The CarbonNeutral Protocol Index

2.1 Treatment of renewable electricity in Scope 2 emissions

This Appendix details how the carbon attributes of renewable energy in the form of energy attribute certificates (EACs) are accounted for in Scope 2 of the GHG inventories that underpin CarbonNeutral® certifications.

A number of countries have adopted policies requiring or encouraging electricity suppliers to offer renewable electricity to consumers. This may be done through a range of different electricity products such as tariff-based programmes and power purchase agreements. All credible renewable electricity products involve the cancellation of EACs such as Renewable Energy Certificates (RECs), International Renewable Energy Certificates (I-RECs) or Guarantees of Origin (GOs) in order to support the renewable electricity claim.

Prior to 2015, detailed guidance on how to report the carbon attributes of renewable electricity was absent from the GHG inventory standards accepted under The CarbonNeutral Protocol. However, in 2015, the WRI, author of the widely used GHG Protocol Corporate Standard, published its “Scope 2 Guidance” as an amendment to the GHG Protocol to clarify the accounting treatment of low-carbon grid-delivered energy in Scope 2 GHG inventories. The amendment, published after four years of development and industry consultation, provides guidance for how corporations should measure emissions from electricity and energy purchases, including renewable energy, and covers:

  • Requirements: Accounting and reporting requirements which entities must meet to be in conformance with the GHG Protocol Corporate Standard
  • Quality Criteria: A list of Scope 2 quality criteria that all electricity purchasing instruments, termed “contractual instruments,” need to meet in order to be used in market-based method accounting
  • Recommendations: Additional features entities are recommended to disclose include their electricity purchases, as well as other metrics such as total electricity, steam, heating, and cooling consumed and what percentage of a corporates’ operations have market-based method data available

From the date of publication of the GHG Protocol Scope 2 amendment, entities using the GHG Corporate Protocol to meet the GHG inventory requirements of The CarbonNeutral Protocol are required to meet its Scope 2 Guidance, as officially amended from time to time by the WRI. It is important to note that EACs address the Scope 2 component of electricity emissions. Transmissions and distribution (T&D) losses from the electricity grid, the Scope 3 component of Scope 2 emissions, are not addressed by EACs and need to be mitigated using carbon credits.

Entities using any other GHG inventory standard recognised under The CarbonNeutral Protocol are subject to The CarbonNeutral Protocol’s original requirements that:

  1. Zero emissions may only be awarded when double-counting is avoided. Evidence should be available to establish either that the renewable electricity is not supplied to the national grid in the country concerned; or, that the benefit of the renewable energy is not included within national average grid factors or any other reporting factors
  2. Emissions from energy supplied as “green,” “clean,” or “low carbon” can be treated as zero where the energy consumed has been fully offset by the supplier or a third party using carbon credits that meet the requirements of The CarbonNeutral Protocol

2.2 Market-based Scope 2 reporting declaration to support CarbonNeutral® certification

This appendix details the disclosure requirements for businesses seeking to make a market-based Scope 2 reporting declaration in support of CarbonNeutral® certification. The disclosure only needs to be made when the party supplying the contractual instrument is not the primary CarbonNeutral certifier. For example, when an entity sources renewable electricity directly from an electric utility to support a Scope 2 reporting claim, it should provide details of the contractual instrument within the disclosure table (Table 12). The disclosure table will be provided by the certifier upon request.

A column should be added to the table to account for each contractual instrument claim made within a corporate GHG inventory. Often this will involve engaging the contractual instrument supplier to determine the appropriate form of evidence that can be supplied to substantiate a market-based claim. The disclosure table should be completed at the time of preparing the GHG inventory and should be signed by a company representative to warrant that the information provided is up to date, accurate and that the CarbonNeutral certifier can rely on the information.

Table 12: Illustrative - Market-Based Scope 2 Reporting Declaration in Support of CarbonNeutral® Certification

Completing this declaration is a requirement for CarbonNeutral® certifications involving a market-based Scope 2 claim. Add a row to the table for each contractual instrument claim, for example each renewable electricity contract, REC or GO purchase would require a separate row of information disclosure.

