2. How to quantify and report GHG emissions
To quantify and report GHG emissions, entities need data about their activities (for example, the quantity of fuel used). They can then convert this into information about their emissions (measured in tonnes of CO2-e) using emission factors.
An emission factor allows the estimation of GHG emissions from a unit of available activity data (eg, litres of fuel used). The factors are set out in the Emission factors interactive and the Emission factors workbook.
\[E = Q*F\]
Where:
- \(E\) = emissions from the emissions source in KgCO2-e per year
- \(Q\) = activity data eg, quantity of fuel used
- \(F\) = emission factor for emissions source
This formula applies to the calculation of both CO2-e emissions and individual carbon dioxide, methane and nitrous oxide emissions, with the appropriate emission factors applied for F.
The preferred form of data is in the units expressed in the emission factor tables, which results in the most accurate emission calculation. If the data cannot be collected in this unit, use the appropriate conversion factors.
A GHG inventory (see Step-by-step inventory preparation) contains all applicable emissions for an entity within a defined boundary during a set period. A GHG inventory is key to measuring emissions.
A GHG report (see Using the emission factors) expands on the inventory with context about the entity, methods used, as well as analysis of drivers and progress over time. A GHG report is key to reporting emissions.
Entities that wish to report in line with ISO 14064-1:2018 should be aware that the standard has specific requirements about what to include in the inventory and report.
With voluntary reporting, it is best practice for entities to understand their full Scope 3 (value chain) emissions and report material sources.
Note that the GHG Protocol requires certain information to be reported alongside the GHG emissions totals if these are reported publicly. If you are planning to make a public GHG statement claiming conformity with the ISO standard, note that you are also required to publish a separate GHG report.
Entities may obtain assurance1 or verification over the GHG inventory or GHG report against the measurement (see section 2.4).
2.1 Step-by-step inventory preparation
To prepare an inventory:
Select the boundaries (organisational and reporting2) and measurement period (ie, calendar or financial year) you will report against for your entity, based on the intended uses of the inventory.
Collect activity data on each emission source within the boundaries for that period.
Multiply the activity data by the appropriate emission factor for each emission source and record the calculation (eg, in a spreadsheet). See the 2024 Example GHG Inventory.
Produce a GHG report, if applicable. See section 2.3 and the 2024 Example GHG Report.
If this is the first year your entity has produced an inventory, you can use it as a base year for measuring the change in emissions over time, as long as the scope and boundaries represent your usual operations, and that comparable reporting is used in future years. Both the ISO 14064-1:2018 and GHG Protocol allow a base year to be quantified using an average of several years. This can be useful as a method of smoothing out unusual fluctuations when a single year’s estimate is not representative of normal activity.
Ensuring time series consistency is central to the GHG inventory because it provides information on the emissions trends for your entity, such as any carbon reduction strategies you have undertaken All emissions estimates in a time series should be estimated consistently. This means that the same methods and data sources should be used across all years covered by the GHG inventory. Using different methods and data in a time series will mask the trend and will not reflect real changes in emissions. To ensure the representativeness of your base year GHG inventory, therefore, it is good practice to undertake a base year review and recalculate the time series to account for any changes that have occurred due to:
· a structural change in your reporting or organisational boundary
· a change or refinement to calculation methodologies or emission factors, or
· the discovery of an error or cumulative errors in your activity data.
Any base year and time series recalculations should be documented in subsequent inventories.
If historic emission factors have changed, we suggest providing these figures in the document itself, or making them available elsewhere.
For some entities, certain GHG emissions may contribute such a small portion of the inventory that they make up less than (for instance) 1 per cent of the total inventory. These are known as de minimis3 and may be excluded from the total inventory, provided that the total of excluded emissions does not exceed the materiality4 threshold set by your entity. For example, if using an overall materiality threshold of 5 per cent, the total of all emission sources excluded as de minimis must not exceed 5 per cent of the inventory. Typically, an entity estimates any emissions considered de minimis using simplified methods to justify the classification. It is important these are transparently documented and justified. Often, you only need to re-estimate excluded emissions in subsequent years if the assumptions change.
