Emissions 101
Emissions 101 - The Essentials for Businesses Essential Concepts, Terms, and Regulatory Frameworks for Businesses
As global greenhouse gas (GHG) emissions continue to rise and governments worldwide tighten environmental regulations, companies must accelerate efforts to reduce their carbon footprint and ensure long-term sustainability. For professionals in heavy industries and logistics, understanding emissions and regulations but also emerging opportunities is increasingly critical to remaining compliant, competitive, and sustainable. This new Net Zero Lubrication series of articles provides an overview and updates of emissions, regulatory frameworks, lubrication specific emissions, practical guides, and real-life stories how to achieve net zero lubrication while increasing reliability and profitability.
Introduction to Emissions
Figure 1. Total net anthropogenic GHG emissions, 1990-2022
Climate change is an urgent global challenge that is increasingly impacting nations around the world and businesses across various sectors. Year 2022 marked the new record year when global greenhouse (GHG) emissions reached a new record of 57.4 gigatons of CO2 equivalent (CtCO2e) (Figure 1.). Virtually all sectors have fully rebounded from the drop in emissions induced by the COVID-19 pandemic according to UNEP Emissions Gap Report 2023. European Commission’s GHG Emissions of all World Countries 2024 report highlights the fact that GHG emissions have continued to rise also in 2023.
Close to 80% of historical cumulative fossil and LULUCF (land use, land use changes and forestry) CO2 emissions came from G20 countries while least developed countries contributed 4% of the emissions. Largest contributions come from China, the United States of America, and the EU27. GHG contributions are not developing evenly, as emissions continue to increase in some regions while they decrease in others. E.g., European Union saw -8% YoY decrease in 2023 largely driven by decreases from the power sector, industry, and buildings sector.
The Role of Industrial Emissions in Climate Change
Industrial operations contribute substantially to GHG emissions, primarily through fossil fuel combustion, chemical processes, and equipment use. Industrial fluids - such as lubricants, hydraulic fluids, and coolants - play a crucial role in machinery operations but also contribute to emissions throughout their lifecycle, from extraction and production to disposal. The emissions impact of these fluids is often overlooked but significant, amplifying the overall industrial carbon footprint.
Greenhouse Gases at a Glance
The main greenhouse gases (Table 1.) that drive climate change include:
Carbon Dioxide (CO₂): Primarily from burning fossil fuels and deforestation, CO₂ is the most prevalent GHG.
Methane (CH₄): Emitted during oil, gas, and coal extraction, as well as organic waste decay, methane has a heat-trapping potential 25 times greater than CO₂.
Nitrous Oxide (N₂O): Released from industrial activities and fertilizer use, N₂O is particularly potent, with a global warming potential (GWP) of approximately 298 times that of CO₂.
Fluorinated Gases (F-gases): Synthetic gases used in refrigeration and air conditioning, including hydrofluorocarbons (HFCs) and sulfur hexafluoride (SF₆). They have very high global warming potentials, often thousands of times greater than CO₂.
Table 1. Greenhouse gases
These gases are measured in CO₂ equivalents (CO₂e), which express each gas's impact in terms of an equivalent amount of CO₂. This standardization allows companies to track emissions accurately and simplifies reporting, aligning with international climate targets.
International Climate Goals: Why the 1.5°C Target Matters
Figure 2. Global GHG emissions scenarios, 2030 and 2035
The Paris Agreement, adopted by nearly every country, is a landmark treaty aimed at reducing GHG emissions to prevent global warming beyond 1.5°C above pre-industrial levels. This target is critical for minimizing severe climate impacts, including more extreme weather events and ecosystem disruptions. To support this, countries worldwide are implementing stringent regulations for industries to limit emissions.
However, according to latest analysis current measures fall way too short to cap the global warming under 1.5°C. Figure 2. illustrates global GHG emissions under different scenarios in 2030 and 2035. The gap between current policies scenario and pathways to 2°C and 1.5°C ranges highlight the fact that imminent and accelerated actions are needed to achieve deep emission cuts by 2030.
Global Regulatory Frameworks
Governments worldwide have established frameworks to standardize corporate emission reporting and climate action:
EU CSRD: Beginning in 2024, large EU companies must disclose their environmental impacts, including GHG emissions, with full compliance expected by 2026.
U.S.: The SEC (Securities and Exchange Commission) is working on mandatory climate risk disclosures, expected to cover emissions reporting and climate-related risks.
Asia: Countries like Japan and South Korea have set ambitious carbon reduction goals and carbon pricing mechanisms, while China aims to achieve carbon neutrality by 2060.
These regulations focus on emissions reporting, requiring companies to categorize emissions into Scope 1, 2, and 3 to ensure accountability across direct operations, energy use, and broader value chain impacts. Adhering to these frameworks is becoming an essential component of corporate sustainability strategies.
Impact on Businesses
With regulatory and social pressure mounting, companies must take steps to reduce their emissions or face financial and reputational risks. Investors, stakeholders, and consumers increasingly expect businesses to contribute to climate action. Companies that ignore or delay emissions compliance may experience financial penalties, damage to their brand reputation, and challenges in securing capital or partnerships.
Three Key Takeaways
Climate change is driving mandatory emissions regulations worldwide, affecting industries, investors, and consumers alike. Companies must stay informed and proactive in addressing emissions.
Understanding key terms and concepts around GHGs, carbon neutrality, and regulatory frameworks is essential for compliance and sustainability efforts.
Familiarize with global frameworks and prepare for compliance deadlines in your region to avoid penalties, maintain competitiveness, and align with stakeholder expectations.
Key terminology
Greenhouse Gas (GHG): Any gas that contributes to the greenhouse effect by trapping heat in the atmosphere.
Carbon Footprint: The total GHG emissions generated directly or indirectly by activities or products.
Carbon Neutrality: Achieving a net-zero carbon footprint by balancing emissions with offsets.
Scope 1, 2, 3 Emissions: Categories representing direct emissions (Scope 1), indirect emissions from energy use (Scope 2), and all other indirect emissions (Scope 3).
Paris Agreement: A global accord aiming to keep global warming below 2°C, ideally below 1.5°C.
Net Zero: A state of balancing emitted GHGs with equivalent removal or offsetting.
Carbon Credits: Tradable permits allowing a company to emit a specific amount of CO₂.
EU CSRD (Corporate Sustainability Reporting Directive): A regulation requiring EU-based companies to disclose sustainability impacts.
GHG Protocol: A globally recognized framework for measuring and managing greenhouse gas (GHG) emissions. The GHG Protocol categorizes emissions into three "Scopes".
Science-Based Targets: Emission reduction targets aligned with climate science.
Carbon Disclosure Project (CDP): An initiative encouraging emissions disclosure.
References and Sources
European Union Corporate Sustainability Reporting Directive (CSRD)
U.S. Securities and Exchange Commission (SEC) -SEC - Climate Risk Disclosure
Disclaimers
The views expressed in this article are those of the authors. We regret for any unintentional errors, omissions, or misinterpretations.
Author: Mika Perttula (CEO - Fluid Intelligence Oy)
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Net Zero Lubrication is a strategic mindset and model helping industrial companies to maximize operational performance while minimizing fluid-based CO2 emissions and costs. This model is based on managing the entire lubrication lifecycle from Emissions Management and Fluid Performance Optimization perspectives in three stages - 1) Lubrication planning, 2) In-Service oil lifecycle and performance maximization, and 3) End-of-life waste oil management.
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