The Hidden Carbon in Every Drop of Water

                                                             Author : AM Tris Hardyanto

The Hidden Carbon in Every Drop of Water

Why understanding water’s invisible climate footprint is key to ESG and net-zero goals

 

1      Why Carbon Matters in Water–Wastewater Systems

Every unit of water extracted, treated, or discharged carries a hidden carbon footprint that extends beyond the chemical element itself. This “shadow carbon” arises not only from the organic matter in water quantified as biochemical oxygen demand (BOD), chemical oxygen demand (COD), or total organic carbon (TOC) but also from the greenhouse gases emitted during pumping, aeration, and treatment. These emissions, expressed in carbon dioxide equivalents (CO₂-E), reveal the fundamental interconnection between water and energy systems.

In practice, environmental, social, and governance (ESG) assessments focus on the second dimension, process- and energy-driven emissions, because they determine a utility’s climate impact and reporting obligations. Recognizing this distinction allows utilities to address both chemical and climate carbon, aligning operational management with broader decarbonization and sustainability goals (Liu et al., 2024).

1.1    Carbon Accounting in Water Utilities: Methods, Practice, and Policy Implications

Accurate carbon accounting in water utilities depends on tracing emissions across the full service chain, from abstraction and treatment to leakage and wastewater management. Each process consumes energy and materials that generate both direct and indirect greenhouse gases. Water losses, often categorized as non-revenue water, amplify these emissions because every cubic meter lost requires additional pumping and treatment energy to replace it. Integrating water-loss accounting into carbon inventories therefore strengthens both climate and operational reporting (Cavanaugh et al., 2025).

Recent advances in dynamic modeling and data-driven accounting systems offer utilities new opportunities to improve precision and transparency. Linking operational data with grid-level emission factors helps quantify real-time carbon performance, while standardized frameworks enhance compatibility with carbon markets and ESG disclosure systems (He et al., 2023).

 

1.2    Carbon Sources and Pathways in Water–Wastewater Operations: Direct and Indirect Emissions

Emissions in water–wastewater operations arise through both biological and energy-intensive processes. Direct emissions originate mainly from methane (CH₄) and nitrous oxide (N₂O) released during anaerobic digestion and biological nutrient removal. These gases, though less visible than carbon dioxide, possess higher global warming potential and often dominate treatment plant footprints. Mitigation measures such as biogas recovery, aeration control, and process optimization can significantly reduce these direct sources while improving energy efficiency (Liu et al., 2024).

Indirect emissions stem largely from electricity use for pumping, aeration, and disinfection, as well as chemical production and transport. Network leakage further compounds emissions by demanding additional water extraction and treatment energy. Accounting for both direct and indirect pathways provides a complete picture of a utility’s carbon balance and supports strategic decarbonization planning (Cavanaugh et al., 2025).

 

1.3    Toward ESG and Climate-Aligned Action: Frameworks, Strategies, and Policy Considerations

Aligning water-sector operations with ESG and climate goals requires a consistent carbon accounting framework that links data accuracy, transparent reporting, and policy compliance. Utilities are increasingly adopting standardized methodologies for CO₂-equivalent calculations, integrating water-balance data, and applying digital monitoring tools to track performance. Such systems support informed decision-making and readiness for regulatory or investor scrutiny, helping utilities demonstrate measurable progress in decarbonization (Johnston & Karanfil, 2013).

Operational strategies include optimizing aeration and pumping, expanding renewable energy use, and capturing biogas for on-site power. Utilities can further strengthen ESG alignment by improving chemical efficiency, reducing leakage emissions, and embedding carbon management into corporate governance structures. These actions create measurable links between sustainability commitments, carbon reduction targets, and long-term resilience (Liu et al., 2024).

1.4    Practical Synthesis: A Coherent, Evidence-Based Framework for Water and Wastewater Utilities

Developing an effective carbon management framework begins with distinguishing between chemical and climate carbon and establishing a unified reporting system for CO₂-equivalent emissions. Utilities need to map both direct and indirect sources along the full service chain, including abstraction, treatment, distribution, and wastewater processing. Incorporating data from non-revenue water and leakage enhances the completeness of emissions inventories and ensures accountability throughout the operational life cycle (Cavanaugh et al., 2025).

Adopting data-enabled carbon accounting allows utilities to integrate real-time operational and grid-level data into emission estimates. This approach supports precise tracking, improved mitigation planning, and transparent ESG reporting. When paired with targeted decarbonization actions—such as energy efficiency upgrades, biogas recovery, and process optimization—it provides a practical foundation for measurable and verifiable climate performance (He et al., 2023).

1.5    Implications and Gaps for Further Research

Despite advances in carbon accounting, the water sector still lacks a unified framework that integrates emissions from water, energy, and chemical interactions within utility systems. Future research should focus on adaptive, data-driven accounting models that link process-level monitoring with grid emissions and life-cycle analysis. Such integration would enhance consistency in CO₂-equivalent reporting and support the development of cross-jurisdictional benchmarks for utility performance (Peng et al., 2024).

Further investigation is also needed into the life-cycle carbon embedded in infrastructure, leakage recovery, and decentralized treatment systems. Exploring the potential of carbon capture, utilization, and storage (CCUS) in wastewater processes could offer new mitigation pathways. These areas remain critical for refining ESG metrics and ensuring that carbon management aligns with national and global climate commitments (Lü et al., 2025).

 

Carbon in water and wastewater systems represents both a material and an energetic dimension of sustainability. While chemical carbon reflects the organic content within water, climate carbon arises from the energy and processes required to treat, transport, and discharge it. The evidence across current literature consistently underscores that greenhouse gas emissions expressed as CO₂-equivalent form the central focus of ESG and climate reporting for utilities (Liu et al., 2024).

A comprehensive, data-driven accounting framework enables utilities to identify key emission sources, evaluate performance, and target practical reduction strategies. Integrating energy efficiency, leakage management, and renewable energy into operational practices not only reduces emissions but also strengthens institutional credibility. In doing so, utilities can align with global decarbonization objectives while maintaining long-term environmental and financial resilience (He et al., 2023).

