Most companies think they know their Scope 1 emissions. They pull the gas invoices, add up the diesel, and file the numbers. What they rarely account for are the refrigerant leaks from the HVAC system, the CO₂ released during on-site chemical processes, or the methane escaping from gas pipelines and storage. These are Scope 1 emissions too, and under the UK Sustainability Reporting Guidance 2025-26, they are mandatory disclosures, not optional extras.
According to the GHG Protocol Corporate Standard, Scope 1 GHG emissions are direct greenhouse gas emissions from sources owned or controlled by an organisation. That definition covers four distinct categories, and most SECR reporters are only capturing two of them consistently.
The cost of incomplete reporting is rising. With approximately 11,900 UK companies now in scope of SECR, ESOS Phase 3 progress reports due December 2026, and the UK Sustainability Reporting Standards arriving in voluntary form from early 2026, the margin for under-reporting is narrowing fast.
This article is part of Thallo's complete guide to Scope 1, 2 and 3 emissions. Here, we focus specifically on:
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The four GHG Protocol categories of Scope 1 emissions, including the ones most frequently missed
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How to calculate Scope 1 emissions using DESNZ 2025 conversion factors
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What SECR and ESOS require you to disclose, and the penalties for getting it wrong
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A prioritised reduction hierarchy and the role of carbon markets for residual emissions
Key Takeaways
Scope 1 covers four categories: stationary combustion, mobile combustion, process emissions, and fugitive emissions. Most SECR reporters only capture the first two.
Fugitive emissions (refrigerant leaks, methane from pipelines) are mandatory disclosures under the UK Sustainability Reporting Guidance 2025-26, not optional extras.
All Scope 1 calculations use the formula: activity data x emission factor = tCO₂e, with DESNZ 2025 conversion factors as the required UK reference.
SECR applies to approximately 11,900 UK companies. Non-compliance fines reach £7,500 for delays over six months, and ESOS Phase 3 progress reports are due December 2026.
Reduction should follow a clear hierarchy: efficiency first, then fuel switching, then fleet electrification. Carbon credits are for genuinely hard-to-abate residual emissions only.
What Are Scope 1 Emissions? The Four Categories
Scope 1 emissions cover everything that comes directly from sources your organisation owns or controls. The GHG Protocol divides them into four categories. The first two are well understood. The second two are where reporting gaps consistently appear.
Stationary combustion
Stationary combustion covers fuel burned in fixed assets: gas boilers, oil-fired furnaces, diesel generators, process heaters, and biomass boilers. This is the category most organisations capture reasonably well, because the data sits in energy invoices.
Sector examples include:
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Manufacturing: gas-fired process heaters and steam boilers
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Hospitality: gas boilers for space heating and hot water across hotel estates
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Logistics: gas heating in large distribution depots and warehouses
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Agriculture: grain dryers, glasshouse heating, and on-site generators
Mobile combustion
Mobile combustion covers fuel burned in vehicles owned or leased by the organisation: company cars, vans, HGVs, forklifts, agricultural machinery, and company-owned vessels or aircraft. The key distinction is operational control: if the organisation owns or leases the vehicle, the emissions are Scope 1. If an employee uses their own car for business travel, those emissions fall under Scope 3.
Common sources include:
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HGV fleets operated by logistics and retail companies
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Company car fleets in professional services and field-based industries
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Forklifts and handling equipment running on LPG or diesel
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Agricultural machinery including tractors and combine harvesters
Process emissions
Process emissions arise from chemical or physical reactions during manufacturing, not from fuel combustion. They are entirely absent from the Scope 1 picture of most non-manufacturing businesses, which is why they are so frequently overlooked.
Industries where process emissions are material:
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Cement: CO₂ released during clinker production as limestone is calcined
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Lime production: similar calcination reaction, high CO₂ intensity per tonne
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Steel-making: CO₂ from the reduction of iron ore using coke in blast furnaces
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Aluminium smelting: perfluorocarbon (PFC) emissions from electrolysis
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Chemical manufacturing: a wide range of process gases depending on the product
If your organisation does not operate in these sectors, process emissions are likely zero or negligible. If you do, they may represent the largest single component of your Scope 1 inventory.
Fugitive emissions
Fugitive emissions are unintentional releases of greenhouse gases from equipment, pipelines, or storage systems. They are the most commonly underreported Scope 1 category, partly because they require active monitoring to quantify and partly because many organisations do not realise they are required disclosures.
