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PG&E Supply Chain Analysis
Supply chain carbon management is emerging as a promising new strategy to reduce economy-wide greenhouse gas (GHG) emissions. Roughly one third of all U.S. emissions result from the production of goods and services. Quantifying the environmental impacts of products and services is the primary objective of life cycle assessment (LCA); however, these techniques to-date have rarely been applied to companies as a whole. Instead, companies have typically limited accounting and reporting of GHG emissions to direct combustion of fossil fuels (Scope 1) and emissions resulting from purchased electricity (Scope 2).
New standards for inclusion of supply chain emissions in GHG reporting have been proposed by the World Resources Institute and the World Business Council for Sustainable Development and dozens of companies are currently testing the protocol. While the proposed standard requires reporting of the largest sources of emissions, it does not specify methodologies to quantify these emissions.
The current proposal will illustrate a “stepping stone approach” to life cycle assessment, providing increasingly detailed information on supply chain emissions resulting from roughly $3 billion of procurement by Paciﬁc Gas and Electric Company. Input-output life cycle assessment will ﬁrst be used to identify carbon “hotspots” in supply chains. Increasingly detailed information on PG&Eʼs suppliers will then be used to reﬁne the results and to quantify GHG emission reduction opportunities. The published results will provide a detailed case study of supply chain carbon accounting and management.