Corporate GHG Inventory: Scope 2 Methods and Target Boundary
A manufacturer reports for the current year: natural gas combustion of 450,000 GJ in its own boilers; 300,000 L of diesel in owned trucks; leakage of 180 kg of R-410A from chillers; 120 GWh of purchased electricity, of which 40 GWh is covered by unbundled renewable energy certificates purchased from a wind farm in another region; purchased goods and services estimated at 180,000 tCO2e; upstream transport 12,000 tCO2e; business travel 1,200 tCO2e; employee commuting 3,000 tCO2e; and waste 500 tCO2e. The company uses a location-based grid factor of 0.45 tCO2e/MWh and reports Scope 2 both location- and market-based. It has just acquired a subsidiary that adds 30,000 tCO2e to the base year and is considering a science-based target. The sustainability manager wants a single headline number and a target boundary.
1. Calculate Scope 1, Scope 2 location-based, Scope 2 market-based, and Scope 3. Show the emission factors and calculation.
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Scope 1: natural gas 450,000 GJ × 56.1 kg CO2e/GJ = 25,245 t; diesel 300,000 L × 2.68 kg/L = 804 t; R-410A 180 kg × 2,088 = 375.8 t; total ≈ 26,425 tCO2e. Scope 2 location-based: 120,000 MWh × 0.45 = 54,000 t. Scope 2 market-based: 80,000 MWh × 0.45 = 36,000 t; the 40,000 MWh of RECs is zero if the instruments are valid. Scope 3: 180,000 + 12,000 + 1,200 + 3,000 + 500 = 196,700 t. Total location-based ≈ 277,125 t; market-based ≈ 259,125 t. Scope 3 is about 71% of the location-based total. Show the factors and state that R-410A GWP is AR5; if AR4 is used the refrigerant number changes.
2. Which Scope 2 number should be the headline, and what conditions must the RECs meet to be used in the market-based method?
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Report both numbers, but do not use a single headline without explaining the method. The location-based figure reflects the physical grid and is mandatory in many jurisdictions; the market-based figure reflects procurement. For the market-based number to be defensible, the RECs must be from the same market, uniquely claimed, retired on behalf of the company, vintage-matched, and not double counted. Unbundled RECs from a wind farm in another region may fail the same-market test or be seen as low-additionality; if so, the market-based Scope 2 should revert to 54,000 t. For a science-based target, use the market-based method only if the instruments meet the quality criteria; otherwise use location-based. Disclose both and explain any difference. Do not let the REC purchase obscure the fact that the company's purchased goods are the dominant source.
3. How should the acquisition affect the base year and target boundary? What Scope 3 categories must be included for a science-based target?
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Treat the acquisition as a structural change. Recalculate the base year and prior-year emissions to include the subsidiary, restate the target, and disclose the change. Do not simply add the subsidiary to the current year while leaving the base year unchanged, because that creates artificial growth. For a science-based target, the boundary must cover company-wide Scope 1 and 2; Scope 3 must be included if it is more than 40% of total emissions, which it is here at about 71%. Include purchased goods and services, upstream transport, business travel, commuting and waste; set a Scope 3 target using supplier engagement or physical intensity, and report progress annually. Set the target on a 1.5°C pathway and use a base year that is representative, not a cherry-picked low year.