The UK Sustainability Reporting Guidance 2025-26 explicitly names fugitive emissions from equipment such as air conditioning units as mandatory Scope 1 disclosures. Common sources include:
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Refrigerant leaks from HVAC systems, industrial chillers, and commercial refrigeration
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Methane from natural gas pipelines, storage tanks, and compressor stations
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SF₆ from high-voltage electrical switchgear
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HFCs from cold storage facilities in food retail and distribution
The practical fix is straightforward: annual refrigerant leak checks, refrigerant top-up logs maintained by your FM team, and a register of all refrigerant-containing equipment. Most of the data already exists; it just needs to be routed into the emissions inventory.
Summary: Scope 1 categories at a glance
| Category | Typical sources | Sectors most affected |
|---|---|---|
| Stationary combustion | Gas boilers, oil furnaces, diesel generators | All sectors with owned premises |
| Mobile combustion | Company cars, vans, HGVs, forklifts | Logistics, field services, agriculture |
| Process emissions | Clinker production, steel-making, electrolysis | Manufacturing, chemicals, metals |
| Fugitive emissions | HVAC refrigerants, gas pipelines, SF₆ switchgear | All sectors with HVAC; energy; food retail |
Scope 1 Emissions by Sector: Worked Examples
Abstract categories become real when you put illustrative numbers against them. The three scenarios below use DESNZ 2025 conversion factors as the basis for estimates. All figures are illustrative only and should not be used as benchmarks for your own reporting.
Logistics company: HGV fleet and gas-heated depot
A mid-sized logistics operator runs 50 diesel HGVs, each covering approximately 80,000 km per year, plus a gas-heated distribution depot consuming around 500,000 kWh annually.
| Scope 1 source | Illustrative tCO₂e/year |
|---|---|
| 50 diesel HGVs (fleet fuel consumption basis) | ~1,350 |
| Gas heating (depot, 500,000 kWh gross CV) | ~92 |
| Refrigerant top-ups (2 x HFC-404A systems) | ~18 |
| Total illustrative Scope 1 | ~1,460 |
The fleet dominates, as expected. But the refrigerant figure is non-trivial and is the one most commonly absent from initial SECR submissions.
Office-based business: gas heating and small fleet
A professional services firm occupies leased offices with gas heating (150,000 kWh/year) and runs 12 company cars on petrol and diesel.
| Scope 1 source | Illustrative tCO₂e/year |
|---|---|
| Gas heating (150,000 kWh gross CV) | ~28 |
| 12 company cars (mixed petrol/diesel) | ~35 |
| Total illustrative Scope 1 | ~63 |
This is a low Scope 1 profile. For this type of organisation, Scope 2 (purchased electricity) and Scope 3 (supply chain, business travel, employee commuting) will almost certainly be the material emissions categories. Scope 1 accuracy matters for SECR compliance, but reduction effort should be directed elsewhere.
Food manufacturer: process, refrigeration and fleet
A mid-scale food manufacturer operates gas-fired process equipment, a large cold storage facility, and a delivery fleet.
| Scope 1 source | Illustrative tCO₂e/year |
|---|---|
| Gas-fired process equipment (2,000,000 kWh) | ~368 |
| Cold storage refrigerant (ammonia system, low leakage) | ~12 |
| 20 refrigerated delivery vans | ~110 |
| Total illustrative Scope 1 | ~490 |
The key insight here: switching to ammonia or CO₂-based refrigeration systems (rather than HFC blends) dramatically reduces the fugitive emissions component. For food manufacturers, refrigerant choice is both a Scope 1 and a cost decision.
How to Calculate Scope 1 Emissions: Step by Step
Every Scope 1 calculation follows the same basic formula:
Activity data × Emission factor = tCO₂e
Activity data is the quantity of fuel consumed, refrigerant released, or process input used. The emission factor converts that quantity into tonnes of CO₂ equivalent (tCO₂e), accounting for all relevant greenhouse gases weighted by their global warming potential (GWP).
Step 1: Gather your activity data
The quality of your Scope 1 figure is only as good as the data behind it. Primary sources include:
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Fuel invoices: gas and oil consumption in kWh or litres, direct from supplier bills
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Fleet telematics or fuel cards: litres of diesel or petrol consumed by company vehicles
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Refrigerant service logs: kg of refrigerant added during annual maintenance or leak repairs
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Energy audits and ESOS compliance data: metered consumption data from Phase 3 audits
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Process records: raw material inputs and process outputs for manufacturing operations
Step 2: Select the right emission factors
For UK operations, use the DESNZ GHG Conversion Factors 2025, published June 2025. These are updated annually and are the required reference for SECR reporting. For international operations, IPCC default factors are the appropriate alternative.
