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Carbon Footprint of Supply Chains: A Scoping Study (2013)

Chapter: 2 Review of Current Programs

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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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Suggested Citation:"2 Review of Current Programs." National Academies of Sciences, Engineering, and Medicine. 2013. Carbon Footprint of Supply Chains: A Scoping Study. Washington, DC: The National Academies Press. doi: 10.17226/22524.
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2 REVIEW OF CURRENT PROGRAMS A review of current methodologies for measuring GHG emissions should begin with the guidelines developed by the Intergovernmental Panel on Climate Change (IPCC). These guidelines serve as a basis for nations to estimate their GHG emissions, and the structure and methods developed by the IPCC have been adopted by many of the programs that have followed. After reviewing the IPCC Guidelines, a survey of other approaches is performed, a framework for considering the carbon footprint of transportation in the supply chain is presented, and a working definition is developed that builds on emerging standards in Europe. BACKGROUND The United Nations Framework Convention on Climate Change (UNFCCC) is an environmental treaty signed in 1992 with the objective to "stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.12" Though the treaty does not require any legally binding limits on emissions, countries are committed to providing an inventory of national greenhouse gas emissions and sinks on an annual basis. The parties to the UNFCCC prepare national inventory reports using the methods developed by the IPCC, an intergovernmental body responsible for providing scientific information regarding climate change. These methods were used in the Kyoto Protocol, a 1997 addition to the UNFCCC that set legally binding emissions reduction targets. In addition to publishing methodologies for measuring GHG emissions, the IPCC provides regular assessment reports reviewing the state of climate science. Though the United States signed the Kyoto Protocol, it was not ratified. The U.S. is thus not subject to any legally binding commitments to reduce greenhouse gas emissions. The Environmental Protection Agency (EPA) does prepare an annual assessment of U.S. sources and sinks of greenhouse gases in accordance with obligations as a party to the UNFCCC13. IPCC GUIDELINES The 2006 IPCC Guidelines for National Greenhouse Gas Inventories 14 (IPCC Guidelines) provide the most recent methodologies for estimating national greenhouse gas emissions. The IPCC Guidelines are based on the original 1996 IPCC Guidelines, along with the supporting Good Practice Guides. GREENHOUSE GASES The gases covered in the Guidelines are the direct greenhouse gases, carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O), the indirect greenhouse gases carbon monoxide (CO), oxides of nitrogen (NOx) non- methane volatile organic 6

compounds (NMVOCs), halocarbons (HFCs, PFCs) sulfur hexafluoride (SF6), and sulfur dioxide (SO2). Other gases (i.e. chlorofluorocarbons (CFCs), hydro-chlorofluorocarbon 22 (HCFC-22), the halons, methyl chloroform and carbon tetrachloride) are not included because they are covered under the Montreal Protocol for ozone depletion. CO2, CH4, and N2O are identified as the main GHGs. Greenhouse gases trap heat, making the planet warmer. Since different gases may have different direct and indirect effects on the atmosphere the IPCC developed the concept of Global Warming Potential (GWP) to compare the gases to one another. The GWP of a greenhouse gas is defined as the ratio of the average amount of radiative forcing caused by the gas over a given time period to the same amount of a reference gas, with CO2 used as the reference15. This allows the amount of warming produced by quantity of a greenhouse gas to be expressed in terms of carbon dioxide equivalents (CO2e) using the following expression: The IPCC defines the GWP of gases in the regular assessment reports. Though the values may change over time as the understanding of climate science improves, the inventories prepared for the UNFCC continue to use the values defined in the IPCC Second Assessment Report (SAR) to remain consistent with previous inventories. Table 1 shows a comparison of the 100-year GWPs for several gases compared to the Third Assessment Report (TAR) and Fourth Assessment Report (AR4)16. Gas SAR TAR AR4 Change from SAR TAR AR4 CO2 1 1 1 NC NC CH4 21 23 25 2 4 N2O 310 296 298 (14) (12) HFC-23 11,700 12,000 14,800 300 3,100 HFC-32 650 550 675 (100) 25 HFC-125 2,800 3,400 3,500 600 700 HFC-134a 1,300 1,300 1,430 NC 130 HFC-143a 3,800 4,300 4,470 500 670 HFC-152a 140 120 124 (20) (16) HFC-227ea 2,900 3,500 3,220 600 320 HFC-236fa 6,300 9,400 9,810 3,100 3,510 HFC-4310mee 1,300 1,500 1,640 200 340 CF4 6,500 5,700 7,390 (800) 890 C2F6 9,200 11,900 12,200 2,700 3,000 C4F10 7,000 8,600 8,860 1,600 1,860 C6F14 7,400 9,000 9,300 1,600 1,900 SF6 23,900 22,200 22,800 (1,700) (1,100) Table 1: Comparison of 100-Year GWPs CO2, CH4, N2O, HFCs, PFCs, and SF6 have relatively long atmospheric lives and tend to be evenly distributed. These gases are used to quantify the annual greenhouse gas emissions for the UNFCCC. The other gases vary regionally, making quantification of 7

