Accounting for refrigerants: Toward a sustainable business

If you want to conduct a greenhouse gas (GHG) inventory to address the emissions associated with your company’s activities, you may want to start by reviewing the GHG Protocol Corporate Standard, the authoritative source on methodologies for accounting and reporting on GHG emissions. As you work through the list of required gases to report on, you may be shocked to find two classes of high-GWP and ozone-depleting refrigerant gases, CFCs and HCFCs, omitted from this list.

Why are CFCs and HCFCs not included in the Greenhouse Gas Protocol? 

National reporting guidelines for GHG emissions inventories are established by the United Nations 

Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol. The GHG Protocol mirrors these criteria for its accounting and reporting framework to align with national inventory practice. As scientific developments are made, the UNFCCC/Kyoto Protocol adjusts international accounting and reporting rules, which the GHG Protocol reflects in its own guidance.  

Leading reporting guidance commonly excludes CFCs, HFCs, and halons from its inventory requirements due to the regulation and phase out of these substances by the Clean Air Act and The Montreal Protocol on Substances that Deplete the Ozone Layer.  

Studies indicate that large banks of halocarbons continue to leak from old equipment even after production of these chemicals has terminated, and will potentially contribute emissions equivalent to more than 21 billion metric tons of CO2 if left unaddressed.  

Creating a Comprehensive GHG Inventory  

Given the gravity of this potential impact, CFC and HCFC emissions should be included in your corporate inventory. Beyond the GHGs covered by the UNFCCC/Kyoto Protocol, the GHG Protocol encourages reporting emissions data from other GHGs, including CFCs and HCFCs. While emissions of these gases may be reported outside the scope of a corporate inventory, this level of disclosure serves to bolster transparency by communicating your organization’s commitment to climate mitigation through targeted, specific action.

To account for these emissions: 

  1. Gather your service records, and identify the total mass (in pounds) of each type of refrigerant added to equipment throughout the year. (It may be that the records indicate you have been recharging a leaking system with the amount of material added to equipment equal to the amount of refrigerant that actually leaked.) 
  2. Convert the volume of each refrigerant type added to systems throughout the year into metric tons. 
  3. Multiply the volume of each refrigerant type by its global warming potential (GWP) to determine the total amount of potential emissions in terms of carbon dioxide equivalent. CFC and HCFC emissions should be reported as a separate line item to distinguish them from Scope 1, 2, or 3 emissions. 

It is also helpful to compile a basic refrigerant inventory for your building or portfolio. Having this information in one place will quantify the emissions risk of your refrigerants, and can help to incorporate environmental considerations when making retrofit or replacement decisions. To do so: 

  1. Determine the full charge of systems and stockpiles of refrigerant by reviewing systems information plates, and equipment and purchasing records. This total can tell you your total volume of refrigerant (list by refrigerant type). 
  2. Convert the volume to metric tons.
  3. Multiply the volume of each refrigerant type by its global warming potential (GWP) to determine the total amount of potential emissions in terms of carbon dioxide equivalent.

“Safe” Boundaries and the SBTi 

A 1.5 ℃ difference in temperature might offer some respite during the brutal winter, allowing you to wear a light jacket in lieu of your usual heavy-duty parkas. But against the backdrop of impending climate catastrophe, global temperature stabilization within the “safe boundary” (less than 1.5 ℃) is critical. Analysis conducted by the Earth Commission indicates that global mean surface temperatures must remain at or below 1.5 ℃ to limit the exposure of global communities to unprecedented temperatures and long-term sea level rise. Even at this level, it is still expected to impact hundreds of millions of people. Despite the urgency of this crisis, global policies currently in effect are still projected to allow for a 2.7°C rise in temperature by 2040.  

For this reason, the Science-Based Target initiative (SBTi), a partnership between the Carbon Disclosure Project, the United Nations Global Compact, World Resources Institute, and the World Wide Fund for Nature was formed, with the goal of helping companies mobilize toward sustainable practices. While providing technical assistance and expert advice, they call on companies to invest in climate change mitigation activities outside their value chain that contribute to societal net-zero goals, referred to as Beyond Value Chain Mitigation (BVCM).  

Companies can do their part by financing projects that reduce emissions, but this type of direct action also needs to increase by at least seven times by 2030, reaching a cost of at least USD 4.3 trillion per year, compared to approximately USD 665 billion today. While private sector climate finance is increasing, the Climate Policy Institute argues that it is not doing so at the necessary pace considering public sector capacity constraints.  

Source: IPCC, Special Report: Global Warming of 1.5℃. Summary for Policymakers.  

Offsets: Immediate Actions 

Offset projects are a class of BVCM strategies under the SBTi protocol that, with proper design and implementation, can contribute significantly to corporate sustainability goals.  

Carbon offsets are emissions reduction activities used to compensate for emissions that occur elsewhere. The benefits accrued from offset projects are realized as carbon offset credits; one offset credit represents an emissions reduction of one metric ton of CO2 or an equivalent GHG amount (mtCO2e). These transferable units are delivered by independent certification institutions or governmental bodies. As a purchaser of a credit, you leverage the opportunity to advance your sustainability goals by “retiring” the credit to claim the associated benefits.  