2.3 Energy Attribute Certificate (EAC) application protocol for third-party assessment partners

To ensure that our assessment partners are fully informed regarding EAC purchases, and so they can be accurately integrated into assessment reports, we ask that you follow the agreed upon EAC Application Protocol.

2.4 How to report GHG emissions from green gas certificates

Green gas certificates are relatively new products that are being adopted at scale by businesses to manage their Scope 1 GHG emissions.

The widespread adoption of green gas certificates has been facilitated by CDP’s 2017 guidance, which encourages companies to extend the market-based reporting approach from renewable electricity to renewable gas.

Green gas, known also as biogas, refers to calorific gas produced by the breakdown of organic matter, through anaerobic digestion or fermentation. Feed stocks include biodegradable materials such as manure, sewage, municipal water, green waste and plant material. Biogas is primarily methane and carbon dioxide and may have small amounts of hydrogen sulphide, siloxanes and moisture, which make it corrosive.

Before biogas can be introduced to a gas grid it needs to be upgraded to pipeline quality natural gas standards. The upgrading process consists of drying the gas and removing hydrogen sulphide and carbon dioxide. This upgraded gas becomes biomethane.

The costs for upgrading biogas to biomethane and the requirement for agreements to inject biomethane into gas grids, makes on site biogas plants more common than biomethane plants that inject gas into gas grids. Biomethane can be used for any purpose currently satisfied by conventional natural gas including heat generation, cogeneration heat/power and natural gas vehicles.

Injecting biomethane into the natural gas grid allows the use of renewable gas in areas located away from where the biomethane is generated. Each unit of green gas injected into the gas grid displaces the need for a unit of conventional natural gas, therefore certificates and contracts are the only practical means of tracking the green gas from production to end use.

Projects such as the Green Gas Certification Scheme (Green Gas Certification Scheme. Available at: aim to provide a certified means of tracking gas injected into the gas grid through to end user consumption claims. This scheme is similar to many renewable electricity tracking schemes such as I-REC (International REC standard) and EECS-GO (European Energy Certificate System – Guarantee of Origin).

While the focus of the GHG Protocol Scope 2 Guidance is on electricity, the guidance does anticipate the application of the market-based reporting approach for green gas products. Appendix A to the GHG Protocol Scope 2 Guidance states:

If a company has a contractual instrument specifying its gas supply as “biogas” or “biogenic,” the company should report using the market-based method and refer to the Scope 2 Quality Criteria to evaluate whether its gas use should be reported as Scope 1 natural gas using a standard emission factor, or as biogenic CO2 emissions reported separately from the Scopes. This evaluation requires some interpretation since the Scope 2 Quality Criteria are specific to electricity and their guidance must be translated for use with gas. For instance, criterion 1 in relation to GHG emission rate claims should be also interpreted to include the emission rate specific to the biogenic fuel origin.

Section 6.12 of the GHG Protocol Scope 2 Guidance provides the following guidance on the treatment of biofuel emissions:

Based on the Corporate Standard, any CH4 (methane) or N2O (nitrous oxide) emissions from biogenic energy sources use shall be reported in Scope 1, while the CO2 portion of the biofuel combustion shall be reported outside the scopes. In practice, this means that any market-based method data that includes biofuels should report the CO2 portion of the biofuel combustion separately from the scopes.

The application of this guidance to the use of biomethane delivered through the gas grid has the following impacts on a company’s GHG report:

  • Scope 1 CO2 emissions can be reported as zero for biomethane consumption, i.e. for each MWh matched to a green gas certificate. This biogenic CO2 represents the carbon sequestered during the growth of the biomass
  • Biogenic CO2 emissions must be reported outside of Scopes 1, 2 or 3, as an addendum to the company’s GHG inventory
  • To fully account for a site’s GHG impact, fugitive CH4 and N2O emissions from biomethane combustion must be reported under Scope 1. Unlike CO2, these fugitive emissions are not captured during the growth of the biomass and therefore need to be reported as a Scope 1 emission

The CDP’s 2017 reporting guidance builds on this direction from the GHG Protocol and recommends that a company report their gas/ certified biogas as follows:

  • Fossil gas and non-certified biogas need to be accounted for and reported as Scope 1. The formula is the usual Activity data multiplied by Emissions factor, where the factor is emissions at the point of generation;
  • Certified biogas will be reported under question CC8.9a; and
  • In question CC11.3 companies shall report total MWh of energy, including certified biogas.
  • Therefore, the use of certified biogas will be considered to be equivalent to “zero” Scope 1 emissions for the purpose of reporting to CDP.

