Scope 2
GHG Emissions
7 min read

ESG Reporting and Scope 2 Emissions

What are Scope 2 emissions and how do you measure them accurately?

What are Scope 2 emissions?

Scope 2 emissions are those emissions that are created in the production of electricity that you use in your building.  You turn on the lights, and they draw power from the electric grid, which delivers electricity from coal, gas, solar, wind, hydro and nuclear power plants.  And those power plants produce different amounts of greenhouse gas emissions.

In a nutshell, carbon emissions, also known as greenhouse gas emissions (GHG), are gasses released by the burning of fossil fuels that trap heat in the atmosphere.  Since there are many different kinds of carbon emissions (e.g. - carbon dioxide (CO2), methane (CH4), and Nitric Oxide (N2O)), total emission volume is typically measured in units of CO2-equivalent or CO2e (such as metric tons). Elexity uses this unit when displaying emissions totals.

How do you calculate Scope 2 emissions?

The GHG Protocol provides two methods for tracking Scope 2 emissions: the market-based method and the location-based method.  And recently, a third, and more accurate method has been introduced called the impact-based method.

  • The market-based method: calculates emissions based on the electricity that organizations have chosen to purchase, often spelled out in contracts or instruments like Renewable Energy Certificates (RECs). 
  • The location-based method: calculates emissions based on the emissions intensity of the local grid area where the electricity usage occurs. 
  • The impact-based method: Uses real-time emissions data to determine how ‘clean’ or ‘dirty’ power is at different times during the day.  This method more accurately measures the emissions footprint for a specific consumer and their power use profile.  For example, using power during the middle of the day in July in California may be 100% emissions-free, but using power at night could be 90% from fossil fuel generation.

Direct Measurement With Impact-Based Accounting

Carbon emissions are arguably the most important thing for our society to learn how to manage in the coming years. The largest single source of U.S. carbon emissions is our electricity system. And yet, we do not measure emissions from our electricity use correctly, meaning we cannot manage our emissions effectively.

But now, thanks to new data providers that accurately measure moment-to-moment carbon emissions on our electricity system, we can unlock a whole host of new opportunities to manage emissions creatively and with less effort.   Combined with real-time metering data from your building, software like Elexity can quickly calculate your foot-print based on the emissions of the grid at the time you used the electricity.  But, wait… there’s more ;)

End-use Flexibility for Reduced Emissions

Many uses of electricity are flexible.  We can make small(ish) adjustments to the timing of when equipment runs (minutes or even hours) without impacting the quality of the service that device is providing.  (e.g. - heating, cooling, hot water)  As Rocky Mountain Institute explored in The Economics of Demand Flexibility, harnessing this flexibility can save consumers and companies money while lowering grid costs.

If we can shift when our equipment and devices use power, we can also shift what power plants are being used to power them — allowing them to be on average, 15 percent cleaner than a “dumb” device, at no cost or quality impacts for the end-user.

Corporations are spending significant resources to try to manage their carbon emissions. Unfortunately, much of this effort occurs without measuring these emissions correctly.  We see two typical approaches:

1) Without measurement, making efforts that are generally associated with reduced emissions. For example, many corporations invest in things like efficiency, solar PV, and grid-sourced clean energy, but do not attempt to quantify the emissions savings associated with specific investments.

2) With rough measurement using broad averages of emissions intensity, primarily by using EPA historical data to estimate averages for electricity-related emissions. For example, a car dealer in California might sell electric vehicles and claim they are ‘zero-emission’ vehicles.  But if they charge those EVs at night, they are relying primarily on fossil-fuel power, and increasing the emissions.

The emissions you make

Elexity partner, WattTime has written extensively about the difference between average and marginal emissions factors.  And the difference can be very large.  Average emissions are the amount of emissions generated over a given time, divided by the amount of energy produced in that time.  For example, California has a significant amount of solar power and wind energy.  During the summer, California may produce more than 50% of it’s energy from clean resources.  

But that doesn’t mean a specific building or user is powered by 50% clean energy.  A marginal emissions factor refers to the rate at which emissions would change when you add or take away load at a particular moment.  Where will that ‘extra’ power come from?  Think about the car dealer charging their EVs.  If they charge at night, those EVs aren’t going to be powered by clean solar power.  They will charging off the generation of traditional fossil fuels power plants – and creating a significant carbon footprint.  

Check out the real-time tracking of emissions in California.

The portfolio of generators dispatching energy into the grid changes every five to 15 minutes, changing the resource mix.  For example, Midwest utilities mostly burn coal at night; if you own an electric vehicle there, you would have lower CO2 emissions if you deliberately charged it during the day.  And if your EV charger is connected to an energy control platform, you can cut emissions even further with micro-timing.  That software can reduce charging when the grid gets to dirty, or it can increase charging to take advantage of on-site solar that you may have installed at your building.

Real-time data is real-time opportunity

Accounting for carbon emissions correctly unlocks a whole host of new emissions-management opportunities. You can:

  • Change the timing of energy use: As noted above, this is likely the easiest and largest source of untapped savings since it doesn’t take any additional investments or impact end-use quality. It simply takes advantage of emerging controls technology associated with Internet-connected devices. Thermostats, EV chargers, commercial-scale HVAC units, and demand-response programs, for example, can all run with lower emissions rates with just a few lines of computer code.
  • Value grid-services based on their actual carbon reduction potential: Today, grid service programs like demand response reduce load and thus reduce energy use.  But not all load reductions reduce emissions equally.  They have different values and should be valued and accounted for differently.  Valuing on-site energy conservation measures and distributed generation based on actual emissions reduction potential can support better decision-making.
  • Price carbon markets correctly: If we do move to a world in which carbon emissions have a price, it would be great if it has the right price. Currently, renewable energy credits (RECs) and carbon offsets are priced, but only on average carbon impacts. Differentiating highly carbon-reducing RECs will lead to more cost-effective emissions reduction.

Elexity is working with companies like WattTime and RMI to advance the software and technologies we need to take advantage of this new data and turn it into actionable results in every building.  Elexity’s energy control platform will reduce emissions by 10-20% on average, and help customers automatically shift when they use energy to reduce costs and emissions.  We’re looking forward to celebrating our customers as they achieve their emissions goals.

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