their impact difficult. For this reason there is no GWP attributed to those gases, and they are not used in measuring the annual national emissions17. TRANSPORTATION EMISSIONS The IPCC Guidelines identify five main categories of emissions: Energy; Industrial Processes and Product Use; Agriculture, Forestry, and Other Land Use; Waste, and Other. Emissions from transportation are covered within the Fuel Combustion Activities section of the Energy category. The IPCC Guidelines provide three tiers of methods for estimating emissions within the Energy sector. The Tier 1 method is fuel-based, using total fuel combustion and average emissions factors. Emissions factors for all greenhouse gases are provided for a variety of fuel types. The Tier 2 method uses a similar approach to Tier 1, but uses country-specific emissions factors in place of the Tier 1 defaults. This allows countries to derive emissions factors that are more appropriate to the specific combustion technologies and fuels used in that country. The Tier 3 method uses detailed emissions models or measurements and data. They can provide better estimates for non-CO2 greenhouse gases, but at the cost of more detailed information and effort. The IPCC Guidelines identify mobile sources as producing three direct greenhouse gases: carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O). The combustion of fuel produces relatively little carbon in non-CO2 gases. Almost all the carbon in fuel is oxidized during combustion and is generally independent of the combustion technology, so the Tier 1 approach is recommended for estimating CO2. Emissions of CH4 and N2O are highly dependent on the technology used, and therefore a Tier 2 or Tier 3 approach is recommended for these gases. The recommended approach for measuring emissions is to use collect data and apply the methodologies separately for the different types of mobile sources. The IPCC Guidelines provide methods for five different sources: road, railways, water borne navigation, civil aviation, and off-road. The methods for the four main transportation modes are reviewed below, and serve as a starting point for understanding how emissions from transportation are estimated. ROAD Emissions from road transport are best estimated using fuel consumption for CO2 and vehicle distance traveled for CH4 and N2O. The Tier 1 approach to estimating emissions from CO2 is shown in Equation (1), and requires only the quantity sold of each fuel and an emissions factor for that fuel. 8

(1) A similar approach for is used for Tier 1 estimates of CH4 and N2O. When country specific emissions factors are available the Tier 2 approach makes the minor change of defining separate emissions factors based on fuel, vehicle type, and emission control technology, but otherwise using the same equation format. This requires more detail in the data collection, as rather than total fuel consumed data must be collected on fuel consumed by each type of vehicle and emissions control technology. The Tier 3 approach estimates CH4 and N2O using distance travelled plus emissions produced during cold start of the vehicle. It requires a more detailed breakdown of the data, requiring distance traveled and emissions factors by fuel type, vehicle, type, emission control technology, and operating conditions. This is shown in Equation (2). (2) When data cannot be separated by road type this can be ignored. In addition, the IPCC Guidelines require reporting CO2 produced from combustion of biofuels separately to prevent double counting of emissions that were considered in the Agriculture, Forestry, and Other Land Use sector. In addition to the recommended procedures for estimating emissions, the Guidelines also specify a method for validating fuel consumption data using Equation (3). Fuel consumption is estimated based on activity data—the distance travelled by vehicles of each type and their average fuel consumption. The validation is considered good practice as many countries and municipalities collect 9

this type of data, and it can serve as a check on the reported fuel consumption numbers. (3) RAILWAYS The methods for emissions from locomotives work in much the same way as for road vehicles. The Tier 1 and Tier 2 methods use fuel consumption data to estimate total emissions, with the Tier 2 method substituting specific emissions factors depending on locomotive type rather than default fuel emissions factors. The Tier 3 method for estimating CH4 and N2O uses activity data based on the number of locomotives of a given type, their annual hours of use, average rated power, typical load factors, and emissions factors specific to that type of locomotive and journey. WATER-BORNE NAVIGATION Emissions from water-borne navigation, from recreational craft to large ocean-going cargo ships, are estimated using either a Tier 1 or Tier 2 approach. In the Tier 1 methodology only total fuel consumed of each type is used, and emissions are calculated using the default fuel emissions factors. In the Tier 2 approach countries develop their own country-specific emissions factors, and emissions are calculated separately for each combination of fuel and type of water-borne navigation. There is no Tier 3 methodology provided for water-borne navigation, but activity data can be used to estimate fuel consumption numbers. Average fuel consumption and engine power data is provided for a number of ship types. When activity data is used it is recommended to check the accuracy of the results using historical shipping data. Recommended approaches for checking activity data include comparing the estimates of emissions against historical averages per tonneii-km or passenger-km for different ship types. ii Throughout this document, the use of the word tonne shall be used to reference a metric ton (1,000 kgs). 10

Though emissions from international shipping are not accounted for in developing national inventories, the methods defined for water-borne navigation are applicable to estimating the emissions of international shipping. CIVIL AVIATION Sources of emissions for civil aviation are all civil commercial airplanes, including general aviation such as agricultural aircraft, private jets, and helicopters. Three tiers of methods are defined, with two possible approaches to the Tier 3 methodology. The Tier 1 methodology again uses only fuel consumption data and average emission factors to estimate emissions, and is suitable for aircraft using aviation gasoline or when operational data for jet fueled vehicles are not available. The Tier 2 methodology expands on the Tier 1 approach by calculating emissions separately for the cruise phase of a flight and the landing/take-off (LTO) phase. This requires knowing the number of LTOs and separating fuel consumed during this phase from the cruise phase, but allows for using emissions factors that capture differences in emissions during these phases. Tier 3 methods are more complex, based on actual flight movement data. There are two possible approaches, one that uses origin-destination (OD) data and one that uses full flight trajectory information. The OD approach accounts for different flight distances, which changes the relative impact of the LTO phase compared to the cruise phase. The full flight trajectory model uses aircraft and engine specific performance information over the entire flight, requiring sophisticated modeling approaches. As is the case for water-borne navigation, emissions from international aviation are not included in national inventories. The methods defined by the IPCC are applicable to international aviation, but parties to the UNFCCC are expected to separate out emissions from domestic and international flights. OVERVIEW For each mode the IPCC recommends a fuel-based approach to measuring emissions. This approach is recommended due to the fairly consistent estimates of the amount of greenhouse gases produced by combustion of each type of fuel and the availability of data related to fuel consumption. Fuel-based approaches are most reliable for CO2, and CO2 is the primary greenhouse gas from transportation, representing an estimated 97% of emissions from road18 and 98% from marine transportation19. The IPCC Guidelines provide the basic methodology and understanding for estimating emissions at the national level. They provide the scientific background and understanding of how emissions sources can be categorized and the emissions calculated. The approach of the IPCC has influenced many of the tools and programs aimed at businesses, but falls short of being a complete guide for calculating the emissions of transportation in the supply chain. Two major issues are the exclusion of transportation related emissions that occur in non-mobile sources and the reliance on fuel data. 11