In allowing “zero” Scope 1 emissions, CDP is ignoring the GHG Protocol’s recommendation to account for fugitive emissions from biomethane combustion as Scope 1. This is a pragmatic approach that reflects the minimal amount of fugitive emissions as they represent less than half of one percent of the biogenic emissions. The CDP guidance goes on to recommend:

  • Green gas certificates need to be a legitimate and legally enforceable means of transacting property rights and claims to biogenic or renewable fuel attributes of gas production in a specific market
  • The use of gas certificates is limited to users on the same pipeline network who can physically receive gas from biomethane gas plants on that network

For the purposes of CarbonNeutral certification, the minimal fugitive CH4 and N2O emissions from biomethane combustion must be reported under Scope 1. Table 14 illustrates how this would play out for a site in London, using the UK relevant 2017 factors published by BEIS (UK Government Department for Business, Energy and Industrial Strategy. Greenhouse Gas Reporting: Conversion Factors 2018 For biomethane, these factors combine the CH4 and N2O emissions into a single factor, which is marginally higher than the fugitive CH4 and N2O emissions associated with natural gas combustion.

Table 13: Reporting 10,000 MWh of Natural Gas Consumption

Table 14: Reporting 10,000 MWh of Biomethane Consumption Evidenced by Green Gas Certificates

2.5 Calculating the climate impact of aviation

How the CarbonNeutral Protocol addresses climate impacts from aviation

As scientific understanding of global warming has evolved it is important that CarbonNeutral certifications remain robust and follow the latest best-practice to ensure businesses compensate fully for emissions in order to be credible.

The CarbonNeutral Protocol recognises the strengthening scientific consensus that high altitude climate impacts from aviation are greater than the impact of recognised GHG emissions alone. It deploys an Aviation Impact Factor (AIF) as a multiplier applied to the GHG emissions from aviation in order to take account of the wider impacts of aviation on climate. This includes but is not limited to short and long-term impacts from GHGs alone and others with global warming influence (including for example, soot particles and aviation induced clouds); and, direct and indirect impacts (for example, the interaction of NOx with methane gases and ozone at high altitudes).

Guidance on calculating the global warming impacts emissions from aviation

Table 15: The Evolution of Recommended and Mandated AIF Factors as Applied to CarbonNeutral Certifications

The requirements of The CarbonNeutral Protocol are that clients must consider the evidence regarding the overall effect of aviation on climate. Having considered the evidence, clients may elect to adopt a value that is higher than the default to take a more cautionary response to climate impacts from aviation accepting that reliably accurate AIFs are not yet available.

When AIF values greater than the default are not applied, the default values of the year in which the assessment is completed must be applied. Product footprints which can apply over multiple years must be adjusted to reflect applicable defaults.

Clients should be alert to the fact that some carbon footprint calculators and algorithms may use a default AIF that is greater than 1.0.

Interpreting guidance on impacts on climate from aviation into The CarbonNeutral Protocol

Natural Capital Partners first reviewed the science underpinning the impact on climate from aviation in 2009, when it commissioned Professor John Murlis to provide guidance on the issue. The 2009 review highlighted that complex atmospheric chemistry associated with high altitude emissions of GHGs, other gases and effects, such as short-lived contrails and cloud formation, supported the view that the impact of aviation on climate may be greater than from recognised GHGs alone. However, the science was not well enough understood to provide clear guidance as to how such additional effects should be calculated. Therefore, The CarbonNeutral Protocol calculated carbon footprints for aviation directly from aviation GHG emissions. Clients were free to apply an AIF of greater than one.

