Overcoming Challenges to Achieve GHG Emission Goals (Scope 1, 2 and 3)

The public declaration of a greenhouse gas (GHG) emission goal can be both exciting and daunting for a large company looking to reduce its environmental impact. Whether government-mandated, consumer-driven or brought forth by ethical social responsibility, ESG goals are often much easier to set than attain. 

With climate milestones like 2030, 2050 and beyond approaching, many organizations must quickly adapt to meet local emissions standards and stay relevant in the business world.   

Today, a business' GHG portfolio is defined in three distinct scopes, each representing a different portion of the company's operations. In this educational blog, we define Scope 1, 2 and 3 emissions and address some of the most common challenges businesses face in meeting environmental goals. 

Scope 1: Direct Emissions

First, Scope 1 emissions represent any greenhouse gases that are produced by company-owned or company-controlled assets such as buildings and vehicles. GHGs produced in Scope 1 are typically categorized as one of the following:

1. Stationary combustions: emissions from fuels and heat sources such as boilers and furnaces
2. Mobile combustions: greenhouse gases from company-owned vehicles
3. Fugitive emissions: potentially dangerous leaks from pressurized equipment (i.e., air conditioning and refrigeration)
4. Process emissions: any GHG produced during a company’s chemical or physical processing. This includes on-site energy generation 

In general, most organizations have some control over Scope 1 emissions, with the ability to change and improve. For this reason, many regulatory agencies and energy consultants focus on first improving direct emissions.  

Reporting Scope 1 Emissions

Scope 1 emissions are typically reported as the estimated sum of all annual GHGs emitted from company-owned assets. For small, office-based businesses, it is relatively common that an organization may have no Scope 1 emissions to report. 

Scope 1 Challenges

Although many assets in Scope 1 can be modified, there are still a considerable amount of challenges associated with meeting direct emissions standards that are beyond a business’s control. For instance, many energy companies and manufacturing facilities rely on GHG-emitting processes simply to produce a product. 

Externally, local resources may also limit the reality of adopting clean energy, both logistically and financially. For example, a midsize company with a fleet of vehicles may not be able to afford a dozen electric vehicles (EVs) and charging stations.

Scope 1 Solutions

Today, Scope 1 emissions are targeted and thwarted all over the world by making buildings and business systems more energy efficient. Annual Scope 1 emissions can be drastically reduced by: 

• Installing energy-efficient heating and cooling systems 
• Replacing an oil-fired boiler with a cleaner burning natural gas alternative
• Optimizing windows and insulation
• Adding a smart thermostat for automated temperature control
• Deep cleaning or replacing ventilation systems 

Besides improving the facilities, companies also have the opportunity to reduce GHGs in manufacturing and internal processes. Vehicles that consume gasoline or diesel fuel can be replaced with electric or hybrid transportation options. 

As mentioned above, GHG emissions are inevitable for some organizations. To mitigate this, it is also possible to purchase carbon offsets as a credit for the company’s annual direct emissions. 

Scope 2: Purchased Power

Scope 2 emissions are defined as indirect emissions produced as a result of energy purchased from a utility. Although utility-generated greenhouse gases are released off-site, any organization that purchases electricity, heat, cooling or steam must report the acquired energy in its total GHG inventory under Scope 2.     

Reporting Scope 2 Emissions

For most companies, all reported Scope 2 emissions are the result of local electric utilities providing power generated from fossil fuels. It is easy to estimate total Scope 2 emissions by identifying annual electricity usage and referencing a utility provider’s grid emissions portfolio.     

Scope 2 Challenges

When identifying ways to lower GHGs, Scope 2 emissions are increasingly becoming one of the easiest parts of a portfolio to reduce. Today, organizations have more control as to where their power is coming from and most large companies have the freedom to explore several alternatives to traditional utility power.  

Scope 2 Solutions

Like Scope 1 emissions, Scope 2 emissions can be lowered by improving the energy efficiency of a building or campus to reduce the amount of electricity consumed on-site. To take another step forward, there are also many ways that a company can adopt clean electricity in place of utility power. Most commonly, this includes:   

• Installing rooftop or ground-mounted PV and thermal solar energy systems
• Adding wind turbines, geothermal heating or other renewable energy systems
• Entering into an off-site purchase power agreement (PPA), although there is a considerable amount of risk embedded in these structures
• Buying renewable energy credits (RECs)
• Adding onsite energy storage for additional self-sufficiency

Scope 3: Indirect, Value Chain Emissions

Beyond purchased energy, Scope 3 emissions represent all other indirect GHGs released along a company’s value chain. For most large companies, Scope 3 emissions should represent the highest percentage of GHGs in an organization’s portfolio. 

Scope 3 emissions span both upstream and downstream activities and are generally more difficult to control than Scope 1 and 2 emissions. Although the Scope 3 umbrella is quite wide, here are some of the most common examples of value chain emissions:

• Travel: GHGs in noncompany owned vehicles, airplanes, etc.
• Purchased goods and services: manufacturing and transportation of equipment, supplies, furniture, etc.
• Waste disposal: transportation, landfill,and water treatment emissions 
• Distribution: transportation and facilities for downstream goods and services, franchises, events, etc. 
• Sold products: consumer emissions and end of life treatment

Reporting Scope 3 Emissions

Accurately reporting Scope 3 emissions can be challenging for most organizations. The Scope 3 reporting standard includes 15 distinct categories for identifying and quantifying potential value chain GHG emissions. 

And while a company is not responsible for reporting everything that happens along its supply chain, any emissions data that is relevant to the business’s goals and operations should be reported.    

Scope 3 Challenges

Unlike in Scopes 1 & 2, it is much more difficult to accurately track and overcome Scope 3 GHGs. Companies with large value chains (i.e., suppliers and distributors) may find it challenging to identify organizations with low GHG portfolios or convince existing partners to adopt new practices.  

Value chain emissions can also be hard to avoid when considering the necessity of business travel and the inevitability of waste production. Electronics, transportation, packaging and end of life treatment in consumer products can account for a large, ongoing emissions issue.  

Scope 3 Solutions

Companies generally have the least amount of control over their Scope 3 emissions because the GHGs are produced by outside sources. This implies a tremendous challenge to reduce Scope 3 emissions but also lends itself to the necessity for innovation and global compliance.

With many enterprise organizations already leading the way, here are a few examples of what a company can do to begin reducing its Scope 3 emissions: 

• Using recycled and minimal materials for product packaging
• Reducing paper, food and other waste within the organization
• Fully vetting partners before purchasing goods and services, and choosing to work with other sustainably minded companies 
• Allowing employees to work from home or attend meetings virtually
• Encouraging existing supply chain vendors to adopt green energy practices

Priority Power is committed to creating energy solutions that help the companies of today and tomorrow meet their emissions goals. For more information, feel free to read our most recent energy blog posts.