First, the IPCC Guidelines are established with national inventories in mind, and there is a focus on separating emissions sources and avoiding double counting. This creates difficulty where transportation occurs at the intersection of different sectors. Two primary examples of this are electric vehicles and biofuels. When vehicles use electricity for power, such as with electric railway locomotives, the emissions from the electricity generation are assessed at the power plant under the stationary combustion sector. The Guidelines provide no methods for estimating emissions from the operation of electric locomotives separately. For biofuels the IPCC Guidelines recommend accounting for the CO2 produced during combustion separately, as these emissions must be reconciled with the CO2 sequestered from the atmosphere in the biogenic material used to produce the fuels. Since those emissions are accounted for in the agricultural section it requires separate accounting to make sure the total net emissions are correctly counted. In both of these cases the approaches fall short of the needs of organizations interested in accounting for emissions from transportation, where the focus is on accounting for all the emissions that can be attributed to the transportation activity, regardless of boundaries or sectors. Second, the reliance on fuel data makes it difficult to calculate emissions at a disaggregated level. Shippers may wish to know the emissions related to shipments that are handled for them by carriers, but since shippers do not own the vehicles or purchase the fuel the necessary data may be unavailable. Further, if carriers do not track fuel purchases at a detailed level it may be impossible to calculate emissions at an individual shipment level. The IPCC focus on total emissions within a national boundary on an annual timeframe is inconsistent with needs of transportation stakeholders who wish to know emissions at a more refined level of detail. This difficulty has led to several approaches to estimating emissions based on activity data that are more appropriate for estimating emissions from transportation. Similar to the activity data methods supplied by the IPCC Guidelines in Tier 3 approaches, these approaches attempt to estimate fuel consumption and emissions based on standard activity data such as vehicle distance travelled or shipment weight and distance. Given the different needs and data availability of the various stakeholders this has led to a number of different approaches. OTHER APPROACHES Many of the programs and approaches reviewed in this work provide the capability to estimate emissions given fuel consumption data, and the approaches are consistent with the guidelines laid out by the IPCC. Where approaches show more diversity is in the estimate of emissions where fuel consumption data is not available. These approaches can be grouped into four general approaches: models and simulation; surveys; Life Cycle Assessment methods; and econometric methods. 12

MODELS AND SIMULATION These approaches generally use mathematical or computer models to estimate the fuel consumption and emissions of a vehicle engine under different operating conditions. The power of many of the tools in this category allow for calculation of very detailed results. Sophisticated computer models such as the EPA’s MOVES20 model can consider many different operating characteristics. In some cases the models can provide estimated fuel consumption in very small time increments, allowing modeling of the full range of vehicle operations. The large number of parameters and the technical sophistication of some models make them ideally suited for scenario analysis. By varying the input parameters, possible future scenarios can be tested and used to create emissions estimates. These approaches generally come at the cost of complexity, requiring detailed knowledge of not just the vehicle used, but the actual operating conditions. If these details are not known the results of any model may not reflect actual operations. Programs may make use of these models to produce more simplified tools. The Network for Transport and Environment21 (NTM) methodology represents one example of this approach. Under the NTM methodology the ARTEMIS tool is used to model emissions for a set of vehicle types under different load factors and driving conditions. This allows users to estimate emissions knowing only the size of the vehicle, weight of the load, and the type of roadway used. By adopting a set of standardized operating models the tool can be used to produce a set of emissions factors that capture the major drivers of emissions without requiring large amounts of input data. SURVEY DATA Survey approaches collect data from actual transport operators in order to provide emissions factors. Several of the most popular programs, including the GHG Protocol22, Business for Social Responsibility (BSR) Clean Cargo Working Group23 (CCWG), and the EPA’s SmartWay24 program, employ this approach. The emission factors for road transport supplied by the U.K. Department for Environment, Food, and Rural Affairs25 (Defra) used in the GHG Protocol use surveys of carriers to estimate fuel efficiency and average loading factors by equipment type. These two pieces of data are then combined to calculate an emissions factor in kg of CO2 per tonne-km for each equipment type. The EPA SmartWay program uses a similar procedure to collect data on fuel consumption and miles driven by trucking carriers operating in the US. The data is used to create an emission factor for that carrier in terms of CO2 per mile. Carriers are ranked in one of five tiers based on their score, and the ranking for all carriers is made available. Shippers are able to use the carrier’s tier-specific emissions factors to estimate the emissions of the shipments handled by those carriers. The BSR CCWG employs a similar approach, providing a standard methodology and format to collect data from ocean carriers. In 2011 the survey captured data for more than 2,000 vessels26. The data is used to develop a set of performance metrics 13

