What Are Scope 2 Emissions and How Should Businesses Measure Them?
If you're starting to measure your business's carbon footprint, Scope 2 emissions are often one of the more straightforward places to begin.
That's because much of the information you need may already be sitting in your electricity bills, energy records or supplier information.
The terminology can still make things sound more complicated than they need to be.
You may come across location-based emissions, market-based emissions, grid emission factors and renewable energy certificates before you've even worked out which electricity data you need.
So let's start with the basics.
Scope 2 emissions are indirect greenhouse gas emissions associated with the generation of electricity, steam, heating or cooling that your organisation purchases or acquires and consumes.
For many UK businesses, purchased electricity will be the most familiar example.
Your business isn't directly producing the emissions at the power station generating that electricity, but you're consuming the energy it produces. Those associated emissions are therefore accounted for within Scope 2.
In this guide, we'll explain what Scope 2 emissions are, look at some common Scope 2 emissions examples and walk through how businesses can collect the right data, calculate their emissions and track them over time.
What Are Scope 2 Emissions?
Scope 2 emissions are indirect greenhouse gas emissions associated with purchased or acquired electricity, steam, heating and cooling consumed by an organisation.
They're described as indirect because the greenhouse gases are generally released somewhere other than the organisation using the energy.
Imagine your business has an office in Birmingham.
You purchase electricity from an energy supplier to power the lights, computers and other equipment inside the building.
Your organisation isn't generating that electricity itself, and the emissions associated with generating it don't physically come from your office.
However, because your business purchases and consumes that electricity, the associated greenhouse gas emissions can form part of its Scope 2 carbon emissions.
The GHG Protocol's Scope 2 Guidance covers emissions associated with four main forms of purchased or acquired energy:
Electricity
Steam
Heating
Cooling
For many businesses, electricity will make up most or all of the activity they need to consider. Other organisations, particularly those using district energy systems or certain industrial processes, may also purchase heat, steam or cooling.
What Are Some Scope 2 Emissions Examples?
It can be easier to understand Scope 2 by thinking about how energy is actually used across a business.
Common Scope 2 emissions examples can include emissions associated with:
Electricity purchased to power an office
Electricity used in a warehouse
Purchased electricity used by machinery or equipment
Electricity consumed across retail locations
Purchased electricity used at operational sites
Purchased district heating
Purchased steam used within industrial processes
Purchased cooling used within buildings or facilities
The important connection is that the organisation purchases or acquires and consumes the energy, but doesn't directly generate the associated emissions itself.
Not all energy used by a business automatically belongs in Scope 2.
For example, if your business burns natural gas in a boiler it owns or controls, the resulting direct emissions would generally fall within Scope 1, rather than Scope 2.
Understanding that distinction can prevent energy data being counted in the wrong part of your carbon footprint.
What's The Difference Between Scope 1, Scope 2 And Scope 3 Emissions?
Scope 2 sits between the direct emissions covered by Scope 1 and the wider value chain emissions covered by Scope 3.
A simple way to think about the three is:
Emissions scope | What does it cover? | Simple example |
Scope 1 | Direct emissions from sources your organisation owns or controls | Natural gas burned in a company-controlled boiler |
Scope 2 | Indirect emissions from purchased or acquired electricity, steam, heating and cooling | Electricity purchased to power an office |
Scope 3 | Other indirect emissions across your wider value chain | Business travel, purchased goods or employee commuting |
So in simple terms:
Scope 1: emissions your organisation produces directly from sources it owns or controls.
Scope 2: emissions associated with certain energy your organisation purchases and consumes.
Scope 3: other indirect emissions connected to your wider activities and value chain.
If you'd like a fuller explanation, our guide to Scope 1, 2 and 3 carbon emissions looks at how all three fit together.
Why Do Businesses Need To Measure Scope 2 Emissions?
If your organisation is already paying electricity bills, measuring the associated emissions can help turn that everyday energy information into something much more useful.
Understanding your Scope 2 emissions can help you:
Build a more complete carbon footprint by including the impact associated with purchased energy.
Establish a carbon baseline that you can compare against future reporting periods.
See how energy use contributes to your emissions across different sites or activities.
