Summary:
Scope 2 emissions are indirect greenhouse gas emissions generated from purchased energy, including electricity, heat, steam, and cooling. As defined by the Greenhouse Gas Protocol, they are reported separately from direct emissions (Scope 1) and value chain emissions (Scope 3).
Electricity consumption is typically the largest contributor and is usually measured using supplier invoices. Electric vehicle charging, purchased heat, steam, and cooling must also be included where generated off site. It is essential to distinguish these from on-site fuel use, which falls under Scope 1.
Organisations report Scope 2 emissions using either the location-based method, reflecting average grid intensity, or the market-based method, which accounts for renewable energy contracts. Accurate data collection and clear documentation are key to credible reporting and effective emissions reduction.
What are Scope 2 Emissions?
Scope 2 emissions, as defined by the Greenhouse Gas Protocol (GHG Protocol), are the indirect greenhouse gas emissions resulting from the generation and consumption of purchased energy, chiefly: electricity, steam, heat, and cooling. Scope 2 emissions are separate from Scope 1 (direct emissions), and Scope 3 (other indirect emissions produced throughout an organisation’s value chain).
For readers who are new to the world of carbon accounting, the GHG Protocol serves as the leading global standard for advising corporations how they shall measure, manage, and report their greenhouse gas emissions through comprehensive carbon accounting measures.
Adherence to the GHG Protocol ensures that companies can accurately disclose their energy-related indirect emissions and understand where best to employ reduction endeavours to lessen their impact on the environment.
As such, the GHG Protocol defines Scope 2 emission sources as: examples of scope emissions and include:
Electricity generation – from the grid (purchased electricity generated off site by utility providers or electricity suppliers)
Electricity generation - company owned/leased electric vehicles
Imported heat (purchased heating generated off site)
Steam consumption (indirect GHG emissions from steam generated off site)
Cooling consumption (indirect GHG emissions from cooling generated off site)
In countries like the UK, it will be uncommon for businesses and organisations to use district cooling and steam imports due to our climate, whereas other regions may utilise this due to their localised climate, such as Poland or Denmark using district heating, or France and Sweden using cooling.
Purchased electricity, purchased heating, and electricity purchased from external utility providers are key contributors to Scope 2 emissions.
Scope 2 is often the easiest data to collect due to most data sources being invoiced on a regular basis—namely monthly or quarterly. But with that said, some organisations (perhaps yours) may experience difficulties due to unsynchronised infrastructure and data fragmentation. Reporting companies and corporations measure emissions from purchased energy to comply with GHG Protocol standards.
Commercial entities and industrial or commercial entities are significant contributors to global emissions, particularly global greenhouse gas emissions, due to their high energy consumption. Emissions occur when energy is generated off site and supplied to the reporting company, contributing to their indirect GHG emissions.
Here, not only do we define what each emission source is, but also how to best collect data for these sources and how to improve data infrastructure within SMEs to ease data collation
Reducing Scope 2 emissions is often one of the fastest and most cost-effective decarbonisation wins available to UK organisations.
Location-based versus Market-based emissions
Before jumping into the emission sources, it is important to distinguish between location-based and market-based emissions. These two different reporting methods reflect different carbon intensities directly relating to how the electricity was generated. The electricity mix (the proportion of renewable vs. fossil fuel sources) directly impacts reported Scope 2 emissions.
The location-based method is linked to a specific regional grid – for example, the average carbon intensity of the UK’s national grid. This is the default way of reporting electricity consumption.
Juxtaposed, the market-based method for calculating Scope 2 emissions utilises calculation methods based on specific energy contracts – namely Purchase Power Agreements (PPAs), Renewable Energy Guarantees of Origin (REGOs), and Renewable Energy Certificates (RECs). Renewable energy contracts are a key mechanism enabling companies to lessen their emissions through supporting renewable energy generation.
