Environmental change has become a matter of immediate concern around the world. As a matter of fact, since climate change is reaching its extremes day by day, businesses and agriculture sectors around the globe are required to address the need to keep an eye not only on their direct emissions but also on its entire value chain system. In Australia, reporting Scope 3 emissions has become a mandatory aspect by the Australian government for various industries, including agriculture and large companies. Scope 3 includes an array of a wide range of indirect emissions of greenhouse gases, both upstream and downstream, by a farmer’s production and supply chain.
The government is focused on gaining clear and transparent insights from large industries, including the agricultural sector, about their climate-related plans, future risks, and opportunities. This approach is targeted to make different industries more aware and mindful while indulging in climate-related practices and following sustainable practices.
What Are Scope 3 Emissions?
The Treasury Laws Amendment Bill 2024 has introduced the mandatory climate reporting requirements for businesses in various sectors. The bill focuses on Scope 3 emissions, which include the approximate insights regarding the release of various indirect greenhouse gases by different industries throughout its entire value chain. These include both upstream activities like extraction of raw materials, transportation, etc. and downstream activities such as product usage, post-sale impacts, etc.
These are basically an estimation of a person or a company’s total carbon footprint throughout the year in all its production and post-production activities. It is better for farmers to understand and accurately measure these emissions so that they fully address and report their impact on the environment.
Impact On The Agricultural Sector
Though Scope 3 primarily focuses on large business houses, the scope of this bill will stretch to the agricultural sector as well. Even if some farmers are not affected directly due to their small production size, they still have to report their emissions due to their role in the supply chains of large companies.
Farmers are required to build their informed emission profile for both of their upstream and downstream activities, including banking and insurance. Nevertheless, calculating and keeping an eye on these emissions will be a very complicated process for all the farmers. They may face many challenges, huge costs, and loss of valuable time in the process of reporting these emissions.
Key Requirements For Agricultural Sector
Scope 3 emissions include reporting of both upstream and downstream activities. Here is the list of requirements for reporting in the agricultural industry with mitigation strategies:
- Production Processes: The production process in terms of Scope 3 emissions includes all those greenhouse gas emissions released in the environment during the growing stage and transportation stage of the agricultural products.
They also include the production of synthetic fertilisers, which release nitrous oxide, which is a potent greenhouse gas, and similarly, the production of synthetic pesticides. Additionally, the emissions made during their transportation are also needed to be reported.
- Farm Operations: The main factor that significantly leads to Scope 3 emissions are the farm operations, which include the following activities:
- Livestock Methane Emissions: Livestock, especially cattle, produce methane while digesting fodder, a process called enteric fermentation. Methane is a potent greenhouse gas that is produced in abundant quantities from livestock, and requires immediate implementation of mitigation strategies.
- Usage of Farm Machinery: From tractors to harvesters, or any other machinery often requires diesel for operation. The ignition of diesel produces carbon dioxide and many other greenhouse gases. These machines should regularly go under maintenance, so that they can reduce their emissions.
- Emissions from Agricultural Waste: Scope 3 emissions require reporting of these agricultural waste emissions:
- Manure Storage: Managing and storing manure can lead to methane and nitrous oxide emissions. Anaerobic digestion is one of the most effective methods for reducing these emissions.
- Crop Residual: Burning and decomposing of crop waste is one of the major causes of these emissions. Thus, incorporating techniques like using residue as animal fodder can reduce these emissions.
- Food Waste: Excess food grown leads to food waste transportation and decomposition, which contributes to the emission of many potent greenhouse gases. Many mitigation strategies, like improved storage techniques and on-site processing for the grown crop, like fruit farms that can set up a juice or jam-producing factory, should be used.
Challenges For Farmers
Though Scope 3 reporting proves to be beneficial for the environment, farmers can face many challenges while reporting Scope 3 emissions:
- Complicated Measurement Process: Calculating emissions mentioned in Scope 3 is a complex process and requires thorough data collection, research, and analysis, as it should not only include field activities but also emissions from machinery, fuel use, and livestock.
- Cost: The cost incurred in calculating and reporting these emissions can be a financial burden on farmers.
- Lack of Resources: Some farmers might find it really difficult to report these emissions due to a lack of knowledge and resources to measure this data.
In A Nutshell
Reporting Scope 3 emissions is a great initiative by the Australian government for reducing greenhouse gas emissions. But it can be really frustrating for the farmers to follow-up on every aspect of every agricultural activity that is causing these emissions.
Eager to know how Scope 3 emissions can be reported? Contact KG2 Australia; we are here to provide you with efficient reporting techniques that can make your Scope 3 emissions calculations easy.
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