expressed in grams of CO2 per twenty-foot equivalent unit (TEU)-km. These metrics are captured for 24 different trade lanes, as well as an overall system average. Survey approaches capture data from actual vehicle operators, and the results reflect actual operations in practice. As in the case of SmartWay and the CCWG, surveys can be used to capture data from individual carriers, allowing their performance to be compared with one another. This practice does create the possibility of fraudulent or error-prone inputs, as surveys often rely on self-reported data. Care must be taken that the information collected is consistent and truthful across carriers in order to make the results useful. LIFE CYCLE ASSESSMENT Life Cycle Assessment (LCA) is a quantitative method for assessing the environmental impact of a product or service over its entire life cycle, referred to as a cradle-to-grave approach. Two main methods of performing LCA exist. The standard method defined by the International Standards Organization27, sometimes referred to as a process-based method, traces all inputs and outputs to the environment for each process in the product’s life cycle. The Economic Input-Output28 (EIO) LCA method uses high-level economic input-output data and public environmental data to estimate the environmental impact of each dollar of economic activity spent in an industry sector. LCA methods go beyond most carbon calculators by including not just direct emission from fuel combustion, but also indirect emissions over the entire life cycle. This includes the emissions related to the upstream production of the fuel, as well as other life cycle impacts such as vehicle production and disposal, maintenance, and infrastructure. Several popular tools make use of LCA methodologies to calculate the environmental impact, including greenhouse gas emissions, of transportation. Ecoinvent is a comprehensive database of LCA information, referred to as a Life Cycle Inventory (LCI) database. This database includes a wide variety of emissions factors for different transportation modes and vehicle types. These emissions factors allow for the calculation of emissions from freight using activity data per km or per tonne-km. Researchers at Carnegie Mellon University have developed an EIO-LCA tool29 that can calculate environmental impact from a number of transportation modes, including truck, water, air, rail, and pipeline. The calculator uses activity data inputs in dollar values to calculate greenhouse gas emissions, and provides a breakdown of the industry sectors that contribute the most to the production of emissions. The Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation30 (GREET) model developed by Argonne National Lab uses an LCA approach to model the full fuel cycle for a number of different fuel pathways. This data is used to produce a calculator that can use either fuel-based or activity-based inputs to calculate emissions. The fleet calculator is capable of handling vehicle that use Gasoline, Ethanol E-85, Diesel, Diesel HEV, Biodiesel B20, Biodiesel B100, Electricity, 14

CNG, LGN, H2 Gas, H2 Liquid, and LPG. Activity data can be entered based on the number of vehicles, miles driven, and MPG efficiency. Default values are supplied for a number of vehicle types. The primary advantage of LCA is the ability to consider environmental impacts over the full life cycle. This allows for the comparison of alternative fuels, such as ethanol or electricity, where activities upstream in the fuel cycle are important contributors to overall emissions. The incorporation of infrastructure, maintenance, vehicle production, and end-of-life scenarios in some LCAs provides a more complete picture of the true environmental impact of transportation. LCA methods are generally time-consuming to develop, due to the requirements of tracing all inputs and outputs of the system over a full cradle-to-grave life cycle. The high cost and time required to perform the analysis means that the results are not always easily updateable. LCA studies are often based on an “average” scenario, or on one specific study, and then extended to more general use. This can lead to problems if the data used in the original study is not representative for other scenarios. ECONOMETRIC Econometric models rely on statistical or mathematical analysis of data to estimate emissions. They have proved popular in the academic literature, as many of the methods allow for long time series comparisons to estimate efficiency by mode and nation. The coupling of the emissions data with other economic data also allows for analysis of the role of global trade and economic activity on emissions level. By developing models that relate emissions to economic indicators these methods can be used to forecast future transportation related emission based on projected economic growth. One of the most popular programs for measuring corporate emissions, The GHG Protocol, makes use of an econometric method for developing emissions factors. The GHG Protocol Mobile Source Tool provides two sources for the emissions factors, one from Defra for the U.K. and one from the EPA for use in the United States. The EPA factors were created for the EPA's now-discontinued Climate Leaders31 program, and employ a top down methodology to calculate emissions factors by mode. Total emissions by mode are estimated from data provided by the EPA's national greenhouse gas inventory.32 The total emissions are then divided by the estimated ton-miles carried by the mode using data from the Federal Highway Administration33. This produces an emissions factor in terms of kg of CO2 per ton-mile for each of the major freight modes: road, rail, water, and air. While econometric models offer consistent methods that can be applied across time and nations, the results tend to be aggregated at high levels. They do not generally allow decomposition below regional or national levels. As in the case of the EPA Climate Leaders program adopted by the GHG Protocol, they can serve as a source of emissions factors for use in company or shipment level calculations, but involve the use of average emissions factors aggregated at high levels. 15

SUMMARY Based on a review of current programs and methods, there is not a single preferred approach to estimating carbon emissions from transportation. The choice of different approaches represents a range of levels of detail in the output and required information of the input. The diversity of approaches may represent a signal regarding the diversity of stakeholders interested in the topic, including academic practitioners, government agencies, NGOs, trade groups, shippers, carriers, and logistics providers. Simulation models are capable of providing detailed estimates of emissions and analyzing potential changes, but require detailed system knowledge to model specific operations. Surveys capture data on actual operations and can be used to compare the results of different carriers, but rely on self-reported data of historical operations. LCA can be used to provide a cradle-to-grave analysis that measures the true impact of different transportation systems, but they are costly and time consuming to perform. Econometric models make use of readily available data and allow for comparisons across time and nations, but are typically highly aggregated and do not provide detailed analysis of operations. Given the wide variety of approaches employed in practice, it is necessary to first understand the role of transportation in the supply chain before proposing a definition. In the next section, we review the role of transportation in the supply chain and how these decisions are typically modeled. This decision model is then used to develop a framework for defining the carbon footprint of transportation in the supply chain. TRANSPORTATION IN THE SUPPLY CHAIN Transportation services play a central role in seamless supply chain operations, moving inbound materials from supply sites to manufacturing facilities, repositioning inventory among different plants and distribution centers, and delivering finished products to customers34. When making choices about which mode or carrier to use, shippers must balance cost constraints with customer service, transit time, and market characteristics to make the best transportation choice for the supply chain. To include the greenhouse gas emissions of transportation in this choice, shippers need access to information regarding emissions in a way that fits the decision process. In typical transportation science modeling, the transportation decision is modeled using a network approach. For policy makers this typically involves a model of the physical network consisting of two types of nodes. The first type includes junctions and crossings, while the second includes access-nodes such as terminals, stations, and crossings. The links between the nodes consist of the physical means of travel, such as roads, railways, and waterways35. This physical network can be extended with the concept of the super-network and hyper-network. A super-network aggregates together multiple physical networks, and links between nodes can be replaced with abstract links that represent different routing choices along the 16