 

2      Main Carbon Pathways in Water–Wastewater Systems

Water and wastewater utilities emit carbon through multiple interconnected processes. The largest share often stems from electricity use in pumping, aeration, dewatering, and disinfection. When grid power depends on fossil fuels, its carbon intensity converts each kilowatt-hour into measurable CO₂-equivalent emissions, making energy-related sources a dominant contributor to utility footprints (He et al., 2023).

Direct process emissions arise when microbes transform organic and nitrogenous compounds during treatment. Aerobic stages release CO₂, while anaerobic digestion, lagoons, and septic systems emit methane and nitrous oxide, gases with significantly higher global-warming potential. Additional emissions originate from sludge management, transport, and the upstream production of treatment chemicals, reinforcing the need for comprehensive accounting across Scopes 1–3 (Liu et al., 2024).

2.1    Practical Implications for Mitigation and Reporting

Reducing emissions across the main carbon pathways requires utilities to integrate energy, process, and supply-chain data into a unified accounting framework. Prioritizing energy efficiency in pumps, aeration, and ultraviolet disinfection can significantly reduce Scope 2 emissions, especially when paired with low-carbon or renewable electricity procurement. In parallel, optimizing biological treatment conditions helps minimize methane and nitrous oxide generation without compromising process stability (Johnston & Karanfil, 2013).

Improved sludge management further contributes to mitigation by capturing biogas for on-site energy use and reducing methane leakage. Incorporating life-cycle assessments for treatment chemicals and infrastructure materials ensures that Scope 3 emissions are accurately represented in ESG disclosures. Together, these measures allow utilities to demonstrate transparent, data-driven progress toward decarbonization while aligning with broader climate and sustainability objectives (Bai et al., 2024).

 

2.2    Main Carbon Pathways in Water–Wastewater Systems

Water and wastewater utilities emit carbon through several interconnected pathways that span energy use, treatment processes, sludge handling, and supply chains. The largest portion typically arises from electricity consumption for pumping, aeration, sludge dewatering, and ultraviolet disinfection. When grid electricity is derived from fossil fuels, each kilowatt-hour carries a measurable carbon intensity, making energy-driven emissions a dominant contributor to the sector’s carbon footprint (He et al., 2023).

Direct process emissions occur when microorganisms oxidize organic and nitrogenous compounds during treatment. Aerobic processes release carbon dioxide, while anaerobic digestion and lagoons emit methane and nitrous oxide—gases with far higher global-warming potential than CO₂. Additional emissions stem from sludge decomposition, transport activities, and the upstream manufacture of chemicals and materials used in treatment systems. Together, these sources define Scopes 1, 2, and 3 in carbon accounting, highlighting the need for integrated measurement and reporting frameworks (Liu et al., 2024).

2.3    Practical Implications for Mitigation and Reporting

Reducing emissions across these pathways requires a holistic approach that links operational data with energy and supply-chain assessments. Energy efficiency measures in pumps and aeration, combined with renewable or low-carbon electricity procurement, can substantially lower Scope 2 impacts. Biological process optimization helps limit methane and nitrous oxide formation without reducing treatment effectiveness (Johnston & Karanfil, 2013).

Enhanced sludge management through biogas recovery, fuel-efficient transport, and shorter haul distances further decreases direct emissions. Incorporating life-cycle evaluations of chemicals and infrastructure ensures that upstream (Scope 3) impacts are also captured. By integrating these strategies, utilities can align operational performance with ESG reporting standards and advance their contribution to long-term decarbonization and climate goals (Bai et al., 2024).

2.4    Measurement Frameworks and Carbon Accounting Methods in Water Utilities

Accurate carbon accounting within water utilities depends on capturing both direct and indirect emissions through standardized, auditable methods. A comprehensive framework typically aligns with the Greenhouse Gas Protocol, classifying emissions into Scope 1 (process-related), Scope 2 (energy-related), and Scope 3 (upstream and downstream) categories. Each scope requires consistent data collection across operations, from raw water abstraction to sludge disposal. Integrating these categories enables utilities to understand their complete carbon footprint and identify priority areas for mitigation (Johnston & Karanfil, 2013).

Recent advances in data analytics and digital monitoring have strengthened the precision of emission measurements. Dynamic accounting models link plant-level operational data with grid emission factors, improving the traceability of CO₂-equivalent outputs. Utilities increasingly apply these models to evaluate the impact of time-varying electricity mixes, optimize process controls, and forecast carbon reductions under different operational scenarios. Standardized reporting tools, such as energy–emission dashboards, further facilitate transparency and comparability across utilities and jurisdictions. The adoption of consistent accounting methodologies not only improves the accuracy of ESG disclosures but also supports utilities in meeting investor expectations and regulatory requirements for climate accountability (He et al., 2023).

2.5    Operational and Policy Strategies for Decarbonizing Water and Wastewater Utilities

Decarbonizing water and wastewater utilities requires coordinated operational improvements and supportive policy frameworks. At the operational level, energy efficiency remains the most immediate and cost-effective mitigation measure. Optimizing aeration, pumping, and sludge dewatering systems can substantially reduce electricity demand, particularly when coupled with advanced controls and variable-speed drives. Integrating renewable energy, such as solar or biogas-based generation, further lowers reliance on carbon-intensive grids. These technical interventions should be complemented by continuous monitoring to verify reductions in CO₂-equivalent emissions and guide future investments (Liu et al., 2024).

Policy alignment is equally critical to sustain decarbonization progress. National and local regulations that promote carbon pricing, renewable-energy incentives, and performance-based reporting can drive utilities toward long-term climate commitments. Governance mechanisms within utilities—such as ESG committees, sustainability audits, and transparent carbon disclosure—ensure that operational targets align with broader institutional goals. Collaboration between utilities, regulators, and research institutions can also accelerate innovation in low-carbon technologies and data-driven decision support. By combining operational optimization with clear policy direction, the sector can transition from compliance-based reporting to proactive climate stewardship, strengthening its contribution to national decarbonization pathways and global sustainability objectives (Bai et al., 2024).

