The Importance of Reducing Scope 3 Carbon Emissions

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Recently, investors and companies have been shifting their focus from reducing scope 1 and 2 carbon emissions to reducing scope 3 carbon emissions. There is a growing need to reduce GHG emissions wherever possible and it is increasingly expected that companies have a greater understanding of their true carbon footprint by taking more responsibility in accounting for Scope 3 emissions. CO2 emissions falling under Scope 3 include indirect emissions such as value chain emissions, carbon footprint from suppliers, customers, business travels, company leases, purchased goods and services, waste disposal and employee commuting. Scope 3 emissions include all sources not within an organization’s scope 1 and 2 boundary. The scope 3 emissions for one organization are the scope 1 and 2 emissions of another organization. Reducing scope 3 emissions has become an area of importance as it is often where the largest carbon footprint is occurring. Although historically overlooked or under-reported, for many business, Scope 3 emissions account for over 70% of their total footprint. Failure to report on scope 3 emissions can often create an inaccurate description of company’s carbon footprint profile and increase its susceptibility to climate change risks.

Scope 3 emissions can be further grouped into upstream and downstream.

Upstream Scope 3 emissions (which include purchased goods and services, capital goods, fuels and energy-related activities not included in Scope 1 and 2, upstream transportation and distribution, waste generate din operations, business travel, employee commuting and upstream leased assets).

Downstream Scope 3 emissions (which include downstream transportation and distribution, processing of sold products, franchises, investments, end of life treatment of sold products, use of sold products and downstream leased assets).

Fertoz objective to address scope 3 emissions is by promoting the use of climate-smart fertilizers such as rock phosphate that producer less CO2 during manufacturing. A scope 3 carbon emission reduction protocol allows the farmer to reduce carbon emissions upstream, indirectly by using fertilizer that lowers their carbon footprint. For every 1 MT of ammonium phosphate fertilizer replaced with rock phosphate, approximately 0.5 MT of CO2 emissions are reduced. Fertoz is encouraging fertilizer manufacturers and retailers to reduce their carbon footprint by replacing or blending their conventional fertilizers with rock phosphate. These changes benefit the environment, the sustainability and health of soil, and crop production. This program would be made available to farmers who are switching their phosphate source from ammonium phosphate to rock phosphate and allow farmers to trade carbon credits through Fertoz’ transparent tracking and trading platform. This project requires the development of a greenhouse gas report that includes a detailed description of the project, calculated carbon emission reductions based on tonnes purchased and applied, producers who have signed up for the program, producer contract and documentation as proof of implementation of the program.

An approved carbon verifier must be employed to verify the carbon credits. These carbon credits would be sold by Fertoz initially, and later added to a carbon registry–if they deem the project acceptable.

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