GHG inventory fundamentals - Base year
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GHG Emission Scopes

The Greenhouse Gas Protocol categorizes emissions into three scopes for GHG accounting:

S1

Scope 1: Direct emissions

Direct emissions from sources that are owned or controlled by your company.

Examples:
  • Company vehicles
  • Fuel combustion in boilers/furnaces
  • Process emissions from manufacturing
  • Fugitive emissions (gases that leak or escape unintentionally, like when refrigerant leaks from air conditioning units)
S2

Scope 2: Indirect emissions from purchased energy

Indirect emissions from the generation of purchased electricity, steam, heating, and cooling consumed by your company.

Examples:
  • Purchased electricity
  • Purchased steam
  • Purchased heating
  • Purchased cooling
S3

Scope 3: All other indirect emissions

All indirect emissions (not included in Scope 2) that occur in the value chain, including both upstream and downstream emissions.

Examples:
  • Purchased goods and services
  • Business travel
  • Employee commuting
  • Waste disposal
  • Transportation and distribution
  • Use of sold products
  • End-of-life treatment of sold products
MB

Market-based Method

A way of calculating Scope 2 emissions based on the electricity that companies have purposefully chosen (or their lack of choice).

What it means:
  • Uses supplier-specific emission factors
  • Accounts for renewable energy purchases
  • Reflects contractual instruments for electricity
  • Enables companies to show reduced emissions from low-carbon energy choices
GHG inventory fundamentals
Base year Definition Purpose Requirements Select your base year Assessment & recalculation policy Action plan

Base year

Before measuring your carbon footprint, you need to establish a reference point for tracking progress. This lesson explains how to set up and maintain a GHG inventory base year that aligns with reporting standards.

Definition

A base year serves as your reference point for measuring emissions over time. It establishes the initial carbon profile against which all future measurements and reduction targets will be compared.

Purpose

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Easily track and assess changes in emissions over time
•
Quantify and report your progress to stakeholders
•
Set meaningful targets with a clear reference point
⚒️ Example:

2010 to 2030 reduction paths for Scope 1, Scope 2, and Scope 3 emissions

Requirements

The GHG Protocol requires you to:

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Choose a verifiable base year with complete and reliable emissions data
•
Document your selection rationale for choosing that specific base year
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Recalculate immediately when your organization undergoes important structural changes

Select your base year

The ideal base year has 3 facets:

Reliable and complete data

Include reliable data for all emission categories in your base year.

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Only use reporting periods that cover a complete calendar or financial year
•
Don't use years when you were still building your GHG inventory
•
Ensure data quality is consistent and verifiable

Representative operations

Pick a normal year for your business. Avoid years with unusual events that changed your carbon footprint.

❗ Important: Incidents (such as maintenance shutdowns, or the 2020-2021 pandemic) distort your baseline, making it harder to achieve and measure future reductions.

Program compliance

Programs may have specific requirements:

•
Science Based Targets initiative (SBTi) requires a base year not earlier than 2015
•
Other frameworks may have different requirements

⚒️ Examples:


Once you've selected an appropriate base year, establish a formal policy to maintain its integrity.

Assessment & recalculation policy

Create a policy to maintain data integrity over time using these key components:


1. Assessment triggers:
When to review your base year calculations (see recalculation triggers).
2. Significance threshold:
The defined percentage of change in emissions data that triggers the need for base year recalculation.
💡 Tip: Set your significance threshold based on company size and industry. Typically, companies use 3-10% - a global corporation might use 5%, while a smaller business might set 10%.
3. Recalculation method:
Your standard approach for adjusting historical data.
💡 Tip: Consistent recalculation ensures your emissions data remains comparable over time, making progress tracking more accurate.
4. Documentation process:
How changes are logged and communicated.

⚒️ Examples:


Recalculation triggers

Structural changes

Changes to your company's organization or operations that meaningfully impact your emissions profile. Examples include acquisitions, divestitures, or shifts in manufacturing operations.

Examples:

  • Acquisitions
  • Mergers
  • Divestitures
  • Outsourcing
  • Insourcing
Methodology updates

Changes to how you calculate emissions, including updates to standards or protocols.

Examples:

  • Adding new Scope 3 categories
  • Switching to market-based accounting
  • Implementing new protocols
  • Changing allocation methods
  • Updating boundary definitions
Data improvements

Improvements in data quality or identification of calculation errors that significantly affect your baseline accuracy.

Examples:

  • Updated emission factors
  • Error corrections
  • More precise activity data
  • Improved calculation methods
  • Discovery of missing emission sources
Recalculate your base year when changes exceed your defined significance threshold (typically 3-10%).

Action plan

🗒 Note: This summary recaps the key actions covered in the previous sections. Use it as a quick reference guide for your base year implementation.
1.Document your ㅤbase year selectionㅤ and justification.
2.Build your ㅤassessment and recalculation policy.
3.Set up data collection systems that can maintain base year information.
4.Communicate your base year to relevant stakeholders.

⚒️ Example: