Three Scopes of the Greenhouse Gas Protocol

In our previous article, titled Scope 1 2 3 Emissions Explained: Understanding the GHG Protocol’s Emission Classification System, we defined scope 1 emissions, scope 2 emissions, and scope 3 emissions as follows:

  1. Scope 1 emissions are GHGs released directly from a business.
  2. Scope 2 emissions are indirect GHGs released from the energy purchased by an organization.
  3. Scope 3 emissions are also indirect GHG emissions, accounting for upstream and downstream emissions of a product or service, and emissions across a business’s supply chain.

To expand on this, we’ve been producing a series of articles, with each piece covering a specific corporate emission category. As the title suggests, this article will explain scope 2 emissions in more detail, giving an example, before suggesting ways to reduce such GHGs.

What are business scope 2 emissions?

Scope 2 emissions are indirect GHGs released from business operations, but not directly by that organization. They’re the result of bought energy, such as electricity, steam, heat, and cooling. The amount of energy you use that contributes to business scope 2 emissions will be reflected in your energy bill.

There are four main forms of energy tracked under scope 2 emissions, which are as follows:

  1. Electricity: The most significant contributor to scope 2 emissions in your business would be electricity purchased. Electricity is generated as power plants burn fossil fuels. This electricity is then provisioned to a business offsite. Hence, the reporting company doesn’t directly release GHGs from its operations, but is ultimately responsible for such emissions due to the energy demand.
  2. Steam: Heated water (steam) is extremely useful for large industrial processes, heating, and cleaning. Combustion assets – e.g. a boiler or a thermal power plant – will produce the steam, and hence the energy provided is outside the company’s direct control.
  3. Heat: There are various forms of heat sources that can be provided to a company, but generally speaking, businesses will utilize hot water. When provided by a third party through a local district heat network, associated emissions will be classified as scope 2.
  4. Cooling: Cooling agents – such as chilled water – provided by a third party will contribute to a business’s scope 2 emissions.

Location-based and market-based scope 2 emissions

In 2015, the GHG Protocol published an update giving guidance on scope 2 emission reporting. The most notable change was deciphering scope 2 emissions as either location-based or market-based, as we explain:

  • Location-based: This refers to the average emission factors for the local grid.
  • Market-based: A more complex look at emissions is taken, considering contractual instruments used in the competitive energy market. This means the final market-based emission calculation considers green tariffs, Renewable Energy Certificates, and Off-Site Power Purchase Agreements (PPA).

For guidance on how to measure and report scope 2 emissions, refer to the GHG Protocol Scope 2 Guidance.

Scope 2 emissions: A real-world example

In our previous article GHG Protocol: Scope 1 Emissions Explained, we compared the scope 1 emissions of Patagonia to Salesforce. The main takeaway from this comparison is that the scope 1 emissions of Patagonia were more significant than the scope 1 emissions of Salesforce.

The reason for this is that Patagonia manufactures a physical product. And the GHGs released from manufacturing (process emissions) heighten the total scope 1 emissions of Patagonia relative to the software provider, Salesforce. In contrast, Salesforce has very little process emissions.

Yet, this isn’t to say that the total emissions of a software provider are larger than the total emissions of a product-based business. Other emission scopes (scopes 2 and 3) need to be considered. emissions

Let’s take a look at Salesforce again. The total scope 1 and 2 emissions for Salesforce in 2020 equated to 297,000 MTCO2e. Out of this total:

  1. 6,000 MTC02e is reported to be from scope 1 sources,
  2. 291,000 MTCO2e is reported to be from scope 2 sources.

This exemplifies how the contribution of scope 1 and 2 emissions differ across industries. This is why it’s vital to consider every emission scope during the carbon reporting process of a business.

So why is the scope 2 emissions of Salesforce so high?

If we take a look at Salesforce’s 2020 Stakeholder Impact Report, we discover the business’s scope 2 GHGs by source:

  1. Data centrers: 264,000 MTCO2e
  2. Offices (which also account for some scope 1 emissions): 28,000 MTCO2e

In this example, most of Salesforce’s emissions (scope 1 and 2) are caused by data centers. To reduce business emissions, Salesforce would need a strategy to improve the sustainability of these systems.

