Carbon emission management is an important component in the landscape of Environmental, Social, and Governance (ESG) targets. Understanding the three emission scopes, Scope 1, Scope 2, and Scope 3, is critical for any big corporate organization seeking to reduce its environmental effect and conform with its sustainability goals. Understanding the various scopes enables organizations to make educated judgments about where they stand in relation to their ESG targets and what more they can do to achieve them.
Scope 1 emissions are those arising from sources owned or controlled by the company. These emissions are often created by industrial operations, the combustion of fossil fuels, and any fugitive emissions (for example, refrigerants). In essence, if an emission source is under the operational control of the company, it falls under scope 1.
Scope 2 emissions differ from Scope 1 emissions in that they are indirect emissions caused by the company's use of purchased energy. This often refers to emissions resulting from the generation of electricity, steam, heat, and cooling obtained from third-party utilities. To reduce Scope 2 emissions, companies can consider renewable energy solutions, such as solar from EPC contractors or the full solution offered by SolBid that streamlines the whole commercial solar process.
Scope 3 emissions are indirect emissions that occur upstream and downstream in a company's value chain and are not covered by Scope 2. This could include emissions from business travel, the life cycle of the company's products, or garbage generated during operations. Though difficult to monitor due to their broad and often external nature, these emissions provide significant potential for sustainability improvements throughout a company's value chain.
Understanding these three scopes is critical for corporate companies looking to minimize their carbon footprint and make progress toward their ESG goals. Comprehensive emissions monitoring and management across all three domains enables informed decision-making and the implementation of successful sustainability strategies.
Understanding the distinction between onsite and offsite renewable energy assets is crucial when considering their impact on emissions.
Onsite renewable energy, such as solar panels, enables companies to generate clean electricity directly at their facilities. This reduces their dependence on traditional energy sources like coal or natural gas, resulting in a decrease in Scope 1 emissions associated with their own operations.
Moreover, onsite renewable energy assets can also influence Scope 2 emissions. Renewable energy assets work in parallel with a utility grid when installed onsite at a company's premises. Since the asset is grid-connected, it reduces the demand for grid electricity from fossil fuel-based power plants. Consequently, the company's indirect emissions (Scope 2) decrease as it purchases less fossil fuel-generated electricity.
In contrast, offsite renewable energy assets, like virtual power purchase agreements (vPPAs) or community solar, primarily impact Scope 2 emissions. Although these assets can help companies procure renewable energy and reduce their indirect emissions, their direct emissions (Scope 1) remain unchanged since the energy is generated offsite.
Incorporating renewable energy technology and solutions is essential for organizations to make significant progress toward their ESG goals. Embracing solar power as part of corporate sustainability efforts not only lowers emissions but also demonstrates a commitment to environmentally friendly operations. By addressing all three emission scopes, companies can make substantial strides towards carbon neutrality and achieve their ESG objectives.
To expedite the evaluation and implementation of onsite solar energy assets across large real estate portfolios, companies leverage SolBid's platform. This approach enables them to achieve significant reductions in both Scope 1 and Scope 2 emissions while also improving their financial cash flow.