Scope 2 emissions are the indirect greenhouse gas emissions from a company's purchased and consumed electricity, steam, heat, or cooling. Although the emissions occur at the power plant or generation source, they are attributed to the company that uses the energy under the GHG Protocol Scope 2 Guidance.
Scope 2 covers emissions from purchased electricity, district heating, district cooling, and steam consumed by the reporting company. It does not include emissions from on-site fuel combustion (which is Scope 1) or value chain emissions such as transportation, business travel, or purchased goods (which is Scope 3).
Scope 1 covers direct emissions from sources the company owns or controls (on-site boilers, company vehicles, process emissions). Scope 2 covers indirect emissions from purchased energy. Scope 3 covers all other indirect emissions across the value chain, both upstream (supplier emissions, business travel, employee commuting) and downstream (use of sold products, end-of-life treatment). The three together cover the full corporate emissions footprint.
Location-based Scope 2 calculates emissions using the average emission intensity of the local grid where the electricity was consumed. Market-based Scope 2 calculates emissions using the contractual instruments the company has procured, such as EACs, PPAs, or specific supplier contracts. Companies typically report both methods in parallel, and the market-based figure is the one that reflects renewable energy purchases.
To make a market-based Scope 2 claim that the company is using renewable electricity, the company must hold and cancel EACs equal to its consumption. The cancellation statement is the auditable evidence that the EACs have been retired against the claim. Frameworks such as RE100, CDP, and the Science Based Targets initiative all rely on cancelled EACs as the underlying evidence for renewable electricity claims.
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