Scope 2 Emissions
Scope 2 emissions are indirect greenhouse gas emissions from the generation of purchased electricity, steam, heating, and cooling consumed by an organization. They are called 'indirect' because the emissions physically occur at the power plant or utility, not at the reporting company's facilities.
Scope 2 emissions represent the carbon footprint of the energy an organization buys. For most commercial and industrial companies, purchased electricity is the largest Scope 2 source. Manufacturing facilities may also have significant steam or district heating purchases.
The GHG Protocol requires dual reporting of Scope 2 using two methods. The location-based method uses average grid emission factors for the region where electricity is consumed. The market-based method reflects the specific electricity supply choices an organization has made — such as renewable energy certificates (RECs), power purchase agreements (PPAs), or green tariffs.
Accurate Scope 2 accounting depends on granular utility data: kWh consumed per facility per month, the grid region, and any contractual instruments. Modern platforms like Gravity automate utility bill capture and apply the correct location-based and market-based factors automatically.
Reducing Scope 2 typically involves on-site solar or other renewables, purchasing green power through PPAs or RECs, improving energy efficiency to reduce consumption, and shifting load to lower-carbon grid periods.
Frequently asked questions
What are Scope 2 emissions? +
Scope 2 emissions are indirect greenhouse gas emissions from purchased electricity, steam, heating, and cooling. The emissions occur at the utility provider, but the consuming organization reports them because its demand drives the generation.
What is the difference between location-based and market-based Scope 2? +
Location-based uses average grid emission factors for where electricity is consumed. Market-based reflects specific purchasing decisions like renewable energy certificates (RECs), power purchase agreements (PPAs), or green tariffs. The GHG Protocol requires reporting both.
How can a company reduce Scope 2 emissions? +
Companies can reduce Scope 2 by installing on-site renewables, signing power purchase agreements for clean energy, purchasing RECs, improving energy efficiency to lower consumption, and implementing demand response and load-shifting programs.
Related terms
Scope 1 Emissions
Scope 1 emissions are direct greenhouse gas emissions from sources that an organization owns or controls. This includes combustion of fossil fuels in owned boilers, furnaces, and vehicles; process emissions from manufacturing; and fugitive emissions such as refrigerant leaks and methane from owned landfills.
Scope 3 Emissions
Scope 3 emissions are all indirect greenhouse gas emissions that occur in an organization's value chain — both upstream (suppliers, purchased goods, business travel, employee commuting) and downstream (product use, end-of-life treatment, investments). Scope 3 typically represents 70–90% of a company's total carbon footprint.
Utility Bill Management
Utility bill management is the process of systematically collecting, validating, and analyzing utility bills — electricity, natural gas, water, steam, and waste — across an organization's facilities to ensure billing accuracy, track consumption trends, identify anomalies, and feed data into carbon accounting and energy management workflows.
Energy Management
Energy management is the systematic monitoring, control, and optimization of energy consumption in an organization to reduce costs, improve efficiency, and lower carbon emissions. It encompasses utility bill tracking, real-time meter monitoring, anomaly detection, efficiency project planning, and incentive capture.
GHG Protocol
The GHG Protocol is the world's most widely used greenhouse gas accounting standard. Developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), it provides frameworks for organizations, cities, and countries to measure and manage their emissions across three scopes.