Data center emissions

Data centers demand a huge amount of energy to keep conditions optimal for the efficient running of a server, data farm, and/or comms rooms. A study by McKinsey showed that data centers have been known to emit a massive 80 megatonnes of carbon dioxide each year. As such, the European Green Deal has highlighted the unsustainability of data centers, giving ways to make these systems more sustainable to achieve carbon neutrality by 2030. As such, Salesforce – and other tech companies – are working to reduce the scope 2 emissions by addressing this main cause. The carbon footprint of data centers can be reduced by:

  1. Accurately measuring and tracking use. The Intelligent Rack Power Distribution Unit (PDU) helps measure and track the energy consumption of data centers.
  2. Deploying sensors to maintain optimum environmental conditions and prevent overcooling.
  3. Implementing remote power controls to power-down centers during non-peak hours.
  4. Optimizing airflow management to prevent air leakage and recirculation so that cool air is guided exclusively through the IT equipment.

How to reduce business scope 2 emissions

The above is a specific example showing how scope 2 emissions can be reported, managed, and reduced. Next, let’s look at how scope 2 emissions can be lowered across industries in a more general sense.

Switch to a green tariff

Meeting your energy needs from electricity, rather than directly from fossil fuels, means you’re already halfway towards powering operations with renewables. I.e. It’s easy to switch your electricity supply to one that’s powered by renewable energy.

Renewable energy solutions – wind, tidal, geothermal, and solar – generate electricity which is then fed to the grid. By opting for a renewable energy tariff, you’ll support projects that are powering the grid with renewables and hence reducing overall fossil fuel demand.

Yet, it must be noted that switching to a renewable energy tariff does not ensure the energy you receive is green as there’s no way of separating energy by source. This can make it a little tricky to track your scope 2 emissions. For complete transparency, purchase a Renewable Energy Certificate or an Off-Site Power Purchase Agreement (PPA).

Renewable Energy Certificates and Off-site Power Purchase Agreements

To ensure your business energy supply comes directly from renewable sources, you can purchase Renewable Energy Certificates, which are bought from suppliers, brokers, or exchanges. These give an official record that a specified amount of energy has come from renewable sources. Think of these certificates as representations of the environmental value of renewable energy production.

Another alternative or additional option would be to purchase an Off-Site Power Purchase Agreement (PPA). With this option, you’ll contract directly with a large renewable generator for a long-term supply of clean energy.

Installing your own renewable energy source

Yet you might also be in a position to generate your own renewable energy on-site by installing the appropriate technology. For instance, the clothing manufacturer Kohl partnered with the US solar company, SunEdison. This partnership was made from the business decision to fit solar panels throughout stores in 2007. As a result, reports indicate that 40% of the chain’s stores operate using electricity generated by the sun.

Improving efficiency to reduce scope 2 emissions

Reductions can also be made by focusing business efforts on efficiency. In the article GHG Protocol: Scope 1 Emissions Explained, we spoke about improving the efficiency of manufacturing and production facilities using the Toyota Production System methodology. Well, the same principles apply when thinking about scope 2 emissions. Greater operational efficiency means less waste and reduced energy demand.

For steam, heating, or cooling systems, plus office appliances such as air conditioning units, lighting, and IT systems, equipment must be regularly monitored, upgraded, and replaced when necessary. Timers, occupancy sensors, and appropriate staff training will ensure energy is not wasted, and energy use is optimized.

Carbon offset remaining emissions

Your remaining scope 2 emissions can be offset. If you want to learn more about carbon offsetting, how it works, and how to choose the right offsetting programs, read the following articles.

Use the Green Business Bureau to measure, manage and reduce corporate emissions

Once you’ve implemented your sustainability strategy, how do you know what initiatives are driving sustainable improvements?

How do you track progress?

How do you measure your successes and set future goals?

At the Green Business Bureau (GBB), we designed our EcoAssessment and EcoScorecard to help businesses worldwide consistently achieve their sustainability goals, and measure, record, and track progress as they go. This includes reducing your organization’s scope 2 emissions, and carbon footprint as a whole.

Once more, on signing up for the Green Business Bureau, you’ll gain access to our carbon footprint calculator software. Using this makes it easy to keep track of your business emissions, meaning you’ll know what green initiatives are effective in reducing these emissions and how much GHGs you’ll need to offset to reduce your carbon footprint.

Get the recognition you deserve with GBB’s certification and Green Seal, allowing you to accurately communicate your efforts to stakeholders.

The Green Business Bureau is designed to help you build a better and more sustainable business.

Click here to sign up for the Green Business Bureau and start building sustainable operations today!

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