After the Report: Reducing Your Scope 2 Emissions

For many working in corporate sustainability, the summer often means one thing: your annual CDP disclosure. For those reporting for the first time, it can be a daunting exercise to complete and validate your greenhouse gas emissions inventory. You should be proud of that work – but what comes next?

Carbon accounting is just the first step. Once your inventory is complete, you now have the data you need to make an emissions reduction plan – for next year, and for the long term. These plans look different for every sector and business, but there are some key frameworks we use to help our clients think through their opportunities – starting with Scope 2 emissions.

Five Steps to Reduce Your Scope 2 Emissions

Step 1: Use your emissions and energy expense data to prioritize

As much as you might like to, you probably can’t reduce all of your organization’s Scope 2 emissions in one calendar year. Your emissions inventory can give you important information about where you should prioritize your efforts. Start with the biggest emitters with the highest energy costs, prioritize, and learn as you go.

Carbon management software can help you quickly identify the facilities that contribute the largest share of Scope 2 emissions. Take a special look at sites and facilities that fall in these categories:

  • Largest output: Facilities with the highest absolute emissions outputs
  • Outsized output: Facilities with the highest emissions per square foot
  • Concentrated markets: Locations with the highest number of facilities on a given electricity grid
  • Highest cost relative to output: Facilities with the highest electricity expenditure per ton of scope 2 emissions

Step 2: Implement short-term efficiency gains

One of the first things you should do to reduce Scope 2 emissions is to invest in efficiency. In the facilities you’ve prioritized, make straightforward updates like switching to energy-efficient lighting, building automation, implementing “smart” controls, and conducting proactive equipment maintenance (like cleaning refrigeration coils and adjusting dampers). These tactics reduce your Scope 2 emissions as well as energy costs, making them an easy win as you partner with facilities and procurement teams across your organization.

Step 3: Strategically apply renewable energy

Depending on your region’s regulatory market, you may be able to easily switch to renewable energy. Check with your utility provider to see if they offer green power plans or green tariffs as part of their existing energy packages. Examples of these programs include Xcel Energy’s Windsource program, Southern California Edison’s Green Rate program, and Duke Energy’s Green Source Advantage program. In many cases, you can make these changes as soon as your next energy bill. While they may increase utility prices slightly, they are predictable, tied directly to consumption, and simple to manage.

If you’re a large consumer of electricity in your market, you may have additional cost-saving options. Power Purchase Agreements (PPAs) are long-term contracts that allow you to purchase renewable energy from an offsite power generator, at a fixed rate. This option is best for large, stable, and high-emitting organizations that can commit to a 5-20 year contract. PPAs can result in overall cost savings on your energy bill – though it’s important to look for local or regional power providers to avoid pricing asymmetry.

The other option, of course, is to install renewable energy within your operations, like onsite solar. While this can feel like a big investment, it is typically a profitable one over time, helping you save on energy costs and directly using renewable energy to reduce your Scope 2 emissions.

CEBA and RE100 are two organizations that can provide education and support as you consider your options. Many Optera clients are members of these groups and have used learnings from CEBA and RE100 to build a scalable approach to procuring renewable energy.

Step 4: Plan for big-ticket efficiency upgrades

Beyond the easy steps, becoming more energy efficient is a multi-year journey. But it doesn’t have to be challenging if you can be strategic and prioritize. First and foremost, identify whether any large technology (like heating or cooling equipment or cold storage equipment) is due to be replaced in the coming years. This is the perfect time to upgrade energy-intensive equipment with more efficient technology. The energy savings will more than makeup for the slight increase in upfront costs. In the longer term, connect with your facilities team about when they’re already planning to replace big equipment or build a new facility, and make sure they’re planning to incorporate energy efficiency into their designs.

Step 5: Purchase RECs

Perhaps you don’t have sufficient green energy options in your market (as outlined in Step 3), or you don’t have control over your utilities relationship (for example, if you’re leasing an office in a multiunit building). You might also not be ready to sign a long-term PPA or invest in onsite renewables because of the inherent complexities. In that case, you may want to invest in energy attribute certificates to account for your remaining Scope 2 emissions. These go by many names; in North America, they’re referred to as renewable energy certificates (RECs), whereas in the EU, they’re called Renewable Energy Guarantee of Origin (REGOs). For shorthand, they’re often simply referred to as RECs.

Purchasing RECs provides funding for renewable energy assets, and in return, you are able to take credit for the green kilowatt hours produced. Place-based RECs, that operate in the same market as your facility, tend to be preferred, but you are also able to purchase unbundled RECs outside of your market. If you take the latter route, look for RECs from markets with equally (or more) “dirty” power grids than the one you operate in, so that you’re not overcounting your impact.

While not a perfect long-term solution, RECs are an important tool that organizations have access to today. Where you can’t make an immediate change to your operations or energy setup, purchasing RECs is a great way to contribute to the overall renewable energy infrastructure in your market while you build longer-term reduction plans.

Ultimately: Get started

With all of these steps, the clock is ticking. Every ton of carbon we save today buys us time to build a more sustainable future. That’s why we encourage our clients to take action on quick wins, make a plan for the longer-term updates, and for areas we cannot yet reduce or replace at scale, don’t be shy about using tools like RECs to start bending the curve.