Introduction
Heating emissions can be tricky to classify, especially when you lease your office space and equipment, like a boiler. Many businesses in similar situations ask us:
"We lease an office space (and as part of it, a boiler). While we don’t own the boiler, we purchase oil for heating. Should we report these heating emissions as Scope 1 or Scope 2?"
In this article, we’ll break down how to classify these emissions correctly and help you stay compliant with the GHG Protocol.
Scope 1 vs. Scope 2: The Key Difference
The classification of heating emissions depends on who controls the source of the emissions:
Scope 1 emissions: Direct emissions from sources your business owns or controls.
Scope 2 emissions: Indirect emissions from the energy you purchase (like electricity, district heating, or cooling).
How to Classify Your Heating Emissions
If your company leases an office and a boiler but directly purchases oil to heat the space:
Scope 1 applies: You control the emissions because you purchase the oil and operate the boiler. Even though the boiler is leased, the emissions occur onsite due to your activity.
If you instead purchased district heating (or similar) from your landlord or utility provider:
Scope 2 applies: The emissions result from generating the heat you’re consuming, which occurs offsite.
Why It’s Not Scope 3
Leased assets only create Scope 3 emissions when your company doesn’t control the emissions source. For example:
If the landlord controlled the boiler and provided heating as part of your lease, these emissions might be part of the landlord's Scope 1 or 2. Your role would be to report them as Scope 3: Category 8 (Upstream Leased Assets).
In your case, since your business controls the heating process, the emissions belong in Scope 1.
Conclusion
For businesses leasing an office and operating a boiler with purchased oil, heating emissions should be reported as Scope 1 because your company has operational control.
If you’re ever unsure how to classify emissions or want to ensure your reporting aligns with the GHG Protocol, we’re here to help.
Need Help with Carbon Accounting?
Reach out to the KEY ESG team at support@keyesg.com or via the in-platform chat function. Our team is ready to assist with any questions about emissions classification, reporting, and more.