What are Scope 1, 2, and 3 Emissions?

• Greenhouse gas emissions are divided into three categories – Scope 1, Scope 2, and Scope 3.

• Companies need to cut emissions in all three areas to meet the global warming targets

• Scope 3 emissions are usually the toughest - emissions produced when customers use products

As we move forward into the new year, it is imperative that we reassess our commitments to achieving Net Zero and the target set forth by the Paris Agreement of limiting global temperature increases to below 2°C.

Steps taken by major organizations such as GAFA (Google, Apple, Facebook, and Amazon) reveal that carbon footprints are becoming increasingly important for businesses.

Apple, for instance, is aiming to have its supply chain become carbon-neutral by 2030 and expand its investments in clean energy and climate solutions around the world.

Additionally, nine huge companies, including Starbucks, Microsoft, Unilever, and Nike, have founded Transform to Net Zero, with the goal for the world's 1000 biggest companies to set goals by 2025, make plans to reach net zero by 2050, and accelerate the transition to a net-zero carbon economy.

An effective corporate climate change strategy requires a detailed understanding of a company’s GHG impact. A recent classification of the greenhouse emissions made by the Greenhouse Gas Protocol has made understanding the emissions easier. The classification divides the emissions from an organization into Scope 1, 2, and 3 based on direct and indirect sources.

Explained: Scope 1, 2 & 3 emissions

Organizations need to measure these scopes before they can make any progress on their net zero or carbon-neutral pledges. In other words, you can’t manage what you can’t measure.

• Scope 1 refers to the direct emissions from an organization's owned operations, including company-owned vehicles and buildings.

• Scope 2 refers to indirect emissions from purchased electricity, steam, heating, and cooling.

• Scope 3 refers to all other indirect emissions generated throughout an organization’s value chain.

The World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) created the Greenhouse Gas Protocol (GHGP) in 2001 to streamline emissions measurement and help organizations identify opportunities to reduce emissions.

The standards, protocols, and guidelines formulated by the Greenhouse Gas Protocol (GHGP) have been embraced by countless businesses, non-governmental organizations, and governments around the world as the global standard for generating and documenting a company-wide greenhouse gas inventory.

Under the GHGP, all emissions are broken down into three scopes. Many countries and organizations require scope 1 and 2 emissions reporting, whereas measuring scope 3 emissions is voluntary for most. Knowing the difference between each scope of emissions can help organizations make accurate assessments.

Let’s go more in-depth on each scope, how you can measure them, and why it’s important to know your organization’s emissions.

What are Scope 1 Emissions?

Scope 1 emissions refer to direct emissions from operations that an organization directly owns.

As organizations have direct control of emissions created on-site, scope 1 emissions are typically the easiest to manage and mitigate.

Scope 1 covers the following types of emissions:

• Stationary combustion: Emissions generated from combustion at a stationary source, such as emissions from boilers, generators, or other industrial processes. Stationary combustion includes emissions from the burning of fossil fuels, biogas, and biomass.

• Mobile Combustion: All vehicles owned or controlled by a firm, burning fuel (e.g. cars, vans, trucks), including the increasing use of “electric” vehicles (EVs).

• Fugitive Emissions: Leaks from gases (e.g. refrigeration, air conditioning units) which are a thousand times more dangerous than CO2 emissions.

• Process Emissions: Released during industrial processes, and on-site manufacturing (e.g. production of CO2 during cement manufacturing, factory fumes, chemicals).

What are Scope 2 Emissions?

Organizations can be held accountable for Scope 2 emissions, which are indirect emissions generated from purchased electricity, gas, steam, heat, or cooling used in their operations.

Although organizations do not control or own the sources responsible for these emissions, they are nonetheless important to report since they are indirectly caused by the organization.

As an example, while Scope 1 emissions refer to those created on-site at the office, Scope 2 emissions refer to those created at the power plant that provided the energy for that same office.

In most cases, Scope 2 emissions are reported using a location- and market-based method.

• Market-based method: utilizes information from contractual documents to estimate the emissions intensity of the energy that has been carefully selected by the consumer, such as renewable energy.

• Location-based method: estimates the emissions intensity based on the average emissions intensity of the grids in the vicinity of the consumer's energy consumption.

What are Scope 3 Emissions?

Scope 3 emissions refer to indirect emissions from activities occurring in an organization's value chain, both upstream and downstream, that it does not directly produce or consume.

According to GHG Protocol, these emissions are categorized into 15 distinct categories, each with its own methodology for measuring and calculating emissions.

Organizations must assess which categories are applicable to their operations and tailor their data collection and calculation methods accordingly. These categories are further divided into upstream and downstream activities.

• Supply chain emissions, including those associated with the extraction, production, and transportation of purchased materials and fuels, shall be taken into consideration.

• Emissions generated from the use of sold products and services must be assessed.

• Emissions from waste disposal, including waste generated from operations and from the production of purchased materials and fuels, and from the disposal of sold products at the end of their life, must be accounted for.

Types of Scope 3 Emissions

The detailed analysis of the types of Scope 3 emissions can be accessed from the Greenhouse Gas Protocol’s “Technical Guidance for Calculating Scope 3 Emissions”

The different types of Scope 3 emissions include:

Upstream Activities

• Category 1: Purchased goods and services

• Category 2: Capital goods used to provide, sell, store, or deliver products or services

• Category 3: Fuel and energy-related activities not counted for scopes 1 or 2

• Category 4: Upstream Transportation and distribution

• Category 5: Waste generated in operations and treated by a third party

• Category 6: Business travel

• Category 7: Employee commuting

• Category 8: Upstream Leased assets not counted for scopes 1 or 2

Downstream Activities

• Category 9: Transportation and distribution after the point of sale

• Category 10: Processing of sold intermediate products used to create a final product

• Category 11: Use of sold products

• Category 12: End-of-life treatment of sold products

• Category 13: Downstream Leased assets not counted for scopes 1 or 2

• Category 14: Franchises

• Category 15: Investments

Conclusion

The GHG Protocol's Scope 1, 2, and 3 emissions categories provide organizations with the tools necessary to measure their emissions and identify opportunities to reduce their impact. Companies need to cut emissions in all three areas to meet their net-zero and carbon-neutral pledges. By understanding their emissions, businesses can make informed decisions to reduce their impact and contribute to global climate goals.