What Are Scope 1, 2 and 3 Emissions? Examples from Turkish Industry

Scopes 1, 2 and 3 are the classification that splits a company's greenhouse gas emissions into three groups according to their source. The GHG Protocol defined this split to clarify what is direct and what is indirect, to prevent two companies from counting the same emission in the same scope, and to serve different climate policies. This guide explains the classification with examples from Turkish industry and the boundary cases that cause the most confusion. For the overall framework of the inventory, see the greenhouse gas inventory guide.

First, two definitions: direct and indirect emissions

According to the GHG Protocol Corporate Standard:

• Direct emissions are emissions from sources owned or controlled by the company.
• Indirect emissions are a consequence of the company's activities but occur at sources owned or controlled by another company.

What counts as direct or indirect depends on the consolidation approach chosen for the organizational boundary (equity share, financial control or operational control). So the same leased warehouse can be scope 1 for one company and scope 3 for another. That is why the organizational boundary needs to be settled before the scopes are defined.

Scope 1: direct emissions

The standard describes scope 1 through four types of activity:

1. Stationary combustion: Burning fuel in stationary sources such as boilers, furnaces and turbines to produce electricity, heat or steam. A steam boiler in textiles, a baking oven in food, a paint-drying oven at an automotive supplier.
2. Physical or chemical processing: Emissions from processes such as limestone calcination in cement, ammonia production and waste processing.
3. Mobile combustion: Fuel for trucks, cars, forklifts and other vehicles owned or controlled by the company.
4. Fugitive emissions: HFC leaks from refrigeration and air-conditioning systems, leaks from seals and joints, SF₆ leaks in switchgear.

There are two special rules. Direct CO₂ from burning biomass is not added to scope 1 but reported separately. Gases outside the Kyoto Protocol, such as CFCs and NOₓ, are not included in scope 1 either; they can be reported separately if desired.

Scope 2: indirect emissions from purchased energy

Scope 2 covers emissions from the generation of electricity, steam, heating and cooling that is purchased or otherwise brought into the company's boundary. The emissions physically occur at the plant where the energy is generated. The Corporate Standard stresses that for many companies, purchased electricity is one of the largest sources of emissions and the most significant opportunity to reduce them.

The 2015 Scope 2 Guidance requires companies operating in markets where contractual instruments (energy attribute certificates, direct contracts, supplier-specific factors) are available to report scope 2 using two methods: the location-based method, which relies on grid averages, and the market-based method, which reflects purchasing choices. For the practical calculation, see the electricity emissions calculation guide.

Transmission and distribution losses follow a separate rule: emissions from electricity consumed as losses fall under the scope 2 of the company that owns the transmission and distribution system. End consumers do not report these losses in scope 2; they can report them in scope 3 Category 3 if they wish.

Scope 3: other indirect emissions in the value chain

Scope 3 covers all other emissions that are a consequence of the company's activities but occur at sources belonging to others. The Scope 3 Standard divides them into 15 categories according to the direction of the financial transaction:

The categories are designed to be mutually exclusive, so the same emission is not counted in two categories. The minimum boundary and calculation methods for each category are in the scope 3 categories guide, and a short reference for the terms is in our scope 3 categories 1-15 quick reference.

Classification table: 28 typical sources

The table below assumes that the company has chosen a control approach and that the assets concerned are in the ownership situation shown in the table. If ownership or control changes, the classification changes too.

The process and sector examples in the table are consistent with the source types in the sector table in Appendix D of the GHG Protocol Corporate Standard: for cement, for example, calcination, the clinker kiln and quarry operations are listed as scope 1, and purchased clinker as scope 3.

The boundary cases that cause the most confusion

Leased buildings and vehicles

Emissions from leased assets are classified according to the chosen consolidation approach. Under the operational control approach, the lessee reports the emissions of a leased asset it operates in scopes 1 and 2. Under the equity share or financial control approach, only finance leases (recorded as assets on the balance sheet) go into scopes 1 and 2; operating leases go to scope 3 Category 8. The accounting team decides which lease is of which type.

Electricity you generate and sell

Take a textile factory with a cogeneration (CHP) plant that sells its surplus electricity to a neighbouring facility. All fuel emissions from the cogeneration plant are the factory's scope 1, and the emissions attributable to the electricity sold are not deducted from scope 1. The standard compares this with the emissions of sold clinker or scrap, which are not deducted either. Emissions attributable to the portion sold can be shown as optional information. The neighbouring facility reports the electricity it buys in scope 2.

Biomass

CO₂ from a boiler burning hazelnut shells or olive pomace is reported separately, outside the scopes. This separate reporting applies only to biogenic CO₂; CH₄ and N₂O from the same combustion stay in scope 1. The Scope 3 Standard applies the same separate reporting rule to biogenic CO₂ in the value chain.

Employee shuttles

Shift shuttle services, which are common in Türkiye, are often misclassified. If the vehicles belong to or are operated by the company, the fuel is scope 1. If the shuttle is purchased as a service from a transport company, the definition of Category 7 applies: travel between home and work in vehicles not owned or operated by the company.

Freight: Category 4 or Category 9?

What matters is who pays. Transport services purchased by the company, including product shipments (outbound logistics), are Category 4. Transport the company does not pay for, for example shipments organized by the customer and the retail stage, is Category 9. The company's own trucks are scope 1 in both cases. We cover how to collect logistics data in our post on Categories 4 and 9.

Capital goods

Emissions from the production of a new press line are reported in Category 2 all at once in the year it is acquired; they are not spread over its life as in depreciation in financial accounting. The electricity the machine consumes while running is scope 2. Category 2 can jump in years of large investment, so giving context in the report is recommended.

Intermediate product manufacturers

A company selling yarn, sheet steel or chemical raw materials may not know the final use of its product. The Scope 3 Standard allows Categories 9, 10, 11 and 12 to be excluded if the eventual end use of the intermediate product cannot reasonably be estimated, provided the exclusion is disclosed and justified; but it does not allow only some of these four categories to be selectively excluded.

Indirect use-phase emissions

Use-phase emissions where a product consumes energy indirectly, such as washing and drying a sold sweater, are optional in Category 11. Products that consume energy directly (vehicles, household appliances, engines), fuels and products that emit greenhouse gases during use make up the required part.

Typical weighting by sector

The weight of each scope varies greatly by sector. In cement and iron and steel, process emissions from calcination and reductants make scope 1 large. In textiles and automotive supply, purchased raw materials (Category 1) are often larger than scopes 1 and 2 combined. In retail and technology companies, purchased goods and services and the use of sold products stand out. For sector-specific boundary decisions, see our GHG Protocol boundary guides (cement, textiles, automotive suppliers, food, logistics).

Moving on to calculation

Once the classification is done, activity data and an emission factor are defined for each source. Ready-made formulas for the most common scope 1 items: natural gas emissions and company vehicle emissions. At Alalëa, we build the source list in inventory projects by cross-checking site visits against accounting records, and we record every classification decision in a methodology note. To build your inventory together, take a look at our carbon footprint service.