Introduction

The Greenhouse Gas (GHG) protocol for project accounting provides a standardised approach to quantifying and reporting GHG reductions from mitigation projects. It is intended for voluntary and mandatory programmes, helping developers, verifiers, and regulators produce transparent, comparable, and credible GHG accounts. The protocol does not cover sustainable development, ownership, uncertainty, or verification, as these are outside the scope of quantification.

Key GHG project accounting concepts

Project activities are the core units of GHG assessment and are defined by their intended GHG effects. Primary effects are the direct outcomes of the project activity, while secondary effects include unintended GHG changes elsewhere. The concept of a baseline is central, representing the emissions scenario against which project performance is compared.

Policy aspects of GHG project accounting

The protocol aligns with multiple GHG programmes, including the Clean Development Mechanism (CDM). Legal requirements, common practices, and regulatory conditions play a role in defining acceptable baselines.

GHG accounting principles

Five principles—relevance, completeness, consistency, transparency, and conservativeness—guide all accounting. Projects must use conservative assumptions where uncertainty exists, favouring underestimation over overstatement of GHG reductions.

Defining the GHG assessment boundary

Project developers must identify and justify all GHG sources, sinks, and reservoirs affected by project activities. This includes estimating the magnitude and significance of secondary effects and clearly defining exclusions.

Selecting a baseline procedure

Two procedures are permitted:

• Project-specific: Identifies a baseline scenario using qualitative and quantitative data.
• Performance standard: Uses statistical analysis of GHG emission rates from a range of technologies or practices. Developers must justify their chosen method.

Identifying the baseline candidates

All credible alternatives to the project activity must be identified and screened. Criteria include current practices, regulations, market conditions, and financial feasibility.

Estimating baseline emissions — project-specific procedure

This involves selecting a baseline scenario based on a comparative assessment of barriers and net benefits. In one example, a cement project evaluated alternatives based on financial returns, investment barriers, and technology feasibility. The selected baseline (91% clinker-to-cement ratio) provided high net financial benefits and minimal barriers, making it more conservative than current practice.

Estimating baseline emissions — performance standard procedure

When using this method, developers must determine emission rates for different stringency levels (e.g., mean, median, lowest percentile) across baseline candidates. The selected level must be justified.

Monitoring and quantifying GHG reductions

Data must be collected systematically to track actual emissions and validate assumptions. Emissions are quantified using emission rates and production levels. Where precise measurement is not feasible, conservative estimates must be used. Sub-annual quantification is encouraged for variable activities.

Reporting GHG reductions

Reporting must include project description, baseline scenario, assessment boundary, emissions estimates, monitoring plans, and expected reductions. Annual monitoring reports are required to update assumptions and confirm implementation. Reporting must follow principles of transparency and completeness, and provide justification for all calculations and exclusions.

GHG project accounting examples

Case studies include cement production and compressor station efficiency upgrades. For the cement project, switching to blended cement and biofuels was assessed. Although biofuels reduced emissions and fuel costs (USD 0.007/Mcal vs. USD 0.089 for natural gas), high investment costs and infrastructure limitations posed challenges. In the final assessment, cost-benefit analysis and market viability determined the baseline scenarios.

This Protocol supports consistent and credible project-level GHG accounting and is applicable across sectors and geographies.