Glossary entry

Residual Emissions

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Definitions

Option 1

Residual Emissions means GHG Emissions [from all operations of [a party] including value and supply chains] that are emitted after all reasonable efforts have been made [by the party] to reduce GHG Emissions [from all operations including value and supply chains].

Option 2

Residual Emissions are any GHG Emissions which remain after a project or organisation has implemented all technically and economically feasible opportunities, as determined by a Climate Professional as part of a Carbon Footprint assessment, to reduce emissions in all scopes and from all sources.

Drafting notes

The words “all operations” and “all scopes” are intended to refer to Scope 1, 2 and 3 Emissions.  If the clause being drafted is intended to refer only to one or two of these categories of emissions then this definition will need to be amended. 

In order to achieve Net Zero Targets, it is essential first to calculate the extent of Residual Emissions in order to come up with a comprehensive plan for balancing them out. Emissions should be reduced to the greatest possible extent before any Residual Emissions can be compensated using Carbon Offsetting.

Emissions trajectories to net zero and an estimate of Residual Emissions should be regularly updated and maintained. The trajectory that will be appropriate will depend on the sector[s], level of ambition and available investment for the relevant entities, and is likely to be the result of advice from a Climate Professional as part of a Carbon Footprint assessment.

Application

National climate laws, local planning authorities, construction contracts, contract manufacturing clauses, corporate climate policies, supply chain agreements, employment contracts.

Residual Emissions is used in the following TCLP clauses:

[Aatmay’s Clause] Sustainable and Circular Economy Principles in Leasing Arrangements for Repairs and Alterations;

[Alex’s Clause] Circular Economy Product Design Obligation; 

[Alexandro’s Clause] Net Zero Sponsor Activation Clause; 

[Cassie’s Clause] Insurance: Disclosure and Mitigation of Pending Climate Change Litigation; 

[Dottie’s Clause] Climate Purchase Agreement and Underwriting Sponsor Warranties; 

[Elliot’s Handbook] Net Zero Culture Employment Handbook; 

[Emma’s Clause] Green Residential Lease Clauses; 

[Estelle’s Clause] Climate Standard of Care (Construction); 

[Eveyln & Ezra’s Clause] Securing Net Zero in Planning Development Projects; 

[Felix’s Clause] Net Zero Completion Adjustment Clause;

[Francis’ Clause]  Climate-Aligned Construction Waste Management; 

[Gordon’s DDQ] Capital Markets ESG Due Diligence Questionnaire; 

[Jessica’s Clause] Carbon Contract Clauses for Environmental Performance, and Associated Incentives and Remedies; 

[Luna’s Clause] Net Zero Aligned Construction Modifications; 

[Ming’s Clause] Target Product Carbon Footprint (Schedule for Consumer Goods Contracts);

[Owen’s Clause] Net Zero Target Supply Chain Cascade Clauses; 

[Pasfield’s Clause] Paris Aligned Company Articles; 

[Ragnar’s Clause] Green Company Articles; 

[Raphael’s Procurement DDQ] Climate Change Due Diligence Questionnaire for Suppliers; 

[Rose’s Clause] GHG Emissions Management Plans in Infrastructure and Construction Project Finance; 

[Rosie’s Clause] Alteration/ Improvement Provisions in Leases to Improve Climate/ Environmental Impact of Buildings and Better Use of Shared Space; 

[Scarlett’s Performance Conditions] Environmental, Social and Governance (ESG) Based Performance Conditions for Employee Incentive Awards; 

[Sebastian’s Clause] Entire Business Net Zero Objectives; and 

[Tristan’s Clause] Construction Materials: Procurement; 

 

References

Climate Action Planning Framework: C40 Resource Centre

Grantham Research Institute on Climate Change and the Environment: What Is Net Zero?

Carbon Trust: Net zero: an ambition in need of a definition

Energy White Paper: Powering Our Net Zero Future, December 2020

ERA Environmental: GHG Emissions: Demystifying Carbon Dioxide Equivalent (CO2e)