How to Measure and Reduce Scope 1, 2 and 3 Emissions

Climate change is one of the most pressing challenges of our time, and businesses have a crucial role to play in tackling it. To do so, they need to measure and reduce their greenhouse gas (GHG) emissions across their entire value chain. This is where Scope 1, 2 and 3 emissions come in.

Scope 1, 2 and 3 emissions are a way of categorising the different kinds of carbon emissions a company creates in its own operations, and in its wider value chain. The term first appeared in the Greenhouse Gas Protocol of 2001 and today, Scopes are the basis for mandatory GHG reporting in the UK.

Scope 1 emissions are GHGs released directly from a business, such as from burning fuel in vehicles or boilers. Scope 2 emissions are indirect GHGs released from the energy purchased and used by a business, such as electricity or heat. Scope 3 emissions are all other indirect GHGs that occur in the upstream and downstream activities of a business, such as from suppliers, customers, waste or travel.

Some examples of Scope 1, 2 and 3 emissions for different types of businesses are:

• A manufacturing company: Scope 1 emissions from fuel combustion in boilers or generators; Scope 2 emissions from electricity used in production processes; Scope 3 emissions from raw materials, transportation, packaging or product use.
  
• A service company: Scope 1 emissions from company vehicles or refrigerants; Scope 2 emissions from electricity or heat used in offices; Scope 3 emissions from business travel, employee commuting, paper or catering.
  
• A public sector organisation: Scope 1 emissions from fleet vehicles or heating systems; Scope 2 emissions from electricity or cooling used in buildings; Scope 3 emissions from procurement, waste disposal, water consumption or community services.

Measuring and reducing Scope 1, 2 and 3 emissions can bring many benefits for businesses, such as:

• Cost savings: By improving energy efficiency, switching to renewable energy sources, investing in low-carbon technologies or optimising logistics, businesses can reduce their energy bills and operational costs.
  
• Reputation: By demonstrating their commitment to sustainability and transparency, businesses can enhance their brand image, attract and retain customers, investors and employees, and gain a competitive edge.
  
• Compliance: By meeting the regulatory requirements for GHG reporting and disclosure, businesses can avoid penalties, manage risks and prepare for future legislation.
  
• Innovation: By developing new products or services that are more sustainable and energy-efficient, businesses can create new markets, increase customer loyalty and generate value.
  
• Sustainability: By aligning their strategies with the global goals for climate action, such as the Paris Agreement or the Net Zero target, businesses can contribute to the collective effort to limit global warming and create a low-carbon future.

In this blog post, we will explain how to measure Scope 1, 2 and 3 emissions using various methods and tools, how to reduce them using various strategies and actions, and how to report them using various frameworks and standards. We will also provide examples of successful case studies of businesses that have measured and reduced their Scope 1, 2 and 3 emissions.

How to measure Scope 1, 2 and 3 emissions

Measuring Scope 1, 2 and 3 emissions is not a simple task, but it is essential for understanding and managing your carbon footprint. There are various methods and tools available for measuring Scope 1, 2 and 3 emissions, depending on the type, source and availability of data.

There are also some challenges and limitations that need to be considered, such as data quality, accuracy, boundaries and allocation. In this section, we will describe some of the common methods and tools for measuring Scope 1, 2 and 3 emissions, as well as some tips and best practices for doing so.

Methods and tools for measuring Scope 1 emissions

Scope 1 emissions are the most straightforward to measure, as they are directly controlled by your business. The main method for measuring Scope 1 emissions is to use emission factors, which are coefficients that quantify the amount of GHG emissions per unit of activity or fuel consumed. For example, an emission factor can tell you how much CO2 is emitted per litre of diesel burned in a vehicle.

Emission factors can be obtained from various sources, such as the US Environmental Protection Agency (EPA), the Intergovernmental Panel on Climate Change (IPCC), or the Greenhouse Gas Protocol. Emission factors can vary depending on the source, region, technology and time period. Therefore, it is important to use the most appropriate and updated emission factors for your business.

