Scope 2 emissions

Scope 2 emissions are indirect emissions from the generation of energy that is purchased from a utility provider. These greenhouse gas emissions are released into the atmosphere from the consumption of purchased electricity, steam, heat, and cooling. Globally, scope 2 represents one of the largest sources of greenhouse gas emissions. The generation of electricity and heat now accounts for at least a third of global greenhouse gas emissions.

The methods for calculating and reporting scope 2 emissions critically affect how your company assesses its performance and incentivizes mitigation actions. To calculate scope 2 emissions, Microsoft Sustainability Manager is aligned with the principles and methodologies that are defined in the Greenhouse Gas (GHG) Protocol. The GHG Protocol recommends multiplying activity data (megawatt-hours of electricity consumption) by source-specific and supplier-specific emission factors to determine the total impact of greenhouse gas emissions from electricity use. The GHG Protocol also emphasizes the role of green power programs in reducing emissions from electricity use. It recommends that companies use statistics such as local or national/regional grid emission factors when other forms of information about electricity supply are unavailable.

There are two methods for calculating emissions from purchased energy:

• Location-based method – This method considers average emission factors for the electricity grids that provide electricity.
• Market-based method – This method considers contractual arrangements under which the organization procures power from specific sources, such as renewable energy.

Calculating scope 2 emissions

For both the location-based method and the market-based method, emissions are calculated by multiplying the purchased electricity by appropriate emission factors. Although this section describes the steps for calculating emissions from the consumption of purchased electricity, the information is also applicable to steam, heat, and cooling.

The GHG Protocol reference document: Greenhouse Gas Inventory Guidance: Indirect Emissions from Purchased Electricity (EPA.gov)

Step 1: Determine the amount of electricity that was purchased

The amount of electricity that was purchased is the activity data that is required to quantify scope 2 emissions. Utility bills or other purchase records can be used to determine the amount of electricity that was purchased. The data from those sources is considered a better type of activity data than submetering data from the facility, because that data might be incomplete. If purchase data isn't available for some facilities or operations, an estimate should be made for the sake of completeness.

For on-site generation that your organization owns, the emissions from the system are direct scope 1 emissions. If your organization doesn't own the on-site generation, the electricity that is used on site should be treated as purchased generation in scope 2.

Step 2: Determine the emission factors

Emission factors are required to calculate the emissions that are attributable to electricity, steam, heat, and cooling purchases.

The location-based method considers average emission factors for the electricity grids that provide electricity. The following types of location-based emission factors are available:

• Direct line emission factor
• Regional emission factor
• National emission factor

The market-based method considers contractual arrangements under which the organization procures power from specific sources, such as fossil, renewable, or other generation facilities. The following types of market-based emission factors are available:

• Energy attribute certificates
• Contracts
• Supplier specific emission factor
• Residual mix factor
• Regional emission factor
• National emission factor

By default, fictitious factors are used for calculation methods and emission factors in Microsoft Sustainability Manager for scope 2 if you're viewing the Contoso demonstration data. You can find emission factors under Factor Libraries in the left navigation pane under Calculations. In Microsoft Sustainability Manager, emission factors are stored in factor libraries. Factor libraries are groups of related emission factors. Those emission factors often have the same source. For example, EPA Factors Hub is stored in a factor library. Emission factors are also mapped to reference data for calculations in the same library. Microsoft Sustainability Manager continues to add more regional and global emission factor libraries via product updates.

When calculating both location and market-based scope 2 emissions, you need to create and use a factor library for each. Your location-based emission factor library should contain the grid factors for all of your facilities. Your market-based factor library should contain the specific emission factors for any certificates, contracts, or supplier specific emissions that you have. It should contain the regional or national grid factor for any facilities for which you don't have more specific factors.

Step 3: Calculate emissions

The following equation is used to calculate emissions:

Emissions = Electricity × EF

Here's an explanation of the equation:

• Emissions = Mass of carbon dioxide (CO₂), methane (CH₄), or nitrous oxide (N₂O) that is emitted
• Electricity = Quantity of electricity that is purchased
• EF = CO₂, CH₄, or N₂O emission factor

To calculate CO₂-equivalent (CO₂e) emissions, multiply the emissions of CH₄ and N₂O by the appropriate global warming potential (GWP). The GWP for CH₄ is 25, and the GWP for N₂O is 298. These values are taken from Intergovernmental Panel on Climate Change (IPCC), Fourth Assessment Report (AR4), 2007. The total CO₂e emissions are calculated as the sum of the CO₂e emissions from CH₄ and N₂O and the CO₂ emissions.

Activity data units

The units of measure for activity data in utility bills or other purchase records can vary. For electricity, heat, and cooling, activity data is typically reported in energy units. For electricity, kilowatt-hours (kWh) or megawatt-hours (MWh) are most often used. Heat and cooling can be reported in various energy units. A common unit of measure for cooling is the ton-hour. One ton-hour equals 12,000 British thermal units (BTUs). Steam can be reported in either energy units or mass units. If only cost information is available, we recommend that you contact the supplier to provide data for energy units.

Emissions for combined heat and power

The emissions from a combined heat and power plant are based on the type of fuel that is used. The emission must be allocated proportionally to each energy stream. The following three methods are most often used to allocate emissions from a combined heat and power plant:

• Efficiency method – This method is the preferred method when greenhouse gas emissions are allocated based on the energy inputs that are used to produce the separate steam and electricity products.
• Energy content method – Greenhouse gas emissions are allocated based on the energy content of the output steam and electricity products.
• Work potential method – Greenhouse gas emissions are allocated based on the energy content of the steam and electricity products.