Track changes over time as electricity consumption or energy procurement changes.
Identify potential reduction opportunities, including reducing unnecessary energy use.
Support carbon and sustainability reporting where Scope 2 information is required or useful.
Make more informed energy decisions using both consumption and carbon information.
For some businesses, Scope 2 may only represent one part of a much larger carbon footprint.
But because electricity consumption data is often readily available, it can also be a useful place to start building confidence with carbon measurement.
What Data Do You Need To Measure Scope 2 Emissions?
You may already have much of the data you need.
For many businesses, electricity bills are a useful starting point.
When collecting Scope 2 data, you may need information such as:
Electricity consumption in kilowatt-hours (kWh)
Purchased heat, steam or cooling where applicable
Which building or site consumed the energy
The period the energy consumption relates to
Energy supplier information
Tariff or contractual information where relevant
The country or region where the energy was consumed
If you operate across several offices, warehouses, retail locations or other sites, you'll usually need to bring this information together across the reporting period.
This doesn't have to be perfect from the beginning.
Perhaps one site has detailed monthly electricity bills while another only has annual consumption information. Start by understanding what you have, record any gaps and improve the quality of the data as your carbon reporting develops.
Good carbon measurement often starts with organising information your business already collects.
How Do You Calculate Scope 2 Emissions?
Once you know how much energy you've consumed, you need to translate that activity into greenhouse gas emissions.
A common calculation follows a simple principle:
Energy consumed × appropriate emission factor = Scope 2 emissions
For example, imagine a business records the amount of electricity it has consumed in kWh.
An appropriate electricity emission factor can then be applied to that consumption to calculate the associated emissions in carbon dioxide equivalent (CO2e).
For UK organisations, the Government publishes greenhouse gas conversion factors each year that can be used to calculate emissions from activity data, including kWh of purchased electricity.
The exact emission factor matters because the carbon intensity of electricity can change over time. This is why businesses should make sure they're using factors appropriate to the reporting year and calculation method.
If you'd like to understand this part of the calculation in more detail, our guide to emission factors explains how activity data is converted into CO2e.
Scope 2 accounting does have an additional consideration, though.
Depending on where your organisation operates and how it purchases electricity, you may encounter two different ways of calculating Scope 2 emissions: the location-based method and the market-based method.
What Is The Location-Based Method For Scope 2 Emissions?
The location-based method calculates Scope 2 emissions using the average emissions intensity of the electricity grid in the location where the energy is consumed.
In simpler terms, it asks:
What are the average emissions associated with the electricity grid supplying this location?
For a UK business, this could mean taking the amount of grid electricity consumed and applying the appropriate UK grid electricity emission factor for the reporting year.
For example:
Electricity consumed (kWh) × grid emission factor = location-based Scope 2 emissions.
The location-based method therefore reflects the broader electricity system you're connected to, rather than the particular electricity tariff or contractual product your organisation has chosen.
What Is The Market-Based Method For Scope 2 Emissions?
The market-based method looks at emissions associated with the electricity products or contractual arrangements an organisation has chosen to purchase, where appropriate qualifying information is available.
Rather than asking only where was this electricity consumed?, it considers:
What electricity has the organisation contractually purchased?
Depending on the market, this can involve information such as supplier-specific emission factors and qualifying energy contractual instruments.
This is also where renewable electricity purchasing can become relevant.
However, market-based Scope 2 accounting has specific rules. The GHG Protocol sets quality criteria for the contractual instruments used within the calculation, so businesses shouldn't simply assume that any tariff described as "green" automatically produces a particular Scope 2 result.
If you're unsure which information your electricity supplier can provide, asking them for the emissions or contractual information associated with your electricity product can be a useful starting point.
Location-Based vs Market-Based Scope 2 Emissions
Both methods measure Scope 2 emissions, but they answer slightly different questions.
Location-based | Market-based | |
What does it reflect? | Average emissions from the electricity grid where energy is consumed | Emissions associated with qualifying contractual electricity purchasing choices |
What data does it use? | Grid-average emission factors | Eligible supplier or contractual information, following the relevant hierarchy |
What does it help show? | The emissions profile of the electricity system serving your location | The effect of eligible energy procurement choices |
Does your chosen tariff affect it? | Generally no | Potentially, where the contractual information meets the required criteria |
It's possible for the two methods to produce different results for the same amount of electricity consumption.
