Understanding Scopes 1, 2, and 3: A Guide to Calculating Emissions

Understanding Scopes: An Overview

When it comes to greenhouse gas (GHG) emissions, businesses need to accurately measure and track their emissions to effectively reduce their carbon footprint. GHG emissions are categorized into three scopes: scope 1, scope 2, and scope 3.

Scope 1

Scope 1 emissions, also known as direct emissions, are greenhouse gases (GHG) emitted from sources owned or controlled by an organization. Examples of sources that generate Scope 1 emissions include combustion in owned boilers, furnaces, and vehicles. 

These emissions occur as a direct result of the organization’s activities and are the most straightforward to measure and report among the three scopes.

Calculating Scope 1

To calculate Scope 1 emissions, organizations must first identify all of their owned and controlled emission sources. After identifying these sources, the organization must collect activity data such as fuel consumption or operating hours of combustion devices. 

This data is then converted into GHG emissions by applying appropriate emission factors, which are coefficients that translate activity data into GHG emissions.

For example, if a company uses natural gas in a boiler, it will need to know the amount of natural gas consumed and the emission factor for natural gas. The emission factor is typically expressed in units of GHG emissions per unit of activity (e.g., kg CO2e per MMBtu of natural gas consumed). Multiplying the activity data with the emission factor provided by relevant guidelines or databases will then give you the total Scope 1 emissions.

In summary, calculating Scope 1 emissions requires three main steps:

• Identify all owned and controlled emission sources
• Collect activity data for each source
• Apply emission factors to activity data to estimate GHG emissions

Scope 2

Scope 2 emissions refer to indirect greenhouse gas (GHG) emissions that result from the purchase of electricity, steam, heat, or cooling by an organization. These emissions are produced offsite but are associated with an organization’s energy consumption. 

As opposed to Scope 1 emissions, which are direct emissions from sources owned or controlled by the organization, Scope 2 emissions give insight into the environmental impact of an organization’s choice of energy provider and its efforts to reduce energy consumption

Calculating Scope 2

When calculating Scope 2 emissions, organizations should follow standardized protocols, such as those provided by the Greenhouse Gas Protocol or the U.S. Environmental Protection Agency (EPA). The process typically involves the following steps:

• Measure energy consumption: Gather data on electricity, steam, heat, or cooling consumed by the organization. This information can usually be found in utility bills or meter readings.
  
  
• Determine emission factors: Identify the appropriate emission factors for each type of energy using regional or national databases, such as the EPA’s eGRID or the International Energy Agency (IEA) database. If specific factors are not available, default values can be used as a last resort.
  
  
• Calculate emissions: Multiply the energy consumption by the corresponding emission factors, resulting in the total Scope 2 emissions in units of carbon dioxide equivalents (CO₂e). For example
  

Total Scope 2 emissions = electricity consumption x emission factor (electricity) + steam consumption x emission factor (steam) + …

• Report and monitor: Organizations should report their Scope 2 emissions transparently and consistently, tracking changes over time to evaluate the effectiveness of energy efficiency measures and the impact of sourcing cleaner energy.

By understanding and calculating Scope 2 emissions, organizations gain valuable insights into their indirect environmental impact and can implement strategies to reduce their carbon footprint.

Scope 3

Scope 3 emissions refer to all indirect emissions that occur in a company’s value chain, both upstream and downstream, excluding those that are already included in Scope 2. 

These emissions are generally more difficult to measure and manage, but they can make up a significant portion of a company’s overall greenhouse gas emissions. 

Examples of Scope 3 emissions include purchased goods and services, waste generated in operations, business travel, and employee commuting source.

Calculating Scope 3

To calculate Scope 3 emissions, companies need to identify and quantify the relevant emission sources within their value chain. The Greenhouse Gas Protocol provides a comprehensive list of 15 categories of Scope 3 emissions for guidance, including:

• Purchased goods and services
• Capital goods
• Fuel- and energy-related activities (not included in Scope 1 and 2)
• Upstream transportation and distribution
• Waste generated in operations
• Business travel
• Employee commuting source

Calculating Scope 3 emissions can be complex, as it requires collecting data from various sources, such as suppliers and other value chain partners. Companies often need to rely on estimation methods or average emission factors when exact data is unavailable.

 The Greenhouse Gas Protocol also provides tools and guidance on calculating Scope 3 emissions to help companies accurately report and disclose this information.

Comparing Scopes 1, 2, and 3

All three scopes of emissions are vital in tracking a company’s greenhouse gas (GHG) emissions and contribute to measuring progress in reducing global temperature rises1. To better understand their differences, let’s briefly compare Scopes 1, 2, and 3.

Scope 1 emissions refer to direct emissions generated from sources owned or controlled by the reporting company2. These emissions often come from:

• Combustion of fossil fuels in boilers, furnaces, or vehicles
• Fugitive emissions from refrigeration, air conditioning, or other equipment
• Process emissions from chemical reactions during manufacturing3

Scope 2 emissions are indirect emissions caused by the consumption of purchased electricity, heat, or steam2. It is important for companies to account for these emissions as they often make up a significant portion of their carbon footprint4. Scope 2 emissions typically involve:

• The generation of purchased electricity
• The production of purchased heat or steam

Scope 3 emissions involve other indirect emissions that occur due to a company’s activities but are not under their direct control2. These emissions often occur throughout a company’s value chain and can be complex to assess5. Examples include:

• Upstream activities such as extraction, production, and transportation of raw materials
• Downstream activities like waste management and product use by consumers
• Business travel, employee commuting, and leased assets6

It is crucial for companies to measure and report on all three scopes to effectively understand and manage their greenhouse gas emissions. This information can then be used to develop strategies and set targets to reduce emissions, contributing to a more sustainable future.

Calculating these emissions can be challenging, but various techniques and tools are available to aid businesses in the process. The GHG Protocol, for instance, provides guidelines and methodologies for measuring and reporting Scope 1, 2, and 3 emissions.

Once a company has a clear understanding of its emissions across all three scopes, it can identify areas of improvement and implement targeted strategies for emission reduction. This may include energy efficiency upgrades, renewable energy procurement, or working with suppliers and partners to reduce their emissions. Monitoring progress and regularly reviewing data will ensure that the company remains on track to achieve its sustainability goals.