Understanding Scope 1, 2, and 3 Emissions: A Simple Guide

The Three Scopes Explained

If you have started looking into carbon reporting, you will have encountered the terms Scope 1, Scope 2, and Scope 3 emissions. These categories were defined by the GHG Protocol Corporate Standard — the most widely used international framework for measuring and reporting greenhouse gas emissions. Understanding these scopes is essential for creating a credible carbon reduction plan.

The scoping system exists because different types of emissions require different measurement approaches and reduction strategies. Lumping everything together would make it impossible to identify where your emissions come from and what you can do about them.

Scope 1: Direct Emissions

Scope 1 covers all direct greenhouse gas emissions from sources that your organisation owns or controls. These are emissions that physically occur at your facilities or in your vehicles.

Common examples for UK businesses:

• Natural gas — gas burned in your office or warehouse heating system
• Company vehicles — petrol or diesel burned in vehicles owned or leased by your company
• Fugitive emissions — refrigerant leaks from air conditioning or refrigeration units
• On-site fuel — diesel for backup generators, propane for site operations

For a typical office-based business, Scope 1 emissions come primarily from gas heating and company cars. For a manufacturing business, Scope 1 can be much larger due to process emissions and on-site fuel use.

Scope 1 is generally the easiest scope to measure because the data comes from your own utility bills, fuel cards, and maintenance records. It is also the scope where you have the most direct control over reductions.

Scope 2: Indirect Energy Emissions

Scope 2 covers indirect emissions from purchased energy — specifically electricity, steam, heating, and cooling that your organisation buys from external providers. The emissions occur at the power station, not at your premises, but they exist because of your energy demand.

For most UK businesses, Scope 2 is straightforward: it is the emissions associated with the electricity you consume. You calculate it by multiplying your electricity consumption (in kWh) by the DEFRA grid electricity emission factor.

There are two methods for calculating Scope 2:

• Location-based — uses the average grid emission factor for the country where you consume electricity. For the UK, this reflects the current grid mix of gas, nuclear, wind, solar, and other sources.
• Market-based — uses the emission factor specific to your electricity tariff. If you purchase a 100% renewable electricity tariff backed by Renewable Energy Guarantee of Origin (REGO) certificates, your market-based Scope 2 can be reported as zero.

A compliant carbon reduction plan should report at least the location-based figure. Including both methods provides a more complete picture and demonstrates the impact of your energy procurement decisions.

Scope 3: Everything Else

Scope 3 is the broadest category, covering all other indirect emissions that occur in your value chain. The GHG Protocol defines 15 categories of Scope 3 emissions, split between upstream and downstream activities.

The most relevant Scope 3 categories for UK SMEs are typically:

• Category 1: Purchased goods and services — emissions from producing everything your business buys, from IT equipment to office supplies to professional services
• Category 5: Waste generated in operations — emissions from disposal and treatment of waste your business produces
• Category 6: Business travel — emissions from flights, trains, taxis, and hotel stays for business purposes (in vehicles you do not own)
• Category 7: Employee commuting — emissions from employees travelling between home and work
• Category 8: Upstream leased assets — emissions from assets you lease, such as office space in a shared building

Scope 3 is almost always the largest scope. For a professional services firm, Scope 3 can represent 80% or more of total emissions, driven primarily by purchased goods and services and business travel.

Why All Three Scopes Matter

Some businesses focus only on Scope 1 and 2 because they are easier to measure and control. While this is a valid starting point, it ignores the majority of your emissions. PPN 006 explicitly requires reporting across all three scopes, and any credible carbon reduction plan should address all of them.

Here is a simplified example for a 50-person office-based business:

• Scope 1: 15 tCO2e (gas heating + 3 company cars) — 8% of total
• Scope 2: 12 tCO2e (electricity) — 6% of total
• Scope 3: 160 tCO2e (purchased goods, travel, commuting, waste) — 86% of total

Ignoring Scope 3 would mean addressing only 14% of this business's actual carbon footprint. That is not a carbon reduction plan — it is a footnote.

Getting Your Scopes Right

A Carbonhogs plan calculates all three scopes using DEFRA 2024 emission factors and the GHG Protocol methodology. Our questionnaire gathers the activity data needed for each scope, and our calculation engine does the rest. You receive a clear breakdown showing exactly where your emissions come from and where the biggest opportunities for reduction lie.