Purchased electricity (Scope 2) covers all the emissions related to electricity purchased 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, Purchased 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 purchased 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) Calculation methods
Here are the various calculation methods available in Cozero Log for calculating Scope 2 emissions from Purchased 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.
Electricity emissions can be calculated according to either the location-based (grid-mix) or the market-based method.
Calculation method | Description | Accuracy level |
Market-based | The market-based method reflects the GHG emissions associated with the choices a consumer makes regarding its electricity supplier or product.
These choices may include opting for a retail electricity supplier, a specific producer or actively procuring renewable energy.
Since markets usually do not have comprehensive energy tracking by contracts yet, this method
Residual-mix: factoring out low-carbon or renewable energy sources. In other words, what's left in the grid mix once the contributions of these cleaner sources have been subtracted. | 1 |
Location-based / Grid-mix | Quantify scope 2 based on average energy generation emission factors for defined geographic locations, including local, subnational, or national boundaries. | 2 |
For this category, the logic differs from the rest of the categories in Log. When accounting for electricity, companies should always, at a minimum, report on the location-based method. If available, they should also report according to the market-based method therefore, including both emission results in their reporting.
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 purchased 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 “Purchased electricity”
Step 2: Select the subcategory (usage case) you want to report on
Step 3: Select “Electricity consumption: Market-based” as calculation method
Step 4: Select the correct activity that best represents your contractual instruments
Step 5: Enter the amount of electricity consumed
Step 6: Select the appropriate country of sourcing
2b. Location-based method
This method quantifies emissions based on average energy generation emission factors for defined geographic locations, within local, subnational or national boundaries.
Activity data: quantity of electricity purchased in kWh. Cozero Log provides conversion for other units (e.g. MWh).
Emission factor: electricity grid emission factors represent the average emissions from energy generation occurring within a defined geographic area and a defined time period (grid-mix).
How to report emissions in Cozero?
Step 1: Select the Log called “Purchased electricity”
Step 2: Select the subcategory (usage case) you want to report on
Step 3: Select “Electricity consumption: Grid-mix” as calculation method
Step 4: Enter the amount of electricity consumed
Step 5: Select the appropriate country of sourcing
Cozero Log will automatically calculate the emissions for the quantity of electricity entered as well as Scope 3 upstream emissions from upstream impacts and T&D losses.
2c. Direct emissions input
Users can enter the amount of emissions in CO2e directly in the Log. Make sure of the accuracy of data used in this estimation.
3) Modeled categories
In the category of Purchased 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 purchased 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. Determination of accounting method: market-based vs. location-based
4b. Usage cases: Subcategories
The following scenarios list various usage cases for Purchased electricity. If multiple usage cases apply, it is recommended that you include all of them when compiling your inventory, to ensure a comprehensive representation of your company's electricity emissions
I. Electricity consumption
Emissions from generation of electricity that is purchased and consumed within the operations of the reporting company. Electricity consumption is reported in Scope 2.
When to use this subcategory:
If you purchased electricity from the grid or directly from a supplierWhen not to use this subcategory:
If you are generating electricity that you also consume: you need to report these emissions within Facility fuel use (Scope 1)
Note on electric vehicle electricity: If you have data on the exact amount of electricity used in your company owned or controlled vehicles, we recommend that you report this electricity consumption in Company vehicles (Scope 1). If this is not the case (e.g. this information is aggregated with all other electricity consumption), the electric vehicle emissions may be included in the category Purchased electricity.
II. Cooling
This subcategory is used by companies purchasing electricity for use in cooling systems. If you have cooling systems, do not forget to also report on refrigerant emissions in the Cozero category Equipment gas leakage.
III. Energy Recovery
This subcategory is used by companies purchasing electricity that is generated from waste processing. Therefore, this scenario is applicable if you are purchasing energy from waste recovery or if you are purchasing energy from the same facility where you send your waste to.
IV. Other
This subcategory is used for all other usage cases that don’t match the above mentioned descriptions.
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.