Carbon accounting, or greenhouse gas (GHG) accounting, is used by organizations, businesses, and local, state, and federal governments to track and report their emissions. As efforts to reduce emissions continue worldwide, carbon accounting has become a foundation for understanding emissions and creating plans, policies, and guidelines to reach climate goals.

Understanding Emissions

Carbon Dioxide Equivalent

There are many GHGs emitted by human activities, including carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), and fluorinated gases (most commonly hydrofluorocarbons, which are used as refrigerants). Carbon dioxide is by far the most common, accounting for nearly 80% of the United States’ GHG emissions in 2025.

GHGs are commonly defined by their global warming potential (GWP), a metric that expresses the amount of heat that a GHG traps in the atmosphere relative to CO₂.

GWP is calculated from how long the GHG lasts in the atmosphere and how much heat it traps. GWP values vary over different time scales, so there are several time scales used, most commonly 20-year and 100-year GWP, which represent the impacts of a GHG on global warming over 20 years and 100 years, respectively. The table below lists some common greenhouse gases and their GWPs.

GWPs of Common Greenhouse Gases

Gas	Major Sources & Notes	20-year GWP	100-year GWP
CO2	Fossil fuel combustion	1	1
CH4 (Methane)	Fossil fuel combustion, agriculture	81.2	27.9
N2O (Nitrous Oxide)	Natural nitrogen cycle, agriculture	273	273
HCFC-22 (R-22 refrigerant)	No longer produced, legacy use in older HVAC systems	5,690	1,690
HFC-134a (R-134A refrigerant)	Refrigerators & vehicle ACs; being phased out	4,140	1,530
HFC-410A (R-410A refrigerant)	Commercial & residential ACs; Being phased out under 2020 AIM Act	4,717*	2,255*
HFC-32 (R-32 refrigerant)	Commercial & residential ACs; Growing US market to replace old refrigerants	2,693	771
R-454B	Common replacement of R-410A	1,856*	531*
SF6 (Sulfur Hexafluoride)	Electrical industry	18,200	24,300
CF4 (Carbon Tetrafluoride, PFC-14)	Low temperature refrigerant, industrial applications	5,300	7,380

*Refrigerants are blends of other refrigerants, and GWP values are calculated based off refrigerant blends.
Data source: IPCC AR6 Chapter 7 Supplementary Materials

To better compare GHGs, a standardized unit, Carbon Dioxide Equivalent (CO₂e), was created. Calculated using the GWP and mass of each gas emitted, CO₂e provides a common value that allows the total emissions of an organization or source to be expressed in a single number.

Emissions Factors

At its core, carbon accounting requires organizations to calculate how much emissions they produce as a result of various activities. To aid this process, databases of emissions factors provide default amounts of emissions for common activities. This includes emissions produced from the combustion of fossil fuels, electricity generation, purchased products, and waste, among others.

In some cases, Continuous Emissions Monitoring Systems (CEMS) that record and report exactly what is being produced by specific sites are preferable and more accurate. These are more common for large emissions sources, such as electricity generating plants and industrial facilities. CEMS and other source specific testing methods can be expensive and difficult to manage, so emissions factors are still an important tool.

Emissions Scopes

The number of sources and potential emissions associated with day-to-day activities can be incredibly difficult to identify and measure. To make accounting and sustainability planning easier, emissions sources are commonly organized into three categories, or scopes, by proximity to an organization.

Scope 1 Emissions

Scope 1 encompasses all direct emissions. Direct emissions refers to all emissions from sources owned or controlled by an organization.

Scope 1 can be divided into four main categories of emissions:

1. Stationary Combustion: emissions from on-site fuel consumption, e.g. natural gas burned for building heating systems.
2. Mobile Combustion: emissions from owned vehicles.
3. Process Emissions: emissions resulting from chemical reactions in industrial processes.
4. Fugitive Emissions: unintentional emissions, generally from leaks in equipment or storage tanks. Refrigerant leaks would fall in this category.

Scope 2 Emissions

Scope 2 refers to emissions associated with energy purchase and use. This includes electricity, district steam, hot water, and chilled water. Since these purchased energy sources are not owned or controlled by the organization, they are called indirect emissions.

Scope 2 is particularly important as electrification continues to be a popular method to decarbonize the built environment. However, without on-site production or direct purchasing of renewable energy sources, electricity itself is not emissions free.

Scope 3 Emissions

Scope 3 encompasses all indirect emissions in an organization’s value chain. This includes both upstream and downstream sources. Due to the wide-ranging nature of Scope 3 emissions, it is usually the largest category, often representing 70-90% of a company’s emissions.

