Category 2: Indirect Energy Emissions

Understanding Indirect Energy Emissions

Category 2 under ISO 14064-1 covers indirect GHG emissions from the generation of imported (purchased) electricity, heat, steam, or cooling consumed by your organization. While these emissions physically occur at the power plant or utility facility, they are attributed to your organization as the consumer.

┌─────────────────────────────────────────────────────────────────────────────────┐
│              CATEGORY 2: INDIRECT GHG EMISSIONS FROM IMPORTED ENERGY            │
├─────────────────────────────────────────────────────────────────────────────────┤
│                                                                                 │
│  YOUR ORGANIZATION                              ENERGY PROVIDER                 │
│  ─────────────────                              ───────────────                 │
│                                                                                 │
│  ┌───────────────────┐    ← Electricity ←    ┌───────────────────┐             │
│  │                   │    ← Heat/Steam  ←    │                   │             │
│  │   Office          │    ← Cooling     ←    │   Power Plant     │             │
│  │   Factory         │                       │   District Heat   │             │
│  │   Warehouse       │                       │   CHP Plant       │             │
│  │                   │                       │                   │             │
│  │  REPORTS EMISSIONS│                       │  GENERATES        │             │
│  │  (Category 2)     │                       │  EMISSIONS        │             │
│  └───────────────────┘                       └───────────────────┘             │
│                                                                                 │
└─────────────────────────────────────────────────────────────────────────────────┘

Indirect Energy Emission FormulaCategory 2 Emissions = Energy Consumed × Grid/Supplier Emission FactorWhere:

Energy Consumed: kWh of electricity, MJ of heat/cooling
Emission Factor: kg CO₂e per kWh (varies by grid region or supplier)

Prerequisites

Before starting, ensure you have:

Dcycle API credentials (get them here)
At least one facility configured in Dcycle
Energy invoices or meter readings (electricity, gas, heat)

Using the Dcycle App?Upload energy invoices directly through the web interface:

Facilities - Manage your facilities
Invoices - Upload and track energy consumption

Data Map: Category 2 Requirements

┌─────────────────────────────────────────────────────────────────────────────────────────┐
│                      CATEGORY 2 DATA REQUIREMENTS                                       │
├─────────────────────────────────────────────────────────────────────────────────────────┤
│                                                                                         │
│  ┌─────────────────────────────────────────────────────────────────────────────────┐   │
│  │ PURCHASED ELECTRICITY                                                           │   │
│  ├─────────────────────────────────────────────────────────────────────────────────┤   │
│  │                                                                                 │   │
│  │  Facility Info             Consumption Data          Supplier Info              │   │
│  │  ────────────────          ────────────────          ─────────────              │   │
│  │  • Facility ID             • kWh consumed            • Supplier name            │   │
│  │  • Grid region             • Invoice period          • Contract type            │   │
│  │  • Country                 • Peak/off-peak           • Renewable %              │   │
│  │                            • Reactive power                                     │   │
│  │                                                                                 │   │
│  └─────────────────────────────────────────────────────────────────────────────────┘   │
│                                                                                         │
│  ┌─────────────────────────────────────────────────────────────────────────────────┐   │
│  │ PURCHASED HEAT & STEAM                                                          │   │
│  ├─────────────────────────────────────────────────────────────────────────────────┤   │
│  │                                                                                 │   │
│  │  District Heating          Consumption               Heat Source                │   │
│  │  ────────────────          ───────────               ───────────                │   │
│  │  • Facility ID             • MWh or GJ consumed      • Heat source type         │   │
│  │  • Connection point        • Invoice period          • CHP efficiency           │   │
│  │                            • Temperature level       • Fuel mix                 │   │
│  │                                                                                 │   │
│  └─────────────────────────────────────────────────────────────────────────────────┘   │
│                                                                                         │
│  ┌─────────────────────────────────────────────────────────────────────────────────┐   │
│  │ PURCHASED COOLING                                                               │   │
│  ├─────────────────────────────────────────────────────────────────────────────────┤   │
│  │                                                                                 │   │
│  │  District Cooling          Consumption               System Details             │   │
│  │  ────────────────          ───────────               ──────────────             │   │
│  │  • Facility ID             • MWh or ton-hours        • Cooling technology       │   │
│  │  • Service provider        • Invoice period          • COP rating               │   │
│  │                                                                                 │   │
│  └─────────────────────────────────────────────────────────────────────────────────┘   │
│                                                                                         │
└─────────────────────────────────────────────────────────────────────────────────────────┘

