Renewable energy can fall under different scopes of emissions depending on how it is utilised and sourced within an organisation. Below is a detailed explanation of how renewable energy fits into each scope of emissions:
Scope 1: Direct Emissions
Scope 1 emissions are direct emissions from owned or controlled sources. Renewable energy can contribute to reducing Scope 1 emissions in the following scenarios:
- On-Site Renewable Energy Production: If an organisation installs and operates its renewable energy systems (such as solar panels, wind turbines, or biomass boilers) on-site, the energy produced and consumed directly by the organisation can offset fossil fuel use, thereby reducing direct emissions. For example, a factory that uses solar panels to generate electricity for its operations will have reduced its Scope 1 emissions as it relies less on grid electricity produced from fossil fuels.
Scope 2: Indirect Emissions from Purchased Energy
Scope 2 emissions are indirect emissions from the consumption of purchased electricity, steam, heat, or cooling. Renewable energy often falls under this scope in the following ways:
- Purchased Renewable Energy Certificates (RECs) or Guarantees of Origin (GOs): When an organisation purchases RECs or GOs, it is effectively paying for renewable energy to be fed into the grid, offsetting the non-renewable energy it consumes. While the organisation still uses grid electricity, the environmental attributes of the renewable energy purchased are attributed to the organisation, reducing its Scope 2 emissions.
- Green Power Purchase Agreements (PPAs): Organisations can enter into PPAs with renewable energy providers to purchase electricity directly from renewable sources. The energy purchased under these agreements is often generated off-site but is counted as renewable, thereby lowering the organisation's Scope 2 emissions.
Scope 3: Other Indirect Emissions
Scope 3 emissions are all other indirect emissions that occur in the value chain of the reporting company, including both upstream and downstream emissions. Renewable energy can be considered within Scope 3 emissions in the following scenarios:
- Upstream Activities: If an organisation’s suppliers use renewable energy in their processes, this can reduce the Scope 3 emissions associated with purchased goods and services. For instance, if a supplier of raw materials to a manufacturing company uses wind or solar power in their production processes, the emissions embedded in those raw materials would be lower, thereby reducing the purchasing company's Scope 3 emissions.
- Downstream Activities: Organisations can also account for the renewable energy used by their customers. For example, a company that sells products requiring electricity can influence or track the renewable energy use of its customers. If customers use renewable energy to power these products, it can lower the downstream Scope 3 emissions associated with the product’s use phase.
Key Considerations for Accounting Renewable Energy Emissions:
- Accurate Documentation: Organisations must ensure accurate documentation and certification of renewable energy purchases (such as RECs, GOs, or PPAs) to appropriately account for emissions reductions.
- Transparency: Clear communication about how renewable energy is sourced and utilised within the organisation’s operations and value chain is crucial for transparency in reporting emissions reductions.
- Regulatory Compliance: Organisations should stay informed about the regulatory frameworks and guidelines governing emissions reporting and renewable energy certification in their regions to ensure compliance and avoid double-counting of emissions reductions.
In summary, renewable energy can impact all three scopes of emissions depending on how it is generated, purchased, and utilised within an organisation’s operations and value chain. Proper accounting and transparent reporting are essential to accurately reflect the environmental benefits of renewable energy in emissions inventories.