In the ESG world, there are tons of terms that aren’t clearly defined. I remember being confused for quite a while — especially about biofuels.

Take this for example: biofuels made from corn or palm oil was subsidized as environmentally friendly energy. But wait — if you burn biofuel, doesn’t it still release CO₂ into the air, just like fossil fuel? From a chemistry standpoint, the combustion of any organic compound (like those found in biofuel) produces greenhouse gases if fully burned. So why the green label?

Biomass as Fuel — What Does It Actually Mean?

Then there's another term: biomass fuel. In some countries, biomass refers specifically to agricultural waste. Here in Malaysia, all crude palm oil (CPO) mills use palm biomass — things like palm kernel shells and empty fruit bunches — to fire up massive boilers that generate heat and electricity.

Of course, burning palm biomass also emits CO₂. That’s just chemistry. Anything organic that burns will release carbon. So again, what makes it different?

The “Above Ground” vs “Below Ground” Carbon Concept

I finally found some clarity when I took a GHG accounting course. One of the concepts that stood out was the idea of "above ground" versus "below ground" carbon.

• Above Ground: Think plants. Anything that grows above the soil — crops, trees, forest biomass — all falls in this category. Plants absorb CO₂ from the atmosphere through photosynthesis and store it in their structure.

• Below Ground: Think fossil fuels — coal, crude oil, and natural gas. These are ancient carbon stores locked underground. When we burn them, we’re adding “new” carbon into the atmosphere.

So here’s the deal: burning biomass releases carbon that was recently absorbed, while burning fossil fuel releases carbon that was previously locked away for millions of years. That’s a big deal in climate terms.

Where GHG Accounting Comes In

GHG accounting, guided by the GHG Protocol, categorizes emissions into Scope 1, 2, and 3.

• Scope 1: Direct emissions from things like fuel combustion.

• Scope 2: Indirect emissions from purchased electricity.

• Scope 3: Everything else across the value chain.

Now, here’s the interesting bit: emissions from burning biomass are reported separately as “biogenic CO₂”, not lumped into Scope 1. This helps distinguish emissions that were already part of the natural carbon cycle (above ground) from those that are new (below ground).

So when airlines experiment with using recycled cooking oil, or when factories switch to biomass boilers, they’re not necessarily stopping CO₂ emissions — but they are reducing Scope 1 numbers, which is key in reporting.

But Wait — Is All Biomass Good?

Not always. There are valid concerns. For instance, if forests are cleared to make wood pellets for fuel, that’s not green — that’s deforestation disguised as sustainability.

In Singapore, I’ve personally been involved in wood-waste-to-energy projects. Each day, we receive mountains of discarded wooden furniture and pallets. These are crushed and burned for energy — often to power food recycling operations. Some of the processed wood pallets are even exported to Japan and South Korea as fuel.

But is all that wood certified as sustainable? Probably not. Still, we see it this way: if the furniture’s going to landfill otherwise, turning it into energy closes the loop.

Repurpose, Renew, Reduce, Recycle

In the real world, ESG ideals often meet the hard wall of profit margins and cost calculations. Industry players need to make decisions that are both sustainable and commercially viable.

We’re solving a systemic problem, not a one-off issue. There’s no silver bullet, and definitely no perfect solution — just better decisions, guided by a better framework.

Take palm oil mills again: when properly designed, they can be self-sufficient, using palm biomass for energy and emitting very little fossil-fuel-derived CO₂. Their Scope 1 and Scope 2 numbers can be impressively low — while biogenic emissions remain high. But that’s acceptable, even encouraged, within the GHG accounting framework.

Final Thoughts: A Tool, Not a Fix

The above-ground vs. below-ground carbon concept doesn’t solve everything. But it guides focus — especially during this energy transition period — to reduce reliance on fossil carbon, and recognize the nuance in where carbon comes from.