Electricity and market vs. location-based emissions

Greenhouse Gas Protocol

Capital goods includes GHG emissions from extraction, production, and transportation of capital goods purchased or acquired by the reporting company in the reporting year. Capital goods are final products that have an extended life and are used by the company to manufacture a product, provide a service, or sell, store, and deliver merchandise. In financial accounting, capital goods are treated as fixed assets or as plant, property, and equipment (PP&E). Examples of capital goods include equipment, machinery, buildings, facilities, and vehicles.

In financial accounting, capital goods (sometimes called “capital assets”) are typically amortized over the life of the asset. For purposes of accounting for scope 3 emissions companies should not depreciate, discount, or amortize the emissions from the production of capital goods over time. Instead, companies should account for the total cradle-to-gate emissions of purchased capital goods in the year of acquisition, the same way the company accounts for emissions from other purchased products in category 1. If major capital purchases occur only once every few years, scope 3 emissions from capital goods may fluctuate significantly from year to year. Companies should provide appropriate context in the public report (e.g., by highlighting exceptional or non-recurring capital investments)

(source: GHGP Corporate Value Chain Standard, p39)

Implementation by Carbon+Alt+Delete

Carbon+Alt+Delete allows the amortization or depreciation of capital goods, but puts the amortization period by default to 1 year. The underlying rationale is that the GHG Protocol doesn’t allow amortization, while the ISO 14064-1:2018 standard does allow amortization.