Scope 3 emissions in the automotive industry

author: FutureCar Staff    

Scope 3 Greenhouse Gas (GHG) emissions refer to emissions that occur outside of an organization's own operations, including in the supply and value chains and throughout product lifecycles. These emissions have become increasingly important for businesses to address in their decarbonization efforts, as they often have a significant impact on total GHG emissions.

There are 15 different categories of scope 3 emissions defined by the GHG Protocol, and three of these categories present an opportunity for automotive firms to take meaningful action in decarbonizing their operations. These categories are:

1. Purchased goods and services

11. Use of sold products

12. End-of-life treatment of sold products

Companies can make a significant contribution to reducing their scope 3 emissions by procuring more sustainable goods and services. This not only helps in decarbonization but also has a positive impact on the bottom line. For example, the EU Carbon Border Adjustment Mechanism (CBAM) will impose a carbon price on embodied emissions in purchased products starting in 2026. By choosing products with better emissions credentials, businesses can lower their costs.

To effectively reduce scope 3 emissions, companies need to be honest with themselves and analyze their current purchasing practices, including the carbon footprint of the products they buy and the suppliers they source from. They should also consider how their procurement decisions align with internal policies. For instance, are they buying recycled materials or virgin materials?

Investing in circularity can help decarbonize the end-of-life treatment of sold products, especially vehicles sold by automotive companies. This reduces the environmental impacts of material decomposition and disposal, which fall under Scope 3 Category 12 emissions. Authorities are also introducing regulatory incentives to encourage the use of materials from end-of-life vehicles in the production of new vehicles.

Having a robust end-of-life strategy not only leads to positive decarbonization results and reduced exposure to future carbon pricing but also improves compliance with new end-of-life and product composition regulations. Some Original Equipment Manufacturers (OEMs) have already set up dedicated business units for reclaiming materials from end-of-life vehicles, and others are exploring similar possibilities.

In addition to investing in end-of-life vehicle infrastructure, OEMs can also focus on the design of the vehicles they bring to the market. Careful design decisions can support priorities such as vehicle electrification, leading to lower emissions in the use phase of the vehicles (Scope 3 Category 11 emissions). Fleet operators and customers are increasingly looking for vehicles with a lower carbon footprint, both in their production and operation.

Measurement is a key aspect of addressing scope 3 emissions. Businesses need to effectively measure their carbon footprint to hold themselves accountable. Currently, many businesses use a "spend-based" approach to calculate their scope 3 emissions for purchased products and services, relying on benchmarks and procurement data. However, as companies change their procurement practices, they need to understand the actual impacts of their decisions and reflect this in their GHG accounting. Using specific data rather than averages, such as supplier-specific data for Scope 3 Category 1 emissions, can be crucial in understanding and capitalizing on decarbonization in the supply chain.

FutureCar Staff