Carbon offsets can be an effective mitigation strategy for both reducing and communicating the gravity of your climate impact and associated efforts. When purchasing offsets, be sure to choose high-quality projects that are: additional (emissions reductions would not occur without revenue from the sale of carbon credits), permanent, and accurate (not overestimated). 

 

 

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Permanence

Emission reductions are considered permanent if they are not reversible. In some projects, such as forestry or soil preservation, carbon offset credits are issued based upon the volume of CO2 that will be sequestered over future decades—but human actions and natural processes such as forest fires, disease, and soil tillage can disrupt those projects. When that happens, the emission reductions claimed by the project are reversed.

The destruction of halocarbon does not carry this risk. All destruction activities in Tradewater’s projects are conducted pursuant to the Montreal Protocol , which requires “a destruction process” that “results in the permanent transformation, or decomposition of all or a significant portion of such substances.” Specifically, the destruction facilities Tradewater uses must meet or exceed the recommendations of the UN Technology & Economic Assessment Panel , which approves certain technologies to destroy halocarbons, including the requirement that the technology achieve a 99.99% or higher “destruction and removal efficiency.” Simply put, this means that Tradewater’s technologies ensure that over 99.99% of the chemicals are permanently destroyed. During the destruction process, a continuous emission monitoring system is used to ensure full destruction of the ODS collected.

Accuracy

Some carbon offset projects necessarily rely on estimations or assumptions when calculating the emission reductions from project activities. Forestry projects, where developers make assumptions about the carbon that will be sequestered over future decades if trees are conserved, are a perfect example. Such projects sometimes result in an overestimation of the environmental benefit of the project.

Tradewater’s halocarbon projects avoid the issue of overestimation by consistently conducting extremely precise testing and measurement of the amount of refrigerant destroyed in each project.

  • Every container of ODS that Tradewater destroys is weighed by a third-party using regularly calibrated scales. The ODS is then sampled by a third-party and analyzed by an accredited refrigerant laboratory to determine its species and purity. These two steps combine to ensure that credits are issued only for the precise volume and type of refrigerant destroyed.
  • The destruction facilities that Tradewater uses continuously monitor the incineration process during destruction events to ensure that over 99.99% of the ODS is destroyed. This monitoring is mandated by regulatory protocols and is part of the verification process to which projects are subjected.
  • Tradewater accounts for the project emissions created during the collection, transport, and destruction of ODS, and the number of offsets issued is reduced by a corresponding amount. The protocols that we use also build in other reductions to account for substitute chemicals that will be used to replace the destroyed refrigerants. Tradewater publishes this information in the documentation for all its ODS destruction projects. These documents outline how the material was obtained, the project emissions calculations, the test results, and the amount and type of ODS chemicals destroyed, among other information.

    • Additionality

    It is a basic requirement of all carbon offset projects that the underlying project activities are additional. “Additional” means that the projects would not happen in the absence of a carbon market. Tradewater’s halocarbon projects simply would not happen – and the gases would be left to escape into the atmosphere – without the sale of the resulting carbon offset credits. This is because there is no mandate to collect and destroy these gases. It is still permissible to buy, sell, and use halocarbons that were produced before the ban. There are other reasons halocarbon destruction projects are additional:

    • There are no incentives or financial mechanisms to encourage halocarbon destruction. According to the International Energy Agency and United Nations Environment Program, “there is rarely funding nor incentive” to recover and destroy ozone depleting substances in storage tanks and discarded equipment. And collecting, transporting, and destroying halocarbons is time-intensive and expensive. The burden to collect and destroy these gases therefore remains prohibitive outside of carbon offset markets—meaning that if organizations like Tradewater do not do this work, nobody else will.
    • Countries are not focused on the need to collect and destroy halocarbons. The Montreal Protocol has been celebrated as a success because of its production ban. This success, however, ignores the legacy gases produced before the ban and is a blind spot for government regulators. In the U.S., for example, the Environmental Protection Agency (EPA) developed a Vintaging Model in the 1990s to estimate the quantify of ozone depleting substances left in circulation. Based on the inputs and assumptions put into the model, the EPA predicted that no CFCs would be available for recovery beyond 2020 in the United States. But this prediction did not prove accurate. Tradewater has collected and destroyed more than 1.5 million pounds of CFCs globally in recent years and continues to identify thousands of pounds per week.
    • International carbon accounting standards do not require corporations to measure or track emissions tied to halocarbons, and refrigerants are specifically excluded from Science Based Targets initiative (SBTi) commitments. These commitments derive from emissions reporting under the GHG Protocol, which requires companies to report on emissions only from new generation refrigerants, such as hydrofluorocarbons (HFCs), but does not establish any obligation to report inventories or emissions of refrigerants still in use, such as CFCs and HCFCs. All these factors combine to make Tradewater’s carbon offset projects highly additional. As Giving Green, an initiative of IDinsight, concluded: “Tradewater would not exist without the offset market, so this element of additionality is clearly achieved.” The case for additionality is not so clear for some other project types, such as forestry and landfill gas carbon projects. For example, some forests are already being conserved for their beauty, or for use as parks, and generate carbon offset credits only because those conservation efforts do not yet have full formal protection in place to avoid deforestation in the future. Similarly, methane from landfills can be used to make electricity or captured as compressed natural gas, thereby creating additional revenue streams to support the activities, beyond the sale of carbon credits.