In 2014, John Murlis, in his capacity as scientific advisor to the Protocol, updated the 2009 guidance. The updated guidance (http://assets.naturalcapitalpa...) recognised strengthening scientific evidence indicating that the full impact of aviation on climate may be greater, by a factor of two, than from recognised GHGs alone. However, the scientific understanding of the higher factor was still poor to fair, and the evidence for quantifying the effect of contrails, which are a large part of the added impact, is particularly poor. Therefore, for the purposes of CarbonNeutral certifications, The CarbonNeutral Protocol required that clients specify whether or not they elected to apply an AIF of 2 (or any other factor >1) based upon their review of the evidence.

In 2019, John Murlis updated the 2014 guidance, concluding that:

“It is now recommended, taking a precautionary view in response to the strengthened evidence and the urgent need to reduce impacts of all kinds of economic activity on the climate system, particularly those showing high growth, that the AIF multiplier of 2 should be considered as a target multiplier, to be adopted over a period to 2025. Clients should be encouraged to continue to take regard of the evidence and to elect to apply higher multipliers in the longer term. The current evidence suggests this would extend to a multiplier of approximately 2.5 to take account of the best estimate of total impact, including currently highly uncertain impacts on cloud processes.”

The CarbonNeutral Protocol does not immediately mandate an AIF of 2 or 2.5 for three main reasons:

  1. The scientific evidence, although strengthening, is still poor to fair in its ability to take accurate account of the wider impacts of aviation on climate to cover short or long-term impacts; impacts from GHGs alone and others with a global warming potential (for example, soot particles and aviation induced clouds); and, direct and indirect impacts (for example, the interaction of NOx with methane gases and ozone at high altitudes).
  2. There is no publicly accessible record of climate regulations or compliance regimes applying an AIF greater than one for emissions from aviation. The EU’s Emission Trading Scheme for aviation considers only emissions of carbon dioxide. DEFRA, the UK Government ministry responsible for environment, has provided internationally recognised guidance in support of a multiplier factor of 1.9. This factor is not actively applied within UK regulatory programme, nor to any voluntary action on climate mitigation by the UK Government and its ministries. The aviation sector’s plans for a global carbon offset scheme to ensure carbon neutral growth from 2027 – the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) – also considers only carbon dioxide emissions.
  3. The CarbonNeutral Protocol’s provision that clients may elect to apply an AIF greater than the default in Table 15 recognises the voluntary nature of the CarbonNeutral certification, while also encouraging clients to take account of the strengthening case for different accounting for aviation emissions in their carbon management strategies and plans.

Natural Capital Partners continues to keep this issue under review. Specifically, the plans by the International Standards Organisation (ISO) to develop internationally applicable guidance on “Radiative Forcing Management— Guidance for
the quantification and reporting of radiative forcing- based climate footprints and mitigation efforts”.

The 2019 updated guidance in full is available at

2.6 Determining aviation emissions from flight distances

Where exact fuel consumption data is not available for GHG emission calculations, passenger kilometres travelled should be used as a basis for calculation instead. Depending on flight distances, different emissions factors are applicable and are often classified as domestic, short haul, medium haul or long haul. Due to the extreme variability in country sizes, the use of “domestic” classification can be counter-productive when applied to flights within a particular country, using emissions factors provided for use within a different country. This applies particularly when using DEFRA emission factors for air passenger transport conversion figures in countries other than the United Kingdom.

Therefore, for the purposes of consistency, the following classifications should apply:

  • Short haul: Flight distance of less than 785km (DEFRA emission factors for “domestic” should be applied)
  • Medium haul: Flight distance between 785km and 3,699km inclusive (DEFRA emission factors for “short-haul international” should be applied)
  • Long haul: Flight distances of 3,700km or greater (DEFRA emissions for “long-haul” should apply)

For clarity, these distance classifications should be applied when calculating emissions arising from passenger flights (passenger km) and/or air freight transportation (tonne km). These distance categories must be applied internationally, in the absence of robust, country-specific factors.

2.7 Treatment of recycled waste – substitution within GHG assessments

An organisational - or entity level - GHG assessment is typically an inventory of actual emissions and removals from the atmosphere. The leading guidance for organisational footprinting, the GHG Protocol Corporate Standard, advocates such an approach, known as attributional analysis.

