Introduction
When setting up a GHG inventory, there are several choices of activity data and emission factors used for calculating emissions from purchases of electricity, steam, heat, and cooling (i.e. scope 2). The primary piece of data needed to quantify scope 2 emissions is the amount of electricity purchased. This information can be found in utility bills or other purchase records. Collecting electricity information in this way is often considered more accurate than sub-metering from within the facility, which may be incomplete for a variety of reasons.
Most buildings by default receive commodity electricity from their local distribution utility (re: utility company). However, some reporting organizations may receive additional invoices from a commodity supplier, which charges a fee for electricity delivery. In this case, the EPA Center for Corporate Climate Leadership recommends using the utility bill for activity data, because local utilities use electricity meters located at the organization’s facility (i.e. metered consumption data). To avoid counting the same consumption twice, ensure that consumption from the commodity supplier is not also included in the activity data.
In the case of leased facilities, the actual amount of electricity used by each tenant may not be readily available. In this case, or in other similar scenarios where data is limited, the organization may estimate its own consumption within the building by multiplying the electricity purchases for the entire facility by the percentage of the floor area that the organization occupies. Organizations may also estimate electricity consumption using published values for average energy consumption per square foot of floor area. Such values are provided by the U.S. Energy Information Administration’s Commercial Building Energy Consumption Survey.
Location-Based Electricity Emission Factors
The location-based method considers grid average emission factors for the electricity grids that provide electricity to your facility. Grid average emission factors refer to the average amount of greenhouse gases within a specified geographic boundary. In order to estimate location-based emissions from electricity use (Scope 2 emissions), companies use emission factors that reflect the greenhouse gases produced by energy generation within that specified geographic boundary or region.
The location-based method is not supplier-specific. That means these emission factors are not specific to individual energy suppliers, but rather reflect the overall emissions from all energy production in a region. Location-based uses grid average emission factors that do not factor out contractual purchases, but rather represent the average emissions from all power plants in a region. In other words, they do not account for any special contracts or purchases that other companies might have to get cleaner energy. This method does not factor in marginal emission factors, which tell us the amount of additional greenhouse gases produced when there’s a slight increase in electricity demand. These extra power plants, which only turn on when demand is high, are often less efficient and produce more pollution (greenhouses gases). Since these plants only operate “at the margin” they are useful for avoided emissions analyses, but are not used for the location-based method where a grid average is needed.
The GHG Protocol outlines three types of location-based emission factors: direct line, regional, and national. These are outlined below in order of preference based on the precision of the factors.
1. Direct Line Emission Factor
By default, most facilities will procure their electricity from the grid – i.e. from their regional utility. Direct line electricity, on the other hand, refers to the electricity supplied directly from a specific generation source, such as a power plant or renewable energy facility, to a consumer without passing through the general electricity grid. In such a case, the emission factor for that generation facility is preferred for calculating emissions in the location-based method. When an organization buys electricity from both a direct line connection and the grid, each source will need their own emission factor applied accordingly. Steam, heat (in the form of hot water), and cooling (in the form of chilled water) are typically purchased through a direct line connection with a generating facility, unless associated with energy attribute certificates or contracts.
2. Regional Emission Factor
Regional emission factors tell us the amount of greenhouses gases produced on average when generating electricity in a specific area or region. Since each building in a region might source electricity from different power plants and providers, using an average gives a better idea of the overall emissions in that region. For the majority of companies who purchase electricity from a utility, they can simply apply regional emission factors obtained through national governments or other sources. For the U.S., these are published by through the EPA’s Emission Factors Hub containing the most recent eGRID subregion emission factors. Emission & Generation Resource Integrated Database (eGRID) is an EPA database from the agency’s Clean Air Power Sector Programs on the environmental characteristics of the majority of electric power generated in the United States. An eGRID subregion represents a portion of the U.S. power grid that is contained within a single North American Electric Reliability Council (NERC) region. The U.S. EPA Power Profiler tool can be used to determine the facility’s eGRID subregion.
3. National Emission Factor
If regional factors are not available, national average emission factors can be used, such as those published by national governments or by the International Energy Agency (IEA).
Location-based scope 2 data hierarchy examples
Data forms listed here should convey combustion-only (direct) GHG emission rates, expressed in metric tons per MWh or kWh.
Location-based method emission factor hierarchy.
Market-Based Electricity Emission Factors
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 emission factors are supplier-specific emission factors, or the emissions profiles associated with renewable energy credits (RECs) and power purchase agreements (PPAs). Imagine you live in a town where you can choose your electricity supplier. Some suppliers offer clean, renewable energy like wind or solar power, while others provide conventional electricity from sources like coal or natural gas. If you decide to pay extra to get your electricity from a clean energy supplier, your market-based emission factor will reflect the lower greenhouse gas emissions from that clean energy.
