What Are Scope 1, 2, and 3 Emissions?

In our previous newsletter, we delved into the world of carbon accounting, a critical concept in today's environmentally-conscious landscape. This week, we turn our attention to the scopes of emissions, a key component in understanding greenhouse gas (GHG) emissions and their impact on global warming.

With the ultimate goal of achieving net zero and carbon neutrality, businesses must be well-versed in the Greenhouse Gas Protocol (GHGP), the gold standard for carbon accounting that categorizes emissions into three distinct scopes.

The GHGP, established in 2001 as an independent, non-governmental organization, offers a standardized approach for businesses to manage and calculate their emissions, paving the way for effective climate policies and regulations. By grasping the full scope of emissions—from direct emissions produced by a company's own operations to indirect emissions linked to its value chain—organizations are better positioned to create and execute strategies that combat climate change and minimize GHG emissions.

Keep in mind that carbon dioxide (CO2) is just one type of GHG, but the GHGP's carbon accounting framework encompasses all GHGs. This comprehensive system for measuring and calculating emissions has given rise to platforms like Net0, which leverage data from businesses to inform their mitigation efforts. Join us as we explore these crucial scopes of emissions and their implications for our global environment.

What are scope 1, 2, 3 emissions exactly?

The categorization of scopes is based on two essential factors that play a vital role in comprehending a company's contribution to greenhouse gas emissions:

1. The ownership of the emissions in question.
2. The extent of control exercised over emission levels at each stage.

By recognizing these aspects, organizations can effectively evaluate their environmental impact and develop focused strategies to mitigate it.

Scope 1 emissions - direct emissions from owned or controlled sources

Scope 1 emissions refer to direct emissions generated during a production process involving assets owned and controlled by a company, such as boilers, furnaces, emissions from machinery and equipment, and fuel-consuming vehicles.

Scope 2 emissions - indirect emissions from acquired services

Scope 2 emissions encompass indirect emissions that stem from the generation of purchased electricity, heating, cooling, gas, steam, and electric vehicles.

Mandatory reporting of Scope 1 and 2 emissions is a common requirement for numerous businesses worldwide.

Scope 3 emissions - all other indirect emissions that occur in a company’s value chain?

Scope 3 emissions, also known as value chain emissions, include all indirect greenhouse gas emissions that arise both upstream and downstream in a company's value chain. It's important to recognize that one organization's scope 3 emissions might be another entity's scope 1 and 2 emissions.

Although companies may not have direct control over scope 3 emissions, they can still impact the activities that produce these greenhouse gases. For example, logistic operations depend on shipping arrangements made among pre-production stages, the reporting company, and the final distribution centers. Addressing scope 3 emissions, which encompass both upstream and downstream emissions, often requires collaboration with multiple stakeholders and businesses throughout the value chain. Companies can choose suppliers and vendors based on their environmentally-friendly practices, thereby integrating greenhouse gas reduction strategies into their reporting.

To avoid double counting emissions across categories, the 15 separate scope 3 categories are designed to be mutually exclusive. This structure ensures precision in evaluating an organization's environmental footprint and aids in the creation of well-rounded emissions reduction strategies.

Upstream emissions?originate during pre-production stages prior to reaching the reporting company's facility, encompassing materials acquisition and preliminary processing emissions.

These emissions can be summarized into 8 categories:

1. Purchased goods and services - Extraction, production, and transportation of procured goods and services, both production-related and non-production-related.
2. Capital goods - Extraction, production, and transportation of long-lasting goods used in manufacturing, service provision, and storage.
3. Fuel and energy-related activities - Extraction, production, and transportation of fuels and purchased energy, excluding scope 1 and 2 emissions.
4. Upstream transportation and distribution - Transportation and distribution of purchased products and services, including logistics and third-party warehousing.
5. Waste accumulated in operations - Disposal and treatment of waste generated by the reporting entity's operations, accounting for other GHGs like CH4 and N2O.
6. Business travel - Transportation of employees for business-related activities, including hotel stays, waste, and energy usage during trips.
7. Employee commuting - Transportation of employees between homes and worksites, covering various transportation modes.
8. Upstream leased assets - Operation of assets leased by the reporting entity, excluding scope 1 and 2 emissions to prevent double counting.

