Accounting for greenhouse gas emissions

For several decades, the environmental, economic and health effects from greenhouse gases (GHG) have been closely studied and debated by the scientific community, regulatory authorities and other diverse groups. GHGs are emitted into the atmosphere mainly as a by-product of waste disposal and the burning of fossil fuels by individuals, households and businesses. Of the six principal types of GHGs, the Environmental Protection Agency (EPA) estimates that carbon dioxide (CO2) makes up 85% of these emissions in the United States. Because GHGs can trap the sun’s heat in the Earth’s atmosphere, many scientists have targeted them as a leading cause of global warming.

A recent article introduces practitioners to the fundamental accounting issues concerning emissions of GHGs. The key elements of “cap and trade” programs are discussed since they are the predominant market mechanism employed globally to limit GHG emissions. The article also examines attempts by standard setters to fill the void in the authoritative accounting guidance in this area and the consequences of the diverse accounting practices that have emerged globally.

(Read the article Accounting for Emissions in the Journal of Accountancy Online.)