physical network. A hyper-network expands this to include other decisions such as the mode choice, by representing the use of different modes with different abstract links36. These transportation-focused models often neglect important logistics elements, such as shipment size, consolidation points, and transshipment locations37. Logistics networks employ a logical model of the network, with nodes representing facilities and links representing different transportation services between the nodes, not necessarily corresponding to the physical network. In some case additional links in the network can be added to represent logistics activities such as warehousing, transferring at terminals and ports, or handling operations. Beuthe et al.38 refer to this as a virtual network, and propose a method where a virtual network is created by expanding the geographic/physical network to include virtual links between nodes that represent not just the different modes and means of transportation, but all the associated loading, unloading, transshipment, and transiting. This concept of the virtual network can be applied to transportation models for the calculation of greenhouse gas emissions as well. In standard transportation modeling, each link would have an associated cost, and the planning problems would involve solving the network flow with a minimum level of cost. The concept can be expanded by having each link also include an associated cost in terms of GHG emissions (or replacing the financial cost with the carbon cost if a single objective method was employed). A number of examples of using network models to calculate GHG emissions and other environmental impacts can be found in the literature39,40,41. The emissions from any shipment would simply be the carbon cost associated with traversing that link in the virtual network. The amount of flow on a link could be the number of vehicles or the tons of cargo moved, and the cost of the link calculated using an emissions factor, in terms of GHGs per mile or ton-mile, derived from any of the available methods. From a carbon standpoint, the challenge becomes deciding how to create the appropriate virtual links in the network to model the available transportation choices and their associated emissions. CONSTRUCTING THE VIRTUAL NETWORK The number of possible virtual links in the network is in practice too great to model. Each virtual link represents the choice of sending a shipment of a certain size on a certain route using different choices of mode, carrier, equipment, fuel, service level, and handling. The needs and information available to different stakeholders in the transportation decision complicate this. Liedtke and Friedrich42 refer to this as the micro-macro gap in their review of freight modeling approaches, and it is illustrated in Figure 1. At the micro level, shippers deal with planning individual shipments along the logical network. At the macro level, policy makers are concerned with aggregate levels of flow along the physical network. In between are the carriers, who must handle routing the shipments along with physical network, but must coordinate their activities between different shippers, services, and intermediate handling 17

activities. While each stakeholder takes a network approach to the transportation decision, the view of the network is quite different. Figure 1: Micro-Macro Gap in Freight Modeling42 Consider the view of a standard intermodal shipment, consisting of an origin drayage movement, a rail line haul, and a destination drayage movement. In the virtual network used by the shipper, this consists of a single virtual link from origin to destination, representing the total cost, time, emissions, and service level offered by the intermodal operator. This is shown in Figure 2. Figure 2: Logical Network Representation This can be contrasted with how that same link may be modeled in a network for the carrier. In this case each of the links represents a specific route in the physical network over roads and railways and additional nodes are added to represent the terminals. This is shown in Figure 3. Origin Destination Intermodal 18 Source: Transportation, 39(6), 2012, 1335-1351, Generation of logistics networks in freight transportation models, Gernot Liedtke and Hanno Friedrich, Figure 1, Copyright Springer Science +Business Media, LLC. 2012, with kind permission from Springer Science+Business Media B.V.

Figure 3: Network Operator View If the network were expanded to include not just transportation, but logistics activities as well, the operations at the terminals could be further modeled using additional links. This is shown in Figure 4. Figure 4: Terminal Operations in the Logistics Network Each choice of different route, equipment, service level, and mode by various carriers could result in the creation of a virtual link in the shipper’s network model. This process could potentially create a large number of links between a single origin and destination, as shown in Figure 5. Figure 5: Virtual Network Creating a model that fits the needs of stakeholders at all levels of the decision-making process can begin by working at the micro level. In order for shippers to make decisions regarding which modes and carriers they wish to use to move their goods, they must solve the network problem at the micro level. Once the flow of goods is determined at this level the network operators then determine actual Origin Destination Intermodal, Carrier 1, Route 1 Intermodal, Carrier 1, Route 2 Intermodal, Carrier 2, Route 3 LTL, Carrier 3, Route 4 Truckload, Carrier n, Route m … Origin Destination Rail Haul Intermodal Terminal Intermodal Terminal Drayage Drayage Rail Haul D ra ya g e I n t e r m o d a l T e r m i n a l T e rmi n a l O p e ra t i o n s 19

