of all global greenhouse gas emissions. Food is one of the most carbon-intensive products. Construction has the next-biggest carbon footprint, at 10% of global emissions, followed by fashion, fast-moving consumer goods (FMCG), electronics, automotive production, professional services, and freight.

Raw material inputs from land use and heavy industries (including agriculture in the food supply chain, cement in construction, plastics in FMCG, and metals in automotive production) drive the majority of emissions.

Figure 1: Emission split in scopes 1, 2 and 3 upstream for selected industries. Source: Net-Zero Challenge: The supply chain opportunity

What construction materials contain the most embedded emissions? Which should I focus on in my data collection?

Our clients often enquire about the carbon impact of their capital works projects. Emissions are determined both by the energy requirements of the operations of a new asset (operational emissions) and the embedded emissions of construction inputs, such as steel or cement.

Due to the carbon-intensive material manufacturing processes and the use of fossil fuels before your construction materials even arrive at your building site, embodied emissions can make up a large part of the carbon footprint of an asset. And once a facility is built, nothing more can be done about embedded emissions.

Given that building new assets requires many different materials, our clients ask what input materials they should put the greatest emphasis on in terms of data collection and reduction efforts.

The most significant embodied emissions come from aluminium, cement, plastic, steel, paint and glass, so you should focus your data collection efforts on these input materials in the first instance, balanced with assessing quantities of these materials in your project. So if you are only using a little bit of aluminium, for example, it may not be relevant to focus on this material over others such as steel and concrete.

Where can you get help?

100% Renewables are experts in helping organisations develop their carbon footprint and emissions reduction strategies. If you need help with your Climate Action Strategy, please contact  Barbara or Patrick.

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.

Exploring carbon neutral and NEXTneutral with Craig Scroggie, CEO NEXTDC [with video]

Information technology is responsible for as many carbon emissions as air travel. Data centres, which house IT infrastructure, are growing at an exponential rate globally, and it is predicted that over the next five years, as much as 20% of all electricity generated will be consumed by the ICT sector.

Australia’s leading data centre provider NEXTDC is tackling this problem head-on: They have been carbon-neutral since 2018 and now offer an industry-leading carbon-neutral service to their customers. I recently had the pleasure to speak with Craig Scroggie, CEO of NEXTDC, about their journey to net-zero.

Craig is a visionary leader who is never satisfied with the status quo and is always on the lookout for performance improvements for his customers, and emissions reductions in NEXTDC’s business. In this article, I’ll share how NEXTDC achieved carbon neutrality, how they are helping their customers achieve their own sustainability goals, and Craig’s three key takeaway messages for other organisations looking to achieve net-zero emissions.

Data centres are power-hungry

Every time you watch a movie on Netflix, make a Zoom or Teams call, search for something on the Internet, post on LinkedIn, watch a funny cat video, or order online, data centres are working away in the background, processing, storing and disseminating the data and applications that enable our modern lifestyle.

In our interview, Craig notes that forecasts from Gartner, IDC and others indicate that every 18 to 24 months, the total amount of information worldwide doubles! It follows then that the amount of information that data centres need to store, back up, protect and share is also doubling.

ICT equipment needs power – and a lot of it. But it’s not just the equipment itself, there is also the power required to cool data centres. Even with advances in digital technology, ICT equipment still generates a lot of heat, which needs to be efficiently removed to ensure the data centre functions optimally.

When you add electricity use from air conditioning to the electricity consumption by the computer equipment itself, you can picture just how much energy is needed. Craig said that the power consumed by data centres globally is between 2% and 3% of all electricity use  and that over the next five years, it is forecast that data centres will consume as much as 20% of all electricity generated.

How NEXTDC achieved carbon neutrality

NEXTDC is dedicated to continuously improving the benchmarks in the industry for data centre operational and sustainability excellence. For Craig, sustainability improvements start at the supply chain, the design, construction and development of data centres, and go all the way through to day-to-day operations.

NEXTDC is making use of the environment rather than use power to drive high-cost cooling and carefully manages airflow to reduce the amount of energy that is required to drive mechanical cooling systems.

They pioneered renewable energy production in the Australian data centre industry with M1 Melbourne’s $1.2 million photovoltaic system, installed eight years ago in 2013. NEXTDC is continuing its rollout of solar on data centre roofs as well as on adjacent buildings. They are also investing in power purchasing agreements, where they act collaboratively with other buyers to fund the development of wind farms and other generation technologies to power their facilities.

NEXTDC also places a high value on water efficiency and recycling of water, as well as recycling the company’s and their customer’s waste materials. As a testament to their operational efficiencies, NEXTDC’s SI Sydney and M1 Melbourne data centres have both been certified as NABERS 5-star rated data centre infrastructure facilities for energy efficiency.

