Electricity (Scope 2) covers all the emissions related to electricity consumed directly by the reporting company. For many organizations, electricity represents one of the main sources of emissions.
In the electricity value chain, an energy producer generates electricity by using primary sources of energy such as fossil fuels or renewable energy (e.g. wind or solar power). Once energy is generated, it is either consumed on-site, or distributed to another entity by direct line transfer or through the electricity grid.
1) How this category aligns with carbon accounting standards
The Cozero category, Electricity, is a source of Scope 2 emissions, as defined by the GHG Protocol. All Cozero emissions calculation methodologies follow the requirements for this Scope of emissions accounting. Other types of consumed energy also fall into Scope 2 but are represented in the separate Cozero category “Purchased heat, steam & cooling”.
The GHG Protocol Corporate Standard
The GHG Protocol Corporate Standard
The GHG Protocol Corporate Standard is an internationally-recognized go-to standard for estimating and reporting corporate GHG emissions. GHG emissions are categorized into three ‘Scopes'. For further information see here.
Scope 1 includes direct GHG emissions that originate from sources that are owned or controlled by the reporting company, e.g. generation of electricity, heat and steam, physical or chemical processing, transportation of materials and fugitive emissions. They are the most important source of emissions because they are the direct result of companies’ activities.
Scope 2 encompasses indirect emissions from the generation of purchased or acquired electricity consumed by the reporting company. These emissions are considered to be indirect because, although they arise as a result of the reporting company’s activities, they originate from sources that are owned and controlled by external entities.
In turn, these emissions are categorized as Scope 1 for the energy producer that generated the electricity, given that they arise from their owned and controlled resources.
Other upstream emissions associated with the transmission and distribution of energy within a grid are included in Scope 3.
2) Accounting & calculation methods
Here are the various calculation methods available in Cozero Log for calculating Scope 2 emissions from Electricity. Users should choose the method that is the most appropriate to the data available to them, to their business goals and the significance of the emissions of the category.
Scope 2 reporting is heavily based on a dual accounting and reporting approach defined by the Greenhouse Gas Protocol. This approach requires companies to report two sets of Scope 2 emissions: market-based and location-based emissions.
Accounting method | Description | Accuracy level |
Market-based | Reflects whether companies intentionally choose to procure low-carbon electricity or not.
These emissions can be calculated by using contractual agreements companies have with their electricity providers.
Examples include purchase agreements of renewable energy, renewable energy certificates, or supplier-specific electricity products. | 1 |
Location-based | Reflects the emissions the company is directly releasing into the air as a result of the use of the regional or national electricity grid.
They are calculated based on the average emissions intensity of the grid on which energy consumption occurs. | 2 |
To make dual-accounting fast and easy, Cozero’s methodology only requires you to input electricity data using the market-based method. Based on the electricity consumption tracked, Cozero will automatically connect your electricity consumption to the correct country or regional grid emissions intensity and calculate the location-based emissions. As a result, you obtain two sets of emissions for the same consumption, which you can use to comprehensively report your electricity emissions.
2a. Market-based method
This method quantifies emissions based on the emissions emitted by the electricity generator from which the user contractually purchases electricity. Under this method, a company uses the emission factor associated with the contractual instruments owned. Note that these should adhere to the quality criteria as stated in the GHG Scope 2 Standard. If these contracts are not available or the instruments do not meet the quality criteria, then regional emission factors representing the residual mix are used.
For more information on this method, including contractual instruments and calculation hierarchy, please refer to the article on the Market-based method.
Activity data: quantity of electricity consumed in kWh. Cozero Log provides conversion for other units (e.g. MWh).
Emission factor: derived from the contractual instruments that meet Scope 2 quality criteria, or in the absence of contractual instruments, the local residual or grid-mix.
How to report emissions in Cozero?
Step 1: Select the Log called “Electricity”
Step 2: Select the subcategory you want to report on
Step 3: Select the calculation method that reflects your sourcing of energy
Step 4: Select the correct activity that best represents the source of your electricity
Step 5: Enter the amount of electricity consumed
Step 6: Select the appropriate country of sourcing
Cozero Log will automatically calculate the emissions for the quantity of electricity entered as well as Scope 3 emissions from upstream impacts and T&D losses.
2b. Calculation methods
Subcategory: Renewable electricity generation
Self-generated renewable electricity
Subcategory: Electricity consumption
Self-generated renewable electricity
Renewable purchase agreements (PPAs)
Renewable energy certificates
Supplier specific contract
Local electricity mix
Subcategory: Electricity for cooling
Self-generated renewable electricity
Renewable purchase agreements (PPAs)
Renewable energy certificates
Supplier specific contract
Local electricity mix
3) Modeled categories
In the category of Electricity, there are additional emissions relating to upstream impact from the electricity purchased and consumed. As a result, additional calculations are required. Cozero Log automatically calculates these emissions but we still want to give you a brief overview of what they include.
Upstream emissions of consumed electricity: Relating to the extraction, production, and transportation of fuels utilized in the generation of electricity, steam, heating, and cooling that is consumed by the reporting company.
Transmission & distribution losses: Generated electricity, steam, heating and cooling that is consumed (i.e., lost) as it passes through a T&D system.
4) Category guidance & helpful information
4a. Accounting methods: market-based vs. location-based
4b. Renewable electricity on-site
Renewable electricity generation is an important sustainability effort companies should report to their stakeholders or through reporting frameworks.
The total generated electricity, includes both the electricity consumed in own operations and the quantity sent back to the grid. This can be tracked in the subcategory “Renewable electricity generation”. This calculation generates no emissions, but helps communicate the total quantity of renewable electricity that the company generated.
The share of the generated electricity that the company consumes itself should be reported separately in the subcategory “Electricity consumption”, by using the calculation method “Self-generated renewable electricity”. You can then log the purchased electricity separately. This helps the company transparently report all its energy consumption, including self-generated and purchased electricity.
4c. Reporting avoided emissions
Emissions that are avoided by opting for low-carbon energy generation and use should be reported separately from the Scopes defined by the GHG Protocol. These avoided emissions represent impacts outside the GHG inventory boundaries. Avoided emissions are not necessarily equivalent to global emissions reductions from additional projects and should therefore not be used to reduce a company’s carbon footprint.
For example, if the project operates in a jurisdiction with an emissions cap on the power sector, or comes from a GHG offset, the company should not make public claims about avoided emissions. In the case of a cap, the avoided grid emissions can be zero as regulated entities may emit up to the level of the cap.
Alternatively they might already be represented in claims by the offset purchaser. Any offsets produced from the project, or any allowances voluntarily retired should therefore be reported separately.
5) Where can I find the relevant data?
Activity Data:
Utility bills or invoices usually sourced from the accounting department, real estate department, operations managers or procurement team
Contractual instruments
To find out more about data collection, you can refer to the article about Data Sourcing.