Category 3: Fuel- and energy-related emissions not included in scope 1 or scope 2
Introduction
This category includes emissions related to the production of fuels and energy purchased and consumed by the reporting company, that are not included in scope 1 or 2. It includes emissions from four distinct activities:
Upstream emissions of purchased fuels. This includes the extraction, production, and transportation of fuels consumed by the reporting company. Examples include mining of coal, refining of gasoline, transmission and distribution of natural gas, production of biofuels, etc.
Upstream emissions of purchased electricity. This includes the extraction, production, and transportation of fuels consumed in the generation of electricity, steam, heating, and cooling that is consumed by the reporting company. Examples include mining of coal, refining of fuels, extraction of natural gas, etc.
Transmission and Distribution (T&D) losses. This includes the generation of electricity, steam, heating, and cooling that is lost in a T&D system, reported by the end user.
Generation of purchased electricity that is sold to end users. This includes the generation of electricity, steam, heating, and cooling that is purchased by a utility reporting company or energy retailer and sold to end users. This activity is relevant for utility companies that purchase wholesale electricity supplied by independent power producers for resale to their customers.
Category 3 excludes emissions from the combustion of fuels or electricity consumed by the reporting company, since they are included in scope 1 and 2.
Scope 1 includes emissions from the combustion of fuels by sources owned by or controlled by the reporting company.
Scope 2 includes emissions from the combustion of fuels to generate electricity, steam, heating , and cooling purchased by the reporting company.
Energy emission factors
There are two types of emission factors that are used to convert energy activity data into emissions data.
Life cycle emission factors, which include the emissions that occur in the life cycle of the fuel i.e. extraction, processing, transportation, and combustion.
Combustion emission factors, which include only the emissions that occur from combusting the fuel.
Combustion factors are used to calculate scope 1 emissions (in the case of fuels) and scope 2 emissions (in the case of electricity).
Life cycle emission factors are used to calculate emissions from fuels and electricity consumed in the reporting company’s value chain, except for category 3 (Fuel- and energy-related activities not included in scope 1 and scope 2). Life cycle emission factors represent all emissions in the upstream supply chain of fuels and energy. These emissions should be used to calculate scope 3 emissions related to fuel and energy consumed in the reporting company’s value chain, except for category 3.
Companies should use life cycle emission factors that exclude emissions from combustion to calculate emissions from the first two activities i.e. upstream emissions of purchased fuels and upstream emissions of purchased electricity, since emissions from combustion are accounted for in scope 1 (in the case of fuels) and scope 2 ( in the case of electricity).
Calculating upstream emissions of purchased fuels (activity #1).
This activity includes the extraction, production, and transportation of fuels consumed by the reporting company. Examples include mining of coal, refining of gasoline, transmission and distribution of natural gas, production of biofuels, etc.
Companies can use either of the following methods to calculate scope 3 emissions from this activity:
Supplier-specific method, which involves collecting data from fuel providers on upstream emissions (extraction, production and transportation) of fuel consumed by the reporting company.
Average-data method, which involves estimating emissions by using secondary (e.g., industry average) emission factors for upstream emissions per unit of consumption (e.g., kg CO2e/kWh)
The activity data needed in this category are quantity and types of fuel consumed.
Companies should use emission factors that exclude emissions from combustion, since emissions from combustion are used to calculate scope 1 and scope 2 emissions.
For the supplier-specific method, one should use fuel-provider-specific emission factors for extraction, production, and transportation of fuels per unit of fuel consumed (e.g., kg CO2 e/kWh), by fuel type and country/region. For the average-data method, one should use average emission factors for upstream emissions per unit of consumption (e.g., kg CO2e/kWh).
Sources of data include:
- Scope 1 GHG inventory, including quantities, sources and types of fuel consumed.
- Fuel procurement departments.
- Fuel suppliers, if necessary.
- Life cycle databases e.g third party databases on the GHG protocol website.
The formula below is used to calculate upstream emissions from purchased fuel.
Calculating upstream emissions of purchased electricity (activity #2).
This activity includes the extraction, production, and transportation of fuels consumed in the generation of electricity, steam, heating, and cooling that is consumed by the reporting company. Examples include mining of coal, refining of fuels, extraction of natural gas, etc.
Upstream emissions from electricity can be calculated in two ways:
Supplier-specific method, which involves collecting data from electricity providers on upstream emissions (extraction, production and transportation) of electricity consumed by the reporting company.
Average-data method, which involves estimating emissions by using secondary emission factors such as industry-average factors, for upstream emissions per unit of consumption (e.g., kg CO2e/kWh).
The activity data needed is the total quantity of electricity, heating, steaming and cooling purchased and consumed, per unit of consumption (e.g. MWh) broken down by supplier, grid region, or country.
Life cycle emission factors that exclude combustion emission factors should be used to calculate these emissions since combustion emission factors are used in calculating scope 2 emissions.
For the supplier-specific method, companies should use utility-specific emission factors for extraction, production, and transportation of fuels consumed per MWh of electricity, heating, steaming and cooling generated. If this data is not available, companies should use the average-data method. Here, one should use grid-region, country or regional emission factors for extraction, production and transportation of fuels consumed per unit of consumption of electricity, steam, heating, or cooling generated.
Data sources for activity data include:
References to scope 2 GHG inventories
National statistics published by government agencies
Government agency energy management departments
Energy suppliers or generators, if necessary.
Emission factors can be derived from:
Life cycle analysis by suppliers
Life cycle databases excluding emissions from fuel combusted to generate electricity and transmission and distribution (T&D) losses.
The formula used to calculate these upstream emissions from purchased electricity is shown below:
Calculating emissions from transmission and distribution losses (activity #3).
This activity includes the generation of electricity, steam, heating, and cooling that is lost in a transmission and distribution system, reported by the end user.
The following methods can be used to calculate upstream emissions from transmission and distribution losses.
Supplier-specific method, which involves collecting data from suppliers, on T&D losses on grids where electricity is consumed by the reporting company.
Average-data method, which involves estimating emissions by using average T&D loss rates, which can be national, regional, or global averages, depending on data availability.
The activity data needed here is data on electricity, heating, steaming and cooling consumed per unit of consumption (e.g., MWh)
Companies should use life cycle emission factors to calculate emissions. They should also factor in T&D loss rates depending on the method used to calculate emissions. For the supplier-specific method, they should use utility-specific T&D loss rate (%) specific to the grid where electricity is generated and consumed. If this data is not available, or applicable, the average data method should be used. For this method, either the country, regional or global average T&D loss rate can be used.
Emissions from losses in a T&D system can be calculated as follows:
Calculating life cycle emissions from power that is purchased and sold to end users (activity #4).
This activity includes the generation of electricity, steam, heating, and cooling that is purchased by a utility reporting company or energy retailer and sold to end users. This activity is relevant for utility companies that purchase wholesale electricity supplied by independent power producers for resale to their customers.
Companies can use the following methods to calculate emissions in this category:
Supplier-specific data, which involves collecting emissions data from power generators.
Average-data method, which involves estimating emissions by using grid-average emission rates.
Companies need data on quantities and specific source of electricity purchased and re-sold.
The emission factors needed in this category depend on the method used to calculate emissions. The supplier-specific method requires specific CO2, CH4, and N2O emissions data for generation units from which purchased power is produced. If data is not available, the average-data method should be used. This method requires the grid average emission factor for the origin of purchased power.
The emissions in this category are quantified using the formula below:
