Understanding Scope 2 Emissions

October 10, 2023
5 minutes

Understanding Scope 2 Emissions

Scope 2 emissions are indirect GHG emissions associated with the purchase of electricity, steam, heat, or cooling. Scope 2 represents one of the largest sources of GHG emissions globally, with generation of electricity and heat now accounting for at least a third of global GHG emissions. These emissions are categorised as indirect, as they are technically emitted from sources controlled by other entities (e.g a gas fired power plant), rather than the reporting entity.

So, what do Scope 2 emissions look like?

At least four types of purchased energy (collectively referred to as “Electricity”) are tracked in Scope 2:

  • Electricity: Almost all companies use electricity. It's used to operate machines, lighting, electric vehicle charging, and certain types of heat and cooling systems.
  • Steam: Formed when water boils, steam is a valuable energy source for industrial processes. It is used for mechanical work, heat or directly as a process medium. Combined Heat and Power (CHP) facilities (also called cogeneration or trigeneration) may produce multiple energy outputs from a single combustion process. Reporting companies purchasing either electricity or heat/steam from a CHP plant should check with the CHP supplier to ensure that the allocation of emissions across energy outputs follows best practices, such as the GHG Protocol Allocation of GHG Emissions from a Combined Heat and Power (CHP) Plant (2006).
  • Heat: Most commercial or industrial buildings require heat to control interior climates and heat water. Many industrial processes also require heat for specific equipment. That heat may either be produced from electricity or through a non-electrical process such as solar thermal heat or thermal combustion processes (as with a boiler or a thermal power plant) outside the business's operational control.
  • Cooling: Similar to heat, cooling may be produced from electricity or through the distribution of cooled air or water.

How do you account for scope 2 emissions?

Thankfully, it’s not rocket science to account for scope 2 emissions. For most businesses you’re performing a pretty straightforward calculation. The GHG Protocol Corporate Standard recommends multiplying activity data (kWhs of electricity consumption - likely on your bills) by source and supplier-specific emission factors to arrive at the total GHG emissions impact of electricity use.

The Corporate Standard puts forward two methods to account for Scope 2 emissions, one is called the location based method and the other is the market based method. 

The location-based method reflects the average emissions intensity of grids on which energy consumption occurs (using mostly grid-average emission factor data). Sumday has those averages, so you simply enter your consumption data (likely on your bill), select your location and this average will be applied. 

The market-based method reflects the GHG emissions associated with the choices you have made as to who your specific supplier is and the product you’ve purchased. For example, choosing a retail electricity supplier, a specific generator, a differentiated electricity product, or purchasing unbundled energy attribute certificates that are conveyed through agreements between you, the purchaser and the electricity provider.

Under the market-based method, you would be using the GHG emissions factor associated with the specific electricity contract you have, provided it meets the criteria under the protocol. The GHG Protocol’s Scope 2 Guidance provides details around the methods and the criteria. Where you are purchasing 100% renewable electricity, the emissions factor will generally be zero under the market-based method.

Are you interested to learn more about Scope 2 emissions? Check out chapter 4 of the Introduction to Carbon Accounting course in the Sumday Academy . You can jump in for free by starting a trial or book a demo with us.

What happens if you don’t get an electricity bill to see what the business consumes?

This is often the case if you’re renting an office space in a shared building - the fact it’s shared isn’t the problem (there’s a method for calculating your portion). The real issue is often that the company can’t even provide total consumption easily - that’s something most organisations would be working on resolving, particularly as accounting for emissions continues to be a regulatory requirement for larger companies. In this case, you can contact your landlord or co-working company and explain why you need this data and provide a deadline for it to be shared. If they refuse, you can leave (ok that’s bold) or you can estimate consumption and disclose the fact you’ve had to do that in your emissions report, listing the assumptions you’ve made. 

The wrap up on Scope 2 emissions

Scope 2 emissions are relatively straightforward to account for. By having a clear understanding of electricity consumption, businesses can identify opportunities to improve operations and reduce emissions. While it’s stating the obvious - to reduce scope 2 emissions you need to use less electricity where possible and move to renewable electricity. You can use the business case templates and tutorials in the Sumday Academy to understand the potential benefits.