The GHG Protocol outlines six types of market-based emission factors: energy attribute certificates, contracts, supplier-specific, residual mix, regional, and national. These are outlined below in order of preference based on the precision of the factors. These are outlined below in order of preference based on the precision of the factors.
1. Energy Attribute Certificates
Energy Attribute Certificates (EACs) are proof that a certain amount of electricity was generated from a renewable energy source, like wind or solar. When renewable energy is produced, an EAC is created and can be bought and sold separately from the physical electricity. By purchasing EACs, companies and individuals can claim they are using renewable energy, even if the electricity they actually receive from the grid is a mix of different sources. Examples of EACs are renewable energy certificates (RECs) in the United States or Guarantees of Origin (GOs) in Europe, which certify that 1 megawatt-hour (MWh) of electricity was generated from renewable sources and added to the grid. Typically these certificates represent renewable energy and may have an emission factor of zero, but may have a nonzero emission factor if there is a fossil-fuel or biomass generation component. Make sure to do your homework and check the certificate!
2. Contracts
An electricity contract like a Power Purchase Agreement (PPA) is a deal between a power producer and a buyer to purchase electricity from a specified generating facility. This facility may be located at the organization’s facility, at a nearby location with a direct line connection to the organization, or located remotely. Put simply, the producer agrees to provide electricity, often from renewable sources like solar or wind, to the buyer at a fixed price for a certain number of years. This agreement helps the producer secure funding to build the energy project by guaranteeing a long-term customer, and it helps the buyer lock in energy costs and use clean energy without having to build their own power plant. Check the contract for the emission factor associated with the specific generation facility.
3. Supplier-Specific Emission Factor
When using an electricity supplier such as a regulated utility or a deregulated supplier, it is recommended to use the emission factor specific to that supplier rather than the general average for all electricity (i.e. from eGRID, as in with the location-based method). In a regulated market, a single company provides electricity to everyone in a specific area. In a deregulated market, you can choose your electricity supplier, similar to how you might choose your phone or internet provider. In either case, you can contact your supplier directly to get their specific emission factor, which details the greenhouse gas emissions associated with the electricity they generate or supply. Alternatively, you may be able to find this information in supplier reports, regulatory filings, or industry databases. To be used in the market-based method, the emission factor must include all the electricity delivered by the supplier, including electricity it generates as well as electricity it purchases from others. Some supplier emission factors only include generation facilities owned by the supplier, which does not represent the full electricity delivered.
4. Residual Mix Factor
A residual mix emission factor represents the remaining emissions after certificates, contracts, and supplier-specific factors have been claimed and removed from the calculation. This number can be used as an estimate for the average amount of greenhouse gases produced for each unit of electricity consumed from the grid when you can’t directly trace where the electricity came from. It’s like an average pollution rate (amount of greenhouse gases) for all the electricity that’s left after accounting for renewable energy claims, like those made with RECs or Guarantees of Origin. This factor helps people and companies understand their carbon footprint from using electricity when they don’t have specific information about their energy source. A residual mix emission factor can be a regional or national factor. To prevent double counting of GHG emission rate claims tracked through contractual instruments, the market-based method requires an emission factor that characterizes the emission rate of untracked or unclaimed energy. For this reason, residual mix factors are the preferred market-based default emission factors for any of an organization’s electricity for which it cannot apply one of the more-preferred emission factors above.
5. Regional Emission Factor
If residual mix factors are not available, organizations can use a regional grid average emission factor as the default.
6. National Emission Factor
If neither residual mix factors nor regional factors are not available, organizations can use a national grid average emission factor as the default.
Market-based scope 2 data hierarchy examples
Data forms listed here should convey combustion-only (direct) GHG emission rates, expressed in metric tons per MWh or kWh. Reporting entities should ensure that market-based method data sources meet Scope 2 Quality Criteria. Instruments listed here are not guaranteed to meet Scope 2 Quality Criteria, but are indicative of instrument type.
Market-based method emission factor hierarchy.
Applying Emission Factors to Consumption
In order to accurately quantify emissions using the location-based and market-based methods, the selected emission factors must be multiplied by the appropriate quantity of electricity purchases. Different facilities may require the use of different emission factors, such as when a portion of the electricity for an individual facility is purchased through RECs or a PPA, and the rest from the grid. Similarly, if a company has purchased certificates to apply to half of a given operation’s electricity use, it will need to use other instruments or information on the emission factor hierarchy to calculate the emissions for the remaining half.
Calculating Emissions
To calculate scope 2 emissions according to one or both methods, the following procedure applies:
- Multiply activity data from each operation by the emission factor for that activity for each applicable GHG. Some electricity emission factor sets may include emission rates for CO2, CH4, and N2O; others may only provide CO2 emission rates.
- Multiply global warming potential (GWP) values by the GHG emissions totals to calculate total emissions in CO2 equivalent (CO2e).
- Report final scope 2 by each method in metric tons of each GHG (where available) and in metric tons of CO2e.
