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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Environment

Sagar Cements Ltd runs a captive power plant and buys electricity from the grid for its offices. Its sustainability head classifies emissions from the captive plant's fuel combustion and from the purchased grid electricity under the GHG Protocol. Which classification is correct?

Emissions from fuel burned in the company's own captive plant are Scope 1 direct emissions, while emissions linked to electricity bought from the grid are Scope 2 indirect emissions. Scope 3 covers other value chain emissions, not purchased electricity.

  1. AFuel combustion is Scope 1; purchased electricity is Scope 2Correct
  2. BFuel combustion is Scope 2; purchased electricity is Scope 1
  3. CBoth are Scope 1 because the company controls the sites
  4. DFuel combustion is Scope 1; purchased electricity is Scope 3

Explanation

Under the GHG Protocol, direct emissions from sources owned or controlled by the company, such as on-site fuel combustion, are Scope 1. Indirect emissions from purchased electricity are Scope 2. Scope 3 covers other value chain emissions, so treating grid power as Scope 3 is wrong.

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