Inventorying greenhouse gasses and reporting emissions not only helps businesses comply with domestic and international regulations, avoiding legal risks and creating sustainable value for society, but also brings them closer to the green transition trend. This allows businesses to quickly establish their position in the fierce competition among "green suppliers" occurring globally. To achieve this goal, companies need to have a clear understanding of emission scopes as defined by the GHG Protocol, including Scope 1, Scope 2, and Scope 3, along with appropriate reporting methods for each market and the company’s development objectives.

Content:

1. Understanding emission scopes according to GHG Protocol regulations

GHG Protocol (Greenhouse Gas Protocol) is a set of guidelines developed by the World Resources Institute and the World Business Council for Sustainable Development. This protocol was created to provide a foundation for enterprises, organizations, and governments to calculate and manage their greenhouse gas emissions. The GHG Protocol also offers guidance, calculation methods, and reporting frameworks tailored to specific industries and types of organizations and activities. Accordingly, facility-level emissions are divided into three scopes:

Scope 1

Direct emissions from the production and business activities of the enterprise, from sources owned or controlled by the enterprise.
Example: A textile factory needs to use fuel to operate its boilers for dyeing fabrics. The combustion of this fuel produces CO2, contributing to the total emissions of the enterprise.

Scope 2

Indirect emissions from the consumption of energy purchased by the enterprise from external suppliers. Emissions in this scope do not occur at the enterprise’s facilities, but the enterprise is still indirectly responsible for using that energy.
Example: A food processing company uses 10,000 MWh of electricity each year to operate its production line. In Vietnam, electricity can be generated from sources such as coal-fired power plants, hydropower, and renewable energy. Therefore, the company is responsible for the emissions from consuming electricity from these sources.

Scope 3

Indirect emissions from the supply chain and activities outside the owned assets of the enterprise. This is the most challenging emission scope to control, as it includes activities of third parties related to the enterprise.
Example: An electronics export company sent three specialists to China in October to negotiate contracts with buyers. The emissions generated from the round-trip flights of these specialists will be the responsibility of this export company.
Another example: A garment company that regularly exports goods often hires logistics companies to transport products to international customers. During transportation, vehicles consume fuel and emit CO2. Even though the enterprise does not directly handle the transportation, it still needs to account for and be responsible for the emissions generated from this activity according to greenhouse gas reporting standards (GHG Protocol).

03 Emissions scope under GHG Protocol

2. Vietnamese greenhouse gas-emitting facilities are required to report emissions in Scope 1 and Scope 2 according to government regulations

Circular No. 38/2023/TT-BCT issued by the Ministry of Industry and Trade on December 27, 2023, stipulates the technical regulations for measuring, reporting, verifying, reducing emissions and conducting greenhouse gas inventories. This regulation specifies the emission scopes that enterprises must comply with when conducting greenhouse gas inventories and reporting emissions. Accordingly, the greenhouse gas inventory reports must meet the requirements of Decree No. 06/2022/ND-CP, ensuring that both direct and indirect greenhouse gas emissions are fully accounted for.

• Direct greenhouse gas emissions refer to emissions generated from the combustion of fossil fuels, surface mineral extraction, underground activities, or leaks from machinery and equipment operated by humans.

• Indirect greenhouse gas emissions refer to emissions from the use of energy forms such as electricity, heat, or steam generated from the combustion of fossil fuels and other related fuels.

Thus, according to current regulations in Vietnam, enterprises with emission activities are only required to conduct inventories according to Scope 1 and Scope 2.

3. How to report emissions at the facility level under Scope 1

Emissions in Scope 1 are direct emissions originating from the combustion of fuels from assets owned or controlled by the company. The main components of Scope 1 include:

• Emissions from fixed sources: This includes all emissions from fuel combustion in fixed installation equipment such as boilers, furnaces, burners, turbines, heaters, incinerators, and other equipment owned or controlled by the company.
  

• Emissions from mobile sources: This includes all emissions from transport vehicles owned or controlled by the company, such as cars, trucks, and vans.
  

• Emissions from industrial processes: This includes emissions from physical or chemical processes that generate greenhouse gases in the facility's production line.
  