Purchased Electricity

Track emissions from purchased electricity consumption at your facilities.

Location-Based vs Market-Based Methods

ISO 14064-1 allows two accounting methods for electricity emissions:

Location-Based
Market-Based

Uses grid average emission factors based on where electricity is consumed.

Location-Based Calculation

Your Facility (Spain) ← Grid Electricity ← Spanish Grid (mix of sources)
                                                │
                                                ├── Nuclear (22%)
                                                ├── Wind (24%)
                                                ├── Gas (17%)
                                                ├── Solar (10%)
                                                └── Other (27%)
                                                
Emission Factor = Average of all grid sources

Use when:

You don’t have supplier-specific data
Reporting regional grid impacts
Required by specific regulations

Dcycle automatically applies location-based factors based on facility country.

Uses supplier-specific emission factors based on contractual arrangements.

Market-Based Calculation

Your Facility ← Contract ← Specific Supplier
                                │
                                └── Renewable Energy Certificate (REC)
                                    OR Specific generation mix
                                    OR Residual mix (if no contract)

Emission Factor = Based on your specific contract/certificate

Use when:

You have renewable energy contracts
Purchasing Guarantees of Origin (GOs) or RECs
Showing impact of procurement decisions

Provide supplier details to enable market-based calculations.

Step 1: Record Electricity Invoice

📋 Data Map: Electricity Invoice

Field	Type	Required	Description	Example
`facility_id`	UUID	✅	Reference to facility	`"abc-123-..."`
`energy_type`	string	✅	Type of energy	`"electricity"`
`quantity`	number	✅	Amount consumed	`25000`
`unit`	string	✅	Unit of measurement	`"kWh"`
`start_date`	date	✅	Invoice period start	`"2024-01-01"`
`end_date`	date	✅	Invoice period end	`"2024-01-31"`
`supplier`	string	❌	Energy supplier name	`"Iberdrola"`
`renewable_percentage`	number	❌	% from renewable sources	`100`

Where to get this data:

Consumption: Electricity invoices, smart meter readings
Supplier details: Contract documents, supplier certificates
Renewable %: Guarantees of Origin, supplier mix disclosure

import requests
import os

headers = {
    "Authorization": f"Bearer {os.getenv('DCYCLE_API_KEY')}",
    "Content-Type": "application/json",
    "x-organization-id": os.getenv("DCYCLE_ORG_ID"),
    "x-user-id": os.getenv("DCYCLE_USER_ID"),
}

# Record electricity consumption
electricity_invoice = {
    "facility_id": "your-facility-uuid",
    "energy_type": "electricity",
    "quantity": 25000,
    "unit": "kWh",
    "start_date": "2024-01-01",
    "end_date": "2024-01-31",
    "supplier": "Iberdrola",
}

response = requests.post(
    "https://api.dcycle.io/api/v1/invoices",
    headers=headers,
    json=electricity_invoice,
)

invoice = response.json()
print(f"✅ Electricity invoice recorded: {invoice['id']}")
print(f"   Consumption: {invoice['quantity']} kWh")
print(f"   Location-based CO₂e: {invoice['co2e_location']} kg")
print(f"   Market-based CO₂e: {invoice['co2e_market']} kg")
print(f"   ISO 14064-1 Category: 2 (Indirect - Imported energy)")

