Scope 1 emissions: What are they? Why are they important for US business?

Understanding and managing a company’s greenhouse gas emissions, particularly Scope 1 emissions, is a priority for businesses globally, and the United States, where regulatory and market pressures are driving greater accountability, is no exception. Among the three scopes of emissions outlined by the GHG Protocol, Scope 1 emissions—which include direct GHG emissions—are often the first to be addressed by businesses. These emissions originate from sources under the direct control of a business and are pivotal to understanding its carbon footprint. For many companies, managing Scope 1 emissions effectively is essential for compliance, sustainability, and operational efficiency.

What are Scope 1 carbon emissions?

Scope 1 direct emissions, also referred to as direct GHG emissions, include those generated by sources that are owned or controlled by a company. These emissions encompass a wide range of activities and processes, such as burning fuel in company facilities or in vehicle operation, leaks of industrial gases, and emissions from certain production processes. Common sources of Scope 1 emissions include:

Stationary combustion: Emissions from fuel consumption in boilers, furnaces, or generators used to power facilities or industrial operations.

Mobile combustion: Emissions produced by an industrial fleet of vehicles owned or controlled by the company.

Fugitive emissions: Leaks from refrigeration systems, fire suppression equipment, wastewater treatment and other industrial processes that release gases into the atmosphere.

Process emissions: Emissions generated during chemical reactions or production activities, such as in cement manufacturing or metal smelting.

It’s worth noting that Scope 1 emissions are typically the smallest portion of a company’s overall carbon footprint, but they are also the most direct and controllable. By reducing Scope 1 emissions, companies can make a significant impact on their overall GHG emissions and contribute to a more sustainable future.

How do Scope 1 emissions differ from Scope 2 emissions?

Scope 1 emissions represent carbon dioxide and other greenhouse gases that are directly under a company’s control, such as those emitted by stationary equipment, a company fleet, or through the fuel consumption in company-owned facilities. In contrast, Scope 2 emissions are indirect GHG emissions that result from the generation of purchased electricity, heat, or steam. While Scope 1 emissions originate directly from operations, Scope 2 emissions occur outside the company but are still closely tied to its energy consumption. This distinction highlights the importance of carbon accounting in understanding how energy sourcing contributes to a company’s overall footprint.

How do Scope 1 emissions differ from Scope 3 emissions?

Scope 3 emissions go beyond the company-owned operations of Scope 1, encompassing all other supply chain or value chain emissions that result indirectly from business activities. For many businesses, they account for more than 70 percent of their carbon footprint. These include emissions from suppliers, product usage by customers, transportation not controlled by the company, and waste disposal. Unlike Scope 1, which is limited to direct emissions, Scope 3 addresses the full chain emissions of a company, making it the broadest and most complex category to measure. Understanding Scope 3 emissions is crucial for capturing the total impact of a business and identifying opportunities to reduce emissions across its entire ecosystem.

Why are Scope 1 emissions important for US businesses?

Regulatory compliance

For a reporting company, compliance with regulations such as the SEC’s proposed climate disclosure rules requires transparent and accurate reporting of Scope 1 emissions. The Environmental Protection Agency (EPA) also mandates specific industries to monitor and disclose emissions, particularly from activities such as burning fuel or using fire suppression systems. Accurate reporting is critical to avoiding penalties and maintaining regulatory approval.

Reducing emissions and operational costs

Addressing Scope 1 emissions can lead to significant opportunities to reduce emissions while cutting costs. By optimizing operations, improving energy efficiency, and transitioning to cleaner fuels, companies can lower their carbon footprint and improve their bottom line. For example, upgrading an industrial fleet to include electric or hybrid vehicles can significantly reduce both fuel costs and emissions.

Enhancing stakeholder trust

Investors, customers, and employees increasingly expect companies to prioritize sustainability. Scope 1 emissions are the most visible and measurable component of a company’s carbon footprint, making them a key focus for stakeholders. Transparent disclosure and proactive efforts to reduce emissions can bolster a company’s reputation and competitive standing.

Challenges in managing Scope 1 emissions

Data collection and carbon accounting

Gathering accurate data for carbon accounting can be a resource-intensive process, especially for companies with multiple facilities or operations spanning diverse industries. Tracking emissions from direct purchases of fuel, refrigerants, or other materials requires meticulous record-keeping and monitoring. For a reporting company, meticulous record-keeping and monitoring are essential for accurate carbon accounting.

Monitoring and verification

Ensuring the reliability of emissions data often involves advanced monitoring tools and third-party verification. This is particularly important when dealing with complex systems that generate direct GHG emissions, such as large-scale manufacturing facilities or extensive vehicle fleets.

High upfront costs

While transitioning to cleaner technologies and fuels can reduce long-term costs, the initial investment may be substantial. For example, replacing aging equipment or adopting carbon accounting software may strain budgets in the short term.

Strategies to reduce Scope 1 emissions

Transition to renewable energy

Replacing fossil fuels with renewable energy sources is one of the most effective ways to reduce Scope 1 emissions. For instance, companies can install solar panels or invest in onsite wind turbines to reduce reliance on burning fuel for power.

Improving energy efficiency

Optimizing energy use across facilities and operations is another crucial step. Regular maintenance of machinery, retrofitting outdated equipment, and implementing energy management systems can reduce fuel consumption and associated emissions.

Addressing fugitive emissions

Preventing leaks from refrigeration and fire suppression systems is critical. Investing in modern equipment and conducting regular leak detection and repair (LDAR) programs can significantly reduce fugitive emissions of industrial gases.

Upgrading the industrial fleet

Transitioning from conventional diesel or gasoline-powered vehicles to electric or alternative fuel vehicles can significantly lower emissions from a company’s industrial fleet. Fleet optimization and route planning tools can further enhance efficiency.

The role of emissions inventory and carbon accounting

A company’s emissions inventory serves as the foundation for effective climate action. By identifying and quantifying all sources of direct GHG emissions, businesses can develop targeted strategies to reduce their environmental impact. Carbon accounting software and platforms play a crucial role in automating data collection, improving accuracy, and ensuring compliance with standards such as the GHG Protocol. For a reporting company, maintaining an accurate inventory is essential for effective climate action and regulatory compliance.

Scope 1 in the broader sustainability context

Managing Scope 1 emissions is an integral part of a company’s strategy to address climate change. However, addressing direct emissions is only the beginning. To achieve meaningful reductions, businesses must also tackle indirect emissions from Scope 2 and chain emissions from Scope 3. Together, these efforts create a comprehensive approach to reducing a company’s carbon footprint. Addressing all aspects of a company’s greenhouse gas emissions is essential for a holistic sustainability strategy.