routings of the goods. Finally, the aggregation of these individual routing decisions provides the macro level view for planners and policy makers. To determine the network at the micro level requires a decision about which virtual links need to be created in the logistics network. Due to the large number of possible links, careful consideration must be given to deciding how to construct these links. Each of the approaches to estimating emissions discussed in the previous section are capable of generating virtual links for the network, but differences in methods affect the number, type, and emissions of the links. More detailed methods may allow a larger number of links, reflecting the increased detail and options capable of being modeled by the more detailed approach. To compare how well the different approaches meet the needs of users, a method of categorizing the links is needed, and drawing upon the idea of traceability in carbon footprints can do this. TRACEABILITY The carbon footprint of transportation in the supply chain represents a credence attribute. Economists define this as an attribute that cannot be determined from a product even after the product has been bought and used43. Since no type of testing or other after-the-fact approach can determine the carbon footprint, an identity preservation system is required to trace the attribute through the supply chain44. No single approach to traceability is adequate for every system, and the characteristics of a good traceability system cannot be defined without considering the system’s objectives. However, the traceability system itself can be described by three dimensions: breadth, depth, and precision. Breadth refers to the information recorded by the system. Depth is how far backwards or forwards the system tracks. Precision is the degree of assurance the system can track a particular characteristic. In traceability systems the characteristics of the attribute determine the minimum breadth, depth, and precision required to preserve a record of the attribute throughout the supply chain45. Together, these attributes describe the measurement of a carbon footprint46. BREADTH The first characteristic of the carbon footprint is its breadth—what is included in the measurement. At the most basic level this covers which gases should be included in the measurement. Though CO2 is the primary greenhouse gas related to transportation, CH4 and N2O can also contribute to the total carbon footprint. The breadth of the measurement also determines which activities should be included. The IPCC Guidelines recommend using different methods for different transportation modes. Many tools focus on only a limited set of transportation modes. Transportation includes many additional logistics activities, such as port and terminal operations; warehousing, break bulk facilities, and cross-docking; refrigeration; equipment repositioning; and infrastructure development. The breadth of the system defines which modes are included, and whether the emissions from other activities are included in the definition of transportation. 20

DEPTH The standard for LCA, the accepted methodology for measuring carbon footprints, is a cradle-to-grave approach, where all inputs are traced back to their origin as raw materials and then followed until end of life. Most tools estimate the emissions from electricity generation and fuel combustion based solely on the emissions released during fuel consumption. This ignores the other steps in the supply chain required to prepare fuel for use, such as extraction, refining, and transportation. LCA normally takes these considerations into account, such that burning a gallon of gasoline involves emissions not just from the carbon content of the gallon of fuel, but also from its production. The full life cycle approach also includes activities such as production, disposal, and maintenance of the vehicles used for transportation. The depth of the system determines whether only the direct emissions of fuel are included in the carbon footprint, or whether a life cycle approach is extended to fuel production and other aspects of transportation. PRECISION The final dimension that defines the carbon footprint is the precision at which the measurement is performed. This includes determining when to draw a distinction between different modes of transportation, how to allocate for shared transportation, and the appropriate use of secondary data. It may be obvious that road and rail must be considered differently, but whether a distinction must be drawn between TL, LTL, parcel delivery, heavy hauling, tankers, and other forms of road transportation must be determined. The precision must also specify the appropriate use of secondary data. The determination of appropriate secondary data sources is an important one given the difficulty in directly monitoring emissions. When direct emissions monitoring is not available, measurable data such as gallons of fuel consumed or vehicle miles traveled must be converted into carbon emissions through the use of emissions factors. The choice of factors affects the precision of the carbon footprint. Emissions factors may be calculated at a number of different levels of detail, and the appropriate level of precision must be determined. DEFINING THE CARBON FOOTPRINT OF TRANSPORTATION IN THE SUPPLY CHAIN Developing a definition of the transportation component of the supply chain requires defining the breadth and depth of emissions included. The breadth specifies the activities and types of greenhouse gases to include, while the depth specifies how far back the emissions should be traced. The focus on organizational boundaries developed by the IPCC and adopted by corporate level programs, such as The Greenhouse Gas Protocol, Carbon Disclosure Project47 (CDP), or the Global Reporting Initiative48 (GRI), is inappropriate for supply chains. Supply chains, and their transportation component, can span multiple organizations and impact a number of stakeholders. 21

The recent adoption of the EN 1625849 standard for quantifying greenhouse gas emissions from transportation in Europe provides a guideline for establishing a definition of transportation in the supply chain. Given the global nature of supply chains and the challenges for multi-national corporations to meet multiple standards, the standards set by EN 16258 should be carefully considered. SCOPE OF THE SUPPLY CHAIN The boundaries specified by the EN 16258 standard state that the calculation should take into account: • all vehicles used to perform the transport service, including those operatedby subcontractors; • all fuel consumption from each energy carrier used by each vehicle; • all loaded and empty trips made by each vehicle.This covers all processes related to the operation of transportation vehicles, including all onboard propulsion and ancillary services. It does not include: • direct emissions of GHG at the vehicle level, resulting from leakage (ofrefrigerant gas or natural gas for example) and not from combustion; • additional impacts of combustion of aviation fuel in high atmosphere, likecontrails, cirrus, etc.; • processes consisting of short-term assistance to the vehicle for security ormovement reasons, with other devices like tugboats for towing vessels inharbors, aircraft tractors for planes in airports, etc.; • processes implemented by external handling or transhipment devices (forfreight), or by external movement devices (for passengers, like elevators andmoving walkways), for the movement or transhipments of freight or themovement of passengers. In express delivery services and other transportservices organized in networks, handling operations that take place insideplatforms, and consisting of loading and unloading of parcels or pallets,belong to this category of processes; • processes at the administrative (overhead) level of the organizationsinvolved in the transport services. These processes can be operation ofbuildings, staff commuting and business trips, computer systems, etc.; • processes for the construction, maintenance, and scrapping of vehicles; • processes of construction, service, maintenance, and dismantling of transportinfrastructures used by vehicles; • non-operational energy processes, like the production or construction ofextraction equipment, of transport and distribution systems, of refinerysystems, of enrichment systems, of power production plants, etc. so as theirreuse, recycle and scrap.The processes included are related to the transportation service, and are not limited by organizational boundaries. 22

