Glossary term

GHG Reductions

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Definition 1

GHG Reductions means the amount by which the [GHG Emissions]/ [Scope 1, 2 and 3 Emissions] [have been/ are to be] reduced or avoided during [time period] relative to a specified baseline.

Drafting notes and guidance

GHG reductions can be calculated for an entire company, a contract, or a specific activity. The Carbon Trust's 'A guide to carbon footprinting for businesses' (2022) presents a clear route map and methodology for how to calculate all three.

One way to specify whether the GHG reductions addressed by your contract relate to organisational, contract-related or activity specific emissions is to adapt your definition of GHG Emissions so that emissions are defined as organisation, contract-related or activity-specific emissions. See TCLP's glossary term GHG Emissions for sample wording.

Examples of GHG reductions include:

  • Replacing power generated by fossil fuels with renewable energy.
  • Reducing consumption of emissions-intensive products or inputs.
  • Avoiding damage to carbon sinks.
  • Carbon capture and storage (CCS).

If the parties to a contract want to specify the technologies, practices or processes to be adopted to achieve the GHG reductions, they can include an additional definition 'GHG Reduction Methods'.

Calculating GHG reductions

GHG reductions are calculated by comparing changes in an organisation's actual emissions inventory over time relative to a Base Year. Organisations can establish a base year to track emissions performance consistently over the target period.

The following considerations are important for any organisation that is selecting a base year:

  • Scope 1, 2, and 3 emissions data should be accurate and verifiable.
  • Base year emissions should be representative of a company’s typical GHG profile.
  • The base year should be chosen such that targets have sufficient forward-looking ambition.

Distinguishing GHG reductions from carbon sinks

A carbon sink absorbs more carbon from the atmosphere than it releases. Examples include plants, the ocean, peat or soil.

Carbon Capture and Storage (CCS) is the process of trapping carbon dioxide produced by burning fossil fuels or other chemical or biological process and storing it in such a way that it is unable to enter the atmosphere.

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