Renewable Electricity

For facilities with renewable energy contracts:

# Record 100% renewable electricity
renewable_invoice = {
    "facility_id": "your-facility-uuid",
    "energy_type": "electricity",
    "quantity": 25000,
    "unit": "kWh",
    "start_date": "2024-01-01",
    "end_date": "2024-01-31",
    "supplier": "Green Energy Provider",
    "renewable_percentage": 100,  # 100% renewable
    "certificate_type": "guarantee_of_origin",
}

response = requests.post(
    "https://api.dcycle.io/api/v1/invoices",
    headers=headers,
    json=renewable_invoice,
)

invoice = response.json()
print(f"✅ Renewable electricity recorded")
print(f"   Location-based CO₂e: {invoice['co2e_location']} kg")
print(f"   Market-based CO₂e: {invoice['co2e_market']} kg (0 with 100% renewable)")

Dual Reporting RecommendationISO 14064-1 recommends reporting both location-based and market-based emissions when applicable. This provides:

Location-based: Regional grid impact
Market-based: Impact of procurement decisions

Dcycle calculates both automatically.

Purchased Heat & Steam

Track emissions from district heating or purchased steam.

📋 Data Map: Heat/Steam Invoice

Field	Type	Required	Description	Example
`facility_id`	UUID	✅	Reference to facility	`"abc-123-..."`
`energy_type`	string	✅	Type of energy	`"heat"`, `"steam"`
`quantity`	number	✅	Amount consumed	`500`
`unit`	string	✅	Unit of measurement	`"MWh"`, `"GJ"`
`start_date`	date	✅	Invoice period start	`"2024-01-01"`
`end_date`	date	✅	Invoice period end	`"2024-01-31"`
`supplier`	string	❌	Heat supplier name	`"District Heat Co"`

Where to get this data:

Consumption: District heating invoices, steam meters
Supplier: Heat supply contracts

# Record district heating consumption
heat_invoice = {
    "facility_id": "your-facility-uuid",
    "energy_type": "heat",
    "quantity": 150,
    "unit": "MWh",
    "start_date": "2024-01-01",
    "end_date": "2024-01-31",
    "supplier": "City District Heating",
}

response = requests.post(
    "https://api.dcycle.io/api/v1/invoices",
    headers=headers,
    json=heat_invoice,
)

invoice = response.json()
print(f"✅ District heating recorded: {invoice['id']}")
print(f"   Heat consumed: {invoice['quantity']} MWh")
print(f"   CO₂e: {invoice['co2e']} kg")
print(f"   ISO 14064-1 Category: 2 (Indirect - Imported energy)")

Purchased Cooling

Track emissions from district cooling systems.

# Record district cooling consumption
cooling_invoice = {
    "facility_id": "your-facility-uuid",
    "energy_type": "cooling",
    "quantity": 80,
    "unit": "MWh",
    "start_date": "2024-07-01",
    "end_date": "2024-07-31",
    "supplier": "City District Cooling",
}

response = requests.post(
    "https://api.dcycle.io/api/v1/invoices",
    headers=headers,
    json=cooling_invoice,
)

invoice = response.json()
print(f"✅ District cooling recorded: {invoice['id']}")
print(f"   Cooling consumed: {invoice['quantity']} MWh")
print(f"   CO₂e: {invoice['co2e']} kg")
print(f"   ISO 14064-1 Category: 2 (Indirect - Imported energy)")

Don’t Double Count!If your cooling is generated on-site using purchased electricity:

The electricity is Category 2
The cooling itself is NOT reported separately (would be double counting)

Only report purchased district cooling as a separate Category 2 source.