A practical note: the DESNZ factors for fuel combustion are updated annually, but refrigerant and process gas factors were last updated in the 2021 publication. Use the most current available set.
Worked calculation 1: Natural gas boiler
A site consumes 200,000 kWh of natural gas per year (gross CV basis, as shown on energy bills).
Using the DESNZ 2025 natural gas factor (approximately 0.18316 kgCO₂e/kWh gross CV):
200,000 kWh × 0.18316 kgCO₂e/kWh = 36,632 kgCO₂e = 36.6 tCO₂e
Worked calculation 2: Diesel fleet
A company fleet consumes 50,000 litres of mineral diesel per year.
Using the DESNZ 2025 factor for mineral diesel (2.706 kgCO₂e/litre):
50,000 litres × 2.706 kgCO₂e/litre = 135,300 kgCO₂e = 135.3 tCO₂e
Worked calculation 3: Refrigerant leak
A chiller system requires a top-up of 5 kg of R-410A refrigerant following an annual service inspection.
R-410A has a GWP of 2,088 (IPCC AR5). The DESNZ refrigerant factors (last updated 2021) apply this GWP directly:
5 kg × 2,088 kgCO₂e/kg = 10,440 kgCO₂e = 10.4 tCO₂e
Ten tonnes of CO₂e from five kilograms of refrigerant. This is why fugitive emissions matter, and why a single uncharged leak can meaningfully distort a Scope 1 inventory.
Handling data gaps
Perfect data is rarely available in the first year of reporting. Accepted approaches for filling gaps include:
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Estimation from partial data: extrapolate from known consumption over a shorter period
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Engineering calculations: use equipment specifications and operating hours to estimate fuel use
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Proxy data: apply industry-average intensity ratios where metered data is unavailable
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Supplier-provided data: some fuel and refrigerant suppliers can provide consumption records
All estimation methods must be documented in your methodology statement. SECR's "comply or explain" provision allows for incomplete data, but requires transparency about what has been estimated and why.
Thallo’s free carbon footprint calculator can help you work through these calculations for your own operations, including refrigerant and fleet sources that are often missed in standard tools.
SECR and UK Regulatory Requirements for Scope 1 Emissions
Scope 1 reporting is not voluntary for most large UK organisations. The Streamlined Energy and Carbon Reporting (SECR) framework, introduced under the Companies Act 2006, makes Scope 1 and Scope 2 disclosure a statutory requirement, published in the Directors' Report.
Who must report under SECR?
SECR applies to all UK quoted companies regardless of size, and to large unquoted companies and LLPs that meet at least two of the following three criteria:
| Criterion | Threshold |
|---|---|
| Employees | More than 250 |
| Annual turnover | More than £36 million |
| Balance sheet total | More than £18 million |
Approximately 11,900 UK companies are currently in scope. The one meaningful exemption is the low-energy user exclusion: organisations that consume 40 MWh or less of energy in the reporting period are exempt, but must explicitly state this in their Directors' Report.
What must be disclosed?
SECR requires the following as a minimum for in-scope organisations:
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Scope 1 and Scope 2 emissions in tCO₂e, covering the seven Kyoto Protocol gases
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UK energy consumption in kWh (electricity, gas, and transport fuels)
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At least one emissions intensity ratio (e.g. tCO₂e per £m turnover or per employee)
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A narrative description of energy efficiency actions taken during the reporting period
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The methodology used, including which emission factors were applied
Quoted companies must also report prior-year comparatives and global energy consumption. Unquoted companies report UK operations only. The UK SRG 2025-26 also recommends disaggregating Scope 1 by source (boilers, fleet, fugitive emissions) to support stakeholder understanding.
Penalties for non-compliance
SECR is a legal requirement, and the penalty structure is tiered by delay:
| Delay period | Private company fine | Public company fine |
|---|---|---|
| Up to 1 month | £150 | £750 |
| 1 to 3 months | £375 | £1,500 |
| 3 to 6 months | £750 | £3,000 |
| Over 6 months | £1,500 | £7,500 |
The fines themselves are modest. The reputational and audit risk is not. The Environment Agency has issued over £160,000 in fines to organisations failing to comply with ESOS, a related energy assessment scheme. Regulators are no longer treating carbon reporting as a soft obligation.