The Greenhouse Gas Protocol, which published standards for emissions reporting and carbon accounting, splits Scope 3 into 15 distinct categories.

Upstream:

1. Purchased Goods & Services
2. Capital Goods: embodied carbon of capital assets
3. Fuel- and Energy-Related Activities: emissions from fuel production and transportation as well as electricity line losses
4. Upstream Transportation and Distribution: emissions from import of purchased goods and materials
5. Waste Generated in Operations
6. Business Travel
7. Employee Commuting
8. Upstream Leased Assets: assets leased but not controlled

Downstream:

1. Downstream Transportation and Distribution: emissions from outbound/export of sold goods
2. Processing of Sold Products: applicable for products that are further processed into a new product or used another product
3. Use of Sold Products
4. End-of-Life Treatment of Sold Products: emissions from disposal, recycling, or reuse of products
5. Downstream Leased Assets: assets owned but leased to another entity
6. Franchises
7. Investments

Image credit: GHG Protocol

Scope 3 emissions are the most complicated to inventory due to the number of activities covered and the difficulty in obtaining complete and accurate information for all applicable categories. Fortunately, not all of the 15 categories identified above are applicable to every organization.

Carbon Accounting Components

GHG Reporting Frameworks

Carbon accounting has become a component of many current business practices, as consumers and investors continue to value sustainability and social responsibility. The increased interest has led to a range of carbon accounting frameworks. Common frameworks include:

• The Greenhouse Gas Protocol
• The International Organization for Standardization (ISO) 140641 standard
• IFRS Sustainability Disclosure Standards

Each framework has its own systems and guidelines for measuring and reporting GHG emissions.

GHG Inventory

The process of measuring GHG emissions is often referred to as a GHG inventory. These inventories begin with identifying all sources of emissions in the organization, including Scope 3 upstream and downstream sources. Once these have been identified, they need to be measured. This may require engagement with different stakeholders along the organization’s value chain. GHG inventories usually measure emissions for a given year, either calendar or fiscal, so data needs to be captured for an entire year. After all data is collected, emissions factors are used to convert the various metrics into GHG emissions.

Authenticating Results

While most carbon accounting is done by an organization, third parties can audit and verify the accuracy and reliability of results. Third party audits of GHG inventory results and carbon accounting processes can be used to provide additional accountability, or they can be used to fulfill mandatory requirements. B Corp Certification, for example, requires a third-party verification of carbon accounting methods and results.

Decarbonization Planning

Much like financial accounting, carbon accounting should not exist in a vacuum; rather, it should be used to inform organizational sustainability planning, goal setting, and progress tracking. Many organizations set climate goals based on results of initial GHG inventories, using them as a baseline to track progress. Successive inventories evaluate reductions compared to the initial baseline, making emissions reduction progress visible across all stages of the organization’s operations. Detailed breakdowns of emissions sources also help organizations identify project and investment priorities in the short term to maximize early emissions savings.

GHG Inventory Examples

IKEA

Carbon accounting is used by organizations of all sizes, with many large international companies publishing ESG (environmental, social, and governance) and/or sustainability reports with GHG inventories.

IKEA, the furniture retailer, is a good example of what this can look like. Their most recent GHG inventory, which covered emissions for fiscal year (FY) 2024, reported total emissions across their value chain of 21.3 million metric tons of CO₂e. The breakdown of the emissions sources can be seen in the graph below:

As a furniture manufacturer and retailer, IKEA’s GHG emissions are predominantly (>99%) Scope 3 indirect emissions. Very little is under their control, with material purchases, transportation of raw materials and products, most production, product use, and product disposal all occurring outside of their direct operations.

IKEA has used their GHG inventories to both set emissions baselines and track progress toward their emissions goals: all of their GHG goals are based off of reductions from the baseline FY 2016 GHG inventory.

University of Pittsburgh

The University of Pittsburgh (Pitt) has published GHG inventories for their Pittsburgh campus since 2008. Their fiscal year 2025 GHG inventory calculated total emissions of 167,192 metric tons of CO₂e. A majority of Pitt’s emissions come from powering and conditioning their buildings: Scope 1 steam and natural gas use and all Scope 2 emissions accounts for 64% of their FY 2025 emissions. When including upstream Scope 3 emissions for energy production and losses, this number increases to over 75%.

Like IKEA, Pitt has used their earliest GHG inventory as a baseline for evaluating progress on their climate and sustainability goals. In 2018, they adopted an interim goal of a 50% reduction in emissions by 2030, with a baseline set by their FY 2008 GHG inventory. This was followed by a goal of reaching carbon neutrality by 2037. For FY 2025, their inventory revealed that Pitt had achieved a 38.8% reduction in emissions compared to the 2008 baseline.