LIFE CYCLE PHASES The EN 16258 standard states that the energy operational processes shall include: • for fuels: extraction or cultivation of primary energy, refining,transformation, transport and distribution of energy at all steps of theproduction of the fuel used; • for electricity: extraction and transport of primary energy, transformation,power generation, losses in electricity grids.The inclusion of both the direct emissions from fuel combustion and from upstream processes is generally defined as well-to-wheel (WTW) emissions. Considering only the direct emissions, as done in the IPCC Guidelines, represents a tank-to-wheel (TTW) scope. A full LCA scope would generally include not only the WTW emissions of the energy system, but also the full life cycle emissions from the vehicle and associated infrastructure. This is shown in Figure 6. Figure 6: Life Cycle Phases of Transport 50 GREENHOUSE GASES The EN 16258 Standard specifies that calculation of GHG emissions shall include all the following six gases: CO2, CH4, N2O, HFCs, PFCs, and SF6. All other gases are excluded. This is consistent with the gases reported for the Kyoto Protocol and as part of national inventories. Source: Auvinen, H., Makela, K., Lischke, A., Burmeister, A., de Ree, D. and Ton, J., 2012. Existing methods and tools for calculation of carbon footprint of transport and logistics. Deliverable 2.1, the COFRET project (Carbon Footprint of Freight Transport). 23

Inclusion of upstream energy processes is also not consistent across tools. While some tools do include these emissions, the majority do not. The difficulty in deriving a standard set of emissions factors that cover WTW emissions may be partially responsible. TTW emissions factors are fairly consistent across most sources, showing relatively small amounts of uncertainty. WTW emissions factors require greater effort to derive, and involve a number of assumptions. This increases the uncertainty of such emissions factors, and a consistent set of such factors have not been widely adopted as of yet. Current tools also vary in the greenhouse gases they include. Many tools consider only CO2, while others include N2O and CH4. These are generally the only direct greenhouse gases emitted during combustion of standard transportation fuels, but the inclusion of upstream emissions involves other potential greenhouse gases. Despite wide use, the term carbon footprint seems to have no clear definition51. Based on a review of its use in literature, Wiedmann and Minx proposed the following definition: "The carbon footprint is a measure of the exclusive total amount of carbon dioxide emissions that is directly and indirectly caused by an activity or is accumulated over the life stages of a product.” This definition includes only the emissions from carbon dioxide, but is applied to the full life cycle of a product. Wiedmann and Minx proposed the use of “climate footprint” as a term for measures that include all greenhouse gases. This is in contrast to most definitions, which include all greenhouse gas emissions. Wright et al.52 identified confusion surrounding this term, as the influence of a number of gases on global climate is still debated. They noted that stricter definitions simply specify the six Kyoto Protocol gases, but in their own definition include only CO2 and CH4. 24 The EN 16528 standards are consistent with the majority of assessed programs in terms of the scope of transportation in the supply chain. Most of the current tools focused on transportation limit the scope to only emissions generated by the vehicles involved in transportation. LCA approaches may extend this boundary to include infrastructure, vehicle production, and associated handling equipment, but this outside of the normal scope of transportation considered by most tools. The explicit inclusion of empty miles is not consistent across tools. In many cases, such as when total fuel use is calculated, any empty miles moved by the vehicle will be included through the fuel consumed during the movement. For activity based approaches the empty miles can be included either implicitly through inclusion within the emissions factors or explicitly through inclusion of the empty miles activity. COMPARISON TO CURRENT PROGRAMS • tank-to-wheel energy consumption; • tank-to-wheel GHG emissions. OUTPUT The EN 16258 standard defines four outputs that should be produced, two related to energy and two related to GHG emissions: • well-to-wheel energy consumption; • well-to-wheel GHG emissions;