To take responsibility for all relevant greenhouse gas emissions, NEXTDC decided to go carbon neutral, and has been a certified Climate Active organisation since November 2018.

Extending NEXTDC’s carbon neutrality to their customers

The next step in NEXTDC’s sustainability journey was to allow their customers to come together around a shared commitment to sustainability leadership and create a more sustainable future. NEXTDC created a service called NEXTneutral, which enables customers and partners to leverage the carbon offset capability NEXTDC has built for their own corporate program.

It is difficult for data centre customers to know how many carbon emissions are generated by data centre operation that relates to their business. Under NEXTneutral, the carbon emissions produced in a standard data centre rack are pre-calculated. NEXTDC takes care of the procurement of carbon offsets on their customers behalf, which helps their customers quickly and easily neutralise carbon emissions attributable to their portion of data centre electricity use. The carbon offsets fund important ecological projects, which in turn creates real change for the environment and for society.

It’s as easy as choosing to fly carbon neutral – NEXTDC customers can opt-in by going to their service management portal and clicking the NEXTneutral button, which allows them to offset their data centre emissions quickly and efficiently.

How NEXTDC manages physical climate change risks

In the interview, I asked Craig how physical climate risks are affecting NEXTDC. Craig mentioned that physical climate risks such as flooding, bushfires, earthquakes and cyclones are front of mind for data centres, alongside other physical risks that could cause outages and disruptions. He says that when you think about protecting customers infrastructure and building business continuity and resilience into operations, the first action is ensuring that the data centre is always on and always available.

With this in mind, NEXTDC has certified to the highest standard in the world. The Uptime Institute, an independent thought leader and certification body in IT and data centres, awarded NEXTDC the ultimate recognition of the overall design excellence of NEXTDC’s facilities. NEXTDC started with Tier III certification, then moved to Tier IV Certification for Fault Tolerance, which is the highest standard in the world.

Craig Scroggie’s three tips for other organisations moving to net-zero

The opportunity to be the platform of choice for the digital era comes with the responsibility to be stewards of a sustainable future. I asked Craig what advice he would give other organisations moving down the net-zero path. He provided these three takeaway messages:

1 – Just start

Craig says to just start and do something. It doesn’t matter where you start, but when you think about your operations, the sustainability of what you do, and looking for partners that can assist you, you don’t have to spend the next three years thinking about all elements of a sustainability strategy. Start somewhere, look at the areas in your supply chain that you can have the most influence over and choose something to make a difference on.

2 – Get help

The second key takeaway message from Craig is that there are a lot of people out there that would love to help. So if you’re looking to achieve Climate Active certification, you can talk to the relevant stakeholders and the Climate Active government department. If you need assistance with energy efficiency, benchmarking, and certification, talk to the NABERS team. You can speak with independent providers who measure energy efficiency and help you build strategies to reduce the amount of power you consume.

And if you’re a customer who builds IT infrastructure, or a cloud service provider or an enterprise, you can talk to a company like NEXTDC to help you opt into programs that allow you to offset the carbon footprint of your data centre and to also reduce your energy footprint. There are many people that want to make a difference in this area, so reach out to someone and start having a conversation on what action you can take that will make a difference.

3 – Never stop

Don’t try and solve the sustainability challenge all in one go. NEXTDC started out with small strategies, such as wanting to have renewable energy as an input to their business, and over time, they got better at managing airflow and reducing their PUE. Craig says that you need to look at the challenge with a long-term view. Being more sustainable is not something that is ever finished; it will always be a work in progress. Every day, every month, every year, you learn something new, and you continue to build that into your long-range plans.

For NEXTDC, every new sustainability achievement will put them a step closer to their long-range plan of getting to 100% renewable energy and to the long-term goal of 100% of their customer base opting into offsetting their carbon footprint as well.

About NEXTDC Limited

NEXTDC is Australia’s leading data centre-as-a-service company and one of Australia’s fastest-growing technology organisations. NEXTDC data centres and custom co-location solutions are engineered to grow in line with the demands of a business and promote flexibility through solutions that scale, supported by the country’s most dynamic and highly skilled ecosystem of partners, carriers and cloud platforms.

About 100% Renewables

100% Renewables are experts in helping organisations develop their net-zero and carbon-neutral pathways. If you need help with developing your climate action plan, please contact  Barbara or Patrick.

If you are an organisation leading in climate action and would like to get interviewed in our Driving Net Profit With Zero Emissions show, please get in touch with Barbara.

Feel free to use an excerpt of this blog on your own site, newsletter, blog, etc. Just send us a copy or link and include the following text at the end of the excerpt: “This content is reprinted from 100% Renewables Pty Ltd’s blog.