Your Strategic Transportation Partner

For companies of all sizes, accounting for greenhouse gas (GHG) emissions is a complicated and varied undertaking. The initial challenges of knowing where to begin, what to quantify, and how to structure it all generate a seemingly exponential number of new questions to answer along the way.

Defining a Boundary in Scopes 1, 2, and 3

When quantifying GHGs, one of the most helpful and important first steps is understanding that different GHG sources–which typically involve fuel combustion–fall into distinct categorical boundaries. These boundaries, also known as “scopes,” are part of a larger framework for GHG accounting established by the World Resources Institute in the Greenhouse Gas Protocol.

Three discrete scopes exist currently within this framework, and the differences between scopes 1, 2, and 3 express varying levels of control and influence an organization has over the emissions source. By understanding what’s included in each scope, organizations can take a critical look at their operations to see where emissions are occurring the most and use that knowledge to find creative ways to reduce their GHG footprint.

Scope 1: Controlled On-Site Emissions

When an organization’s owned or controlled assets and on-site operations emit greenhouse gasses, these activities make up their scope 1 emissions footprint. Scope 1 emissions are all those that an organization has direct control over, and as such are perhaps the most straightforward to quantify and report.

Examples of activities that are categorized under scope 1 include fuel emissions from owned transportation assets and on-site energy generation. It can also include unintentional leakage from air conditioning or refrigerant units. Organizations who operate private fleets must include transportation fuel emissions within this boundary.

Reporting scope 1 emissions is a requirement for most GHG disclosure and reduction programs, as the reporting company has the most control and responsibility for them. Data that is helpful for determining scope 1 activities also tends to be more straightforward, because it is generated in-house. When looking to reduce scope 1 emissions, organizations typically focus on making on-site technology more energy efficient.

Scope 2: Indirect Emissions from Power Generation

An organization’s emissions are considered within the boundary of scope 2 if they result from purchasing electricity, heat, or steam from somewhere else, rather than being produced by the organization itself. These emissions physically occur at the facility where the resource is generated.

Examples of scope 2 emissions sources include the energy purchased to heat or cool an organization’s facilities, charge electric equipment and assets, or power remote data centers. As the chart below illustrates, although transportation recently overtook it in size, power generation has historically been one of the largest contributors to GHG emissions worldwide.

Although they originate “off-site,” scope 2 emissions are a distinct aspect in carbon accounting because they are a direct result of a company’s energy use and energy purchasing decisions. Because of this, scope 2 emissions disclosures are also a requirement for most GHG disclosure and reduction programs. In addition to prioritizing energy efficiency to reduce the amount of electricity needed for purchase, organizations often choose to mitigate scope 2 emissions by replacing traditional fossil fuel energy sources with more renewable alternatives their energy provider may offer.

Scope 3: … Everything Else

Whereas scopes 1 and 2 pertain to emissions an organization either owns or has purchasing control over, the third boundary includes many more potential sources. Scope 3 emissions essentially encompass indirect emissions from everything not included in the prior two boundaries.

Also known as value chain emissions, scope 3 encompasses activities both upstream and downstream from a company’s normal operations. While they are a consequence of decisions made by a company, they are from sources neither owned nor controlled by them. The diagram below breaks down the different scope boundaries and illustrates all the categories of sources included in scope 3.

Unlike scopes 1 and 2, quantifying scope 3 emissions is not required for most reporting and disclosure. While this may simplify the process, by omitting scope 3 emissions companies can have an incomplete view of their total footprint.

Because it is such a broad category, scope 3 emission sources often make up the majority of an organization’s GHG emissions. As such, they also typically offer the greatest opportunities for emissions reductions. From collaborating with transportation suppliers on efficiency improvements to designing a product with more sustainable end-of-life use, there are many strategies available to improve value chain sustainability today.

Beyond Scope Boundaries

Once the boundaries of an organization’s emissions are established, a critical aspect of GHG accounting emerges: having accurate and reliable data to quantify the GHGs within each scope. Without reliable data, scope 1, 2, and 3 emissions are merely categorical concepts.

With access to the right data, these categorical concepts transform into measurable, and therefore improvable, information. This underlines the importance of not only quality data sources, but also the collaborative relationships between organizations and the companies that comprise each step along their value chain. Stronger partnerships lead to better data availability, and better data leads to more impactful and sustainable changes. 

At Breakthrough, we pride ourselves on our ability to cultivate these critical partnerships in the industry, bringing clear data and actionable solutions forward to inform transportation sustainability strategies for our clients.

A future fueled by alternative energy technology—like battery-electric (BEV) and hydrogen fuel cell electric (FCEV) vehicles—has been generating a lot of buzz in commercial transportation for years. And although most agree they will create valuable solutions to use in the future, shippers need to improve their carbon footprint today. Goals have been set, expectations are clear, and action needs to be taken now.

