The Greenhouse Gas Protocol standard helps measure greenhouse gas emissions within a value chain and it divides the emissions into 3 scopes. Scope 1 are emissions directly emitted by the company. Scope 2 are indirect emissions related to energy production and Scope 3 are indirect emissions generated upstream or downstream from the company's boundaries.
The Greenhouse Gas Protocol (GHG Protocol) provides a standard for measuring greenhouse gas emissions from corporate and public sector value chains. The GHG Protocol covers the Kyoto Protocol regulated greenhouse gasses carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), and nitrogen trifluoride (NF3).
Direct and indirect emissions
To determine the emissions of a value chain, the organizational boundaries of the company responsible for the value chain need to be defined. If a company consists of several subsidiaries, the emissions of the subsidiaries are either allocated proportionately to the shareholding of the parent company (equity share approach) or the emissions are allocated in full to the parent company if it has control (control approach).
Once a company's accounting limit is set, it can determine its emissions. To do this, the emission sources that are directly under company control are identified within the company. These include, for example, the heating or air conditioning systems of company-owned buildings or the vehicles in their fleet. These emissions are called direct emissions. All other emissions occurring in the value chain that are not directly under the control of the company are called indirect emissions.
The 3 Scopes
In addition to the distinction between direct and indirect emissions, the GHG Protocol distinguishes emissions into 3 different scopes.
Scope 1: All emissions a company directly emits
Scope 2: All indirect emissions caused by energy consumption
Scope 3: All indirect emissions caused by the upstream and downstream supply chain
Scope 1 are all emissions from resources controlled directly by the company. They can be further divided into 4 subcategories:
Stationary combustion (e.g. heating systems running on fossil fuels)
Mobile combustion (vehicles owned or controlled by the company that run on gas or diesel)
Fugitive emissions (leakage from GHGs, for example from air conditioning systems)
Process emissions (emissions from industrial processes)
Scope 2 emissions are indirect emissions that occur in connection with energy generation in any form. This can be electricity generation, but also heat or steam generation.
Scope 3 covers all indirect emissions that do not fall into the Scope 2 category. However, these emissions are also subdivided into two subcategories:
Upstream emissions are indirect emissions of the company that result from the purchase of goods and services. They can be divided into eight categories:
Purchased goods and services
Fuel & energy-related activities
Upstream Transportation and Distribution
Waste generated in operations
Upstream leased assets
Downstream emissions are indirect emissions from the company that result from the sale of the goods and services produced. They can be divided into seven categories:
Downstream transportation and distribution
Processing of sold products
Use of sold products
End-of-life treatment of sold Products
Downstream leased assets