Scope 2 Emissions and HVAC: How Cooling Savings Become Reported Emissions Reductions

Key takeaways

• Scope 2 covers emissions from purchased electricity, steam, heat and cooling. Refrigerant leaks are Scope 1.
• The GHG Protocol requires dual reporting: location-based (grid average) and market-based (contracts and certificates).
• EPA eGRID2023 (rev2, June 2025) puts ERCOT's total output rate at 733.9 lb CO2/MWh and 736.6 lb CO2e/MWh.
• Saving 1,000 MWh in ERCOT cuts location-based Scope 2 by about 334 metric tons CO2e.
• A revised Scope 2 standard is in development; as of October 2026 the 2015 guidance still applies.

Sustainability teams report emissions in metric tons of carbon dioxide equivalent (tCO2e). Facility teams manage kilowatt-hours. This page connects the two. It explains how the Greenhouse Gas Protocol treats electricity, where HVAC fits, which emission factor to use in Texas, and how to convert a measured kWh saving into a defensible emissions number.

Scope 1, Scope 2 and where HVAC fits

The GHG Protocol Corporate Standard is the most widely used framework for corporate emissions reporting. It sorts emissions into three scopes. EPA's Center for Corporate Climate Leadership summarizes the first two:

• Scope 1 covers direct emissions from sources the organization owns or controls, such as boilers, vehicles and on-site generators. Refrigerant leaks from HVAC-R equipment are Scope 1 (EPA calls them direct fugitive emissions).
• Scope 2 covers indirect emissions from purchased electricity, steam, heat or cooling. The emissions physically happen at the power plant, but they are attributed to the buyer. The electricity that runs chillers, rooftop units, split systems and refrigeration racks lands here.
• Scope 3 covers other value-chain emissions, such as purchased goods and tenant energy use in some leasing arrangements.

So an HVAC-R project can affect two scopes at once. Electricity savings reduce Scope 2, and better leak control reduces Scope 1. Keep them separate in your accounting.

Location-based and market-based: the two Scope 2 numbers

The GHG Protocol Scope 2 Guidance (2015) requires companies to report Scope 2 two ways:

• Location-based method: multiply your electricity use by the average emission rate of the grid where it is consumed. In the US, that rate usually comes from EPA's eGRID.
• Market-based method: use the emission rates attached to the electricity you have contracted for, such as a supplier-specific rate, renewable energy certificates or a power purchase agreement, subject to the guidance's quality criteria. Where you have no contractual instruments, a residual mix factor is used.

Efficiency improves both numbers, because you buy fewer kWh. It shows up most clearly in the location-based figure. If a company already buys certificates for 100% of its load, cutting kWh may reduce how many certificates it needs rather than its reported market-based emissions.

Revision status (as of October 2026)

The GHG Protocol is revising its Scope 2 rules. The Independent Standards Board approved draft revisions for public consultation in mid-2025. The consultation ran from October 20, 2025 to January 31, 2026. The proposals include a more precise hierarchy of location-based emission factors (by time and region, where public data exist) and hourly and same-grid matching for market-based claims, with feasibility exemptions and phased implementation. The GHG Protocol has said it expects to publish the full revised standard by the end of 2027. Until it does, the 2015 Scope 2 Guidance remains the rulebook. If your organization reports to customers or investors, ask your sustainability lead which version to plan for.

The emission factor: EPA eGRID for ERCOT

EPA's Emissions & Generation Resource Integrated Database (eGRID) publishes emission rates for every US power plant, aggregated by state, balancing authority, eGRID subregion and nation. EPA's guidance on using eGRID for footprinting recommends the total output emission rate for an emissions inventory and the eGRID subregion rate for a single facility. Houston and other areas served by the ERCOT grid fall in the ERCT (ERCOT All) subregion; parts of Texas outside ERCOT fall in other subregions. EPA's Power Profiler finds the subregion for any ZIP code.

As of October 2026, the latest edition on EPA's eGRID site is eGRID2023 (2023 data), with the revision 2 summary tables released in June 2025:

eGRID figures lag by about two years, and EPA sometimes revises a release. The revision 1 tables from January 2025 showed a different ERCT value. Always cite the edition and revision you used, and update when a new edition is published.

Total output rate or non-baseload rate?

The two rates answer different questions:

• The total output rate is the average for all generation in the subregion. Use it for your inventory, the location-based Scope 2 figure you report each year.
• The non-baseload rate weights the plants that run at the margin, which EPA describes as the generation that "might be avoided" by efficiency or renewable energy. EPA tools use it as a simple estimate of avoided emissions. It is not what you put in your annual Scope 2 inventory.

Label clearly which one you are using. Mixing them in one report is a common error.

Worked example: converting kWh savings to tCO2e

Illustrative example. The numbers below are for showing the arithmetic only. They are not CryogenX4 results or a prediction for any building.

Suppose a Houston office building cuts measured cooling electricity by 1,000,000 kWh (1,000 MWh) in a year compared with a weather-normalized baseline.

1. Inventory (location-based Scope 2) effect: 1,000 MWh x 736.6 lb CO2e/MWh = 736,600 lb CO2e. Divide by 2,204.62 lb per metric ton to get about 334 tCO2e.
2. Avoided-emissions estimate (non-baseload): 1,000 MWh x 1,247.5 lb CO2e/MWh = 1,247,500 lb, or about 566 tCO2e. This is a different metric for a different purpose, such as a project impact statement.
3. Same saving, national average rate: 1,000 MWh x 770.9 = about 350 tCO2e. Use the subregion rate for a Texas site, not the national average.

