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Decoding Carbon Footprints: A Deep Dive into Scope 1, 2, and 3 Emissions

Written by Karol Kaczmarek
Published March 29th, 2024
Decoding Carbon Footprints: A Deep Dive into Scope 1, 2, and 3 Emissions
4 min read
Updated June 2nd, 2024
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Scope 1, 2, and 3 emissions are categories defined by the Greenhouse Gas Protocol, which is a widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions. The categorization helps organizations measure their environmental impact in a comprehensive manner. Here’s a breakdown of each:

SCOPE 1: DIRECT EMISSIONS

Scope 1 emissions are direct emissions from owned or controlled sources. This includes emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc., as well as emissions from chemical production in owned or controlled process equipment. Essentially, if the emissions come directly from the organization’s activities or assets, they’re considered Scope 1.

SCOPE 2: INDIRECT EMISSIONS FROM PURCHASED ENERGY

Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the reporting company. Even though these emissions occur at a facility that is not owned or controlled by the organization, they are the result of the organization’s energy use. Therefore, organizations account for these emissions to get a full picture of the greenhouse gas impact of their electricity consumption.

SCOPE 3: OTHER INDIRECT EMISSIONS

Scope 3 is the broadest category and covers all other indirect emissions that occur in a company’s value chain. This includes emissions associated with the production of purchased goods and services, waste disposal, employee travel and commuting, transportation and distribution (both upstream and downstream), investments, and leased assets and franchises. Scope 3 emissions often represent the largest source of greenhouse gas emissions for organizations and can sometimes offer the most significant opportunities for climate impact reduction.

The Stratification of Corporate Emissions: An illustrative guide to Scope 1, 2, and 3 categories, showcasing the journey from direct to indirect carbon footprints.

WHY THEY MATTER

Understanding and managing Scope 1, 2, and 3 emissions is critical for organizations looking to reduce their carbon footprint, improve sustainability, and respond to regulatory, customer, and investor pressures regarding climate change. By categorizing emissions this way, organizations can identify opportunities to reduce emissions, engage in more sustainable practices, and make more informed decisions to support their sustainability goals.

Understanding and categorizing emissions into Scopes 1, 2, and 3 helps organizations identify where their greenhouse gas emissions are coming from and develop strategies to reduce them. It is also crucial for reporting emissions accurately to comply with regulations, participate in voluntary reporting initiatives, and for overall environmental stewardship. Addressing Scope 3 emissions, in particular, can be challenging due to the complexity of tracking indirect emissions across a value chain, but it often represents the largest share of an organization’s carbon footprint, offering significant opportunities for emission reduction and sustainability improvements.

UNCHARTED TERRITORY OF ‘SCOPE 4’ EMISSIONS

the concept of “Scope 4” emissions is not formally recognized in the same way as Scope 1, 2, and 3 emissions under widely accepted greenhouse gas (GHG) reporting frameworks such as the Greenhouse Gas Protocol, which is a global standard for measuring and managing emissions. The term “Scope 4” has sometimes been used informally or in speculative discussions about expanding the framework for accounting for emissions. However, its definition can vary and is not officially established.

One way “Scope 4” has been discussed is in the context of avoided emissions. This concept refers to emissions that are prevented from being released into the atmosphere due to the use of a company’s products or services. For example, a company that produces energy-efficient appliances might consider the emissions avoided by consumers using their products instead of more energy-intensive alternatives as “Scope 4” emissions. Similarly, a company that provides a car-sharing service might view the reduction in emissions achieved by decreasing the number of cars on the road as “Scope 4”.

The idea behind “Scope 4” emissions, in this context, is to capture the positive impacts a company can have on reducing GHG emissions in the broader economy. However, it’s important to note that calculating and reporting such avoided emissions can be complex and is subject to much debate regarding the methodology and validity of such claims. There is a concern about double counting and ensuring that the reductions are real, additional (meaning they wouldn’t have occurred without the specific product or service), and verifiable.

Given the evolving nature of sustainability metrics and reporting standards, it’s possible that concepts like “Scope 4” could be more formally defined and adopted in the future. For now, organizations focusing on reducing their environmental impact primarily concentrate on managing and reducing their Scope 1, 2, and 3 emissions.


Karol Kaczmarek
Written by:
Karol Kaczmarek
Co-Founder of Net Zero Compare
Karol is a seasoned entrepreneur and co-founder of A&K Ventures OÜ. With a strong foundation in quantitative economics, he has a proven track record in strategic consulting, real estate, and global business expansion. Karol is dedicated to leveraging innovative technologies and creative business strategies to drive growth and transformation in every venture.