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Reporting carbon emissions

Making sense of carbon emissions reporting

What are Scope 1, 2 and 3 emissions?

Carbon emissions are generally reported as Scope 1, 2 or 3, depending on the level of control a company has over a particular emission source.

Different emission sources have different global warming potential. The unit used for emissions reporting is tonnes CO2e, which means emissions with the global warming potential of one tonne of carbon dioxide.

Scope 1 emissions are direct emissions from our operations. The main sources of scope 1 emissions for Wesfarmers are natural gas, diesel and fugitive emissions from coal mined.

Scope 2 emissions are indirect emissions from the electricity used by our operations. For Wesfarmers, most of these emissions come from electricity used by Coles and Kmart.

Scope 3 emissions are indirect emissions that occur as a result of our operations. The reporting of these emissions is less clearly defined as the boundaries are determined by the entity disclosing the emissions, and by what is practical and useful. For example, it could be argued that a business is indirectly responsible for the emissions that occur from hiring cars during business travel, but this would be very challenging to calculate.

Wesfarmers reports Scope 3 emissions over which it has some influence and for which it can provide reasonably accurate data. Our Scope 3 emissions are calculated by applying National Greenhouse Accounts factors.

The Scope 3 emissions that Wesfarmers reports include:

  • emissions from air travel by Wesfarmers Group employees (32,662 tonnes CO2e);
  • emissions from the transmission and distribution of the electricity, natural gas and fuel such as diesel and petrol we use in the businesses that we operate (the emissions that occur as a result of transferring the electricity and natural gas from its source to our operations);
  • emissions that escape from waste that is disposed to landfill;
  • indirect emissions from our Port Kembla operation, which is owned but not under the operational control of Wesfarmers.

Our Scope 1 and 2 emissions include our equity proportion from our joint ventures, including Wespine, QNP, Bengalla and Air Liquide WA (for the first half of the year while we still owned it).  The data we have recorded for Wespine, Bengalla and QNP in this report is for the 2013 financial year due to their reporting schedules.

We acknowledge that our businesses have an impact on other indirect emissions sources, such as transport emissions from our supply chain and emissions resulting from the burning of the coal we produce, but we are not able to estimate these with an acceptable degree of accuracy and so do not report estimates in these areas.

What is NGER Act Reporting?

Under the National Greenhouse and Energy Reporting Act 2007 (NGER Act), companies that exceed a threshold are required to report particular Scope 1 and 2 emissions that are emitted by entities under their operational control. It makes more sense to compare these between companies because the types of emissions that must be reported are consistent.

In this report, Wesfarmers chooses to report some additional Scope 1 and 2 emissions that are not required to be reported under the NGER Act, to give a more complete picture of our emissions profile. These include certain refrigerant gases, emissions from businesses that are owned but not controlled by Wesfarmers (such as our Port Kembla air separation unit) and international facilities.

Our Chemicals, Energy and Fertilisers division and our Resources division both include liable entities under the Clean Energy Act and its Carbon Pricing Mechanism, and have been compliant with their obligations under that legislation. Both entities have met their commitments for the surrender of carbon units. Further information about Wesfarmers’ NGER Act reporting can be found here.

Why does Wesfarmers report emissions intensity?

Where the operations of an entity are getting bigger or smaller, the absolute change in the emissions may be less relevant than the emissions intensity, or in other words, how much carbon is emitted per unit of production. Given the diversity of our businesses, we use emissions per dollar revenue as our common emissions intensity metric across the Group.

This year, our emissions intensity decreased despite the expansion of our businesses. This is primarily due to improvements with the abatement catalyst in CSBP’s nitric acid plants at Kwinana in WA. Innovations in the arrangement of the nitric acid plants have ensured there are no welds in the structure, which means cracking during expansion is avoided and no nitrous oxide slips around the catalyst bed. It is also due to energy efficiency initiatives at Coles.