The World Resources Institute/World Business Council for Sustainable Development (WRI/WBCSD) Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (GHG Protocol) provides a standardized approach for corporations to complete GHG emissions accounting. The GHG Protocol classifies GHG emissions into three categories: Scope 1, Scope 2, and Scope 3, which represent different sources of GHG emissions within an organization’s value chain. The GHG Protocol provides detailed guidance on quantification of Scope 1, 2, and 3 emissions. In the following sections, this article will provide a brief overview of each scope and offer tips that may assist in quantifying GHG emissions. For additional details, please refer to the guidance resources referenced throughout this article.
Scope 1
Scope 1 emissions are direct GHG emissions from an organization. They represent sources that are owned or controlled by the organization and can be calculated using two methods depending on how the organizational boundaries are drawn. The operational control method accounts for Scope 1 emissions from operations that the organization has full authority to implement operating policies. The equity share method accounts for Scope 1 emissions based on an organization’s ownership stake in those operations. Sources of Scope 1 emissions may include on-site fuel combustion, industrial processes or fugitive emissions. Scope 1 emissions are typically the simplest to identify and quantify because they result from activities within an organization’s operational or financial control.
Tips for Quantifying Scope 1 Emissions
1. Fuel Consumption
Identify all facilities, equipment, and vehicles that consume fuels such as natural gas, diesel, gasoline, or propane. Gather fuel usage data from utility bills, fleet management systems, or fuel purchase records.
2. Emission Factors
Use emission factors—such as those contained in 40 CFR Part 98 (Mandatory Greenhouse Gas Reporting), the EPA Emission Factors Hub, or The Climate Registry (TCR) to convert fuel usage data into GHG emissions. If possible, use the same emission factor source across your Scope 1 inventory for comparability over time. Supplier specific emission factors or fuel analyses should be used, if available, for non-traditional fuels.
3. Fugitive Emissions
Fugitive GHG emissions may result from leaks from refrigeration or air conditioning equipment. Quantification of fugitive GHG emissions may require maintenance records or refrigerant purchase logs. Quantification of fugitive emissions can be completed using the TCR protocol, which outlines three methods:
- Advanced mass balance method – most accurate and requires detailed data on refrigerant purchases, sales, storage, and changes in total equipment capacity.
- Simplified mass balance method – when the necessary data to use the advanced mass balance method is not available.
- Screening method – a simplified estimation method (SEM) used by multiplying the quantity of refrigerants used by default emission factors. Because default emission factors are highly uncertain, the resulting emissions estimates are not considered accurate yet considered a reasonable approximation if emissions from refrigerant systems comprise of less than 10% of a company’s Scope 1 emissions.
Scope 2
Scope 2 emissions are indirect GHG emissions associated with the consumption of electricity, heat, or steam purchased by your organization. These emissions occur at the facility where the electricity is generated but are attributed to the organization that uses it under Scope 2. The GHG protocol has a detailed guidance document for the calculation of Scope 2 emissions.
Tips for Quantifying Scope 2 Emissions
1. Purchased Electricity Data
Gather data on purchased electricity. This information can be found in the form of utility bills, supplier invoices, or building management systems. Check that usage data is complete and aligns with the reporting period.
2. Location-Based and Market-Based Calculation Methods
The Greenhouse Gas Protocol includes two methods for calculating Scope 2 emissions:
- Location-based method: Uses average emission factors from the electricity grid in the local region.
- Market-based method: Uses emission factors associated with specific electricity purchase agreements, such as supplier-provided data or renewable energy contracts.
According to the Greenhouse Gas Protocol Scope 2 Guidance, organizations can determine whether the market-based method applies by assessing whether differentiated energy products in the form of contractual instruments (including direct contracts, certificates, or supplier-specific information) are available in a given market.
3. Emission Factors
Emission factors for the location-based method are available in the U.S. EPA’s eGRID database. Select emission factors that correspond to the correct region and reporting year for accurate calculations. For the market-based method, emission factors result from the energy contract and are based on the method of energy generation. In the absence of specific market-based instruments available at the company location, locations in the U.S. must estimate market-based emissions based on the Green-e Residual Mix emission factors.
Scope 3
Scope 3 emissions include all other indirect GHG emissions from an organization’s activities that are not included in Scope 1 or Scope 2. These emissions occur in the value chain, both upstream and downstream from the organization. There are several challenges that arise when quantifying Scope 3 emissions:
1. Complexity and volume of dataA large quantity of data from many different sources or suppliers must be collected.
2. Lack of resourcesMany organizations do not have dedicated resources to manage and assess Scope 3 data. 3. Availability of dataThe sources of Scope 3 data are not under the control of the organization; therefore, it can be difficult to acquire due to a lack of internal recordkeeping practices. 4. Quality of dataThe quality of available emission factors for Scope 3 emissions is questionable, and inevitable data gaps may require the use of assumptions or proxy data.
Examples of Scope 3 emissions include emissions from the production of purchased goods and services, employee commuting, business travel, transportation and distribution, use of sold products, and end-of-life treatment of products. The Greenhouse Gas Protocol has separate Scope 3 guidance documents which discuss the 15 categories of Scope 3 emissions and specific considerations in detail.
Tips for Quantifying Scope 3 Emissions
1. Identify Relevant Categories
Review the 15 categories listed in the Greenhouse Gas Protocol to determine which are applicable to your operations. Consider both upstream and downstream activities and prioritize categories that are the most relevant to your organization first.
2. Identify Available Activity Data and Emission Factors
Identify what data is available for each relevant category. Primary data, like quantities purchased or miles traveled, usually comes from internal systems or suppliers. Secondary data, such as industry averages or life cycle databases, can be used when primary data is unavailable. Choose emission factors that match the activity type, and document data sources and assumptions.
3. Estimation Methods
Choose estimation methods based on the type and quality of data available. Spend-based methods use financial data and general emissions factors per dollar spent to quantify Scope 3 emissions. In the absence of any other data, spend-based methods can be used to screen each category to show which are significant and may require a more robust calculation. Average data methods apply industry emission averages to quantities such as purchased/used, produced/sold, or received/shipped. Value chain–specific methods rely on detailed supplier or product-specific emissions data and offer higher accuracy. Value chain-specific methods require engagement with the organization’s value chain (e.g., Procurement Policy, supplier and customer engagement, internal tracking of employee commute and travel). Hybrid methods combine elements of multiple approaches where available and can be used to fill gaps as needed. Due to the variability in Scope 3 data, it is important to document sources, assumptions, and methodologies clearly.
Note that the Scope 3 inventory is considered to be an iterative process, and the inventory may be refined over time based on availability of better-quality data.
Conclusion
Each of the three scopes presents its own challenges: Scope 1 and 2 emissions are data-driven, possibly requiring organized data collection systems to be installed. Scope 3 requires an analysis of upstream and downstream activities, value chain engagement, coordination between internal departments and external stakeholders, making quantification of Scope 3 emissions more resource intensive than Scope 1 and Scope 2. Following standardized approaches like those outlined in the Greenhouse Gas Protocol can help maintain accuracy, consistency, and comparability in your GHG emissions calculations. If you have questions about next steps, please reach out to Geoffrey Bright in Trinity’s Indianapolis office.
