The Energy Balance Sheet : Maintaining Entity-Level Comparability in Carbon Accounting

Comparability is considered by carbon accounting systems as an attribute of consistency, or making different items similar. However, financial accounting systems consider comparability as the ability to understand similarities and differences between objects. A gap exists entity-level comparability: our current carbon accounting systems make different items similar but are unable to depict differences. We propose a new carbon accounting system that uses energy accounting as a bridge from financial accounting. The system follows the conditions of comparability and introduces double entry bookkeeping into energy and carbon transactions. This paper proposes an energy balance sheet, energy gains and use statement, and an energy flow statement, with their carbon counterparts. We then construct the first half of the system: the energy/carbon asset stack and the energy/carbon flow statement. Our system keeps track of intrinsic, operational, and embodied energy and carbon attributes. We show how our system can differentiate between carbon embodied into products and equipment from carbon expended from operations. We also show how an energy salvage value can be derived by analyzing embodied energy at end-of-life. This enables integration of time-value characteristics to show different tradeoff options between up-front embodied energy and embodied carbon that locks in ongoing operational energy and carbon. Our system also implies improvements to valuation of energy storage resources, such as batteries, and thermal storage options. Finally, we show how a carbon flow statement can extract Scope 1, 2, and 3 for contemporary disclosure requirements