SPACE is the abbreviation of Strategic Planning and Analysis for Clean Energy.

ASEAN is the abbreviation of the Association of Southeast Asian Nations.

We choose SPACE ASEAN to emphasize our mission to help firms in the region reduce their GHG emissions. Decarbonization is a complicated and costly process, so it requires firms to carefully analyze their internal and external resources and then develop a strategic plan to gradually reduce GHG emissions and simultaneously transition to clean energy.

Carbon/GHG accounting is a framework of methods to measure, monitor, and report an organization’s GHG emissions. These procedures strictly adhere to standards and protocols, including ISO 14064-Part I, ISO 14064-Part II, ISO 14064-Part III, ISO 14065, ISO 14066, ISO 14067, The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, and The GHG Protocol for Project Accounting. It should be noted that the last two documents are the collective work of the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI). These two documents are more detailed and cover in-depth carbon accounting at the organizational level and project level.

Carbon neutral means that an organization’s GHG emissions are neutralized by their offset credits or removals.

Net zero refers to a scenario in which an organization has reduced its GHG emissions to a minimum level, and the rest is offset or removed by carbon offset credits or other removal projects.

According to the above definitions, firms are encouraged to pursue net-zero targets rather than carbon-neutral targets.

A carbon credit is a permit that allows an organization to emit one ton of carbon dioxide. Carbon credits are also applied for other GHGs after they are converted to tons of carbon dioxide equivalent, using Global Warming Potentials (GWP.

Carbon credits seem bad at first because they give firms certain rights to pollute the environment, but this is a market mechanism that helps effectively regulate firms’ GHG emissions. First, firms are allocated a certain number of carbon credits. Second, firms will trade these credits on the regulated markets. Specifically, if firms consume more than the number of allocated credits, they have to buy credits from the firms that still have extra credits. If firms only focus on buying offset credits, carbon credit demand will go up, given that their supplies are fixed. As a result, the carbon credit price will go up, stimulating firms to reduce their demands by focusing on GHG emission reductions.

ESG consists of three components: Environmental, Social, and Governance. The first pillar refers to environmental factors, including sustainable use of resources, renewable energy, environmental justice, air pollution, climate risks, and so on. The second pillar mentions social factors, including employment laws, employee compensation policies, community engagement, DEI policies, and others. The last pillar talks about corporate governance, which includes board diversity, shareholder rights, stakeholder engagement, and others. The ESG shares some similarities with some other concepts, such as the 3Ps (People, Planet, and Prosperity) and Corporate Social Responsibility (CSR).

According to the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, there are 3 GHG emission scopes:

Scope 1 is direct GHG emissions that occur from sources belonging to the company. These emission sources include combustions, boilers, furnaces, or vehicles owned or controlled by the firm.

Scope 2 is indirect GHG emissions that take into consideration the GHG emissions in the process of generation of the electricity the firm purchases and consumes. Scope 2 emissions physically occur at the location where the purchased electricity is generated.

Scope 3 is the other indirect GHG emissions. These indirect emissions are generated by the activities upstream and downstream of the value chain, but these activities are not owned or controlled by the firm.

The regulated carbon market is a trading mechanism set by governments. For example, the emission trading schemes (ETS) in the E.U., U.K., Australia, Brazil, and China are considered regulated carbon markets.

The voluntary carbon market is a trading mechanism in which big corporations buy carbon credits to manage their carbon footprints. In addition, firms voluntarily participate in the voluntary carbon market to show their commitment to net-zero objectives.

It should be noted that the voluntary carbon markets operate independently of the regulated markets. However, some countries, including the United States (U.S.), have introduced some principles to improve the quality and integrity of this carbon market.

According to Hot Climate, Cool Commerce: A Service Sector Guide to Greenhouse Gas Management by the World Resources Institute (WRI), firms should follow a 7-step process to develop their GHG inventory.

Step 1: Assign resources

Step 2: Design GHG inventory

Step 3: Collect data

Step 4: Calculate emissions

Step 5: Set a target

Step 6: Reduce emissions

Step 7: Report results