As most organisations draw their energy directly from the grid, those that do must disclose their scope 2 emissions using the location-based reporting method. For those opting to purchase renewable energy separately, industry best practice is to report - most commonly side-by-side - via both location-based and market-base. In doing so, organisations may demonstrate their commitment to a greener, more sustainable grid, while maintaining a comparable calculation methodology to sector peers.
For companies to be eligible for market-based reporting, it is vital to share evidence of your purchase/s to your carbon auditors.
Electricity Consumption
Electricity consumption drawn from the grid will largely comprise a mix of both energies derived from fossil fuels and renewables, and as such, will need to be reported.
Electricity produced from renewable sources results in lower Scope 2 emissions compared to electricity produced from fossil fuels. Here, the modal way of disclosing your consumption will be the sum of kilowatt/hours (kWh) billed by your electricity provider. These bills should be available with your Finance Department, like Natural Gas and other utilities consumption bills.
However, in co-working spaces or in offices where utilities are included in your rent, it can be more difficult. Ideally, the building managers will be able to provide a granular breakdown of your office’s consumption – but this is not always plausible. Here, you should request to receive the total amount of electricity consumed within the reporting period and the total building’s footprint. From here, you should assign a percentage of the total base on your office’s footprint.
For instance, if the total building is 1,000 m2 and your office is 100 m2, 10% of the total electricity consumed should be attributed to your office.
If this is also unavailable, you can estimate your electricity consumption using the building’s Energy Performance Certificate (EPC). Your office should have a valid EPC certificate for 10-years which denotes the average primary energy use (kWh/m2/year); this value should be multiplied for your office size.
If your building’s EPC rating is 50.00 kWh/m2/year, then using the footprint from above, this would equate to roughly 5,000 kWh consumed.
If your building does not have a valid EPC certificate, you should speak with a trusted Consultant as they will be able to advise further steps.
Electricity Consumption – Electric Vehicles
Like traditional internal combustion engine (ICE) vehicles, if an organisation has electric vehicles (EVs) in its fleet, these need to be disclosed and reported under Scope 2.
Unlike ICE vehicles however, there is an interesting caveat with reporting the emissions associated with EVs – battery charging. If your fleet’s EVs are always charged on site, then the emissions will be captured in the office’s grid electricity consumption.
It should be noted that the electricity grid supplies the energy for charging, and the emissions associated with this electricity depend on the grid's energy mix and the utility provider. If your fleet’s EVs are not always charged on site (e.g. At an employee’s home, a carpark, or a public docking station), then these emissions should be reported separately – namely captured by the mileage completed by the fleet during the reporting period.
For most small businesses, it is highly likely that most charging is done off-site, meaning the mileage completed will be the most accurate method of reporting this data. If this is the case, the total mileage completed of vehicles should be obtained through the following methods:
Manual mileage logs: drivers may manually record their mileage at the beginning and end of the reporting period (or for the calendar year) in a company logbook – whether physical or digital.
Automatic mileage logs: organisations may opt to utilise third-party hardware and software to automatically track all the mileage completed by company vehicles, commonplace for logistics vehicles to adhere to compliance and legal requirements
MOT odometer readings: MOT mileage readings can be used to record mileage for company vehicles, even if unaligned with the reporting period. The caveat being the period recorded by the MOT must remain consistent, otherwise this method cannot be used. Similarly, this is often the least accurate method due to no assurances for human error when recording the mileage. Moreover, some vehicles may be ineligible for this, namely HGVs or vehicles less than three-years old.
Heat
Commercial and industrial buildings may require additional heat for industrial processes such as manufacturing. Heat may be generated on site through renewable sources such as solar thermal heat, combustion processes, or may be imported from other sources and facilities outside of the organisation’s control.
It is very important to distinguish the difference between natural gas used for heating (categorised by Scope 1) and importing/generating heat energy. These two are distinctly different emission sources. Natural gas is transported and distributed across the UK through the National Transmission System (NTS), whereas heat energy (if imported from offsite) is often distributed via technologies like heat pumps. As such, if your organisation is purchasing heat and gas from third parties, it is vital to ensure the two are reported separately, and correctly.