That doesn't necessarily mean one calculation is wrong.
They're looking at the organisation's electricity consumption from two different accounting perspectives.
Do Businesses Need To Report Both Scope 2 Methods?
This is one area where Scope 2 reporting can sound more complicated than it needs to.
Under the GHG Protocol Scope 2 Guidance, organisations with operations in markets where qualifying product- or supplier-specific contractual information is available are expected to report Scope 2 using both the location-based and market-based methods.
This is often referred to as dual reporting.
Where such contractual information isn't available, the reporting requirements differ.
The important point is not to assume that every organisation in every location should treat Scope 2 in exactly the same way.
If you're following a particular reporting framework or reporting Scope 2 to meet a regulatory requirement, check the specific methodology and disclosure requirements that apply to your organisation.
What About Renewable Electricity?
If your business buys renewable electricity, you may understandably wonder whether that means your Scope 2 emissions are automatically zero.
The answer is more nuanced.
Renewable electricity procurement can affect market-based Scope 2 emissions where the relevant contractual instruments and information meet the required accounting criteria.
But your location-based Scope 2 emissions still reflect the average emissions intensity of the electricity grid where the electricity is consumed.
So an organisation can potentially report different location-based and market-based Scope 2 figures.
This is another reason it's useful to keep good records of both your electricity consumption and the energy products or contracts you're purchasing.
Renewable energy procurement can be an important part of a carbon reduction strategy, but it should be reported using the appropriate methodology rather than simply assuming that a renewable tariff makes all electricity-related emissions disappear.
How Can Businesses Reduce Scope 2 Emissions?
Once you've measured Scope 2, the next question is usually: what can we actually do about it?
The right approach will depend on your buildings, operations and energy needs, but businesses can consider areas such as:
Improving energy efficiency across buildings, equipment and operations
Reducing unnecessary electricity consumption
Reviewing heating and cooling requirements
Monitoring energy use across individual sites
Reviewing electricity procurement and available renewable energy options
Exploring appropriate on-site renewable electricity generation
Tracking Scope 2 emissions over time to understand whether changes are having an impact
It's useful to distinguish between using less energy and changing how energy is sourced.
Both can be relevant, but they don't necessarily affect location-based and market-based Scope 2 emissions in the same way.
Reducing electricity consumption can also have benefits beyond carbon reporting, including helping organisations better understand and manage their overall energy use.
How Can Scope Help Businesses Measure Scope 2 Emissions?
If you're measuring electricity across several sites or reporting periods, managing the calculations through individual spreadsheets can quickly become difficult.
Scope's carbon tracking software helps businesses bring their emissions data together in one place.
Instead of rebuilding Scope 2 calculations every time you need to understand your carbon footprint, Scope gives you a more structured way to collect activity data, calculate emissions and track changes over time.
With Scope, you can:
Bring energy and carbon data together rather than keeping it across disconnected spreadsheets.
Record activity data such as energy consumption as part of your wider carbon footprint.
Calculate emissions using relevant emission factors.
Track Scope 1, Scope 2 and Scope 3 emissions within a more consistent carbon measurement process.
Compare carbon data over time and understand how your footprint is changing.
Keep business and event carbon tracking within one platform, giving you a more connected view of your organisation's emissions.
Carbon tracking software doesn't replace the need for accurate energy information. You still need to understand what energy your organisation is consuming and collect the best data reasonably available.
But it can make that information much easier to organise, calculate and revisit.
And if your energy data isn't perfect yet, you don't need to wait until every gap has been solved before you start building a clearer picture of your emissions.
Can Events Have Scope 2 Emissions?
This is an interesting question for organisations that run conferences, exhibitions, meetings and other events.
Events use energy too.
A venue may use electricity for:
Lighting
Heating and cooling
AV equipment
Production equipment
Catering facilities
Exhibition stands
Temporary event infrastructure
Those activities can contribute to the carbon footprint of an event.