2.6    Integrating Carbon Accounting with ESG and Financial Governance Frameworks

Embedding carbon accounting into environmental, social, and governance (ESG) systems transforms it from a technical reporting exercise into a strategic management tool. When integrated with financial governance, carbon data can inform investment planning, risk management, and long-term asset valuation. Utilities that disclose consistent and verifiable CO₂-equivalent data enhance investor confidence and align with emerging sustainability standards. Establishing a transparent governance structure—supported by carbon audits, third-party verification, and internal performance reviews—ensures accountability across operational and administrative levels (Johnston & Karanfil, 2013).

Financial mechanisms linked to carbon performance, such as green bonds and sustainability-linked loans, increasingly reward utilities for measurable emission reductions. These instruments create tangible incentives to adopt low-carbon technologies and improve reporting accuracy. Incorporating life-cycle emission data into procurement and budgeting decisions also supports fair valuation of infrastructure projects under carbon-aware accounting. Beyond compliance, such integration positions utilities as leaders in responsible investment and climate stewardship. Strengthening the relationship between carbon management, ESG reporting, and financial governance allows utilities to balance environmental integrity with fiscal sustainability, ensuring that decarbonization efforts are both credible and economically resilient (Bai et al., 2024).

2.7    Challenges, Opportunities, and Future Directions in Carbon Governance for Water Utilities

Despite increasing recognition of the need for carbon accountability, water utilities face several barriers in implementing consistent carbon governance. Limited data integration, inconsistent measurement methodologies, and insufficient institutional capacity often constrain the reliability of emission inventories. Smaller utilities, in particular, struggle to apply complex accounting models or maintain continuous monitoring systems. Financial constraints and competing operational priorities can delay investments in low-carbon technologies, while fragmented policy environments may reduce incentives for transparent reporting and cross-sector collaboration (He et al., 2023).

Yet these challenges also present opportunities for innovation and capacity building. Advances in real-time monitoring, remote sensing, and digital twins now enable more precise carbon tracking across treatment and distribution networks. Partnerships between utilities, regulators, and research institutions can facilitate shared data platforms and standardized emission metrics. Emerging policy instruments—such as carbon markets, performance-based tariffs, and sustainability-linked financing—can further encourage utilities to internalize carbon costs while unlocking access to climate finance. Future governance frameworks should emphasize inclusivity, data transparency, and adaptive learning, ensuring that carbon management evolves alongside technological and regulatory progress. By reframing carbon governance as a core component of water sector modernization, utilities can position themselves as proactive agents in the global transition toward net-zero systems (Liu et al., 2024).

2.8    Synthesis and Conclusion

The decarbonization of water and wastewater utilities represents both a technical challenge and a governance transformation. Across the sector, emissions arise from interconnected pathways, including: energy consumption, biological processes, sludge handling, and supply-chain activities, that collectively define the carbon footprint of urban water systems. Integrating these pathways through structured carbon accounting frameworks enables utilities to identify where reductions can be achieved most effectively. Advances in data-driven models, process optimization, and renewable energy integration provide practical solutions for reducing emissions while maintaining operational reliability (He et al., 2023).

Equally vital is the institutional alignment that links carbon accounting with ESG and financial governance systems. When utilities embed carbon metrics into strategic decision-making, they strengthen transparency, investor confidence, and long-term sustainability. Policy support, standardized reporting, and performance-based financing further reinforce this alignment by connecting environmental accountability with economic resilience. The path forward lies in scaling data-informed governance, expanding access to climate finance, and nurturing collaborations across sectors. Through these efforts, water utilities can move beyond compliance to lead in climate action—demonstrating that environmental stewardship and financial integrity are mutually reinforcing goals. By adopting a holistic, evidence-based approach to carbon management, the sector can contribute meaningfully to national decarbonization strategies and global climate commitments (Liu et al., 2024).

 

3      Why ESG and Climate Policies Care

The water and wastewater sector has emerged as a significant contributor to global greenhouse gas emissions, accounting for an estimated 4–5 percent of total output, comparable to aviation. This high carbon intensity positions utilities as key actors in climate governance. Electricity consumption for pumping and aeration, biological treatment emissions, and upstream material use collectively shape the sector’s carbon profile. As a result, utilities are now subject to growing scrutiny under ESG frameworks and international climate commitments that emphasize transparent, verifiable disclosure of Scope 1, 2, and 3 emissions (Liu et al., 2024).

Regulatory momentum continues to redefine carbon governance in the sector. Paris-aligned initiatives, such as the Science-Based Targets framework, require utilities to quantify and reduce emissions across the full operational value chain. Strengthened disclosure requirements in both national and regional policies have turned carbon reporting from a voluntary sustainability practice into a formal compliance obligation. These expectations have also deepened the link between carbon accounting and financial governance, as credible reporting influences access to investment and determines exposure to carbon pricing or trading schemes (Bai et al., 2024).

Reducing emissions delivers more than compliance; it enhances operational and financial resilience. Energy-efficient systems lower electricity costs, while improved sludge management through biogas recovery supports circular-economy objectives. Together, these co-benefits enhance investor confidence and demonstrate alignment with climate-adaptation goals, positioning utilities as essential contributors to the global decarbonization transition (He et al., 2023).

3.1    Regulatory Pressure, Financial Risks, and Resilience in Utility Governance

Climate policy frameworks increasingly compel water and wastewater utilities to measure, disclose, and reduce their carbon emissions. The Science-Based Targets initiative and similar Paris-aligned mechanisms now set explicit expectations for Scope 1, 2, and 3 accounting, transforming carbon management into a compliance and governance priority. In many jurisdictions, utilities must demonstrate measurable progress toward emissions reduction targets to maintain regulatory credibility and access to financial incentives. The integration of these requirements within national climate strategies highlights how water-sector performance contributes to broader decarbonization agendas (Gallegos et al., 2022).