The quality of the result depends on the quality of the kWh number. A credible saving comes from measured data against a baseline that adjusts for weather and operating changes. See baselines and weather normalization and IPMVP options explained.

Portfolios across several grid regions

A company with buildings in Texas, the Southeast and California should not apply one factor to everything. EPA's eGRID footprinting guidance says to use the subregion rate for a single facility. For many facilities across a large area, you may use the NERC region or US rate to simplify the analysis. The trade-off is precision. A kWh saved in a lower-emitting subregion is worth fewer tons than one saved in a higher-emitting subregion, and a single national factor hides that. If you are choosing which sites to treat first for emissions reasons, compare them using each site's own subregion rate.

EPA also cautions against using the emission rate of a nearby power plant. Electricity from many plants mixes on the grid, so an aggregated rate such as the eGRID subregion is more appropriate than any single plant's rate.

Common mistakes to avoid

• Using the vendor's estimate instead of measured kWh. Emissions claims inherit every weakness of the energy number underneath.
• Mixing rate types. Use total output rates for the inventory and non-baseload rates only for clearly labeled avoided-emissions estimates.
• Mixing CO2 and CO2e. The CO2e rate includes methane and nitrous oxide. Use it consistently if you report in CO2e.
• Forgetting to update. When EPA publishes a new eGRID edition, recalculate your factors and note the change in your methodology.
• Counting the same saving twice, for example in Scope 2 and again as a separate offset or credit.

Where reporting pressure comes from in 2026

• California's SB 253. Companies with over $1 billion in annual revenue that do business in California must report Scope 1 and 2 emissions. CARB moved the first reporting deadline, covering fiscal 2025, from August 10 to November 10, 2026. Scope 3 reporting is still scheduled to begin in 2027.
• Building performance standards in cities like New York and Boston convert electricity to emissions. See our 2026 status table.
• Voluntary targets set by owners, tenants and lenders, many of which use GHG Protocol accounting.

Where HVAC-R efficiency shows up in the numbers

Cooling and refrigeration are often among the largest electric loads in commercial, industrial and cold storage facilities, and they peak during the hottest hours. Common ways to reduce that load in existing equipment include fixing controls, cleaning external coils, correcting refrigerant charge, and addressing internal oil fouling. Each kWh saved reduces location-based Scope 2 at the subregion rate.

CRYOGENX4 targets the internal side. The company describes oil that migrates past compressor seals and coats internal coil surfaces as an insulating film, and says its treatment lifts that film, returns oil to the sump and improves lubricity. CryogenX4 reports energy savings of up to 30%, with results varying by equipment condition. To claim the resulting Scope 2 reduction, measure kWh on the treated equipment before and after, normalize for weather and load, and multiply by the documented eGRID rate.

Reporting checklist

1. Record the eGRID edition, revision, subregion and rate type (total output or non-baseload) for every calculation.
2. Report location-based and market-based Scope 2 separately.
3. Base kWh savings on measured, normalized data, and keep the M&V report with your inventory files.
4. Report refrigerant leaks as Scope 1, separately from electricity.
5. Recheck factors each year, and watch for the revised GHG Protocol Scope 2 standard.

Next step

If you need defensible Scope 2 reductions from existing HVAC-R equipment, start with measured kWh on a few representative units. The HVAC savings calculator gives a first estimate in dollars and tCO2e using the same eGRID2023 ERCOT factor, and a measured pilot turns the estimate into data.

Frequently asked questions

Are refrigerant leaks Scope 1 or Scope 2?

Scope 1. Leaks from refrigeration and air conditioning equipment are direct fugitive emissions from equipment you own or control. The electricity the equipment uses is Scope 2.

What emission factor should a Houston building use?

For a location-based inventory, EPA recommends the eGRID subregion total output rate. Houston is in ERCT (ERCOT All). In eGRID2023 rev2 that rate is 736.6 lb CO2e/MWh (733.9 lb CO2/MWh). Recheck when EPA publishes a newer edition.

Why does my market-based number not drop when we save energy?

If your organization already covers its load with renewable energy certificates or a clean supply contract, saving kWh may reduce the certificates you need rather than your reported market-based emissions. The location-based figure still falls.

Is the GHG Protocol changing Scope 2 rules?

A revision is underway. Public consultation closed January 31, 2026, and the GHG Protocol has said it expects to publish the full revised standard by the end of 2027. The 2015 Scope 2 Guidance applies until then.

Sources

1. Scope 2 Guidance — Greenhouse Gas Protocol
2. Scope 2 standard advances: ISB approves consultation on market- and location-based revisions — Greenhouse Gas Protocol
3. eGRID2023 Summary Tables (rev2, June 2025) — U.S. EPA
4. Emissions & Generation Resource Integrated Database (eGRID) — U.S. EPA
5. Using eGRID for Environmental Footprinting of Electricity Purchases — U.S. EPA
6. Scope 1 and Scope 2 Inventory Guidance — U.S. EPA Center for Corporate Climate Leadership
7. California Extends SB 253 Greenhouse Gas Reporting Deadline (June 2026) — King & Spalding
8. What's next for GHG Protocol's electricity rule revision — Trellis
9. GHG Inventory Guidance: Direct Fugitive Emissions from Refrigeration, Air Conditioning, Fire Suppression, and Industrial Gases — U.S. EPA Center for Corporate Climate Leadership