Downstream emissions?occur after a product departs from the reporting company's facility, encompassing aspects such as distribution, product use, and product lifecycle. These emissions predominantly relate to the goods and services sold by the company. Downstream interventions primarily hinge on product and service design, as well as modifications in consumer behavior.

These emissions encompass 7 categories:

1. Downstream transportation and distribution - Emissions from product transportation, distribution, and storage between the organization and end consumer.
2. Processing of sold products - Scope 1 and 2 emissions from downstream companies during production processes.
3. Use of sold products - Emissions generated by customers during product usage over its life expectancy.
4. End-of-life treatment of sold products - Emissions from waste disposal and treatment of products at the end of their life.
5. Downstream leased assets - Scope 1 and 2 emissions from the operation of assets owned by the organization and leased to others.
6. Franchises - Scope 1 and 2 emissions from the operation of the organization's franchises.
7. Investments - Emissions from the operation of investments, including equity, debt, and project finance.

Assessing these categories helps organizations create a comprehensive emissions inventory, identify their total emissions, and implement effective strategies for reducing greenhouse gases.

Leveraging Net0 carbon management tool to measure all scopes of emissions

To accurately and comprehensively measure greenhouse gas (GHG) emissions, businesses can leverage the Net0 carbon management tool, designed to optimize and streamline the process for organizations across various industries and sizes.

Efficient Data Collection: Net0 simplifies data collection for all scopes of emissions, enabling companies to gather information from various sources. The vendor outreach program allows data collection from suppliers throughout the supply chain. Granular data for scope 1 and 2 emissions can be examined by location, department, and team for a complete understanding of a company's carbon footprint.

Automated Calculations and Precise Data: Net0 automates emission calculations, providing a clear overview of a company's carbon emissions. With over 350 API integrations, including ERP systems, Net0 sources accurate data directly from utility providers and other sources. Automation and AI reduce the error rate in emissions data by up to 45%, offering reliable data for sustainable progress and effective carbon reduction strategies.

Tailored Reporting: Net0's customizable reporting features enable businesses to generate detailed, relevant reports that meet stakeholder requirements, aligning with regional climate regulations and industry standards.

Emission Reduction Planning: Net0 helps identify significant emission sources, assisting in creating targeted reduction plans and monitoring progress over time.

Benchmarking and Progress Tracking: Net0 allows businesses to set benchmarks for emission reduction goals, tracking progress against industry standards and competitor performance.

Integration with Other Sustainability Initiatives: Net0 can integrate with other sustainability initiatives and tools, coordinating climate action strategies across different aspects of operations.

By using the Net0 carbon management platform, businesses can effectively measure all scopes of emissions and work towards a sustainable, carbon-neutral future. The tool's streamlined approach ensures organizations can readily comply with evolving climate regulations, meet stakeholder expectations, and remain competitive in an eco-conscious market.

Book a demo

Net0 empowers businesses to accurately measure all three scopes of carbon emissions and implement strategies to reduce those emissions, ultimately achieving carbon-neutral status.?Schedule a demo?with us today to discover how Net0 can transform your organization's sustainability efforts.

This article has been adapted from?the original piece?published on net0.com

Recommended reading:

For further information and a deeper understanding of carbon accounting, we highly recommend reading?our comprehensive blog?and?downloadable resources?on the subject.

? Article:?How to Reduce Upstream Emissions With the Gold Standard Framework for Supplier Engagement

? Article:?GHG Reporting: Everything You Need to Know

? Article:?11 Reasons Net0 Is the Best Carbon Accounting Platform

? White Paper:?How Net0 Brings Businesses Towards Carbon Neutrality in 5 Steps