At the same time, financial instruments such as carbon taxes and emissions-trading systems have reshaped the economics of water operations. Energy-intensive activities, particularly aeration and pumping, expose utilities to rising operational costs as carbon pricing mechanisms tighten. Proactive carbon accounting, coupled with investments in low-carbon technologies, can mitigate these risks while improving operational efficiency. Transparent ESG disclosures also enhance investor confidence, ensuring that capital flows toward utilities demonstrating climate resilience and sound governance. Beyond compliance, integrating carbon performance into financial and operational planning allows utilities to align environmental responsibility with long-term economic stability, reinforcing their role as both service providers and climate actors (Bai et al., 2024).

 

3.2    Resilience, Co-Benefits, and Strategic Value for ESG Performance

Efforts to reduce carbon emissions in water and wastewater systems often produce complementary benefits that extend beyond environmental compliance. Lowering electricity consumption through energy-efficient pumping and aeration directly decreases operating costs while strengthening grid stability. Similarly, optimizing sludge digestion and capturing biogas transform waste into renewable energy, reducing methane emissions and generating an internal energy source. These outcomes enhance both financial performance and operational resilience, positioning utilities as contributors to national sustainability and energy-transition objectives (Liu et al., 2024).

From an ESG perspective, the co-benefits of decarbonization signal effective governance and adaptability to investors and regulators. Utilities that integrate carbon management into daily operations demonstrate not only climate alignment but also institutional capacity for long-term stewardship. Transparent disclosure of emissions data, verified through standardized frameworks, builds stakeholder trust and improves access to green financing. Moreover, linking emissions reduction with adaptation measures—such as flood management, water reuse, and renewable-energy integration—helps utilities frame their sustainability performance as part of a broader resilience narrative. In this way, carbon reduction becomes both a mitigation tool and a strategic instrument for reinforcing the credibility, competitiveness, and social license of water utilities in an evolving climate economy (Aris et al., 2024).

3.3    Synthesis and Policy Alignment for Utility Decarbonization

Achieving meaningful decarbonization in the water and wastewater sector depends on the alignment of operational, policy, and financial dimensions. Utilities must integrate carbon accounting across all emission scopes to build credible ESG strategies that meet both regulatory expectations and investor standards. Policy instruments such as the Science-Based Targets initiative, the Carbon Border Adjustment Mechanism, and national climate frameworks increasingly tie operational compliance to financial incentives and access to capital. As a result, utilities that demonstrate measurable progress through standardized reporting and verified data are better positioned to attract funding, enhance reputational standing, and maintain long-term policy compatibility (Gallegos et al., 2022).

The path toward policy-aligned decarbonization also requires sector-specific collaboration and innovation. Strengthening data governance, harmonizing reporting formats, and linking emissions inventories to performance benchmarking can improve consistency across jurisdictions. Utilities that combine energy optimization, biogas utilization, and low-carbon procurement achieve both operational efficiency and compliance readiness. Governance mechanisms—such as sustainability committees, internal audits, and third-party verification—help institutionalize these practices. When supported by coherent climate policy, this integrated approach enables utilities to move from reactive compliance toward proactive environmental leadership. Ultimately, aligning utility operations with national and global decarbonization goals transforms carbon management into a strategic pillar of sustainable infrastructure governance (Bai et al., 2024).

The interconnection between ESG frameworks and climate policy underscores the growing responsibility of water and wastewater utilities in achieving national and global decarbonization goals. As the sector accounts for a measurable share of greenhouse gas emissions, transparent carbon accounting and systematic mitigation have become fundamental to its legitimacy and resilience. Integrating Scope 1, 2, and 3 emissions within standardized reporting systems allows utilities to translate operational data into actionable strategies that satisfy both regulatory and investor expectations. Through this integration, carbon management evolves from a compliance obligation into an institutional practice that enhances governance, transparency, and long-term sustainability (Liu et al., 2024).

Effective decarbonization in the water sector requires continuous coordination between technical innovation, financial mechanisms, and policy frameworks. Utilities that embed carbon reduction within operational planning not only lower emissions but also strengthen their financial performance and public trust. Policy alignment with science-based targets, coupled with verifiable ESG disclosures, ensures that progress is both measurable and credible. As utilities transition toward low-carbon operations, their efforts contribute to broader societal goals—supporting energy security, climate adaptation, and sustainable development. In this way, water and wastewater utilities can redefine their role from service providers to active partners in climate governance, demonstrating that environmental integrity and institutional accountability are central to the future of sustainable infrastructure (Bai et al., 2024).

 

4      Why It Is Not “Just C”

Carbon in water and wastewater systems cannot be treated as a uniform chemical element because its climate impact depends on the molecular form and environmental conditions in which it occurs. During aerobic treatment, microorganisms oxidize dissolved organic carbon, releasing carbon dioxide. Under anaerobic conditions, the same element can form methane, a greenhouse gas nearly 28 times more potent than carbon dioxide over a century. When carbon interacts with nitrogen during incomplete denitrification, it can generate nitrous oxide, whose warming potential is hundreds of times higher than that of carbon dioxide. These reactions reveal that the behavior of carbon in treatment systems is governed by microbial pathways and redox environments rather than by simple elemental abundance (Duan et al., 2021).

This biogeochemical complexity means that carbon accounting in water and wastewater utilities must extend beyond chemical measurement to include process-level and energy-system dynamics. Effective accounting integrates direct emissions from biological reactions, energy-related emissions from electricity use, and upstream emissions embodied in treatment chemicals and infrastructure materials. Such an integrated approach captures both the chemical transformations within treatment processes and the broader energy footprint of system operations (Johnston & Karanfil, 2013).

Adopting this perspective enables utilities to link scientific understanding with practical governance. By recognizing that carbon exists in multiple reactive forms CO₂, CH₄, and N₂O utilities can design mitigation strategies that target each pathway, from optimizing aeration and biogas capture to managing nitrogen cycles, thereby aligning operational performance with climate and ESG objectives (Liu et al., 2024).

4.1    Integrated Framework for Carbon Accounting in Water–Wastewater Utilities

A comprehensive carbon accounting framework for water and wastewater utilities must bridge biogeochemical processes with energy-system assessments. This integration begins by distinguishing between chemical carbon in the water matrix, measured through parameters such as biochemical oxygen demand (BOD), chemical oxygen demand (COD), and total organic carbon (TOC), and climate-relevant carbon, which includes greenhouse gas emissions expressed as carbon dioxide equivalents. Chemical carbon informs treatment design and process optimization, while climate carbon determines the broader environmental footprint associated with operations, energy use, and supply chains (Liu et al., 2024).