reported. Some tools may also include total energy in the output, but for most tools focused on GHG emissions this is not included. RECOMMENDATION Based on the review of current programs, the emerging EN 16258 standard in Europe, and output of similar research projects such as COFRET; we recommend adopting a scope consistent with that of the EN16258 standard. This involves a focus on energy consumed by transportation vehicles used to move goods between locations, adopts a well-to-wheel view for considering the emissions required to produce that energy, and includes the six Kyoto gases. This provides a standardized scope for companies that operating both in the U.S. and Europe, and captures the most relevant aspects of transportation in the supply chain. The decision to include TTW emissions or energy consumption in reported emissions is a separate issue. A tool that calculates emissions may produce a number of outputs, including those required by the EN 16258 standard. However, this should be considered a question of implementation and tied to the use of the tool. 12 Article 2 of the Framework Convention on Climate Change published by the UNEP/WMO Information Unit on Climate Change. See <http://unfccc.int>. 13 EPA (2013). Inventory of U.S. Greenhouse Gas Emisisons and Sinks: 1990-2011. Washington, D.C., U.S. Environmental Protection Agency. 14 IPCC (2006). IPCC guidelines for national greenhouse gas inventories. S. Eggleston, L. Buendia, K. Miwa, T. Ngara and K. Tanabe, IGES, Japan. 15 EPA (2013). Inventory of U.S. Greenhouse Gas Emisisons and Sinks: 1990-2011. Washington, D.C., U.S. Environmental Protection Agency. 16 EPA (2013). Inventory of U.S. Greenhouse Gas Emisisons and Sinks: 1990-2011. Washington, D.C., U.S. Environmental Protection Agency. 17 EPA (2013). Inventory of U.S. Greenhouse Gas Emisisons and Sinks: 1990-2011. Washington, D.C., U.S. Environmental Protection Agency. 18 IPCC (2006). IPCC guidelines for national greenhouse gas inventories. S. Eggleston, L. Buendia, K. Miwa, T. Ngara and K. Tanabe, IGES, Japan. 19 IMO (2009). Second IMO GHG Study 2009, International Maritime Organization (IMO) London, UK 20 http://www.epa.gov/otaq/models/moves/index.htm 21 NTM (2010). Road Transport Europe, Network for Transport and Environment. 22 WRI (2011). GHG Protocol tool for mobile combustion. Version 2.3, The Greenhouse Gas Protocol. 23 http://www.bsr.org/en/our-work/working-groups/clean-cargo 24 http://www.epa.gov/smartway/ 25 Defra (2010). 2010 Guidelines to Defra/DECC's GHG Conversion Factors for Company Reporting, Defra. 26 BSR (2012). Clean Cargo Working Group Global Trade Lane Emissions Factors. Business for Social Responsibility. 27 ISO (2006). ISO 14040 Environmental management - Life cycle assessment - Principles and framework. Geneva, International Standards Organization. 28 Hendrickson, C., A. Horvarth, et al. (1998). "Economic input-output models for environmental life-cycle assessment." Environmental Science & Technology 32(7): 184. 29 http://www.eiolca.net/ 30 http://greet.es.anl.gov/ 25 Most tools provide only total GHG emissions as an output. For tools that include WTW emissions, it is not uncommon for both WTW and TTW emissions to be

31 EPA (2008). Direct Emissions from Mobile Combustion Sources. Washington, D.C., U.S. Environmental Protection Agency. 32 EPA (2007). Inventory of U.S. Greenhouse Gas Emisisons and Sinks: 1990-2005. Washington, D.C., U.S. Environmental Protection Agency. 33 FHWA (2005). Highway Statistics 2005, U.S. Federal Highway Administration. 34 Stank, T. P. and T. J. Goldsby (2000). "A framework for transportation decision making in an integrated supply chain." Supply Chain Management: An International Journal 5(2): 71-78. 35 Liedtke, G. and H. Friedrich (2012). "Generation of logistics networks in freight transportation models." Transportation: 1-17. 36 Sheffi, Y. and C. Daganzo (1978). "Hypernetworks and supply-demand equilibrium obtained with disaggregate demand models." Transportation Research Record 673, TRB, National Research Council, Washington, D.C. 37 De Jong, G. and M. Ben-Akiva (2007). "A micro-simulation model of shipment size and transport chain choice." Transportation Research Part B: Methodological 41(9): 950-965. 38 Beuthe, M., B. Jourquin, et al. (2001). "Freight transportation demand elasticities: a geographic multimodal transportation network analysis." Transportation Research Part E: Logistics and Transportation Review 37(4): 253-266. 39 Janic, M. (2007). "Modelling the full costs of an intermodal and road freight transport network." Transportation Research Part D: Transport and Environment 12(1): 33-44. 40 Winebrake, J. J., J. J. Corbett, et al. (2008). "Assessing energy, environmental, and economic tradeoffs in intermodal freight transportation." Journal of the Air & Waste Management Association 58(8): 1004-1013. 41 Bauer, J., T. Bektas, et al. (2009). "Minimizing greenhouse gas emissions in intermodal freight transport: an application to rail service design." Journal of the Operational Research Society 61(3): 530-542. 42 Liedtke, G. and H. Friedrich (2012). "Generation of logistics networks in freight transportation models." Transportation: 1-17 43 Darby, M. and Karni, E. (1973). “Free Competition and the Optimal Amount of Fraud”. Journal of Law and Economics, Vol. 16, No. 1. pp. 67-88. 44 Golan, E., F. Kuchler, et al. (2001). "Economics of food labeling." Journal of Consumer Policy 24(2): 117-184. 45 Golan, E., B. Krissoff, et al. (2004). Traceability in the US Food Supply: Economic Theory and Industry Studies, US Dept. of Agriculture, Economic Research Service. 46 Craig, A. J. (2012). Measuring Supply Chain Carbon Efficiency: A Carbon Label Framework. Doctoral Thesis. Engineering Systems Division. Massachusetts Institute of Technology. Cambridge, MA. 47 https://www.cdproject.net/en-US/Pages/HomePage.aspx 48 http://www.globalreporting.org/Pages/default.aspx 49 European Committee for Standardization (CEN) (2011). prEN 16258:2011 Methodology for calculation and declaration on energy consumptions and GHG emissions in transport services (good and passengers transport). Working Draft. Brussels. 50 VTT Technical Research Centre of Finland (2012). Methodologies for emission calculations - Best practices, implications and future needs, COFRET. 51 Wiedmann, T. and J. Minx (2008). A Definition of 'Carbon Footprint'. Ecological Economics Research Trends. C. C. Pertsova. Hauppauge, NY, Nova Science Publishers: 1-11. 52 Wright, L. A., S. Kemp, et al. (2011). "Carbon footprinting: towards a universally accepted definition." Carbon 2(1): 61-72. 26

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TRB’s National Cooperative Freight Research Program (NCFRP) Web-Only Document 5: Carbon Footprint of Supply Chains: A Scoping Study defines a standardized, conceptual approach to assessing global greenhouse gas (GHG) emissions of the transportation component of supply chains, critiques current methods and data used to quantify greenhouse gas (GHG) emissions, and outlines a work plan to develop a decision tool to help estimate the carbon footprint of the transportation component of supply chains.

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