ESOS Phase 3 and UK SRS: what to watch
ESOS Phase 3 compliance deadlines passed in 2023, but Phase 3 progress reports are due by December 2026. These reports require organisations to demonstrate action on the energy-saving opportunities identified in their ESOS audits. The consumption data gathered for ESOS is also the natural foundation for SECR Scope 1 calculations, so the two frameworks should be managed together.
The UK Sustainability Reporting Standards (UK SRS) entered voluntary use in early 2026. They are aligned to ISSB IFRS S1 and IFRS S2. The FCA and government are consulting on mandatory application for certain entities, likely beginning with listed companies.
UK SRS goes further than SECR. It requires Scope 1 disaggregation by source, transition plan disclosures, and more granular climate-related financial information. Organisations that build a complete Scope 1 inventory now will be better positioned when mandatory UK SRS arrives.
How to Reduce Scope 1 Emissions: The Priority Hierarchy
Reduction should follow a clear hierarchy: eliminate what you can, switch what you can't, manage what remains, and address the residual through carbon markets. Skipping to carbon credits before exhausting operational options is neither credible nor cost-effective.
1. Prioritise energy efficiency
Insulation upgrades, boiler replacements, LED lighting, and variable speed drives on motors and pumps all deliver immediate cost savings alongside emissions reductions. No fuel switch is required. These are the lowest-risk, fastest-payback interventions available, and they should come first.
2. Switch fuels where combustion continues
Replace gas boilers with heat pumps where the building fabric supports it. Transition diesel HGVs to battery-electric or HVO (hydrotreated vegetable oil) as a bridge fuel. Switch HFO to biofuel in marine and industrial applications. The technology is mature; the barrier is capital planning, not availability.
3. Electrify the fleet
For most organisations with company vehicles, fleet electrification is the primary Scope 1 reduction lever. The business case depends on annual mileage, charging infrastructure access, and vehicle availability in the relevant segment. Leasing rather than purchasing reduces balance sheet exposure during the transition.
4. Invest in process innovation
This is sector-specific and longer-term: carbon capture at cement and lime plants, hydrogen-based direct reduced iron in steel-making, and refrigerant substitution programmes moving from high-GWP HFCs to R-32, R-290 (propane), or CO₂-based systems.
5. Tackle refrigerant management now
This is the most overlooked near-term lever. A structured leak detection programme, combined with a planned transition to lower-GWP refrigerants, can deliver material Scope 1 reductions within 12 to 24 months at relatively low cost. It is also the quickest win for any organisation still running legacy HFC systems.
The most frequently missed quick win: refrigerant management. Many organisations have already invested in heat pumps and EV fleets but are still running legacy HFC systems with annual leak rates of 10-15%. Fixing this costs less than a fleet vehicle and can remove tens of tonnes of CO₂e per year.
| Intervention | Typical timeline | Scope 1 impact |
|---|---|---|
| Energy efficiency measures | 0 to 12 months | Low to medium |
| Refrigerant leak management | 6 to 24 months | Medium (high for cold-chain operators) |
| Fuel switching (HVO, biofuel) | 12 to 36 months | Medium to high |
| Fleet electrification | 2 to 5 years | High for vehicle-heavy operations |
| Process innovation (CCS, hydrogen) | 5 to 10 years | High for manufacturing sectors |
Carbon Market Instruments for Residual Scope 1 Emissions
Even with a robust reduction programme in place, some Scope 1 emissions will remain. Hard-to-abate process emissions, residual fleet emissions during an electrification transition, and fugitive releases that cannot yet be fully eliminated all fall into this category. Carbon market instruments exist to address these residuals, but they are a complement to reduction, not a substitute for it.
For a detailed treatment of compliance versus voluntary carbon markets, see Thallo's complete guide to Scope 1, 2 and 3 emissions.
UK Emissions Trading Scheme (UK ETS)
The UK ETS is a compliance market covering large industrial installations, the power sector, and aviation within the UK. Covered entities must surrender allowances equal to their verified emissions each year. Organisations in scope of the UK ETS have no choice about participation; the question is how they manage their allowance position and whether they invest in reduction to reduce their surrender obligation.
For most SECR reporters, the UK ETS is not directly relevant. It applies to specific high-emitting sectors, not to the broader universe of companies reporting under SECR.
