Few FAQs on GHG Accounting Under Different Scopes

Managing carbon emissions and protecting business from potential impacts of climate change is the fundamental to achieve sustainable growth and ensure stable shareholder returns. Most of the companies manage and report their GHG emissions in the form of GHG reports or Sustainability reports. These companies understand the significance of measurement, management and disclosure of greenhouse gas emissions in standard business practice.

Emissions are generally broken down into three categories ( Scope 1, Scope 2 and Scope 3) by the Greenhouse Gas Protocol for better understanding. 

Scope 1 Direct GHG emissions occur from sources that are owned or controlled by the company, for example, emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.; emissions from chemical production in owned or controlled process equipment. Direct CO2 emissions from the combustion of biomass shall not be included in scope 1 but reported separately. GHG emissions not covered by the Kyoto Protocol, e.g. CFCs, NOx, etc. shall not be included in scope 1 but may be reported separately.

Scope 2 accounts for GHG emissions from the generation of purchased electricity consumed by a company. Purchased electricity is defined as electricity that is purchased or otherwise brought into the organizational boundary of the company. Scope 2 emissions physically occur at the facility where electricity is generated.

Scope 3 is an optional reporting category that allows for the treatment of all other indirect emissions. Scope 3 emissions are a consequence of the activities of the company, but occur from sources not owned or controlled by the company. Some examples of scope 3 activities are extraction and production of purchased materials; transportation of purchased fuels; and use of products and services.

We might encounter a variety of questions or scenarios on where to account-specific emissions. Few such questions or scenarios with solutions have been discussed in this article. Few more will be updated whenever we encounter them.

A company purchases CO2 from a supplier, uses it in operations and then emits into the atmosphere. Should we include this emission under scope 1 fugitive emissions or under scope 3?

• It should be reported under the scope 3 category. The supplier or producer will account it under scope 1

Fully owned transport trucks are used by a company to carry materials in and out of the factory. Where should these emissions get accounted?

• These should be accounted under scope 1 category as scope 1 category includes all those emissions caused due to combustion processes owned by a company either by stationary or mobile means ( Trucks).

Where should the emissions caused due to employee commute to office/factory be accounted?

• Two scenarios here. If employees are using their own means of transport then it comes under scope 3 and if the transport is provided by the company through their own vehicle (Company Bus) then it comes under scope 1 

For land developers, are emissions created due to land clearing activities counted in scope 1?

• No, all biogenic emissions created due to land clearing activities are reported generally out of the scopes. But emissions from machinery used in land clearing should be reported under scopes.  

Waste pick up is the responsibility of a municipality. So they hire a contractor for the same and they deploy the vehicles. Now under which scope these emissions will be accounted?

• Scope 3 for the municipality

When a solar plant is installed in a company's premises under the OPEX model, where should that be accounted?

• It should be accounted as scope 2 by company and scope 1 by the generator under operational control approach

For an electricity distribution company (DISCOM), emissions due to power generation are accounted under which category?

• It comes under scope 3. For power generator, it comes under scope 1 and for end-user, it comes under scope 2