What are scope 1,2 and 3 of CO2 emissions?

written by

Christopher Scheubel

When it comes to ESG, the term Scope 1, 2 and 3 emissions also often comes up. But the various greenhouse gas (GHG) emissions may still be a mystery to many companies. What is the difference between the different scopes and direct and indirect emissions? And what does the GHG Protocol have to do with the emission scopes?

Blog >

What are scope 1,2 and 3 of CO2 emissions?

What are scope 1,2 and 3 of CO2 emissions?

Here we clarify all your important questions on the subject of emissions:

  • What are Scope1, 2 and 3 emissions? What are direct and indirect emissions?
  • (Direct) Scope1 emissions
  • (Indirect) Scope 2 emissions
  • (Indirect) Scope 3 emissions

What are scope 1, 2 and 3 emissions? What are direct and indirect emissions?

The GHG Protocol Corporate Standard defines three types of greenhouse gas emissions, as shown in the infographic below:

Scope 1, 2 and 3 emissions of a company

  • Scope 1 (direct emissions): The emission sources are owned or controlled by the reporting company.
  • Scope 2 and Scope 3 (indirect emissions): Emission sources owned or controlled by another company, but resulting from the activities of the reporting company. Scope 2 is purchased energy, while Scope 3 includes all other indirect emissions.

Companies using the GHG Protocol are required to report on Scope 1 and 2 emissions. Scope 3 reporting is voluntary, but recommended, especially since Scope 3 can account for more than 90% of a company's emissions. For example, almost 100% of Apple's emissions are Scope 3.

Scope 1 emissions

Scope1 emissions are direct emissions from sources owned or controlled by the reporting company. Examples include fossil fuels burned at the company's site or in its vehicle fleet. Scope 1 emissions are divided into four categories:

  • Stationary: Emissions from the combustion of fuels in a facility that generates electricity, heat, or steam (e.g., boilers, turbines, furnaces, incinerators, etc.). All fuels that produce GHG emissions must be included in Scope 1.
  • Industrial processes: Emissions released during the production or processing of materials or chemicals such as cement, aluminum, ammonia, waste processing, etc.
  • Mobile: Emissions from the combustion of fuels in company-owned or controlled mobile sources (e.g. trucks, ships, cars, aircraft, mobile machinery, etc.). Note that electric vehicles may fall under Scope2 emissions.
  • Fugitive: intentional or unintentional release of GHGs during the operating life of facilities (e.g., hydrofluorocarbon emissions from refrigeration and air conditioning systems, leakage from joints/seals, methane emissions fromcoal mines and venting, fire suppression systems, methane leakage fromgas transport, etc.).

The GHG Protocol provides calculation tools and online training for companies to calculate emissions using the Corporate Standard.

Scope 2 emissions

Scope2 emissions are indirect emissions caused by the consumption of purchased energy such as electricity, heating or cooling. This includes energy purchased for the operation of the company or the operation of its own vehicle fleet. Scope 2 is indirect because the emissions result from the reporting entity's energy use but are released outside of the facilities it controls. Capturing Scope 2 emissions is important because nearly 40% of the world'sGHG emissions are due to energy production, and half of that energy is consumed by businesses. Purchased energy also typically offers companies the greatest opportunities for savings. Examples include implementing energy efficiency measures, participating in green electricity markets, or installing on-site combined heat and power plants.

There are two methods for calculating Scope 2: a market-based or a site-based approach. They represent different ways of "allocating" the GHG emissions that result from power generation to the end users of a particular grid. The market-based approach reflects emissions from a specific electricity supplier or a single electricity product selected by the reporting entity. The location-based approach reflects the average emissions intensity of the networks where electricity consumption takes place.

The GHG Protocol provides comprehensive guidance and online training for companies on calculating Scope 2 emissions using both approaches.

Scope 3 emissions

Scope3 emissions are the remaining indirect emissions resulting from a company's activities that are not related to purchased energy. Examples include production of purchased materials, business travel, product distribution, and end-of-life treatment. There are 15 categories of Scope 3 emissions, divided into upstream and downstream activities:

 

Scope3 categories: Upstream activities no. 1-8

These are indirect GHG emissions associated with purchased or acquired goods and services up to the point of receipt by the reporting entity.