CORSIA
The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) applies to international aviation operators from 2027 for routes between participating states. Airlines and aviation operators should be building their Scope 1 inventory now to understand their CORSIA exposure.
Voluntary carbon credits for residual Scope 1
For organisations outside the UK ETS and CORSIA, voluntary carbon credits are the primary instrument for addressing residual Scope 1 emissions. Credits verified under standards such as Verra's Verified Carbon Standard (VCS) allow organisations to fund verified emissions reductions elsewhere. They are not a substitute for reducing your own footprint; they run alongside it.
The right framing: carbon credits represent a contribution to global emissions reduction, not a licence to avoid your own. Credible net-zero strategies use credits only for genuinely hard-to-abate residual emissions, with a documented reduction trajectory for everything else.
When to use credits and when not to:
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Appropriate: residual Scope 1 from hard-to-abate processes where no cost-effective reduction technology yet exists
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Not appropriate: as a substitute for investing in fleet electrification, heat pump installation, or refrigerant management where those options are available
Frequently Asked Questions
What is included in Scope 1 emissions?
Scope 1 emissions include all direct greenhouse gas emissions from sources owned or controlled by your organisation. The GHG Protocol defines four categories: stationary combustion (gas boilers, furnaces, generators), mobile combustion (company-owned vehicles), process emissions (chemical reactions in manufacturing), and fugitive emissions (refrigerant leaks, methane from pipelines). All four are mandatory disclosures under SECR.
Are company cars Scope 1 or Scope 3?
Company cars owned or leased by the organisation are Scope 1 emissions. The fuel burned in those vehicles is a direct emission from an asset under your operational control. If an employee uses their own private vehicle for business travel and claims mileage, those emissions fall under Scope 3, Category 6 (business travel). The distinction is ownership or operational control of the vehicle, not the purpose of the journey.
Do leased assets count as Scope 1?
Yes, in most cases. The GHG Protocol uses an operational control boundary as the default: if your organisation controls how a leased asset operates, the associated emissions are Scope 1. This applies to leased vehicles, leased buildings with gas heating under your control, and leased industrial equipment. Finance-leased assets where the lessee bears the risks and rewards of ownership are also typically included.
What is the difference between Scope 1 and Scope 2 emissions?
Scope 1 emissions are direct: they come from sources your organisation owns or controls, such as gas boilers and company vehicles. Scope 2 emissions are indirect: they result from the generation of electricity, heat, or cooling that your organisation purchases from an external supplier. Both are mandatory under SECR. Scope 3 covers all other indirect emissions across your value chain and is voluntary under SECR, though increasingly expected by investors and supply chain partners.
How do I report Scope 1 emissions under SECR?
Calculate your Scope 1 emissions in tCO₂e using DESNZ 2025 conversion factors, covering all four GHG Protocol categories relevant to your operations. Include the figures in your Directors' Report alongside your Scope 2 emissions, an intensity metric, a narrative on energy efficiency actions, and a methodology statement. Quoted companies report global emissions; unquoted companies report UK operations only.
What are fugitive emissions and how do I measure them?
Fugitive emissions are unintentional greenhouse gas releases from equipment or infrastructure, most commonly refrigerant leaks from HVAC systems, chillers, and cold storage. To measure them, use refrigerant top-up logs from annual service records: the quantity of refrigerant added equals the quantity that leaked. Multiply the kg of refrigerant by its GWP value (from DESNZ refrigerant factors) to convert to tCO₂e. A structured annual leak inspection programme is the most reliable way to keep this data complete.
Next Steps: Measure, Report and Reduce Your Scope 1 Emissions
Knowing all four Scope 1 categories is the starting point. The organisations that get SECR right, and that are best positioned for UK SRS, are the ones that have already built a complete inventory: combustion, fleet, process emissions, and fugitive sources all accounted for.
Use Thallo’s free carbon footprint calculator to calculate your Scope 1 emissions across all four categories, including refrigerant sources that standard tools frequently miss.
Book a scoping call with Thallo if you need support building a defensible Scope 1 methodology, preparing your SECR disclosure, or sourcing verified carbon credits for residual emissions.
Continue reading:
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Scope 2 emissions explained: purchased electricity, market-based accounting and SECR requirements
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Scope 3 emissions explained: the 15 categories, materiality assessment and supply chain engagement
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Thallo's complete guide to Scope 1, 2 and 3 emissions