Glossary term
Scope 2 Emissions
Subject: Sustainability and ESG, Climate Risk
Also known as: Indirect energy emissions, Purchased energy emissions
Scope 2 emissions are greenhouse gases released in generating the electricity, steam, heat or cooling that an organisation buys and uses, even though the release happens at the supplier's site.
Explanation
The emissions occur at the power station, not at the company, but they exist because of the company's demand, so the Greenhouse Gas Protocol counts them as the company's own indirect emissions. Two figures are reported. A location-based figure uses the average emissions of the local grid. A market-based figure reflects the company's contracts, such as green tariffs or renewable energy certificates, and can be much lower. Showing both stops a firm claiming clean power it has not actually secured. Cutting Scope 2 means using less energy, generating on site or buying verified renewable supply. Offices, data centres and factories using lots of power have large Scope 2 figures. Buying clean electricity is among the quickest ways to cut a footprint, so auditors check the contracts behind the market-based figure.
Example
A data centre operator uses 500 million kilowatt-hours of electricity a year. At the local grid average, that produces a location-based figure of 250,000 tonnes. Because it buys renewable energy certificates for 80% of its use, its market-based figure is much lower. It reports both numbers and explains the contracts behind the second.
Not to be confused with
- Scope 3 Emissions
- Scope 2 covers energy the firm buys for its own use. Scope 3 covers every other indirect emission in its value chain.