From Direct to Indirect: Navigating Scope 1, 2, and 3 Emissions

Emissions can be classified as Scope 1, 2, 3, and 4 emissions as per the system established by the Greenhouse Gas (GHG) Protocol to help organizations measure and manage their carbon footprint. These categories define emission sources based on their relationship to the reporting organization.

Scope 1: Direct Emissions

Scope 1 emissions refer to direct emissions from sources that an organization owns or controls. These include emissions from the on-site combustion of fossil fuels, such as fuel burned in company-owned vehicles, heating systems, or industrial processes. Chemical reactions in manufacturing, transportation using company-operated vehicles like trucks, ships, and aircraft, and fugitive emissions from leaks, refrigeration, or air-conditioning systems are also included.

For instance, emissions from fuel used in company-owned vehicles, such as trucks and planes, fall under Scope 1. Similarly, a manufacturing plant that burns natural gas for heating contributes to these emissions. By monitoring Scope 1 emissions, organizations can better understand their direct impact on the environment and implement strategies to reduce their carbon footprint, improving sustainability efforts and regulatory compliance.

Scope 2: Indirect Emissions (Purchased Energy)

Scope 2 emissions refer to indirect emissions that result from the generation of electricity, steam, heating, or cooling that an organization purchases. Although these emissions are not produced directly by the organization, they are attributed to it because the company relies on and consumes the energy. The emissions themselves occur at the facility where the energy is generated, such as power plants, but they are considered part of the organization’s carbon footprint due to its energy consumption.

A key example of Scope 2 emissions is electricity used to power office buildings, manufacturing facilities, or data centres. Similarly, emissions generated from purchased heating and cooling systems are also included in this category. Since organizations depend on external energy sources, reducing Scope 2 emissions is often achieved through strategies like improving energy efficiency, investing in renewable energy sources, or optimizing operational energy use to lower overall demand.

To accurately report Scope 2 emissions, organizations use either the location-based method, which calculates emissions based on the average emissions of the regional electricity grid, or the market-based method, which considers the specific energy contracts the organization purchases. This distinction helps companies measure their environmental impact more precisely and make informed decisions to enhance sustainability efforts.

Scope 3: Indirect emissions (own value chain)

These emissions refer to indirect emissions that occur within a company’s value chain, both upstream and downstream, and are not included in Scope 2. These emissions typically represent the largest share of a company’s total carbon footprint, as they result from activities outside the organization’s direct control but are still associated with its operations.

Upstream Scope 3 emissions arise from the extraction, production, and transportation of raw materials, as well as waste disposal and logistics. For example, emissions generated from shipping materials to a manufacturing facility or the energy used in supplier operations fall under this category. Downstream emissions, on the other hand, stem from the use and disposal of a company’s products or services. This includes emissions from vehicles manufactured by an automobile company when driven by customers or emissions from discarded consumer goods.

Additionally, employee travel contributes to Scope 3 emissions, encompassing business trips and daily commuting. Supply chain emissions are another key component, as they result from the production of goods and services purchased by the company, such as materials, equipment, and outsourced services. Accurately measuring Scope 3 emissions is essential for companies aiming to develop comprehensive sustainability strategies and reduce their overall environmental impact.

Scope 4: Avoided emissions

These emissions are those that have been effectively prevented due to an organization’s efforts, products, or services. These avoided emissions typically result from mitigation strategies, energy efficiency improvements, or investments in technologies that reduce emissions in other sectors or parts of the value chain. Unlike Scope 1, 2, and 3 emissions, which measure an organization's direct and indirect emissions, Scope 4 focuses on the positive environmental impact of actions that help lower emissions elsewhere.

For example, a company investing in renewable energy projects, such as wind or solar farms, helps avoid emissions from fossil fuel-based power generation. Similarly, businesses that produce energy-efficient products, such as LED lighting or electric vehicles, enable customers to reduce their energy consumption and associated emissions. Organizations engaged in carbon offset projects, including reforestation or carbon capture, also contribute to avoided emissions by removing carbon from the atmosphere. Waste reduction and circular economy initiatives, such as recycling and repurposing materials, further help lower emissions by reducing landfill waste and incineration.

Despite its potential benefits, reporting Scope 4 emissions presents challenges. Measuring avoided emissions is complex, requiring estimates of what emissions would have occurred without these initiatives. Additionally, since Scope 4 is not officially recognized under the Greenhouse Gas (GHG) Protocol, there are no standardized guidelines for reporting, leading to variations in methodologies.

Many organizations choose to report Scope 4 emissions to highlight the positive environmental impact of their sustainability efforts. By demonstrating how their products, services, or initiatives contribute to global emission reductions, companies can showcase their commitment to sustainability beyond their direct and indirect emissions.

SYNE is a leading Sustainable Technology company with a 360-degree platform to analyse, optimize, and offset emissions. We use advanced technologies and data-driven solutions to drive economic growth and a sustainable impact economy. Contact us at contact@syne.com to transform the world together.