To calculate your Scope 1 emissions using emission factors, you need to multiply the emission factor by the amount of activity or fuel consumed. For example, if your business uses 30,000 litres of diesel in a year, and the emission factor for diesel is 2.68kg CO2 per litre, then your Scope 1 emissions from diesel consumption are:

30,000 litres x 2.68 kg Co2/litre = 80,400 Kg CO2

To measure your Scope 1 emissions more accurately, you can also use direct measurement methods, such as meters, sensors or monitors that capture the amount of GHG emissions released from a specific source or process. For example, you can use a flue gas analyzer to measure the CO2 concentration in the exhaust gas from a boiler or a generator. Direct measurement methods can provide more precise and real-time data than emission factors, but they can also be more costly and complex to implement.

Methods and tools for measuring Scope 2 emissions

Scope 2 emissions are indirect emissions that result from generating electricity, heat or steam that your business purchases and uses. The main method for measuring Scope 2 emissions is to use emission factors that reflect the GHG intensity of the electricity grid or the energy supplier that provides your energy.

There are two main methods for calculating Scope 2 emissions – location-based and market-based. According to the Greenhouse Gas Protocol, a location-based method reflects the average emissions intensity of grids on which energy consumption occurs. A market-based method reflects emissions from the electricity that companies have purposefully chosen.

For example, if your business consumes 100 MWh of electricity in a year in California, and the location-based emission factor for California is 0.23 kg CO2 per kWh, then your location-based Scope 2 emissions are:

100 MWh x 0.23 kg CO2/kWh x 1000 kWh/MWh = 23,000 kg CO2

However, if your business purchases renewable energy certificates (RECs) or power purchase agreements (PPAs) that guarantee that your electricity comes from zero-emission sources, then your market-based Scope 2 emissions are zero.

The Greenhouse Gas Protocol recommends reporting both location-based and market-based Scope 2 emissions to provide a more complete picture of your impact and influence on the electricity system. To calculate your Scope 2 emissions using emission factors, you need to multiply the emission factor by the amount of electricity or heat consumed. Emission factors can be obtained from various sources, such as the EPA, the International Energy Agency (IEA), or your energy supplier.

To measure your Scope 2 emissions more accurately, you can also use direct measurement methods, such as meters or sub-meters that capture the amount of electricity or heat consumed by your business at a specific location or time. Direct measurement methods can provide more granular and timely data than emission factors but also require more infrastructure and maintenance.

Methods and tools for measuring Scope 3 emissions

Scope 3 emissions are the most challenging to measure, as they are indirect emissions that occur in the upstream and downstream activities of your business, such as from suppliers, customers, waste or travel. Scope 3 emissions can be significant and represent the majority of your carbon footprint, but they are also the most difficult to track and quantify.

There are multiple approaches for calculating Scope 3 emissions. The optimal approach is to base calculations on actual usage data, which normally can be determined from invoices, purchase orders, receipts or contracts. For example, if your business purchases 1,000 tons of steel in a year, and you have a document that shows the GHG emissions associated with the production and transportation of that steel, then you can use that data to calculate your Scope 3 emissions from purchased goods and services.

If this paper trail does not exist, a secondary approach is to conduct surveys to obtain direct and indirect energy usage or GHG emissions data from your suppliers, customers or other stakeholders. For example, you can ask your suppliers to provide information on their energy consumption, fuel mix, emission factors or GHG inventory. Surveys can provide more specific and relevant data than generic emission factors, but they can also be time-consuming and prone to errors or biases.

If surveys are not feasible or reliable, a tertiary approach is to use estimation methods based on generic emission factors, industry averages or assumptions. For example, you can use the GHG Protocol’s Scope 3 Evaluator tool to estimate your Scope 3 emissions based on your sector, revenue, expenditure or employee numbers. Estimation methods can provide a quick and easy way to calculate your Scope 3 emissions, but they can also be inaccurate and inconsistent.

The GHG Protocol allows companies some flexibility for calculating Scope 3 emissions. For example, companies can use these three methods to calculate emissions from purchased goods and services:

• Supplier-specific method: Collect lifecycle assessment, emissions impact analyses and other product-level data from suppliers.
  
• Spend-based method: Use economic input-output models and environmental extensions to estimate emissions based on financial expenditure data.
  
• Hybrid method: Combine supplier-specific data with spend-based data to fill data gaps or improve accuracy.

