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Understanding the Differences: Scope 1 vs Scope 2 vs Scope 3 Emissions

Scope 1 vs 2 vs 3

Sustainability is not a milestone but a journey, a long path that gets paved with continuous efforts towards making things better with all aspects of Environmental, social and governance.  

Some of the world’s largest corporations have carbon footprints that rival entire countries. For example, the combined annual emissions of the largest 100 companies have been reported to be responsible for more than 70% of the world’s greenhouse gas emissions.

Understanding the carbon footprint of an organization is crucial. The Greenhouse Gas Protocol categorizes emissions into three scopes – Scope 1, Scope 2, and Scope 3 – each representing different sources of emissions. This distinction is vital for organizations aiming to reduce their environmental impact. Let’s dive into the differences between Scope 1, 2, and 3 emissions and explore how they can be measured effectively. 

Feature  Scope 1 Emissions  Scope 2 Emissions  Scope 3 Emissions 
Definition  Direct emissions from owned or controlled sources.  Indirect emissions from the generation of purchased electricity, heat, steam, or cooling.  All other indirect emissions that occur in a company’s value chain. 
Examples  Emissions from company vehicles, manufacturing processes, and on-site fuel combustion.  Emissions associated with the energy purchased for company buildings, factories, and offices.  Emissions related to business travel, employee commuting, waste disposal, production of purchased materials, and end-use of sold products. 
Control  Direct control by the company.  Partial control; emissions occur at the facility where energy is generated, not consumed.  Limited control; involves activities not owned or directly controlled by the company. 
Measurement  Based on direct fuel consumption and operational data.  Requires data on purchased energy and application of regional emission factors.  Complex; often requires data collection from suppliers, estimations, and use of industry averages. 
Mitigation Strategies  Efficiency improvements, switching to cleaner fuels, investing in renewable energy.  Purchasing green energy, energy efficiency upgrades, energy contracts for renewable sources.  Engaging with suppliers on sustainability, product circularity, influencing consumer behavior. 
Regulatory Focus  EU Emissions Trading System (ETS), Clean Air Act (US), specific national regulations.  Energy Efficiency Directive (EU), State-based Renewable Portfolio Standards (US).  Streamlined Energy and Carbon Reporting (SECR) (UK), California SB 1383 (US) for supply chain. 
Reporting Frameworks  GHG Protocol Corporate Standard, ISO 14064-1.  GHG Protocol Corporate Standard, ISO 14064-1.  GHG Protocol Scope 3 Standard, CDP (formerly Carbon Disclosure Project). 
Impact on Sustainability Goals  Reflects operational efficiency and environmental stewardship.  Commitment to reducing reliance on fossil fuels, supporting renewable energy markets.  Broader influence on sustainability across the value chain, comprehensive ESG practices. 

Scope 1 Emissions: Direct Emissions from Owned Sources 

Scope 1 emissions are direct greenhouse gases (GHG) emissions from sources that are controlled or owned by an organization. This includes emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc., as well as emissions from chemical production in owned or controlled process equipment. 

  • Examples: If a company owns a fleet of vehicles, the exhaust emissions from these vehicles are considered Scope 1. Similarly, emissions from a furnace at a manufacturing plant owned by the company also fall under Scope 1. 

Scope 2 Emissions: Indirect Emissions from Purchased Electricity 

Scope 2 covers indirect GHG emissions from the consumption of purchased electricity, heat, steam, or cooling. These emissions are considered indirect because they occur at the place where the electricity (or other energy form) is generated, not where it’s consumed. 

  • Is electricity Scope 1 or 2? Electricity falls under Scope 2 because the emissions are produced at the power plant that generates the electricity, not at the company consuming the power. 
  • Examples: When a company purchases electricity to light its office building, the emissions produced by the power plant generating that electricity are Scope 2 emissions attributed to the company. 

Scope 3 Emissions: All Other Indirect Emissions 

Scope 3 emissions are all indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions. Scope 3 emissions often represent the largest source of GHG emissions and can offer the most significant opportunities for GHG reductions. 

  • What is considered Scope 3 emissions? Scope 3 includes emissions associated with the production of purchased goods and services, business travel, employee commuting, waste disposal, use of sold products, and more. 
  • Examples: For a clothing retailer, Scope 3 emissions could include the emissions from producing the clothes in factories (not owned by the retailer), the emissions from employees commuting to work, and the emissions associated with the disposal of unsold clothing. 

Measuring Scope 1, 2, and 3 Emissions 

Measuring Scope 1 Emissions: To measure Scope 1 emissions, companies need to track the consumption of all fuels within their controlled assets and apply emission factors specific to each type of fuel. This includes natural gas, diesel, gasoline, coal, and any other combustible materials. 

Measuring Scope 2 Emissions: Organizations measure Scope 2 emissions by collecting data on their consumption of purchased energy and applying emission factors that reflect the mix of energy sources used to generate that energy. This requires understanding the grid-specific factors or, if available, specific data from energy suppliers. 

Measuring Scope 3 Emissions: Given its complexity, measuring Scope 3 emissions often involves leveraging supplier and industry data, conducting surveys, and using estimation methodologies. Organizations must engage with their suppliers and customers to gather relevant data and apply estimation techniques where direct data is not available. 

In conclusion, tackling the challenges of Scope 1, 2, and 3 emissions management is essential for any organization aspiring to lead in the era of sustainability. By leveraging tools like Lythouse for comprehensive emissions measurement and management, companies can not only safeguard their environmental legacy but also drive forward towards a more sustainable and prosperous future. Engaging in this effort is not just a corporate responsibility; it’s a strategic opportunity to contribute to a healthier planet for future generations. Book a demo today!

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