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Carbon accounting is the process of measuring and tracking how much greenhouse gas (GHG) an organization emits and sequesters. This is also referred to as an organization’s “carbon footprint.” 

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Calculating your carbon footprint is critical – as the adage goes, you can’t manage what you can’t measure – but getting to that final, accurate footprint can often seem like a daunting task. Especially if you’re doing it on your own! 

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You’ve likely come across the idea of Scope 1, Scope 2, and Scope 3 emissions on your carbon accounting journey. All three of these emission types play a significant role in ensuring you are performing accurate carbon accounting. 

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In this guide, we’ll define the different types of emissions to help you get started. 

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The Three Types of Emissions

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The Greenhouse Gas Protocol outlines three types (or Scopes) of greenhouse gas emissions.

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Think of each Scope as a way to track the emissions from different aspects of your operations, with key differences in your scope of control.  Scope 1 refers to your most direct emissions, the ones you have the most control over. Scope 2 are indirect emissions that you have some control over. And Scope 3 are indirect emissions that you have much less control over. 

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Scope 1

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Scope 1 emissions are direct emissions that come from sources owned or controlled by your company. This is energy that is expended via direct fuel or gas combustion either on-site (i.e., stationary combustion) or through vehicles (i.e., mobile combustion), as well as any fugitive emissions (i.e., refrigerants or other similar gasses). 

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Most commonly, in practice, Scope 1 refers to fuel or gas utilities. These are both the utilities that you use to power a facility, as well as the fuel that you use to power vehicles and industrial machinery. 

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For example, if you lease a facility and you are directly paying for the natural gas utility, then the natural gas combusted at this facility is part of your Scope 1 emissions. Similarly, any fuel that is combusted via a company-owned vehicle also falls under your Scope 1 emissions.

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Scope 2

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Scope 2 emissions are indirect emissions that come from sources of energy that are not generated on-site by the company but are consumed on-site. This is essentially any electricity, steam, heating, or cooling that is purchased externally and consumed on-site in company-owned or operated facilities.

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These are indirect greenhouse gas emissions because the organization did not directly generate or establish the energy expenditure. It is coming from an already-established electricity grid, district heating source, water cooling or heating system, etc. You are using the utility, but it is not necessarily being generated on your behalf.  

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While fuel and gas usage are usually part of Scope 1 emissions as they tend to be directly owned or controlled by the reporting entity (you), utilities like electricity, steam, and others are part of your Scope 2 emissions. The key difference here is whether or not the utility is being generated on-site and on your behalf. 

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Scope 3

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The last category of emissions, Scope 3 emissions, tend to make up the majority of a company’s carbon footprint. These emissions are commonly referred to as “value chain emissions” because your company does not have ownership or control over the emissions from these activities, products, or services — they exist in a different part of your value chain. 

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For example, you can’t always control the way your employees commute to work, but the emissions from this commute contribute to your company’s overall carbon footprint. These transportation-related emissions are an indirect component of your operations, and are therefore part of your company’s carbon footprint. 

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There are emissions from both upstream and downstream activities within the value chain. Upstream emissions are essentially anything that either happens prior to your company obtaining a resource or service or during your company’s operations. If you are an ice cream producer, your upstream activities include all of the energy and emissions involved with growing, processing, and transporting your raw materials. This can encompass dairy, sugarcane, and other commodities as well as any paper and other materials needed to create packaging. 

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Downstream emissions are essentially anything that comes after the product or service leaves the company’s operations (i.e., how a company’s products are used by consumers). For example, a company that produces disposable plastic products has to account for the energy needed to dispose of, or recycle, their product at the end of its lifecycle. 

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You can also think about Scope 3 emissions in terms of how your company’s emissions may contribute to another company’s emissions. One company’s Scope 1 emissions may be another company’s Scope 3 emissions, and so on. You have to think about the entire value chain of your product and service and identify everywhere along the way where emissions may be produced. 

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If you’ve ever been asked by any of your suppliers or customers for your carbon footprint, it’s likely because your Scope 1-3 emissions contribute to their Scope 3 emissions. Similarly, if you want to calculate your own carbon footprint, you’ll have to account for everyone in your value chain in some manner. 

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Overview

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It’s important to note that not all categories or even all Scopes may be relevant to each company’s operations. Determining organizational boundaries is another important step to ensure that emissions are being accounted for and calculated appropriately. It is also important to note that the Greenhouse Gas Protocol has a variety of methods that are accepted when it comes to data collection. 

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Check out the breakdown below for a summary of each Scope and examples of the relevant metrics captured within each Scope.

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Scope 1

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Definition: Energy that is expended via direct fuel combustion or gas usage in company facilities and vehicles (e.g., natural gas, propane, and diesel). These are direct emissions which come from sources directly owned or controlled by a facility.

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Categories:

• Stationary combustion (most commonly natural gas, but also any other fuels combusted onsite)
• Mobile combustion (i.e., emissions from vehicles)
• Fugitive emissions (i.e., emissions from refrigerant)

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Scope 2

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Definition: Electricity, steam, heating, or cooling that is purchased externally and consumed onsite in company-owned or operated facilities. These are indirect GHG emissions since the reporting company did not directly generate the energy even though they are being used within company-owned or controlled assets (i.e. grid electricity, district heating, chilled water, etc.).

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Categories:

• Purchased electricity (location-based vs market-based)
• Purchased steam
• Purchased heating
• Purchased cooling
• Energy from colocations (the Scope which these emissions are allocated to may vary)

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Scope 3

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Definition: Goods, services, and other activities that are not owned or controlled by the company, commonly referred to as “value chain emissions”. These activities or products indirectly contribute to the company’s emissions. This includes both upstream and downstream activities. Scope 3 emissions tend to make up the majority of a company’s carbon footprint.

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Categories:

• Purchased Goods & Services (includes Cloud services)
• Capital Goods
• Fuel- and Energy-Related Activities
• Upstream Transportation & Distribution
• Waste
• Business Travel
• Employee Commuting
• Upstream Leased Assets
• Downstream Transportation & Distribution
• Processing of Sold Products
• Use of Sold Products
• End-of-Life Treatment of Sold Products
• Downstream Leased Assets
• Franchises
• Investments

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Interested in learning more about how to calculate your carbon footprint?

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Chat with our dedicated Sustainability Managers for guidance on how to navigate the carbon accounting process, collect the right data, and map the right emissions factors for your company. 

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