To accurately represent a utility’s carbon profile, emissions should be categorized across three scopes. Scope 1 includes direct process emissions such as carbon dioxide from aerobic oxidation, methane from anaerobic digestion, and nitrous oxide from nitrification and denitrification. Scope 2 captures indirect emissions from electricity used for pumping, aeration, and disinfection, adjusted for grid carbon intensity. Scope 3 encompasses upstream embodied emissions from the production of treatment chemicals and infrastructure materials. Incorporating sludge management and transport emissions further strengthens the accuracy of reporting. This holistic approach supports the creation of auditable, data-driven carbon inventories that inform ESG disclosures and guide mitigation strategies, linking operational performance with climate responsibility and long-term sustainability goals (Johnston & Karanfil, 2013).

4.2    Biogeochemical Pathways and Management Implications for CO₂, CH₄, and N₂O Emissions

Understanding how carbon behaves across different treatment environments is essential for identifying effective mitigation strategies. In aerobic systems, microorganisms oxidize organic carbon to carbon dioxide, representing a predictable component of direct emissions. However, in anaerobic zones such as digesters, lagoons, or septic tanks, the same carbon can form methane, which has a global warming potential roughly 28 times greater than that of carbon dioxide. During nitrogen transformation processes, incomplete denitrification and variable redox conditions can lead to the formation of nitrous oxide, a gas with even higher climate potency. Each of these pathways is influenced by microbial activity, process control, and environmental parameters such as dissolved oxygen concentration, carbon-to-nitrogen ratio, and temperature (Duan et al., 2021).

From a management perspective, reducing these emissions requires process-specific interventions. Methane emissions can be minimized through efficient biogas capture and the use of energy recovery systems that convert biogas into on-site power. Nitrous oxide can be mitigated by stabilizing dissolved oxygen levels, optimizing carbon dosing, and applying process controls that prevent over-aeration or nutrient imbalance. Aerobic carbon dioxide emissions, while less potent, can still be reduced through improved energy efficiency in aeration and reduced reliance on fossil-based electricity. These measures, when implemented systematically, help utilities balance treatment efficiency with climate goals, reinforcing both operational resilience and environmental accountability (Liu et al., 2024).

 

4.3    Incorporating Sludge, Supply Chains, and Life-cycle Emissions into Utility Carbon Inventories

Accurate carbon accounting in the water and wastewater sector extends beyond process emissions to encompass the full life cycle of materials, sludge management, and supply chain activities. Sludge that is stockpiled or sent to landfills continues to emit methane and carbon dioxide, representing a direct addition to a utility’s Scope 1 emissions. The transportation of sludge and biosolids also produces carbon dioxide from fuel combustion, further increasing the operational footprint. Conversely, when anaerobic digestion systems efficiently capture methane and convert it into usable energy, utilities can offset a portion of these emissions. Such measures not only reduce the net greenhouse gas balance but also enhance energy self-sufficiency and resilience in plant operations (Daelman et al., 2013).

Equally significant are the upstream emissions associated with the production of treatment chemicals and construction materials, which fall under Scope 3. Chemicals such as alum, ferric salts, and polymers, as well as materials like PVC pipes and membranes, carry embedded carbon from manufacturing and transport. Including these indirect emissions in carbon inventories supports a more complete understanding of a utility’s climate impact. Engaging with suppliers to source low-carbon alternatives, applying life-cycle assessments, and integrating carbon performance into procurement decisions align utilities with ESG principles and sustainability reporting frameworks. Together, these efforts ensure that carbon accounting reflects not only operational efficiency but also responsible value-chain management (Johnston & Karanfil, 2013).

4.4    Toward an Integrated Governance and Reporting Model for Utility Decarbonization

Effective decarbonization in the water and wastewater sector requires governance systems that unify technical performance, policy compliance, and transparent reporting. Utilities must institutionalize carbon management through structured governance mechanisms that ensure consistency in data collection, verification, and disclosure. Embedding carbon accounting within corporate decision-making strengthens accountability and helps align operational practices with national and international climate goals. Establishing sustainability committees, periodic audits, and third-party verification can enhance credibility while integrating carbon data into broader ESG reporting systems. This structured governance approach transforms emissions accounting from a technical task into a component of institutional integrity and strategic leadership (Bai et al., 2024).

Standardized and auditable reporting systems are essential to maintaining investor confidence and meeting regulatory requirements. Adopting harmonized accounting protocols and sector-specific tools—such as dynamic models linking energy consumption with emission factors—improves accuracy and comparability across utilities. These frameworks also enable benchmarking, allowing utilities to assess progress against peers and identify areas for improvement. When paired with clear communication of results through sustainability reports and financial disclosures, carbon governance becomes a mechanism for both transparency and trust-building. By combining reliable data management with strong institutional oversight, utilities can integrate environmental performance into financial and operational strategies, positioning themselves as credible contributors to national decarbonization pathways and global sustainability agendas (Johnston & Karanfil, 2013).

 

4.5    Integrating Science, Governance, and Practice for Meaningful Carbon Accountability

Carbon management in the water and wastewater sector demands an integrated approach that connects scientific understanding of biogeochemical processes with the governance and financial systems guiding utility operations. Recognizing that carbon exists in multiple reactive forms, such as carbon dioxide, methane, and nitrous oxide, helps utilities design targeted mitigation strategies that address both process-level and energy-related emissions. This scientific foundation enables more accurate reporting, supports evidence-based decision-making, and aligns daily operational practices with broader climate objectives. When utilities integrate such knowledge into their emission inventories, they move beyond compliance to achieve measurable reductions in their environmental footprint (Liu et al., 2024).