However, if the user needs to report into a particular programme or satisfy an intended use or user, they may decide to, or be required to, include de minimis activities. Under the NZCS, information is considered to be ‘significant’ or ‘material’ if omitting, misstating or obscuring it could reasonably be expected to influence decisions that primary users make on the basis of those climate-related disclosures.
Most entities reporting voluntarily do so each calendar year or financial year. However, theFinancial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 (CRD) and the CNGP requires reporting based on financial year. Most commonly, a single year serves as their base year. However, it is also possible to choose an average of annual emissions over several consecutive years as a base year.
2.2 Using the emission factors
Emission factors rely on historical data. This version of the guidance is largely based on New Zealand’s Greenhouse Gas Inventory 1990–2023 as this was the latest complete set of data available. Emissions factors will be updated annually, when more recent data is available.
If you use the Interactive workbook, input your activity data and the emission factors will be applied automatically. If you do not use the Interactive workbook, simplified example calculations are provided throughout sections 3 to 11 to demonstrate how to use the emission factors.5
The emission factors in this guide are:
default factors, used in the absence of better entity-specific or industry-specific information.
consistent with the reporting requirements of ISO 14064-1:2018 and the GHG Protocol
aligned with New Zealand’s Greenhouse Gas Inventory 1990–2023
presented in kg CO2-e per unit. Under the reporting requirements of ISO 14064-1:2018 and the GHG Protocol, GHG emissions should be reported in tonnes CO2-e. However, many emission factors are too small to be reported meaningfully in tonnes. Dividing by 1,000 converts kg to tonnes (see example calculations on the following pages).
In line with the reporting requirements of the standards, the emission factors allow calculation of carbon dioxide, methane and nitrous oxide separately, as well as the total carbon dioxide equivalent for direct (Scope 1) emission sources.
Carbon dioxide emission factors are based on the carbon and energy content of a fuel. Therefore, the carbon dioxide emissions remain constant irrespective of how a fuel is combusted.
Non-carbon dioxide emissions (eg, methane and nitrous oxide) and emission factors depend on the way the fuel is combusted.6 To reflect this variability, the guide provides uncertainty estimates for direct (Scope 1) emission factors. ?@tbl-stationary-combustion presents separate carbon dioxide equivalent emission factors for residential, commercial and industrial users. It follows the IPCC guidelines for combustion and adopts the uncertainties.7
We derived these emission factors primarily from technical information published by New Zealand government agencies. Each section below provides the source for each emission factor and describes how we derived the factors.
2.3 Producing a GHG report A full GHG report provides context to the GHG inventory by including information about the
entity, comparing annual inventories, discussing significant changes to emissions, listing
excluded emissions, and stating the methods and references for the calculations.
A GHG REPORT
To compile a full GHG report, entities should include:
• a description of the entity/organisation
• the person or entity responsible for the report
• a description of the inventory boundaries ‒ entity/organisational boundary
‒ reporting boundary
‒ measurement period
• the chosen base year (initial measurement period for comparing annual results)
• emissions (and removals where appropriate) for all GHGs, separately reported in metric tonnes CO2-e
• emissions separated by scope
‒ total Scope 1 and 2 emissions
‒ total and specified Scope 3 emissions
• emissions from the combustion of biologically sequestered carbon, reported separately from the scopes
• a time series of emissions results from base year to present year
• significant changes to the inventory, including in the context of triggering any base year recalculations
• the methodologies for calculating emissions, and references to key data sources
• impacts of uncertainty on the inventory
• any specific exclusions of sources, facilities or operations
• a statement describing the recognised standard or standards that the GHG emissions have been measured in accordance with.
View an example reporting template on the GHG Protocol Corporate Standard webpage.