To calculate your Scope 3 emissions using any of these methods, you need to multiply the emission factor or intensity by the amount of activity or expenditure. For example, if your business spends $10 million on professional services in a year, and the emission intensity for professional services is 0.11 kg CO2 per dollar, then your Scope 3 emissions from professional services are:

$10 million x 0.11 kg CO2/dollar = 1.1 million kg CO2

Tips and best practices for measuring Scope 1, 2 and 3 emissions

Measuring Scope 1, 2 and 3 emissions can be a complex and daunting process, but there are some tips and best practices that can help you do it more effectively and efficiently:

• Set a base year: Choose a reference year for which you have reliable and complete data to measure your emissions and track your progress over time.
  
• Choose a scope: Decide which scope of emissions are relevant and material for your business and report them consistently and transparently.
  
• Report both location-based and market-based Scope 2 emissions: Provide a more complete picture of your impact and influence on the electricity system by reporting both methods.
  
• Prioritise the most significant Scope 3 categories: Focus on the categories that represent the largest share of your value chain emissions and where you have the most leverage to reduce them.
  
• Use the most appropriate and updated emission factors: Choose emission factors that reflect the source, region, technology and time period of your emissions and update them regularly.
  
• Verify your results: Use independent third-party verification or assurance to validate your data quality, accuracy and credibility.

How to reduce Scope 1, 2 and 3 emissions

Measuring Scope 1, 2 and 3 emissions is not enough to achieve your sustainability goals and combat climate change. You also need to take action to reduce your emissions across your value chain. There are various strategies and actions that you can implement to reduce your Scope 1, 2 and 3 emissions, depending on the type, source and magnitude of your emissions.

There are also some resources and guidance that you can use to help you plan and execute your emission reduction initiatives. In this section, we will discuss some of the common strategies and actions for reducing Scope 1, 2 and 3 emissions, as well as some examples of successful case studies of businesses that have done so.

Strategies and actions for reducing Scope 1 emissions

Scope 1 emissions are the easiest to reduce, as they are directly controlled by your business. The main strategy for reducing Scope 1 emissions is to switch to low-carbon or renewable energy sources for your operations, such as solar, wind, hydro or biofuels. This can help you avoid or minimise the combustion of fossil fuels that generate GHG emissions.

Some examples of actions that you can take to switch to low-carbon or renewable energy sources are:

• Install solar panels or wind turbines on your premises or purchase renewable energy certificates (RECs) or power purchase agreements (PPAs) that guarantee that your electricity comes from zero-emission sources.
  
• Replace petrol or diesel vehicles with electric or hybrid vehicles or use biofuels or hydrogen as alternative fuels.
  
• Replace natural gas or oil boilers or generators with heat pumps, biomass boilers or geothermal systems.

Another strategy for reducing Scope 1 emissions is to improve your energy efficiency and reduce your energy consumption for your operations. This can help you lower your energy bills and operational costs, as well as your GHG emissions.

Some examples of actions that you can take to improve your energy efficiency and reduce your energy consumption are:

• Upgrade your lighting, heating, cooling and ventilation systems with more efficient models or use smart controls, sensors or timers to optimise their performance.
  
• Insulate your buildings, windows and pipes to prevent heat loss or gain and improve thermal comfort.
  
• Implement energy management systems or practices to monitor, measure and manage your energy use and identify opportunities for improvement.

Strategies and actions for reducing Scope 2 emissions

Scope 2 emissions are indirect emissions that result from generating electricity, heat or steam that your business purchases and uses. The main strategy for reducing Scope 2 emissions is to switch to low-carbon or renewable energy sources for your electricity or heat consumption. This can help you avoid or minimise the GHG emissions associated with the conventional generation of electricity or heat from fossil fuels.

Some examples of actions that you can take to switch to low-carbon or renewable energy sources are:

• Purchase green tariffs or contracts from your energy supplier that provide electricity or heat from renewable sources such as solar, wind, hydro or biomass.
  
• Purchase RECs or PPAs that guarantee that your electricity comes from zero-emission sources.
  
• Install onsite renewable energy generation systems such as solar panels, wind turbines, heat pumps or biomass boilers.

Another strategy for reducing Scope 2 emissions is to improve your energy efficiency and reduce your electricity or heat consumption. This can help you lower your energy bills and operational costs, as well as your GHG emissions.