Equally important is the institutional capacity to translate carbon data into governance and financial action. Embedding carbon metrics into ESG frameworks, procurement policies, and performance evaluations ensures that decarbonization is sustained and verifiable. Transparent reporting, standardized accounting, and stakeholder engagement create the foundation for accountability and investor confidence. Through these interconnected systems, carbon accounting evolves from a technical assessment into a strategic instrument that advances both climate resilience and financial integrity. By combining scientific precision with institutional commitment, the water and wastewater sector can contribute meaningfully to national and global decarbonization goals while setting a benchmark for responsible, evidence-based environmental governance (Bai et al., 2024).

 

5      Exposing the Hidden Carbon

Water and wastewater utilities often report operational and water-quality metrics such as biochemical oxygen demand (BOD), chemical oxygen demand (COD), or nutrient concentrations, yet they rarely disclose the factors that define their true climate impact. Key indicators such as aeration energy use per cubic meter of water treated, methane losses from anaerobic digesters, nitrous oxide fluctuations during wet-weather events, and upstream emissions from chemical production remain largely absent from public reporting. These overlooked variables together represent the “hidden carbon” of utility operations, the emissions that shape the sector’s contribution to climate change but remain invisible in conventional performance summaries (Johnston & Karanfil, 2013).

Making these hidden sources visible within ESG disclosures transforms how carbon accountability is perceived and managed. Tracking aeration energy intensity provides a direct measure of Scope 2 emissions, while quantifying methane and nitrous oxide emissions captures critical Scope 1 processes with high global-warming potential. Incorporating upstream emissions from chemicals and infrastructure materials completes the life-cycle perspective, extending accounting boundaries beyond the plant gate. When disclosed consistently, these indicators create a transparent foundation for benchmarking, target setting, and regulatory alignment (Bai et al., 2024).

Public reporting of these parameters also encourages operational innovation and governance improvement. Utilities can use such data to identify energy-efficiency opportunities, optimize biogas recovery, and refine nitrogen-removal processes that reduce nitrous oxide formation. Including upstream emissions further strengthens supplier engagement and procurement transparency. By revealing the full spectrum of carbon pathways, utilities take a critical first step toward measurable decarbonization and long-term climate accountability (Daelman et al., 2013).

5.1     Integrating Hidden Carbon Metrics into ESG Disclosure Frameworks

Integrating hidden carbon metrics into environmental, social, and governance (ESG) frameworks transforms carbon accounting from a technical assessment into a strategic management practice. Utilities that incorporate energy intensity, methane slip, nitrous oxide variability, and upstream supply-chain emissions into their reporting systems gain a more accurate picture of their full carbon footprint. This integration strengthens both compliance and credibility, allowing investors, regulators, and the public to evaluate performance through a transparent and comparable framework. By linking carbon indicators to financial and operational data, utilities can demonstrate how energy efficiency, process control, and supplier engagement directly influence emissions outcomes and long-term value creation (Bai et al., 2024).

Developing such frameworks requires standardized methodologies and clear governance structures. Utilities can align their disclosures with international initiatives such as the Science-Based Targets framework and the Greenhouse Gas Protocol, ensuring consistent classification of Scope 1, 2, and 3 emissions. Incorporating these data into annual sustainability reports or digital ESG dashboards enables trend analysis, benchmarking, and policy alignment. More importantly, connecting performance metrics with mitigation actions such as digester optimization, aeration control, and procurement reforms turns disclosure into a tool for continuous improvement rather than compliance alone. In doing so, utilities position themselves as climate-responsive institutions that integrate scientific accountability with transparent governance, reinforcing both environmental integrity and investor confidence (Johnston & Karanfil, 2013).

 

5.2     From Disclosure to Decarbonization: Turning Visibility into Action

Revealing hidden carbon emissions is only the first step; meaningful decarbonization depends on translating data transparency into targeted operational change. When utilities make emissions visible across all scopes, they gain the analytical foundation to prioritize interventions with the greatest impact. Energy-use metrics guide investments in efficient aeration and low-carbon electricity sourcing, while methane monitoring informs improvements in biogas capture and digester management. Identifying nitrous oxide spikes allows operators to adjust process controls in real time, optimizing dissolved oxygen levels and carbon dosing to minimize greenhouse gas formation. Similarly, tracking upstream emissions supports low-carbon procurement strategies that align with broader sustainability goals and reduce life-cycle impacts (Daelman et al., 2013).

To convert these insights into sustained emissions reductions, utilities must embed carbon management into both operational and strategic planning. Integrating carbon targets into capital investment frameworks, staff performance metrics, and procurement contracts ensures accountability across institutional levels. Cross-sector collaboration can also enhance results, as partnerships with energy providers, chemical suppliers, and research institutions foster innovation in low-carbon solutions. By coupling transparency with governance mechanisms, utilities shift from reactive reporting to proactive decarbonization leadership. This evolution strengthens financial resilience, reduces exposure to carbon pricing risks, and reinforces the sector’s contribution to national and global climate objectives (Bai et al., 2024).

 

5.3     Making the Invisible Measurable in Utility Climate Governance

Recognizing and quantifying hidden carbon in water and wastewater utilities redefines how sustainability performance is measured and governed. Traditional reporting centered on water quality or compliance indicators often overlooks the embedded emissions that shape a utility’s total climate footprint. By integrating data on energy use, process-generated greenhouse gases, sludge management, and upstream chemical emissions, utilities move toward a comprehensive form of environmental accountability. This shift aligns carbon transparency with decision-making, positioning utilities not merely as service providers but as active contributors to climate mitigation and sustainable resource management (Johnston & Karanfil, 2013).

Embedding hidden carbon metrics within governance structures transforms them from passive disclosures into instruments of strategic change. When utilities institutionalize carbon accounting supported by robust data systems, periodic verification, and stakeholder engagement, they create an adaptive governance framework capable of guiding long-term decarbonization. This integration supports regulatory alignment, strengthens investor confidence, and ensures that operational improvements translate into measurable climate outcomes. As evidence continues to link transparency with environmental and financial resilience, utilities that make the invisible measurable exemplify a new generation of climate-responsive infrastructure institutions committed to accountability, efficiency, and continuous improvement (Bai et al., 2024).

