Scope 2 emissions come from the electricity, heating, and cooling your organization purchases, and the most effective way to reduce them is to shift that energy supply toward renewable or low-carbon sources. Companies in the RE100 coalition now average 53% renewable electricity, up from 50% the prior year, showing steady but incomplete progress. The gap between where most organizations are and where they need to be leaves plenty of room for action across several proven strategies.
On-Site Solar and Renewable Generation
Installing solar panels, small wind turbines, or other renewable systems directly at your facilities is the most straightforward path to cutting scope 2 emissions. You generate clean electricity behind the meter, which directly displaces grid power and the emissions associated with it. On-site generation also hedges against rising utility rates and gives you physical control over part of your energy supply.
For commercial-scale solar specifically, payback periods have been shrinking. Wood Mackenzie modeling shows a national average payback of about 6.3 years under moderate electricity price growth, dropping to 4.2 years if retail rates climb faster (around 6% annually). That said, the gap between the best and worst states is roughly 12 years in either scenario, so local electricity prices, solar irradiance, and available incentives matter enormously. If you’re in a high-rate state with good sun exposure, on-site solar is likely one of your fastest-returning investments. In lower-rate regions, off-site procurement options may deliver better value.
Power Purchase Agreements
When on-site generation can’t cover your full electricity load, or when your facilities aren’t well suited for renewables, power purchase agreements (PPAs) let you contract directly with wind or solar projects. PPAs come in two main forms, and the distinction matters for how you manage energy and report emissions.
A physical PPA means you’re buying actual electricity from a renewable project. The developer builds and operates the project, and you take legal title to the energy at an agreed delivery point. From there, you’re responsible for scheduling that power to your facilities or selling it into the wholesale market. Physical PPAs work best when the renewable project is on the same grid as your operations and you can genuinely receive the electrons.
A virtual PPA (sometimes called a synthetic PPA) is a financial contract rather than a physical energy delivery. You and the project developer agree on a fixed price per megawatt-hour. When the project sells power into the wholesale market, you receive (or pay) the difference between the market price and your contract price. The key for emissions reporting: you receive the energy attribute certificates from the project, which you use to claim the renewable energy on your scope 2 inventory. Since 2014, corporate buyers have contracted more than 100 GW of renewable energy in North America and around 65 GW in Europe through these long-term agreements. VPPAs are especially useful for organizations with facilities spread across multiple regions, since the project doesn’t need to be physically connected to your load.
Green Tariffs From Your Utility
If your facilities are in regulated electricity markets where you can’t choose your power supplier, utility green tariffs offer a way to access renewable energy without negotiating a PPA yourself. These are optional programs, approved by state public utility commissions, that let large commercial and industrial customers buy bundled renewable electricity from a specific project through a special rate.
The exact structure varies. Some green tariffs peg your rate to the wholesale electricity market price. Others let you engage directly with a renewable project, essentially functioning like a PPA that the utility facilitates (sometimes called a “sleeved PPA”). In all cases, the utility ensures program costs don’t get shifted to non-participating customers. As of late 2023, 62 active green tariff programs existed across more than 30 utilities in 30 U.S. states. If you operate in a regulated market and lack the bandwidth to negotiate a direct PPA, a green tariff can be the simplest procurement path available.
Renewable Energy Certificates
Renewable energy certificates (RECs) are the accounting mechanism that underlies nearly all scope 2 renewable energy claims. One REC is issued for every megawatt-hour of electricity generated and delivered to the grid from a renewable source. Whether you install rooftop solar, sign a PPA, or enroll in a green tariff, RECs are what formally transfer the environmental attributes of that clean energy to you.
You can also purchase RECs separately on the open market, known as “unbundled” RECs. This is the lowest-cost and lowest-effort option, but it’s also the weakest signal of impact. Unbundled RECs don’t necessarily finance new renewable projects or match your actual electricity consumption in time and location. For credible scope 2 reporting under the GHG Protocol’s market-based method, your RECs need to meet several quality criteria: they should come from a recognized tracking system, carry verified data on the generation facility, fuel type, location, and vintage, and not be double-counted. Programs like Green-e in the U.S. and I-REC internationally provide third-party certification that these standards are met.
If you’re serious about emissions impact rather than just accounting, prioritize bundled RECs from PPAs or green tariffs over unbundled purchases. Bundled procurement creates a direct financial link between your purchase and the operation (or construction) of a renewable project.
Electrifying Heating and Cooling
Scope 2 isn’t just about electricity. If your organization purchases steam, heating, or cooling from a third party, those emissions count too. And even when heating is generated on-site with natural gas boilers, switching to electric heat pumps and then sourcing clean electricity creates a powerful one-two reduction.
Heat pumps currently on the market are three to five times more energy efficient than gas boilers, according to the International Energy Agency. Even running on today’s electricity mix, which still includes fossil fuels in most regions, heat pumps reduce greenhouse gas emissions by at least 20% compared to a gas boiler. In countries with cleaner grids, that reduction reaches 80%. As grids decarbonize further, the advantage only grows. Globally, heating in buildings accounts for about 4 gigatonnes of CO2 per year, roughly 10% of all emissions, so the opportunity here is massive.
For organizations with industrial heat needs, the calculus depends on temperature requirements. Heat pumps work well for space heating and processes up to moderate temperatures. Higher-temperature industrial processes may require different electrification technologies or alternative fuels, but for most commercial buildings and light industrial facilities, heat pumps are a proven, available solution.
Energy Efficiency and Load Management
The cheapest megawatt-hour is the one you never use. Before investing heavily in renewable procurement, reducing your total electricity demand lowers the volume of clean energy you need to source. LED lighting retrofits, building envelope improvements, efficient HVAC systems, and smart building controls can cut electricity consumption by 20% to 40% in older commercial buildings.
Battery energy storage adds another layer. By storing electricity when the grid is cleaner (typically midday, when solar generation peaks) and discharging it during dirtier periods (evenings and early mornings, when gas plants ramp up), you can lower the emissions intensity of the power you actually consume. This “carbon time-shifting” strategy works whether you have on-site solar feeding the battery or you’re simply responding to real-time grid carbon signals. Storage systems also provide economic benefits through demand charge reduction and participation in utility demand response programs.
Choosing the Right Mix of Strategies
No single approach eliminates scope 2 emissions on its own. The most effective programs layer multiple strategies based on what’s practical for each facility. A reasonable sequence looks like this:
- Start with efficiency. Reduce total energy demand through building upgrades and operational changes. This shrinks the renewable energy gap you need to close.
- Install on-site generation where feasible. Rooftop or ground-mount solar on owned properties delivers direct reductions and long-term savings.
- Sign PPAs or green tariffs for remaining load. These provide the largest-scale reductions and directly support new renewable capacity on the grid.
- Use unbundled RECs as a bridge. They can cover residual emissions while you build out longer-term procurement, but they shouldn’t be your primary strategy.
- Electrify thermal loads. Replace gas-fired heating with heat pumps to bring those emissions under scope 2 and then address them through your clean electricity strategy.
The right balance depends on your facilities’ locations, whether you’re in regulated or deregulated electricity markets, your capital budget, and your timeline. Organizations in deregulated markets have more procurement flexibility. Those in regulated states can lean on the growing number of utility green tariff programs. Either way, scope 2 reductions are among the most achievable and well-documented decarbonization steps available, with clear procurement mechanisms and established accounting standards already in place.