The emission factors used for organisational - or entity - GHG assessments should relate to actual physical emissions or actual physical removals. However, some emission factors include a “crediting” effect for avoided emissions, and are therefore inconsistent with the principle of only counting actual physical emissions and actual physical removals.

Certain national GHG reporting guidelines (e.g. the U.S. Waste Reduction Model), include a substitution effect in the emission factors for recycled waste. The factors include a credit for the avoidance of embodied emissions that would have occurred had the waste not been recycled - i.e. they provide credit for emissions that do not happen. This approach leads to negative emission factors for certain recycled waste streams. The result of including such factors within an entity-level inventory is that the calculated emissions are no longer a true assessment of actual physical emissions and actual physical removals.

GHG emissions associated with recycled waste should be quantified using national, regional, international, or other relevant emission factors, with preference given to national emission factors when they are available. If national emission factors are not available for recycled waste, the next most relevant source of factors must be used.

If the most geographically relevant emission factors take a substitutional approach within their waste stream methodologies, then recycled waste streams can be assumed to produce zero emissions for accounting purposes. “Zero rating” recycled waste is considered appropriate, as an organisation is rewarded with a lower footprint for sending less waste to landfill, whilst maintaining the attributional integrity of their GHG assessment

2.8 Water consumption and waste water treatment

The 2013 revision of the Protocol introduced the inclusion of water consumption and waste water treatment as recommended emission sources for entity level CarbonNeutral® certifications. While the carbon footprint of water consumption and waste water treatment will be a relatively small emission source for most organisations (the water industry typically contributes around 1% of GHG emissions in developed economies), the water industry and its customers have an important part to play in reducing GHG emissions.

For corporates, water should not simply feature within a carbon management plan. Water warrants its own water management plan. A mature plan considers water volume in the context of both water stress and water quality to understand the full impact of corporate water use at the water basin level.

Including water as a recommended emission source in CarbonNeutral® certifications will encourage users of The Protocol to collect volume data and evaluate water use within their carbon management plan. In creating this awareness and disclosure we hope it will encourage corporates to explore more sophisticated water management plans and consider water use in the context of water stress and water quality.

2.9 Quality assurance and verification

The CarbonNeutral Protocol places strong emphasis on quality assurance requirements to support the integrity of CarbonNeutral® certifications.

Quality assurance is conducted by the CarbonNeutral certifier. It is an independent evaluation to check that the quality of input data, a GHG assessment, or use of a CarbonNeutral® certification logo meets the requirements of a CarbonNeutral® certification and is in line with the approach and principles of The CarbonNeutral Protocol.

Entities seeking CarbonNeutral® certification are encouraged to maintain their own internal quality control and third-party quality assurance covering the measurement of GHG emissions.

Verification of input data, calculations, reductions, and CarbonNeutral communications is at the discretion of the client, or may be requested by the CarbonNeutral certifier should their quality assurance review surface concerns about whether these are correct, complete and accurate. Verification means an independent evaluation conducted by an expert third party to the requirements of an independent verification standard (such as ISO 14064:3 or ISAE 3410) to confirm that the quality of input data, a GHG assessment, or that the use of a CarbonNeutral® certification logo, meets the requirements of CarbonNeutral® certification and is in line with the approach and principles of The CarbonNeutral Protocol.

Quality assurance and verification requirements for the five steps to achieving CarbonNeutral® certification are summarised in Table 16. The CarbonNeutral Certification Form (see Annex F) requests information about the quality assurance and verification procedures underpinning the GHG emissions assessment. Rights to use the CarbonNeutral certification logo are subject to the successful completion of this Certification Form.

