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  • Writer's pictureBen Ellenberger

SB-253: Are you ready to report Scope 3 Greenhouse Gas Emissions?

The California Legislature has passed SB-253 and sent it to the governor, who is expected to sign it shortly. If it is signed into law, large companies doing business in the state would be required to report greenhouse gas emissions annually, beginning in 2026. The bill would both expand how many companies must report emissions and the scope of emissions that must be reported.

Who would report emissions under the law?

Any company with annual revenues over one billion dollars per year that does business in California would be subject to reporting requirements. SB-253 expands reporting requirements beyond companies currently subject to the Mandatory Reporting of Greenhouse Gas Emissions (MRR) regulation, which applies to facilities and operators based on their facility type, not annual revenues. Large companies that are not industrial operators, energy suppliers, or fuel suppliers could find themselves subject to mandatory greenhouse gas reporting requirements in California for the first time.

What emissions must be reported?

The bill would require reporting of Scope 1, 2, and 3 emissions. Scope 1 emissions are direct GHG emissions from sources that are owned or controlled by a company, such as boilers, furnaces, and engines. Scope 2 emissions are indirect emissions associated with the purchase of electricity, steam, heat, or cooling.

The major impact from this bill for facilities that already report emissions is the new requirement to report Scope 3 emissions. These are emissions that a company indirectly affects through its value chain, such as purchased goods, business travel, employee commuting, use of sold products, and investments. Scope 1 and Scope 2 emissions are well-defined, but Scope 3 emissions are trickier. Identifying emissions, gathering data, and establishing recordkeeping procedures will require many companies to more closely analyze parts of their operations that have not historically been tracked closely.

What comes next?

The bill directs CARB to develop regulations by January 1, 2025 that define the reporting requirements for these emission sources. Companies must have systems in place so that they are prepared to report their Scope 1 and 2 emissions beginning in calendar year 2026, and their Scope 3 emissions starting in 2027.

How can ALG help?

Our ESG team has helped a broad spectrum of clients prepare GHG inventories, develop tracking and reporting tools, and evaluate GHG reduction opportunities. Our client work has been audited by state agencies, who have singled out ALG’s work product as representing best practices among ­firms that provide these services. We can help you understand the potential impacts of SB-253 on your operations and develop a plan to meet its requirements.

For additional information about our services, please contact:

Bart Leininger, P.E.

Principal (805) 764-6012

Elliott Ripley

Sr. Environmental Engineer (805) 764-6004

Irra Core, Ph.D.

Sr. Environmental Engineer (805) 764-6006

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