Query Category 2 Emissions

Retrieve all your indirect energy emissions for reporting:

# Get Category 2 emissions summary
response = requests.get(
    f"https://api.dcycle.io/api/v1/organizations/{os.getenv('DCYCLE_ORG_ID')}/emissions",
    headers=headers,
    params={
        "year": 2024,
        "category": "indirect_energy",  # ISO 14064-1 Category 2
    },
).json()

print(f"📊 Category 2: Indirect GHG Emissions from Imported Energy (2024)")
print(f"")
print(f"   LOCATION-BASED METHOD:")
print(f"   Electricity: {response['electricity_location']:,.0f} kg CO₂e")
print(f"   Heat/Steam: {response['heat_location']:,.0f} kg CO₂e")
print(f"   Cooling: {response['cooling_location']:,.0f} kg CO₂e")
print(f"   ─────────────────────────")
print(f"   TOTAL (Location): {response['total_location']:,.0f} kg CO₂e")
print(f"")
print(f"   MARKET-BASED METHOD:")
print(f"   Electricity: {response['electricity_market']:,.0f} kg CO₂e")
print(f"   Heat/Steam: {response['heat_market']:,.0f} kg CO₂e")
print(f"   Cooling: {response['cooling_market']:,.0f} kg CO₂e")
print(f"   ─────────────────────────")
print(f"   TOTAL (Market): {response['total_market']:,.0f} kg CO₂e")

Emission Factors

Calculation Methods: Location-based vs Market-based

Location-based Method
Market-based Method

The location-based method uses average grid emission factors based on where energy is consumed. This reflects the average emissions intensity of the local grid.

Facility (any country) → Invoice → Grid EF by Location → CO₂e
      ↓                     ↓              ↓                ↓
  Country from          kWh consumed    Grid emission    Reflects average
  facility address                      factors          grid emissions

Key characteristics:

Uses country/regional grid average emission factors
Emission factors from Ecoinvent and REE (Red Eléctrica Española)
Updated when new version of Ecoinvent or REE (annually) is released
Required for GHG Protocol and ISO 14064-1 compliance

Emission Factor Sources - Location-based

For location-based calculations, Dcycle uses emission factors from:

Ecoinvent - Global grid emission factors
REE (Red Eléctrica de España) - Spain-specific factors

Factors are automatically selected based on:

Facility country
Invoice year
Latest available data version

Calculation Details - Location-based

Location-based emissions are calculated as:CO₂e = Energy Consumed (kWh) × Grid Emission Factor (kg CO₂e/kWh)Where:

Energy Consumed: Electricity consumption in kWh
Grid EF: Average emission factor for the country/region grid

Example (Non-renewable electricity in Spain, 2024):

10,000 kWh × 0.1 kg CO₂e/kWh = 1,000 kg CO₂e

Note: Spain’s grid has been decarbonizing rapidly, so emission factors vary significantly by year.

The market-based method uses emission factors from contractual instruments that convey claims about the emissions attributes of purchased electricity.

Facility → Invoice + Supplier → Supplier-specific EF → CO₂e
      ↓           ↓                    ↓                  ↓
  Country     kWh + supplier      Contractual EF      Reflects supplier
              information                             energy mix

Key characteristics:

Uses supplier-specific emission factors (when available)
Reflects actual contractual arrangements
Can show zero emissions for 100% renewable suppliers

For Spain, Dcycle uses CNMC-published emission factors for each electricity supplier.

Emission Factor Sources - Market-based

For market-based calculations, Dcycle uses emission factors from:

CNMC (Spain) - Supplier-specific factors published annually
Supplier certificates - When provided by the user (custom emission factors)

Calculation Details - Market-based

Market-based emissions are calculated as:CO₂e = Energy Consumed (kWh) × Supplier Emission Factor (kg CO₂e/kWh)Where:

Energy Consumed: Electricity consumption in kWh
Supplier EF: Emission factor specific to your electricity supplier

Example (100% renewable supplier):

10,000 kWh × 0.00 kg CO₂e/kWh = 0 kg CO₂e

Note: Market-based can be higher or lower than location-based depending on your supplier’s energy mix.