Table 16: Quality assurance and verification requirements for the five steps to achieving CarbonNeutral® certification

1 As a member of ICROA, Natural Capital Partners is subject to an annual third-party audit against the requirements of the ICROA Code of Best Practice:

Third-party review of the management systems supporting certifications; and, third-party verification of the data, calculations, carbon credit retirements, carbon neutrality and communication of CarbonNeutral® certifications should be considered when:

  1. The subject’s GHG emissions are material or in excess of 100,000 tCO2e/yr
  2. Certifications are publicly reported or presented to audiences which may use CarbonNeutral® certifications to make commercially material decisions
  3. Certifications are used in support of mandatory reporting requirements or submissions to regulatory authorities

The additional costs of verification should be weighed against the value derived from third-party review. The value of third-party review comes from increased rigour and integrity, and from the identification of management system improvements which increase cost-effectiveness and improve management of climate risks.

Routes to increased rigour and integrity of certifications include, but are not limited to:

  1. Maintaining on file the data, assumptions, models and supporting calculations to a recognised standard such as ISO 14064-1 or the GHG Protocol
  2. Subjecting the accuracy of the input data, assessments, and carbon neutral claims to third-party verification against a recognised verification standard such as ISO 14064 or ISA E3410
  3. Ensuring that staff and management involved in the CarbonNeutral® certification have the requisite qualifications, competencies and experience
  4. Independent confirmation of the accuracy of the CarbonNeutral® communications and claim

2.10 How to report GHG emissions from carbon neutral services within a corporate GHG inventory

Businesses are increasingly considering the environmental performance of suppliers as part of their procurement process. If a business has selected a supplier because they provide a carbon neutral service, this guidance sets out best practice with regards to reporting the GHG emissions from the service within the business’ annual GHG inventory. Services that are frequently supplied as carbon neutral services include taxis, flights, logistics services, electricity or gas supply. This approach would apply equally to the GHG inventory of a product where components of the product are sourced as carbon neutral products. Given carbon neutral services are more widely available in the market, this guidance focuses on services in the context of an annual corporate GHG inventory.

This guidance aligns with the GHG Protocol’s Scope 3 Standard (The Corporate Value Chain (Scope 3) Accounting and Reporting Standard) and UK DEFRA’s Environmental Reporting Guidelines (Environmental Reporting Guidelines: including mandatory greenhouse gas emissions reporting guidance). This guidance recommends the following steps:

1. Request suppliers provide a breakdown of the GHG emissions associated with the services consumed: the total gross carbon footprint for a specific time period (e.g. financial year) plus an intensity measure relevant to how the service is consumed. For example, if document storage is outsourced to a cloud-based service, request the figure for CO2e emitted per gigabyte per year. The carbon intensity metric is useful for forecasting how GHG emissions will vary based on the level of consumption

2. Confirm if the service purchased is carbon neutral. To deliver a carbon neutral service the provider will need to offset (retire) a volume of carbon credits equivalent to the emissions created by the provision of the service. For example, if the gross footprint of the service equals 10 tCO2e, then 10 tCO2e of carbon credits need to be purchased and retired, and once retired the net footprint equals 0 tCO2e, i.e. the service is carbon neutral. To ensure the service provider is using high quality carbon credits which guarantee emissions reductions from credible project types, you should request that they work with a carbon credit supplier that complies with the ICROA Code of Best Practice (International Carbon Reduction and Offset Alliance, Code of Best Practice). If a supplier is not using credits in compliance with the ICROA Code, then those credits cannot be included in support of a CarbonNeutral® certification

3. When preparing a corporate GHG inventory, categorise the carbon neutral service according to requirements of the GHG Protocol standards. To maintain the integrity of the GHG inventory, total GHG emissions should be reported, before reporting a lower figure for net emissions that has been reduced by the retirement of carbon credits by the product or service provider

Table 17 illustrates how this guidance can be applied to a corporate GHG inventory in order to transparently account for the GHG emissions of carbon neutral services consumed within a reporting period. In this example, the reporting company has sourced three services; electricity, logistics and data hosting, that are offset by their respective suppliers. The GHG emissions of all three services are counted in the total annual GHG emissions figure, and the GHG reduction from the purchase and retirement of carbon credits is then subtracted from this figure. The reporting company then purchases and retires a sufficient number of carbon credits to reduce its remaining net GHG emissions to zero to support a carbon neutrality claim.

Table 17: Illustrative Corporate GHG Inventory for 2019 and 2020