Calculating scope 1 and 2 emissions

What do scope 1 and 2 emissions cover?

The GHG Protocol Corporate Standard sorts emissions by who controls the source. Scope 1 covers direct emissions from sources the company owns or controls: stationary combustion in boilers, furnaces and generators; mobile combustion in company vehicles; process emissions from chemical reactions, such as in cement making; and fugitive emissions, mainly leaks of refrigerants from air conditioning and cooling. Scope 2 covers emissions from generating the electricity, steam, heat and cooling the company buys and uses. Everything else in the value chain, from purchased materials to customers using the products, is scope 3. See sustainability reporting explained. See operational boundaries and the three scopes.

How are scope 1 and 2 emissions calculated?

First the company sets its organisational boundary, choosing to include entities based on operational control, financial control or equity share, and applies the choice consistently. Then, for each source, it gathers activity data, ideally from meters, fuel invoices and maintenance records, and multiplies it by an emission factor: the emissions per unit of activity, published by government agencies, energy suppliers or grid operators. Emissions of methane, nitrous oxide and refrigerant gases are converted to carbon dioxide equivalent, CO2e, using global warming potentials from the Intergovernmental Panel on Climate Change, with the source of the values disclosed. See the GHG Protocol explained. See organisational boundaries and choosing emission factors.

Scope 1 and 2 emissions: a manufacturer's inventory

A manufacturer gathers a year's activity data from one plant and its vehicle fleet. The emission factors below are illustrative; a real inventory uses factors published for the company's own country and fuels.

Scope 1 is 2,440 tonnes. For scope 2, the location-based figure applies the grid average to all 20,000 MWh, giving 8,000 tonnes. The company bought renewable electricity certificates covering 12,000 MWh, so under the market-based method those megawatt-hours count at zero, and the remaining 8,000 MWh use the residual mix factor, the grid's emissions after removing electricity sold with certificates, giving 3,600 tonnes. Both scope 2 figures are reported. See renewable energy certificates.

Why are there two scope 2 methods?

The location-based method shows the emissions of the grids a company actually draws from, so it changes only if the company uses less electricity or the grid gets cleaner. The market-based method shows the effect of the company's purchasing choices, such as power purchase agreements, green tariffs and certificates, provided the instruments meet quality criteria, such as being from the same market and the right period. Reporting both lets readers see what a company's purchasing achieved and what its physical consumption implies. See location-based vs market-based scope 2 for a worked example across three countries.

What mistakes are common?

Common errors include missing sources such as backup generators or leased vehicles, double counting electricity sold on to tenants, using energy figures on the wrong calorific basis, applying factors from the wrong year or country, forgetting refrigerant top-ups (see refrigerants and fugitive emissions), and counting certificates that do not meet the market-based quality criteria. Estimates are allowed where data is missing, for example for a leased office where only floor area is known, but should be disclosed and reduced over time. Good inventories keep a clear trail from invoices and meters to the reported figure, because that is what assurance providers test. See building a GHG inventory and sustainability assurance explained.

How will the scope 2 revision change this?

The GHG Protocol is revising its 2015 scope 2 guidance. The proposals that went to public consultation, which closed on 31 January 2026, would require market-based instruments to match consumption hour by hour and to come from grids the electricity can physically reach, which would make many annual certificate purchases count for less. Companies showed little support for those two proposals, and in July 2026 the Independent Standards Board asked for further work on several market-based approaches; the result will feed into a single corporate standard the GHG Protocol and ISO plan to publish in late 2028. Until then, the 2015 guidance applies. See the scope 2 revision.

Where are scope 1 and 2 emissions reported?

California's SB 253 requires them from large US companies from 2026, IFRS S2 and ESRS E1 require them in sustainability reports, and many customers ask suppliers for them. Emissions intensity, such as tonnes per million dollars of revenue or per unit produced, is often reported alongside. See California SB 253 and IFRS S2. For which EU companies report under ESRS E1, see the CSRD after the Omnibus and the revised ESRS.

This guide is general information. It is not tax or legal advice for your situation.