Some examples of actions that you can take to improve your energy efficiency and reduce your electricity or heat consumption are:

• Upgrade your lighting, appliances, equipment and devices with more efficient models or use smart controls, sensors or timers to optimise their performance.
  
• Implement demand response programs or practices to reduce or shift your electricity consumption during peak periods or when prices are high.
  
• Implement energy management systems or practices to monitor, measure and manage your electricity or heat use and identify opportunities for improvement.

Strategies and actions for reducing Scope 3 emissions

Scope 3 emissions are the most difficult to reduce, as they are indirect emissions that occur in the upstream and downstream activities of your business, such as from suppliers, customers, waste or travel. The main strategy for reducing Scope 3 emissions is to engage with your value chain stakeholders and collaborate with them to reduce their GHG emissions. This can help you create shared value, enhance your reputation, and foster innovation and sustainability.

Some examples of actions that you can take to engage with your value chain stakeholders are:

• Set emission reduction targets or standards for your suppliers and monitor their performance and compliance.
  
• Provide incentives, support or training for your suppliers to adopt low-carbon practices or technologies.
  
• Encourage or require your suppliers to report their GHG emissions and disclose their emission reduction initiatives.
  
• Design or source your products or services to minimise their GHG emissions across their lifecycle, such as by using recycled, renewable or biodegradable materials, reducing packaging or optimising transportation.
  
• Educate or influence your customers to use your products or services in a more sustainable way, such as by providing information, guidance, feedback or incentives.
  
• Offer or promote low-carbon alternatives or solutions for your customers, such as by providing repair, reuse or recycling options, enabling circular economy models or offering carbon offsetting schemes.

Resources and guidance for reducing Scope 1, 2 and 3 emissions

Reducing Scope 1, 2 and 3 emissions can be a complex and challenging process, but there are some resources and guidance that can help you plan and execute your emission reduction initiatives. Some of the resources and guidance that you can use are:

• The Greenhouse Gas Protocol: Provides the most widely used standards and tools for measuring and managing GHG emissions across the value chain and setting emission reduction targets.
  
• The Science Based Targets initiative: Provides a framework and methodology for setting science-based emission reduction targets that are aligned with the goals of the Paris Agreement and the Net Zero target.
  
• The Carbon Disclosure Project: Provides a platform and system for disclosing and reporting GHG emissions and emission reduction initiatives to investors, customers and other stakeholders.
  
• The RE100, EV100 and EP100 initiatives: Provide global networks and platforms for businesses to commit to 100% renewable electricity, electric vehicles and energy productivity respectively.
  
• The Renewable Energy Buyers Alliance: Provides education, resources and tools for businesses to procure renewable energy from various sources and markets.

Conclusion

In this blog post, we have explained what Scope 1, 2 and 3 emissions are and how they are categorised by the Greenhouse Gas Protocol. We have also highlighted the benefits of measuring and reducing Scope 1, 2 and 3 emissions for businesses, such as cost savings, reputation, compliance, innovation and sustainability.

We have also described some of the methods and tools for measuring Scope 1, 2 and 3 emissions, such as emission factors, direct measurement, surveys and estimation methods. We have also explained some of the challenges and limitations of measuring Scope 1, 2 and 3 emissions, such as data availability, accuracy, boundaries and allocation.

Furthermore, we have discussed some of the strategies and actions for reducing Scope 1, 2 and 3 emissions, such as switching to low-carbon or renewable energy sources, improving energy efficiency, engaging with value chain stakeholders and collaborating with them to reduce their emissions. We have also provided examples of successful case studies of businesses that have reduced their Scope 1, 2 and 3 emissions.

Finally, we have provided some resources and guidance for reducing Scope 1, 2 and 3 emissions, such as the Greenhouse Gas Protocol, the Science Based Targets initiative, the Carbon Disclosure Project and the RE100, EV100 and EP100 initiatives.

We hope that this blog post has helped you understand the importance and the process of measuring and reducing Scope 1, 2 and 3 emissions for your business. If you want to learn more about how to measure and reduce your carbon footprint or how to report your GHG emissions to various stakeholders, please contact us for more information or assistance. We are here to help you achieve your sustainability goals and create a low-carbon future.

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