News 07 November 2023 News from SKAO
Who do these emissions belong to? Focus on the most impact with Handbook 4.0
From the entry into force of Handbook 4.0 next year, organisations will focus even more on the measures that make the most CO2 impact, even if this means that the organisation then has to look beyond its own operations or even beyond its own value chain.
Creative thinking and collaboration are encouraged and the administrative burden should decrease. ‘That makes it a system that simply helps more in the real world.’ We speak to Harald Versteeg, independent chairman of the Central College of Experts (CCoE), and Gijs Termeer, representative on behalf of Climate Foundation HERE (Klimaatstichting HIER) in the CCoE.
Why does Handbook 4.0 take a different approach?
Gijs: “The current Ladder always asks organisations to at least focus on their own operations (scope 1 and 2), while that is not always where the most CO2 can be reduced. Yet the organisation has to make separate targets for scope 1, 2 and 3, and they all have to be checked every year. We want to do something about that."
Harald: “Take an engineering firm, for example. It has, roughly speaking, an office and a fleet of cars (scope 1 and 2), while it designs, for example, power plants or bridges (scope 3), which clearly has much more CO2 impact.”
“Yet that company now has to make reports on lighting and cars, which feels pointless and like an administrative burden, especially since these things naturally become sustainable. Current policy in the Netherlands is already steering strongly towards more electric leased cars and a climate-neutral electricity supply by 2035. So are you ambitious enough if you achieve this in 2030? That's on the one hand.”
“On the other hand, there are also companies that feel that it is precisely about their own operations and therefore focus enormously on this, and then pay too little attention to where the impact does lie, namely in the value chain or even beyond it.”
“With Handbook 4.0, we want to ensure that companies don't have to pay attention to things that don't matter in the big picture and at the same time pressure them into focussing on where the most impact is. In short: even more ambition and more impact with less administration.”
So with Handbook 4.0, organisations will focus on where they can make impact. What will this look like in practice?
Gijs: “The starting point of Handbook 4.0 is that organisations will be climate neutral by 2050 at the latest. With this goal in sight, organisations will make an influence-impact analysis: With which activities or measures can I make the biggest CO2 impact? Which activities can I influence? They start thinking about this and afterwards they also map those measures out in time. What can be done now, what can be done later and what do I need to do now to get something done later?”
Addressing own emissions beyond scope
Harald: “Then they may start implementing ‘scope-transcending’ measures.”
“As an example, take a traditional construction company engaged in earthworks. The company uses machinery for this every day. Suppose a large part of that is machinery they own (scope 1) and a smaller part is hired machinery (scope 3). Now the manual requires the company to come up with separate measures for both categories while this construction company uses the machines for the same work. Therefore, the following will soon apply: whether the machines are scope 1 or scope 3, i.e. whether they are owned or hired, makes no difference. The bottom line is: those machines have to be cleaner and smarter.”
Increase influence through collaboration
“There will also be examples of organisations realising that they have too little influence to get anything off the ground on their own. They see that they could make an impact if they had more influence. That can be done by collaborating with others.”
“Take a small marine construction company that wants to convert an existing ship to run on hydrogen. This would have a big impact on its scope 1 emissions and the client's scope 3 emissions. But due to safety regulations, this is not currently allowed. On their own, the company won't get those rules changed. However, if the company manages to make this an important issue together with industry peers and clients, that chance becomes much bigger. Looking for partners to cooperate with can then be started as an activity under the Ladder now, in order to implement the actual measure at a later stage.”
Using influence for far-reaching CO2 impact
Gijs: “Furthermore, it may be the case that the organisation does its analysis and figures out that it can actually take high-impact CO2 reduction measures, while that impact does not even concern its own emissions.”
“For example, there is a contractor working with an energy cooperative to build a large electric truck charging station locally. The contractor has a big construction project they want to do with electric equipment and machinery and the energy cooperative has several large windmills and a solar farm, and sometimes has to supply power at negative prices. So now there will be a charging station there, initially for the infrastructure project, but it will also be the first major charging point between Rotterdam and the Ruhr for other trucks.”
“The impact of that contractor extends so much beyond its own emissions, and that's also the kind of creative thinking we hope will emerge with Handbook 4.0. That charging station cannot be categorised as scope 3 downstream. And yet this contractor is influencing emissions for years after its project is completed. With an interesting business case created on top of that.”
So an organisation can use Handbook 4.0 to deal with emissions that are not its own? How far can this extend?
Harald: “Yes, that's right, it could. The new handbook requires organisations to make an impact and that could also fall outside the scope classification defined by the greenhouse gas protocol.”
“The organisation will soon have to justify why it is doing one thing and not the other. If it turns out that the organisation has or can get influence to make a lot of impact somewhere, the auditor will question them about that.”
“So this also applies to other influenceable emissions (Avoided, biogenic and removed emissions): emissions that are not in scope 1, 2 or 3 but that the organisation can influence.”
“The rule of thumb is: doing something different or extra as an organisation either leads to extraction of energy or saving energy, or preventing emissions elsewhere. How far that reaches is actually unlimited. It is only limited by the amount of influence you have and who you want to work with, and, of course, by your creativity.”
With Handbook 4.0, scope classification becomes less important. Or will it fall away altogether?
Gijs: “No, it does not fall away, because organisations still make a footprint and do still use the scope classification for insight. It can be useful to know in which scope your biggest impact is. But with Handbook 4.0, the scope classification no longer determines what the organisation should focus on. The degree of potential impact does.”