 

6      The Climate-Smart Roadmap

A climate-smart approach provides utilities with a structured path to manage emissions across all scopes. The roadmap begins with establishing a comprehensive baseline that includes direct process emissions, energy-related emissions, and upstream embodied carbon. By quantifying CO₂, CH₄, and N₂O from treatment processes and linking them to energy and material flows, utilities can identify their most influential emission sources and set measurable reduction targets (Johnston & Karanfil, 2013).

Reducing energy intensity remains one of the most effective levers for decarbonization. Upgrading pumps, optimizing aeration systems, and using variable-speed drives can significantly lower electricity consumption and associated Scope 2 emissions. These improvements not only reduce carbon footprints but also enhance operational efficiency and reliability, creating financial savings that reinforce sustainability commitments (Bai et al., 2024).

Capturing and utilizing biogas transforms methane from a climate liability into a renewable energy asset. Well-designed anaerobic digestion systems can generate heat or power, offset grid electricity, and reduce fugitive methane emissions. This dual benefit strengthens both climate and energy resilience while contributing to local renewable-energy supply (Daelman et al., 2013).

Process redesign further advances emission control by minimizing nitrous oxide formation through alternative nitrogen-removal pathways, such as partial nitrification or anammox. Implementing anaerobic membrane bioreactors or verified nature-based systems can lower both energy intensity and greenhouse gas formation without compromising effluent quality (Duan et al., 2021).

For emissions that cannot yet be eliminated, utilities can pursue certified offsets through renewable-power procurement, local reforestation, or biosolids-to-biochar initiatives. These actions support carbon neutrality while generating environmental co-benefits that enhance community and ecosystem resilience (Ernst, 2025).

Finally, transparent disclosure under frameworks such as GRI 303/305, ISO 14064, or the Science-Based Targets initiative embeds accountability into governance. Public reporting not only aligns with investor expectations but also transforms technical progress into verifiable climate leadership. Together, these six steps create a continuous improvement cycle that integrates carbon measurement, reduction, innovation, and transparent communication across the entire water-wastewater value chain (Minea et al., 2025).

6.1    Synthesis and Implementation Framework: Operationalizing the Climate-Smart Roadmap

Translating the Climate-Smart Roadmap into practice requires connecting each action with measurable outcomes and governance structures. Establishing a carbon baseline provides the foundation for data-driven decision-making, while reduction, capture, redesign, and offset measures transform that baseline into a roadmap for continual improvement. By aligning these activities with Scope 1–3 pathways, utilities create a closed feedback loop where measurement informs mitigation, mitigation supports policy compliance, and disclosure reinforces accountability (Johnston & Karanfil, 2013).

Implementation depends on integrating carbon accounting into existing utility operations. This involves embedding energy and process-emission tracking into supervisory control and data acquisition (SCADA) systems, ensuring that operators can monitor CO₂e performance in real time. Strategic planning should link carbon reduction to capital investment cycles, so that infrastructure upgrades, such as aeration retrofits or sludge-to-energy facilities, are prioritized based on their emission-reduction potential and financial viability (Bai et al., 2024).

Cross-departmental collaboration is central to maintaining momentum. Engineering, finance, and sustainability teams must work within a unified governance framework to ensure that climate objectives influence operational and procurement decisions. Partnerships with suppliers and research institutions can also accelerate innovation in low-carbon materials, energy efficiency, and biogas utilization. Such collaboration extends the roadmap beyond compliance, embedding decarbonization within institutional culture and stakeholder relations (Minea et al., 2025).

Effective implementation concludes with transparent reporting and third-party verification. Utilities that communicate progress under internationally recognized standards strengthen both public trust and investor confidence. By linking disclosure with measurable performance indicators—such as kWh per cubic meter treated, CH₄ captured, or N₂O intensity per load—utilities demonstrate tangible progress toward net-zero alignment. This operational synthesis ensures that the Climate-Smart Roadmap functions not merely as a policy document but as a practical management system grounded in accountability and continuous improvement (Ernst, 2025).

 

6.2     Institutional Readiness and Governance Mechanisms for Carbon Accountability

Building institutional readiness for carbon accountability requires integrating climate objectives into the core functions of utility management. Effective governance begins with leadership commitment to carbon transparency and extends through structured responsibilities across departments. Senior management must ensure that carbon accounting is treated as a strategic priority, embedded within financial planning, infrastructure design, and performance evaluation systems. Establishing clear roles for environmental, financial, and operational teams ensures that data collection, verification, and reporting are consistent and traceable. This alignment promotes institutional maturity, enabling utilities to transition from reactive environmental compliance to proactive climate stewardship (Bai et al., 2024).

Governance mechanisms should combine accountability with adaptability. Utilities can adopt internal carbon management committees or ESG boards tasked with overseeing data integrity, target setting, and disclosure alignment. Periodic internal audits and third-party verifications under frameworks such as ISO 14064 help sustain credibility and prevent reporting fatigue. Moreover, establishing partnerships with municipalities, regulators, and academic institutions fosters a learning ecosystem where utilities can benchmark progress and share innovations. Embedding carbon considerations into procurement policies, staff training, and investment criteria reinforces institutional resilience, ensuring that decisions consistently reflect climate objectives. Over time, these mechanisms cultivate a culture of accountability in which carbon reduction becomes integral to operational excellence and public trust (Ernst, 2025).

6.3    Integrating Carbon Governance with Financial and Policy Instruments

Embedding carbon governance into financial and policy instruments enables utilities to align operational sustainability with long-term fiscal resilience. When utilities integrate carbon metrics into budgeting, procurement, and capital investment frameworks, they create a direct link between emissions reduction and financial performance. Projects such as aeration upgrades, biogas recovery systems, or leak-reduction programs can be prioritized not only for operational efficiency but also for their capacity to mitigate carbon-related financial risks. Incorporating internal carbon pricing or shadow pricing within project appraisals encourages cost transparency and helps quantify the economic value of emission reductions, reinforcing the business case for decarbonization (Bhardwaj et al., 2025).

