The iceberg of industrial emissions
Beyond the smokestack
For the last two decades, industrial sustainability has focused heavily on Scope 1 and Scope 2 emissions. These represent the direct pollution from smokestacks and the electricity purchased to run factories. While critical, these often represent only the tip of the iceberg.
Scope 3 emissions cover everything else in the value chain. This includes the upstream extraction of raw materials, the manufacturing of purchased goods, and the transportation of those goods. For many manufacturing and energy companies, Scope 3 accounts for 80% to 90% of their total carbon footprint. The uncomfortable reality for many Chief Sustainability Officers is that they cannot reach Net Zero solely by installing solar panels or switching to LED lights. They must fundamentally change what they buy. The Greenhouse Gas Protocol defines these as “Purchased Goods and Services,” and they are notoriously difficult to reduce because they sit outside the company’s direct operational control.
The carbon cost of newness
Every new industrial asset comes with a “carbon mortgage” paid upfront during its creation. Manufacturing a single ton of new steel generates approximately 1.85 tons of CO2. A complex asset like an industrial pump or turbine involves mining copper, refining aluminum, casting steel, and shipping components across multiple continents.
When a company chooses to buy a used asset instead of a new one, they effectively reduce the carbon required for manufacturing that item to zero. This is known as Avoided Emissions. For a standard 500-kilowatt electric motor, opting for a refurbished unit instead of a new one can save over 4,000 kilograms of CO2 equivalent. This is roughly equal to the annual emissions of a passenger car. Scaling this across an entire procurement strategy offers one of the fastest routes to tangible decarbonization.
Procurement as the new frontline
Changing the buying criteria
Historically, procurement teams were evaluated on three metrics which were price, quality, and speed. A fourth metric has now entered the equation which is carbon intensity.
Progressive organizations are beginning to implement an Internal Carbon Price. This assigns a monetary value to every ton of carbon emitted by a purchase. If a company prices carbon at $100 per ton, a cheaper new asset with a high carbon footprint may effectively become more expensive than a premium refurbished asset with a zero carbon manufacturing footprint. This financial mechanism aligns the incentives of the procurement department with the goals of the sustainability department. It effectively imposes a “Brown Discount” on new, carbon-heavy goods and a “Green Premium” on circular assets.
The data challenge and LCA
The primary barrier to this shift is data. Calculating the precise Avoided Emissions for a specific piece of equipment is complex. It requires Life Cycle Assessment (LCA) data that is often proprietary to the original manufacturer.To solve this, the industry is moving toward Category-Level Averages. Instead of calculating the carbon footprint of every individual bolt, organizations use standardized tables for asset classes. For example, a “Class B Centrifugal Pump” is assigned a standard carbon value based on its weight and material composition. This allows procurement teams to report estimated carbon savings immediately upon purchase. This provides the audit trail necessary for ESG reporting. As digital product passports become common, this data will flow automatically from the asset to the balance sheet.