The good news is that even though we see futuristic technology being piloted and prototyped in headlines, there are effective alternative energy solutions available right now. Shippers can integrate today’s technologies, while maintaining an eye towards tomorrow’s plans, using resources at their disposal to create a solution.

This solution needs to be achievable and optimized, layering existing technology within transportation networks as they operate today, and doing so based on trustworthy data and insights. Creating this multidimensional action plan will require the right data, information, and collaborative partnerships.

The Right Data Makes Alternative Energy Implementation a Reality

Where does alternative energy use make sense? Where in a shipper’s network will implementation bring the biggest economic and emissions reduction impact? How will this technology help meet their ambitious climate goals?

Access to clean and comprehensive freight flow data internally leads to better visibility into the ways that your network is already primed to adopt new, cleaner methods of movement—and both historic and more recently captured data can play a key role in this. From biodiesel to compressed natural gas to intermodal conversion and beyond, if you know what to look for you can find ways to seamlessly make incremental improvements that drive huge results over time.

Accompanying this internal visibility with data from outside the organization will also help target alternative energy use cases in regions that drive optimal results across multiple stakeholders. Looking to the wider transportation ecosystem is a quick way to see how a little time, investment, and effort can go an even longer way.

Unbiased Information Creates a Solid Foundation for Your Strategy

Just about anything in today’s world feels like an internet search away. Unfortunately, finding a relevant and reliable source for transportation best practices and pressing answers about the future has become a growing challenge. Unbiased information from a trusted advisor can assist the alternative energy implementation of today and set a plan for engaging future technologies.

Incentives and opportunities are available at a state or regional level for alternative equipment, fueling infrastructure, and alternative energies themselves. Getting access to this information can improve the financial considerations and business case for low-carbon solutions. Unfortunately, not having information about incentives or which alternatives they encourage can leave these opportunities under the radar unless you ask the right—or the perfect—questions.

A great example of this is renewable diesel (RD). While many believe this fuel is synonymous with biodiesel, the chemical makeup of RD and ability to use it as a 100 percent replacement of conventional diesel in today’s equipment makes it exciting on its own merit. The challenge is that RD is still in the process of scaling up, with demand outweighing supply. This challenge also increases the expense of the fuel, making information on which providers are scaling up production and geographies that incentivize its use paramount for a RD business case.

Unbiased information for battery electric (BEV) and hydrogen fuel cell (FCEV) vehicles will also be key to their future success. Both technologies have the promise of a zero-emission future, but face challenges with cost, performance, and availability today. The good news is that investment and development for BEVs and FCEVs continues to ramp up at a fast pace, changing their outlook. Knowing how these technologies are developing and who is developing them is important. Staying informed will also help determine when and where these technologies can be piloted and ultimately commercialized in a shipper’s network.

Advanced carbon pricing mechanisms are also important for staying informed. California, Oregon, and all of Canada currently have carbon pricing plans that incentivize low carbon solutions. Similar pricing schemes are planned for states in the Northeast (2022), Washington (2023), and have been discussed in multiple other states as well. Each of these developments can expand the reach of a successful alternative energy strategy. 

Collaboration Brings Bigger Success and Limits Obstacles for All Parties

Few would argue that we can do more together than we can apart in many aspects of life. This adage holds true in climate plans and alternative energy strategies. Collaborating with internal stakeholders, energy providers, carriers, and other industry stakeholders can accelerate success.

Corporate climate plans and alternative energy strategies that support them are easier to tackle with alignment within a company. Aligning sustainability team members, transportation professionals, and executive sponsorship around a shared goal has become paramount. The first step: identify these individuals and make a connection to get on the same page.

Carrier partners are also key for an effective alternative energy strategy in for-hire transportation. Alternative energy strategies most often require longer-term commitments with carriers and ongoing discussions to setup a feasible plan and measure its success once alternatives are implemented. Key carrier partners can also grow with your strategy, providing long-term benefit for both companies. Partnerships with carriers can extend to include partnerships with vehicle manufacturers as well.

Additionally, the importance of energy provider relationships is growing as quickly as the availability of alternative energy options. Some of these providers are focusing on a diverse portfolio of energy types to meet a shipper’s growing needs, while others set their sights on individual energy types. Collaborating with these providers can bring better visibility to cost and emissions benefits to strengthen your program. This partnership can also bring solutions to new areas of freight density.

Combining Data, Information, and Collaboration to Move Forward

Finding a partner that brings all elements together can help shippers move to action on their ambitious climate goals. Breakthrough is well positioned to help your team identify their goals, find avenues to pursue it, and then bring those initiatives to life. As a proven innovator and a proud trusted advisor, we support shippers’ ability to track, plan, and execute a climate plan that is founded in accurate, transparent data and that keeps pace with the realities of a rapidly evolving marketplace.