At the policy level, carbon governance must remain compatible with evolving regulatory and market mechanisms. Participation in emissions-trading systems, renewable energy certificates, or performance-based financing programs can expand utilities’ access to capital while promoting accountability in carbon reporting. Utilities that adopt frameworks such as the Science-Based Targets initiative (SBTi) or comply with GRI and ISO standards gain credibility with investors and policymakers. Financial alignment with carbon goals also enables participation in green bonds or ESG-linked loans, which reward measurable progress toward decarbonization targets. These instruments collectively shift carbon management from a compliance exercise to a performance-driven strategy that supports institutional legitimacy, investor confidence, and long-term climate resilience (Minea et al., 2025).

 

6.4    Linking Carbon Data to Decision Intelligence and Digital Transformation

Digital transformation provides the foundation for turning carbon data into actionable intelligence. Utilities that deploy integrated monitoring and analytics platforms can track energy use, process efficiency, and emissions performance in real time. Advanced supervisory control and data acquisition (SCADA) systems, combined with digital twins and automated sensors, enable operators to visualize carbon flows across treatment stages and distribution networks. When linked to predictive analytics, these systems can identify inefficiencies such as excessive aeration energy or unplanned methane releases, allowing corrective actions before emissions escalate. This integration of operational data with carbon accounting tools improves accuracy, responsiveness, and overall governance quality (He et al., 2023).

Decision intelligence emerges when data systems move beyond monitoring to support scenario analysis and optimization. By simulating process adjustments—such as modifying aeration regimes, adjusting sludge retention times, or balancing oxygen transfer efficiency—utilities can quantify the emission impacts of operational changes before implementation. Coupling this with life-cycle and cost-benefit analyses enhances strategic planning by revealing both environmental and financial implications. Moreover, linking carbon performance data to management dashboards strengthens institutional learning and transparency, ensuring that leadership decisions are evidence-based and aligned with climate goals. This digital layer transforms carbon governance from static reporting into a dynamic management system, enabling continuous adaptation and progress toward net-zero objectives (Chen et al., 2024).

6.5    Human Capacity, Culture, and Stakeholder Engagement in the Decarbonization Journey

Technological and policy reforms alone cannot drive sustainable decarbonization without a parallel shift in human capacity and institutional culture. Building an informed and motivated workforce is essential to maintaining consistent carbon governance. Training programs that connect operational actions with climate outcomes help staff understand the significance of energy efficiency, emission reduction, and data accuracy. Embedding carbon literacy within technical and managerial training ensures that climate objectives are not perceived as external mandates but as integral components of professional excellence. Organizational cultures that recognize and reward innovation in low-carbon practices foster long-term commitment to sustainability goals and strengthen institutional identity (Aris et al., 2024).

Stakeholder engagement extends this transformation beyond the utility’s boundaries. Collaborative governance with local governments, communities, and regulators enhances transparency and shared accountability in emission reduction efforts. By communicating progress through public ESG reports and open data platforms, utilities can build trust and encourage behavioral change among customers and partners. Involving suppliers through low-carbon procurement standards and contractual incentives also expands the utility’s decarbonization influence across its value chain. Internally, inclusive dialogue among departments promotes a sense of ownership and mutual responsibility for carbon outcomes. Externally, community partnerships in areas such as tree planting, renewable energy adoption, or biochar production can demonstrate tangible local benefits from climate action. When supported by consistent communication and participatory governance, stakeholder engagement becomes a social foundation for sustaining the decarbonization journey (Ernst, 2025).

 

6.6     Evaluating Progress and Adaptive Learning in Climate-Smart Utilities

Sustaining a climate-smart transformation requires systems that measure, evaluate, and adapt to performance outcomes. Continuous assessment ensures that carbon-reduction strategies remain both effective and responsive to emerging conditions. Establishing clear key performance indicators (KPIs)—such as CO₂e intensity per cubic meter treated, energy use per functional unit, or methane recovery rates—allows utilities to monitor trends and identify deviations from expected performance. Regular benchmarking against peer utilities and regional or international standards helps validate progress and uncover innovation opportunities. These feedback loops convert performance evaluation into a learning process rather than a compliance exercise, enabling the institution to refine its methods as operational realities evolve (Minea et al., 2025).

Adaptive learning depends on linking data interpretation with decision-making structures. When evaluation results are integrated into annual reviews and investment planning, carbon performance becomes a criterion for resource allocation and project design. This approach promotes accountability by ensuring that lessons from audits, pilot projects, and community feedback inform both short-term actions and long-term strategy. Learning frameworks that combine quantitative metrics with qualitative insights—such as staff reflections, stakeholder feedback, or post-implementation reviews—strengthen institutional resilience by embedding flexibility and foresight into decision processes. Over time, these adaptive systems cultivate a knowledge culture that prioritizes continuous improvement and evidence-based governance, positioning utilities to remain agile in a rapidly changing policy and climate landscape (Bai et al., 2024).

6.7    Embedding Climate Intelligence into the Future of Water-Wastewater Governance

Embedding climate intelligence within the governance of water and wastewater systems marks a fundamental evolution in how utilities define sustainability. The transition from traditional compliance-based management to data-driven, climate-responsive governance requires integration across technology, finance, policy, and human behavior. Through the Climate-Smart Roadmap, utilities can systematically measure their emissions, optimize energy use, capture methane, redesign nitrogen processes, offset residual carbon, and disclose verified progress. Each of these steps transforms climate ambition into operational practice, aligning environmental accountability with service reliability and institutional legitimacy (Johnston & Karanfil, 2013).

Looking forward, the utilities that will lead in the next decade are those capable of embedding adaptive learning, transparent reporting, and stakeholder participation into the fabric of daily decision-making. Carbon governance must evolve from an annual reporting task into a continuous management process supported by digital intelligence, skilled personnel, and cross-sector collaboration. By linking emission metrics to financial instruments and community partnerships, utilities not only reduce their climate footprint but also strengthen public trust and investment confidence. In this integrated model, decarbonization becomes both an environmental and a developmental agenda—one that enhances resource efficiency, financial resilience, and social inclusion. The future of climate-smart water governance, therefore, lies in uniting scientific rigor with institutional empathy, ensuring that utilities contribute meaningfully to both planetary health and human well-being (Bai et al., 2024).

 

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