Emissions assessments: the path to sustainability

Trinidad and Tobago

Frank Teelucksingh, managing director of Coastal Dynamics Limited, talks to The Energy Year about why assessing greenhouse gas emissions is increasingly important for companies and demand in the Trinidadian market for relevant assessment services. Coastal Dynamics provides environmental consulting and monitoring services on onshore and offshore projects.

Why is it important for companies to assess their greenhouse gas emissions through your services?
With the new accounting rules that will come into effect in 2024 related to International Financial Reporting Standards [IFRS] Standard S1 and S2, companies will need to look carefully at their greenhouse gas [GHG] emissions and report them. These standards are a set of accounting rules that guide the financial statements of companies and allow their GHG emissions assessments and ESG standards to be compared to each other and to others globally.
CDL can assess these emissions and give the company recommendations to help reduce them. A lot of that is generally done to show stakeholders and customers that a company is doing its part to reduce emissions, but with the new rules, it will become a part of their overall accounting under the same IFRS standard used for audits.
The new IFRS standard will include auditing for greenhouse gas emissions so that, when looking at companies on the stock market, investors are able to compare their emissions just like any other factor. Companies may even have a chief sustainability officer as part of their executive board alongside the CEO and CFO and so on. This is especially relevant if they are listed on international markets, as it will likely become a requirement of loan financing that they have their ESG standards in place.

How would taking action on ESG goals relate to loan financing?
Increasingly, many financing agencies may now require some reporting of ESG and GHG metrics from local companies when they are assessing these companies to qualify for financing and investment. And if they are part of a value chain or a major corporation, they will need to see how every entity is performing down that supply chain. This is particularly true of financial agencies operating out of the EU. Therefore, in the near future, it will be very important to show how a company is performing in that regard. As a company, you may also want to show your customers and shareholders that you’re an environmentally responsible company. By reporting your financials through the S1 and S2 accounting standards you can do this in a way that can be used to compare your performance with that of others.

What demand is there in the Trinidadian market for these emissions assessment services?
A lot of the major corporations, especially multinationals, already have their ESG being documented, but smaller corporations will soon benefit from doing it as well. These companies may have been dealing with international entities that require, or may soon require, the local companies to report on their ESG standards and their GHG emissions. They may not have easy access to experts that can do that.
We have been providing this service to the oil and gas sector for several years. It is a requirement as part of a project’s environmental assessment to look at its GHG emissions. It is something we can do for any company that is interested, but what we do now is offer it as a consultancy service where we assess the emissions and offer solutions to mitigate them.
In such a case, a company would request that we do a greenhouse gas inventory for them. We would then go in and analyse the company’s various processes taking place to see where greenhouse gases are being emitted. This may include manufacturing processes, transportation, shipping, utilities, waste management, etc. We then calculate the overall emissions of greenhouse gases such as CO2, methane, NO2, SO2 and others and then convert that number to a CO2 equivalent which is used as a universal standard of GHG emissions.
We can then look at the emitting processes of that company and recommend ways of reducing them. This can even include looking at the number and types of vehicles they use, the type of fuel these vehicles use and so on. We can then help that company with their decarbonisation goals. We believe that you can only truly place your company on a path to sustainability when you measure your GHG emissions correctly. For each company, we can look at Scope 1 and Scope 2 and Scope 3 emissions.

What does a Scope 1, Scope 2 and Scope 3 emissions assessment involve?
When we do a greenhouse gas inventory, we look at both direct and indirect emissions. Scope 1 looks at direct emissions that may come from a process happening within the company, such as a petrochemicals process that releases carbon dioxide into the air, a gas leakage or emissions from company vehicles transporting goods for sale, etc.
Scope 2 looks at emissions that come from power consumption: for example, electricity used for lighting and air conditioning can be equated to carbon dioxide emissions from the power company that burns gas to supply that power.
There is also a Scope 3, which are emissions that result from indirect activities of the company that they do not control or own. These are upstream and downstream emissions. You can think of it as a supply chain for managing greenhouse gases. If you sell oil, where does that oil go? And what are the emissions being produced from the use of that oil? That’s what makes Scope 3 more detailed and challenging. There are many benefits from measuring Scope 3 emissions.
For many businesses, most of the recorded emissions come from Scope 3 sources. So this provides lots of opportunities for a company to reduce its overall emissions by addressing how it does business with its suppliers and vendors. This can greatly help a company advance its sustainability or decarbonisation goals.

Can you tell us about the blue carbon project you are undertaking in Jamaica?
CDL is presently conducting a blue carbon project that involves looking at the restoration of a mangrove forest in neighbouring Caribbean island. It’s a large area of mangrove that has been stressed by hurricanes and lack of fresh water. The IDB [Inter-American Development Bank] has provided financing for this project to find a solution to prevent that mangrove forest from further degradation.
Not only does the mangrove tree itself take carbon out of the air but there is a lot of biomass and soil that can store carbon as well. Mangrove forests are very powerful carbon traps. Mangrove restoration, carbon credits and CCUS are all buzzwords right now. Since mangroves are fantastic carbon catchers, working on restoration projects would be beneficial for us to prepare for potential similar projects in the future. The carbon sequestration potential of mangrove communities can help position Caribbean islands, including Trinidad and Tobago, to sell carbon credits.

How can mangroves and their restoration help countries to benefit in their carbon accounting?
Most mangrove restorations now have a carbon credit aspect. Mangroves have value that can offset carbon discharges, so if a company is emitting greenhouse gases and wants to balance it out, they can buy carbon credits from whoever owns the source that is taking carbon out of the atmosphere.
There’s a whole financial market based on trading carbon credits. This has not yet gained momentum in Trinidad, but there is potential for it. It would require assessments of the biomass both above and below the soil level for forested areas as well as mangroves. It’s also a good option for financing environmental projects, and it can help sustain valuable ecosystems.

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