Introduction to Scope 2 Emissions
What is Scope 2 Emissions?
According to the GHG protocol, the purchasing of energy sources by the reporting company—such as electricity, heat, steam, and cooling—is categorized as scope 2. For the producing company, emissions resulting from the production of these energy forms fall under Scope 1, and for the consuming industry, they are classified as indirect emissions (Scope 2). Heat and power production currently account for at least one-third of global GHG emissions, making Scope 2 one of the largest sources of GHG emissions. The Corporate Standard mandates that businesses should quantify emissions from the use of power, steam, heat, and cooling that has been purchased or consumed during business activities. These emissions are classified under “scope 2 emissions” and are not directly contributed by the reporting entity hence are called indirect emissions.
- If a business generates power on-site and consumes it, the industry must disclose emissions related to that within scope 1.
- An industry that purchases power from a local grid or a private supplier is required to report the emissions under scope 2.
- Purchase of energy can occur in different forms such as electricity, Heat, Steam, and Cooling
Scope 2 emissions can be further categorized as per the emission sources:
Energy Attribute Certificates– Energy attribute certificate carries with them an emission factor, that factor can be used to quantify emissions in the market-based method. Eg:- Renewable energy certificates (RECs) or Guarantees of Origin (GOs) in Europe.
Contracts – an agreement regarding the power supply, such as a power purchase agreement (PPA), to purchase electricity from a specified generating facility, which may be located at the organization’s facility, at a nearby location with a direct line connection to the organization, or located remotely. If there are no certificates available, the contract itself carries the emission factor associated with the generation facility, regardless of the energy resource used.
Residual Mix Factor – The emissions and generation that are left over after supplier-specific factors, contracts, and certificates have been claimed and subtracted from the computation are represented by the emission factor.
REC – A Renewable Energy Certificate (REC) is the tool that energy users must use to support claims of using renewable power on a shared grid, regardless of whether the electricity is generated on-site or from off-site resources.
Bundled: Bundled RECs are those that are sold along with the associated energy.
Unbundled: They’re referred to as unbundled RECs if they’re sold independently of the underlying energy. All across the country, unbundled renewable energy certificates (RECs) can be obtained from a single resource type, like wind or solar power.