2.4 Assurance and verification Seeking independent16 third-party assurance of your inventory is a key component of a responsible reporting approach. Obtaining assurance means to appoint an independent practitioner to undertake a selection of procedures to enable them to express an opinion or conclusion of your entity’s reported statement and is intended to increase the confidence that users can place on the reported information.
There are differing levels of assurance which result in different types of reports. Reasonable assurance is the highest level of assurance, where your assurance practitioner will perform procedures to enable them to state, in their opinion, that the subject matter is not materially misstated. Limited assurance provides a lower level of assurance, where the assurancepractitioner will perform fewer procedures comparative to reasonable assurance. A limited assurance conclusion will state nothing has come to the assurance practitioner’s attention which indicates the information is materially misstated.
It is recommended that you speak to an assurance provider about your GHG data quality, available evidence and the level of assurance you require. Many assurance providers also provide pre-assurance or an assurance gap analysis, with the aim of providing you with a preliminary assessment of whether the pre-conditions to an assurance engagement are met and feedback ahead of formal assurance. The purpose of pre-assurance is to prepare the reporter for attaining assurance, though it will not provide guidance on whether or not assurance will be attained.
If you are a Climate Reporting Entity under the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 or required to report under the CNGP, specific assurance requirements apply.
• If your entity is a covered entity under the Financial Markets Conduct Act 2013, as amended by the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 (the Financial Markets Conduct Act 2013 as amended), you are required to obtain third-party assurance in relation to the parts of your climate statement that relate to GHG emissions for periods that end on or after 27 October 2024. For more detail, please see (Assurance, External Reporting Board [XRB]).
If your entity is a participant to the CNGP, please note that you must seek assurance from an independent third party annually. Please see the CNGP guide to measuring and reporting greenhouse gas emissions for more information.
2.4.1 Choosing an assurance provider
If you are seeking independent assurance over your GHG disclosures, consider the following factors when choosing a verifier:
• independence and objectivity
• sufficient skills, with previous experience in GHG inventory verifications or assurance
• competence and understanding of GHG reporting and accounting standards and frameworks
16 An independent assurer or verifier is an organisation or person who has not helped in the calculation of the emission inventory in any way and does not provide a tool for the calculation of these emissions.
Measuring emissions: A guide for organisations: 2024 detailed guide 25
• can carry out GHG inventory assurance in accordance with applicable assurance standards.
ISAE 3410 and ISO 14064-3:2019 are widely used for the assurance or verification of GHG
emissions reports. One or the other of these standards should be used:
− ISAE standard – free to download
− ISO standard – there is a download charge.
ISO 14064-3:2019 uses the terms ‘validation’ and ‘verification’, whereas ISAE 3410 uses ‘assurance’. However, assurance engagements undertaken in accordance with the two international assurance standards include the same, or substantively similar, procedures.
The topic of assurance over GHG reports and providers of such assurance is currently evolving in New Zealand. At the time of publication of this guide, the Ministry of Business,Innovation and Employment had not issued its decision following feedback on the licensing regime consultation for assurance providers. We recommend that entities regularly review developments in this area. See the Ministry of Business, Innovation and Employment’s Assurance over climate-related disclosures: occupational regulation and expanding the scope of assurance.
We also recommend that entities covered by the CRD monitor developments of the XRB, following its consultation on assurance of GHG emissions disclosures.
Footnotes
KPMG: Note suggested rewrite since assurance will/is mandatory for some entities. Please also note we suggest using the term “entity” and keeping consistent throughout. Avoid using the word “company” since the MEG targets a broad audience.↩︎
The emission factors in the example calculations within this document and the Emission factors summary are rounded. In the Emission factors workbook and Interactive workbook they are not. For this reason, you may notice small discrepancies between the answers in the example calculations and the answers provided in the workbooks.↩︎
For example, the nitrous oxide emission factor for diesel used for industrial heating is different from the nitrous oxide emission factor for diesel used in vehicles.↩︎
2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2, Chapter 2.↩︎