Scope3 categories: Downstream activities no. 9-15

These are indirect GHG emissions related to goods and services sold that occur after they have been sold by the reporting entity and/or control has been transferred from the reporting entity to another entity.

  1. Purchased goods and services comprise the upstream emissions of purchased goods and services. This includes the extraction, production and transportation of goods and services purchased by the reporting company in the reporting year that are not included in the other upstream categories.
  2. Capital goods, sometimes referred to as capital assets, are end products with a longer life that are used by the company to manufacture or provide a product or service. Examples include plant, machinery, buildings, equipment, and vehicles. This categoryincludes all upstream emissions resulting from the extraction, production, and transportation of capital equipment acquired by the reporting entity during the reporting year. Note that emissions from the use of capital goods are included in either Scope 1 (for fuel consumption) or Scope 2 (for electricity consumption).
  3. Fuel and energy-related activities not included in Scope 1 or 2. This includes upstream emissions of purchased fuels and electricity by the reporting entity. Examples include coal mining, fuel refining, natural gas extraction/distribution, etc.
  4. Upstream Transport and distribution of products purchased by the reporting company from upstream suppliers in the reporting year. This includes emissions from the transportation of purchased products by air, rail, road and ship, as well as from third-party transportation and distribution services and the storage of purchased products.
  5. Waste generated in operations includes emissions from the disposal and treatment by third parties of waste from the reporting entity's own or controlled operations during the reporting year. Examples include disposal at a landfill, wastewater, incineration, composting, etc.
  6. Business travel includes emissions generated when employees travel for business purposes in vehicles owned or operated by third parties. Examples include air travel, rail travel, bus travel, rental cars, etc.
  7. Employee commuting includes emissions caused by employees commuting between home and work. Examples include travel by car, bus, train, plane, subway, etc. Companies may also include in this category emissions from employees who telecommute.
  8. Upstream leased assets include emissions from operational assets leased by the reporting company in the reporting year and not already included in the scope 1 or 2 inventories. In this case, the reporting entity is the lessee.
  9. Downstream Transport and distribution of products sold in vehicles and facilities not owned or controlled by the reporting company in the reporting year. This includes downstream emissions from the transportation of products sold by air, rail, road and ship, as well as from third-party transportation and distribution services and the storage of products sold.
  10. Processing of products sold are the emissions generated during the processing of intermediate products in the reporting year. Intermediates are precursors to final products or services that must be further processed before they can be used by the end consumer. An example would be an engine contained in a car. The scope 3 emissions of the reporting company here include the scope 1 and 2 emissions of the downstream partners in the value chain, such as the car manufacturer.
  11. Use of products sold includes emissions from the use of goods and services sold by the reporting company in the reporting year. The reporting company's Scope 3 emissions here include Scope 1 and 2 emissions from end users. There are two types of use phase emissions - direct and indirect. Direct use phase emissions include products that directly consume energy (e.g., cars, data centers) and fuels (e.g., natural gas, coal), as well as products that contain or release greenhouse gases during use (e.g., refrigeration equipment, fertilizers). Indirect emissions in the use phase include products that indirectly consume energy during use (e.g., clothes that need to be washed and dried, food that needs to be refrigerated). Reporting companies must report direct use phase emissions, while indirect use phase emissions are optional.
  12. End-of-life treatment of sold products includes the total expected emissions from waste disposal and end-of-life treatment of products sold by the reporting company in the reporting year. Examples include landfilling, incineration, recycling, etc. If the product sold is an intermediate product, the reporting company should consider the emissions at the end of the life cycle of the intermediate product and not the final product.
  13. Downstream leased assets include emissions from operating assets owned by the reporting entity and leased to other entities in the reporting year that are not already included in Scope 1 or 2 inventories. In this case, the reporting entity is the lessor.
  14. Franchises include emissions from the operation of franchises that are not included inScope 1 or 2 for the reporting entity.
  15. Investments include issues related to the reporting entity's investments that are not included in Scope 1 or 2 for the reporting entity. This category mostly refers to investors, banks and other financial institutions.

The GHG Protocol provides comprehensive guidance and online training for companies on calculating Scope 3 emissions.

Book a meeting

Talk to an expert. 🚀