However, there's an important distinction between measuring the carbon footprint of an event and deciding how those emissions should be classified within an organisation's corporate Scope 1, 2 and 3 inventory.
The correct classification can depend on organisational boundaries and who purchases or controls the relevant energy.
So while electricity consumption is an important part of event carbon measurement, businesses shouldn't automatically assume that every unit of electricity associated with an event belongs within their own corporate Scope 2 inventory.
This is where measuring business and event carbon emissions together can be useful. It helps organisations understand the impact of individual events while also maintaining a clearer picture of their wider organisational footprint.
Scope 2 Emissions FAQs
What Is The Simple Definition Of Scope 2 Emissions?
Scope 2 emissions are indirect greenhouse gas emissions associated with the generation of electricity, steam, heating and cooling purchased or acquired and consumed by an organisation. Scope 2 emissions are indirect greenhouse gas emissions associated with the generation of electricity, steam, heating and cooling purchased or acquired and consumed by an organisation. For many businesses, purchased electricity is the most common source of Scope 2 emissions.
What Are Examples Of Scope 2 Emissions?
Common Scope 2 emissions examples include emissions associated with electricity purchased to power offices, warehouses, shops, machinery and other operational sites. Purchased steam, heating and cooling can also fall within Scope 2.
Is Electricity Scope 2?
Purchased or acquired electricity consumed by an organisation is generally accounted for within Scope 2. Electricity generated and consumed under different arrangements may need to be treated differently, so the organisation's operational boundaries and energy arrangements should be considered.
Is Gas Scope 1 Or Scope 2?
If an organisation burns natural gas in equipment it owns or controls, such as a boiler, the resulting direct emissions would generally be Scope 1. Purchased heat generated elsewhere can instead fall within Scope 2.
How Do You Calculate Scope 2 Emissions?
A common calculation involves multiplying the amount of energy consumed by an appropriate emission factor: Energy consumption × emission factor = Scope 2 emissions. The appropriate factor depends on factors including the energy source, reporting year, location and whether the calculation is location-based or market-based.
What Is Location-Based Scope 2?
Location-based Scope 2 emissions reflect the average emissions intensity of the electricity grid in the location where electricity is consumed.
What Is Market-Based Scope 2?
Market-based Scope 2 emissions reflect emissions associated with qualifying electricity products and contractual arrangements an organisation has chosen to purchase, following the relevant Scope 2 accounting requirements.
What's The Difference Between Location-Based And Market-Based Scope 2?
The location-based method reflects the average emissions intensity of the electricity grid where consumption occurs. The market-based method reflects qualifying contractual electricity purchasing choices. As a result, the same electricity consumption can produce different location-based and market-based Scope 2 figures.
Does Renewable Electricity Mean Scope 2 Emissions Are Zero?
Renewable electricity purchasing can affect market-based Scope 2 calculations where the relevant contractual information meets the required criteria. Location-based Scope 2 emissions still reflect the average emissions intensity of the electricity grid where the energy is consumed.
What Data Do I Need To Measure Scope 2 Emissions?
For many businesses, the starting point is energy consumption data from electricity bills or meters. You may also need information about the site where energy was consumed, reporting period, energy supplier and relevant tariff or contractual arrangements.
Start With The Energy Data You Already Have
Scope 2 can sound technical when you first encounter terms like emission factors, location-based accounting and market-based reporting.
But the starting point is usually much simpler:
How much electricity, heat, steam or cooling did your organisation purchase and consume?
For many businesses, the answer is already sitting in energy bills, meter readings or supplier records.
Start by bringing that information together. Check which sites and reporting periods it covers, identify any gaps, then use the appropriate emission factors and methodology to turn your energy consumption into a clearer Scope 2 emissions figure.
You don't need every part of your carbon data to be perfect before you begin. Your data and processes can become more detailed as your carbon reporting develops.
And you don't have to manage that process across disconnected spreadsheets.
Scope helps you measure and track your business carbon footprint in one place, bringing Scope 1, Scope 2 and Scope 3 emissions together alongside your event carbon data.
Whether you're starting with electricity bills or already managing emissions across multiple sites and activities, you can build your footprint using the data you have today and improve it over time.
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