Reporting your organisation’s heat consumption will be near identical to reporting your electricity consumption. Your company is to report emissions from the purchase and use of energy from heat – again, using the location- or market-based methods based on purchase of ‘green heat’ alongside any documentation validating the purchase. Organisations should also account for heat obtained through a capital lease, as this can affect how emissions are reported under the GHG Protocol.
However, some organisations may purchase heat directly from an off-grid supplier, by which, the organisation should disclose this information, and the heat generation method must be shared with your auditors along with any certification for market-based reporting. Implementing strategies to cut emissions and reducing emissions from purchased heating is an important part of a company's sustainability efforts.
Steam and Cooling Energy Consumption
The disclosure of steam and cooling energies consumption are comparable to heat. It is unlikely for organisations operating outside of the industrial or mechanical sectors to utilise steam and cooling energies. When these energy sources are used, they are typically generated off site and purchased from external suppliers, contributing to Scope 2 emissions.
Invoices for steam and cooling purchased are to be used to obtain the total energy consumed for each source along with any appropriate documentation certifying its origin for market-based reporting where applicable.
Summary
In short, Scope 2 emissions are indirect emissions relating to energy generation and consumption and can be categorised as: electricity generation (both from the grid and from vehicles), heat, steam, and cooling.
In most cases, invoices will be the primary way of reporting consumption throughout the reporting period – but in some niche cases, you may need to utilise your building or property management team to confirm consumption values. In both instances, you should confirm whether you must disclose your consumption using the location-based (standard) or market-based (renewables with evidence) methods
Rob Hebden
Sustainability Consultant | Carbon Expert | Helping UK Businesses on the Journey to Net-Zero
What are Scope 2 emissions in simple terms?
Scope 2 emissions are indirect greenhouse gas emissions from the generation of electricity, heat, steam or cooling that a business purchases and consumes. Although the emissions occur at the power plant, they are attributed to the organisation using the energy.
Are Scope 2 emissions mandatory to report in the UK?
Large UK organisations subject to Streamlined Energy and Carbon Reporting (SECR) must disclose energy use and associated Scope 1 and Scope 2 emissions in their annual reports. Smaller businesses are not legally required but often report voluntarily to meet investor and supply chain expectations.
How do you calculate Scope 2 emissions?
Scope 2 emissions are calculated by multiplying electricity consumption (kWh) by the relevant greenhouse gas emission factor (kg CO₂e per kWh). UK organisations typically use official government conversion factors and must report both location-based and market-based results.
What is the difference between location-based and market-based reporting?
Location-based reporting reflects the average carbon intensity of the electricity grid where energy is consumed.
Market-based reporting reflects the specific energy contracts a company has chosen, such as renewable tariffs or power purchase agreements. Both methods are required under the Greenhouse Gas Protocol.
Is renewable electricity zero Scope 2 emissions?
Not automatically. Under the market-based method, renewable electricity backed by credible contractual instruments can significantly reduce reported Scope 2 emissions. However, under the location-based method, grid average factors still apply.
Why are Scope 2 emissions important for net zero targets?
For many UK office-based businesses, purchased electricity represents one of the largest and most measurable parts of their carbon footprint. Reducing Scope 2 emissions through efficiency and renewable procurement is often one of the fastest routes to progress towards net zero.
Do tenants or landlords report Scope 2 emissions?
Responsibility depends on organisational boundaries and lease arrangements. Under operational control, the entity controlling the energy use typically reports the emissions. Clear documentation is essential to avoid double counting.
What should I look for in a trustworthy carbon footprint assessment?
Look for assessments that are tailored to your operations, use up-to-date emission factors (like DEFRA 2025/26), and include all relevant scopes—especially Scope 3. You should also be able to ask for the methodology and assumptions used. Transparency, relevance, and data quality are key.
