Scope 1 covers activities directly related to an organization’s carbon dioxide emissions. Scope 2 deals with the indirect carbon dioxide emissions caused by the organization’s choice of electricity supplier. Lastly, Scope 3 includes almost everything not included in Scopes 1 and 2 within the inventory boundary.
In addition, there are three important points to keep in mind when reporting emissions from Scopes 1 through 3:
- Scopes 1, 2, and 3 are mutually exclusive, so there is no double counting. What has been reported in one scope should not be repeated in another.
- The organization should use consistent operational and organizational boundaries for all Scopes during data collection or inventory; and
- All GHGs reported in all Scopes must be converted to carbon dioxide equivalents (CO2e). Different GHGs have different global warming potentials (GWPs). To standardize the calculation, each GHG should be converted to its corresponding CO2 e based on its GWP.
What are Greenhouse gas emissions?
Greenhouse gas (GHG) emissions are gases that are regulated under the various agreements of the United Nations Framework Convention on Climate Change (UNFCCC). Each has a serious impact on global warming.
Among the seven major greenhouse gases considered under the Kyoto Protocol include:
- Carbon dioxide (CO2),
- nitrous oxide (N2O),
- methane, nitrogen trifluoride (NF3),
- as well as the 3 types of fluorinated gases (F-gases) such as sulphur hexafluoride (SF6), hydrofluorocarbons (HFCs), and perfluorocarbons (PFCS).
While most of these greenhouse gases occur naturally in the environment, CO2 emissions account for the largest share of all emissions at 81%. This is followed by methane (10%), nitrous oxide (7%), and fluorinated gases (3%). Each year the total greenhouse gas emissions demand a stronger commitment from leaders and businesses to reduce their GHG emissions.
To help companies become aware of their carbon footprint and eventually take action, the Greenhouse Gas Protocol has established some guidelines for greenhouse gas accounting standards.
Below are some of the basic terminologies used by the GHG Protocol.
What are the Scope 1 emissions?
Scope 1 emissions are all direct emissions that a company produces through its operations or activities. Those included in Scope 1 include:
- Stationary Combustions Emissions – these are typically emissions resulting from burning or incinerating solid, liquid, or gaseous materials at the source. Examples could include:
- Fuel consumption to generate energy or electricity;
- Steam generated during energy production, as in the case of geothermal energy production;
- Other natural gasses consumed to operate boilers, incinerators, heaters, etc.
- Fugitive Emissions – these are vapors or gases that accidentally escape from pressurized equipment. These emissions occur either due to bad equipment, leaks, or other unplanned events (e.g., leaks from refrigeration or air conditioning systems). Some of these emissions can be very hazardous to the environment.
- Mobile Combustion – this includes direct GHG emissions from owned or leased mobile sources (both on-road and non-road vehicles). They are located within the company’s inventory boundaries.
Some of the data typically collected under Scope 1 include:
- The total number of vehicles in the fleet and fuel consumption;
- The amount of coolant and air conditioning, and
- The amount of fuel or gas used in operations.
What are the Scope 2 emissions?
Scope 2 are indirect emissions from the type of energy consumed by the organization. They are referred to as “indirect emissions sources” because they are caused by the reporting organization’s activities. However, they occur at sources owned and controlled by an external supplier, in this case the electric utility.
Scope 3 aims to reflect the decisions made by the entities with respect to the type of electricity they purchase. The data collected under Scope 2 includes:
- Market-based emissions – emissions based on the company’s choice of electricity supplier or product, verified through contractual agreements (e.g., power purchase agreements); and
- Site-based emissions – emissions based on the average emission factor of the electricity grids (EGRIDS) to which the operation belongs.
Both of the above emissions are calculated using emission factors. It is a standard use to convert a given source’s GHG emissions into CO2 equivalents (CO2 e) relative to its sector, technology type, and/or fuel type.
For market-based emissions, the emission factor is determined per supplier and its renewable energy credits (RECs). For site-based emissions the emission factor depends on the average emission intensity in the area where the electricity is consumed. An example of this is the eGRID database in the USA.
What are Scope 3 emissions?
Scope 3 includes all of the company’s other indirect emissions in its supply chain that it does not necessarily have full control over. Scope 3 typically generates the largest carbon footprint. It includes all value chain emissions that may be owned or controlled by other companies.
The Corporate Value Chain Scope 3 Accounting and Reporting Standard is an assessment report that companies can use to evaluate their total value chain emissions. It also helps them identify areas or activities they can focus on to reduce their carbon emissions.
Scope 3 related emissions include
- Purchased goods and services
- Business travel
- Employee commuting
- Waste disposal
- Use of products sold
- Transportation and distribution (upstream and downstream)
- Capital expenditures
- Leased assets and concessions
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