Climate Reporting Blog › Understanding of Scope 2 and indirect energy

|  February 19, 2024

🕓 Reading time 5 minutes

Table of contents

1. What are Scope 2 emissions?

2. The connection between Scope 1 and Scope 2 emissions

3. Examples of Scope 2 emissions

4. Strategies to reduce Scope 2 emissions

1. What are Scope 2 emissions?

The categorisation of greenhouse gas emissions into three different ‘scopes’ is a central component of the Greenhouse Gas Protocol, an internationally recognized standard for recording and reporting greenhouse gas emissions.

Scope 2 includes indirect emissions from procurement of purchased electricity, heat, steam and cooling that are produced outside the physical boundaries of a business but are necessary for its operation.

This energy is then used for various processes and activities within the company, such as lighting, heating, or machine operation. These emissions are a key component of a company's carbon footprint because they result from energy production, which the company indirectly causes through its energy consumption.

2. The connection between Scope 1 and Scope 2 emissions

Direct emissions from the energy producer

When an energy producer (e.g. a power plant) produces electricity, greenhouse gas emissions are directly generated during this process. These emissions are known as Scope 1 emissions of the energy producer, as they come directly from its own or controlled sources. Once a company purchases and consumes this electricity, the associated emissions are classified as its Scope 2 Emissions are considered. This means that the direct emissions of the energy producer to indirect emissions for the company that uses the energy.

Example for illustration

Let's assume a power plant burns fossil fuels like coal to generate electricity. The CO2 emissions released in this process are considered Scope 1 emissions of the power plant. A company purchases this electricity to light its offices and run machinery. The emissions associated with generating this electricity are now considered Scope 2 The company’s emissions are recorded.

3. Examples of Scope 2 emissions

Electricity consumption in office buildings

A company operates several office buildings that use computers, lighting, air conditioning, and other electrical equipment. The electricity required to operate this equipment is usually generated outside the company, for example, in a coal- or gas-fired power plant. The emissions associated with generating this electricity are among the Scope 2 Company emissions.

Thermal energy for production processes

A manufacturer requires heat energy for various production processes, such as heating materials. If this heat energy is purchased in the form of district heating, which is generated in an external CHP plant and delivered via a district heating network, the emissions resulting from the generation of this heat are subject to the Scope 2 Emissions of the manufacturing company.

Cooling for data centers

IT companies and data center operators require significant amounts of cooling to keep their servers and IT infrastructure at optimal temperatures. The energy required to operate the cooling systems can be purchased from external providers as cooled air or water. The resulting indirect emissions are classified as Scope 2 emissions classified.

Steam for industrial cleaning processes

In some industries, such as food processing or the pharmaceutical industry, steam is required for cleaning and sterilization processes. If this steam is purchased from an external service provider that generates it in a power plant by burning fossil fuels, the associated emissions are among the Scope 2 Company emissions.

Use of renewable energies

Companies that conclude contracts for the purchase of renewable energy, such as wind or solar energy, are also Scope 2 Emissions. Although renewable energy sources do not emit greenhouse gases during operation, emissions can occur during their production and installation. However, these are generally significantly lower than those of conventional energy sources.

4. Strategies to reduce Scope 2 emissions