• Leakage emissions: This includes greenhouse gases that leak from machinery, equipment, or during the extraction and processing of minerals. It is important to note that greenhouse gases leaked from these devices can have a much greater impact than CO2, often thousands of times more. Therefore, companies are encouraged to proactively report the full amount of these emissions to ensure transparency and enhance control over negative environmental impacts.
  

• Emissions from Other Activities:
  

• Emissions from solvents and refrigerants used in production and business processes.

• Emissions from the collection, management, and treatment of waste.

Steps to Report emissions at the facility level under Scope 1:

• Step 1: Survey and assess activities at the facility level

The enterprise needs to conduct a comprehensive survey and review all business and production activities, along with the assets that the enterprise owns or controls (both financially and operationally). The goal is to clearly identify which activities are likely to produce direct emissions from fuel consumption.

• Step 2: Inventory emission-generating activities

Next, the enterprise should create a detailed list of activities that generate emissions, such as operating machinery, transport vehicles, or heating systems. From there, it should compile specific data on fuel consumption from each activity to lay the groundwork for emissions calculations.

• Step 3: Calculate total Scope 1 emissions

Finally, compile all data on fuel consumption to estimate the total Scope 1 emissions at the facility.

Below is the Example of Scope 1 emission reporting in the Retail and Technology sector:

Scope 1 emissions report for Amazon for the period 2019-2023 (Source: Amazon Sustainability Report).

4. How to report emissions at the facility level under Scope 2

Scope 2 includes indirect emissions from the energy purchased by the enterprise from third parties. Unlike Scope 1 (which involves direct emissions), emissions in Scope 2 do not occur at the assets owned and controlled by the enterprise but are indirectly related as they arise from the use of energy that the enterprise purchases. Scope 2 encompasses three main sources of emissions:

• Emissions from electricity consumption

• Emissions from steam usage

• Emissions from heating and cooling systems. For small and medium enterprises, or those without the need or capability to install steam, heating, or cooling systems year-round, these services are often purchased from external providers.

According to the GHG Protocol, since these emissions do not directly occur at the enterprise's assets but result from energy purchases, they must be included in the Scope 2 emissions reporting.

Below is the Example of Scope 2 emission reporting:

Scope 2 emissions report for Apple for the period 2021-2023 (Source: Apple Environmental Progress Report 2024)

To calculate Scope 2 emissions, there are two methods for converting electricity consumption (MWh) into tons of CO2:

• Market-based: This method uses emission factors based on data from the electricity supplier that the enterprise purchases from.

• Location-based: This method relies on general emission factors for each country or geographical area where the enterprise operates.

The choice of method depends on the regulations of each country where the enterprise has offices, factories, or operational headquarters. Understanding local requirements and regulations is essential to ensure accurate emissions reporting and legal compliance. In its environmental impact report, Apple has decided to use only the Market-based method for emissions calculations.

5. Vinacontrol - Pioneer in Greenhouse gas inventories under Scope 1 and Scope 2

According to current regulations in Vietnam, enterprises are required to report greenhouse gas emissions under Scope 1 and Scope 2. With extensive experience in environmental and energy consulting, Vinacontrol has become a leading unit in supporting enterprises to conduct greenhouse gas inventories according to these two scopes. We have researched and developed advanced methods and processes, along with modern equipment, ready to assist businesses in conducting inventories for Scope 1 and 2 accurately, quickly, and comprehensively.

Vinacontrol understands that conducting greenhouse gas inventories at the facility level can be challenging and poses risks during implementation without guidance from experienced professionals. Common challenges that many enterprises face include:

• Incomplete or excessive inventory of emission sources in Scope 1 and 2.

• Exclusion of indirect emission sources without reasonable justification.

• Incorrect selection of emission factors or inventory methods.

• Lack of a comprehensive and accurate data collection plan.

Recognizing these obstacles, Vinacontrol has developed a Greenhouse gas inventory and Technology transfer service, providing optimal solutions for enterprises. We are committed to offering you the best solutions at the most reasonable cost!

→ Learn more about Vinacontrol's Greenhouse gas inventory services: here.

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