Greenhouse Gas Protocol: Four Scopes
A video corresponding to this post is available here.
We are writing and publishing a series of posts to do with the proposed climate rule from the United States Securities and Exchange Commission, the SEC. (An overview of the SEC’s proposed rule is provided in the post SEC Climate-Related Disclosures for Investors and in a video with the same title. The first parts of an analysis of the Introduction to the proposed rule is provided at SEC Climate-Related Disclosures Introduction: Part 1 and SEC Climate-Related Disclosures Introduction: Part 2)
In the proposed rule the agency requires climate-related reports to use the structure provided by the organization Greenhouse Gas Protocol. This means that companies will divide their emissions into three categories or ‘Scopes’. We will discuss what these Scopes are in detail in future posts. In this post we provide a high level overview.
Scope 1 — Direct Emissions
Scope 1 covers emissions generated directly by the organization. In all cases, the reported emissions include all greenhouse gases. Carbon dioxide (CO2) is the most significant of these. However, methane/natural gas is also very important because it is around 50 times more potent than CO2 and because ‘fugitive emissions’ (leaks) of natural gas are probably much more serious that most organizations recognize.
Scope 1 emissions typically come from the burning of oil or natural gas for heating or cooling, fired heaters used in chemical processes, and leaks of HVAC fluids from air-conditioning units. Emissions associated with business travel may fall either into Scope 1 or Scope 3.
Scope 2 — Indirect Emissions
Scope 2 covers indirect emissions caused by the organization’s activities. For most companies, the largest Scope 2 emissions are those associated with the purchase of electricity from a utility. Another example would be the purchase of steam for building heating.
Scope 3 — Corporate Value Chain Standard
Scope 3 covers emissions to do with the supply chain and other activities that are created by the company’s activities but over which it has no direct control. Items in this category include the emissions associated with employee commuting, purchased goods and services, and waste management.
Scope 3 emissions are often the most significant. They are also the most difficult to understand, as discussed in the post Scope 3 Emissions: Systems Complexity.
Scope 4 — Avoided Emissions
Most organizations restrict their reporting to the three Scopes just described. There is a fourth Scope that is being discussed. If a business adjusts its operations to reduce emissions then such action is sometimes placed in the Scope 4 category. The widespread use of video conferencing during the COVID-19 pandemic was a good example of a Scope 4 activity. It reduced commuting traffic substantially, thereby reducing CO2 emissions.
Whether it is useful to create this fourth category is questionable. A reduction in commuting, for example, could be included in either Scope 1 or Scope 3 reporting.