Automatic Dual CalculationWhen you upload an electricity invoice, Dcycle automatically calculates both location-based and market-based emissions. Both values are stored and available in reports for ISO 14064-1 and GHG Protocol compliance.

District Heating and Cooling Emission Factors

District Heating Emission Factors

Sources include:

National district heating associations - Country averages
Supplier-specific data - When provided
Default factors - Based on typical CHP efficiency

Factors account for the heat source fuel mix.

District Cooling Emission Factors

Calculated based on:

Cooling technology (absorption, compression)
Coefficient of Performance (COP)
Electricity emission factor for electric chillers

Understanding Your Results

Why Location-based ≠ Market-based?

The two values represent different things:

Location-based reflects the average grid emissions where you consume energy
Market-based reflects your contractual arrangements with suppliers

Common scenarios:

Market > Location: Your supplier has a higher carbon intensity than the grid average
Market < Location: Your supplier uses more renewables than the grid average
Market = 0: You have 100% renewable electricity contracts

Reducing Category 2 Emissions

Strategies to reduce indirect energy emissions:

Switch suppliers: Choose suppliers with lower emission factors
Purchase green tariffs: 100% renewable electricity contracts
Install on-site renewables: Solar panels, wind (moves to Category 1 or carbon-neutral)
Energy efficiency: Reduce overall consumption
PPAs: Power Purchase Agreements with renewable generators

Renewable Energy and Market-based

For renewable energy to count as zero emissions in market-based:

Must have contractual proof (certificates, PPA, green tariff)
Certificate must match consumption location and timing
Guarantees of Origin (GOs) or RECs must be retired on your behalf

Dcycle tracks supplier-reported renewable percentages automatically for supported suppliers.

Best Practices

ISO 14064-1 Category 2 Best Practices

Track all facilities: Include all locations consuming purchased energy
Monthly data: Capture consumption monthly for seasonal variation
Supplier documentation: Keep certificates for renewable energy claims
Both methods: Report location-based AND market-based when possible
Data quality: Prefer meter readings over estimates

Calculate Emissions

ISO 14064

GHG Protocol

Use Case Tutorials

Advanced

Automation & AI

Understanding Indirect Energy Emissions

Prerequisites

Data Map: Category 2 Requirements

Purchased Electricity

Location-Based vs Market-Based Methods

Step 1: Record Electricity Invoice

Renewable Electricity

Purchased Heat & Steam

Purchased Cooling

Query Category 2 Emissions

Emission Factors

Calculation Methods: Location-based vs Market-based

District Heating and Cooling Emission Factors

Understanding Your Results

Best Practices

Next Steps

Category 3: Transportation

Back to ISO 14064 Tutorial

Calculate Emissions

ISO 14064

GHG Protocol

Use Case Tutorials

Advanced

Automation & AI

​Understanding Indirect Energy Emissions

​Prerequisites

​Data Map: Category 2 Requirements

​Purchased Electricity

​Location-Based vs Market-Based Methods

​Step 1: Record Electricity Invoice

​Renewable Electricity

​Purchased Heat & Steam

​Purchased Cooling

​Query Category 2 Emissions

​Emission Factors

​Calculation Methods: Location-based vs Market-based

​District Heating and Cooling Emission Factors

​Understanding Your Results

​Best Practices

​Next Steps

Category 3: Transportation

Back to ISO 14064 Tutorial

Understanding Indirect Energy Emissions

Prerequisites

Data Map: Category 2 Requirements

Purchased Electricity

Location-Based vs Market-Based Methods

Step 1: Record Electricity Invoice

Renewable Electricity

Purchased Heat & Steam

Purchased Cooling

Query Category 2 Emissions

Emission Factors

Calculation Methods: Location-based vs Market-based

District Heating and Cooling Emission Factors

Understanding Your Results

Best Practices

Next Steps