Energy use is the largest contributor to global greenhouse gas (GHG) emissions, accounting for approximately 73% of total emissions according to the Intergovernmental Panel on Climate Change (IPCC). For companies, this typically translates into Scope 1 (direct combustion) and Scope 2 (purchased energy) emissions. In both the United States and Europe, energy-related emissions are increasingly under the microscope as governments introduce stricter climate policies and investors demand credible net-zero roadmaps.
In this context, energy-related emissions are not just a regulatory concern but a strategic issue that impacts operations, risk management, and corporate reputation. The U.S. Inflation Reduction Act (IRA) and the EU Green Deal, alongside regulations like the Corporate Sustainability Reporting Directive (CSRD), are accelerating a shift toward renewable electricity, energy efficiency, and low-carbon innovation. Companies that fail to decarbonize energy use face mounting risks—including stranded assets, supply chain disruptions, and capital flight.
In Europe, policy ambition has made energy-related emissions a core compliance issue. The EU Emissions Trading System (EU ETS) imposes a carbon price—averaging around €70–€90 per ton of CO₂ in 2024—on industrial energy use, incentivizing companies to switch to lower-carbon fuels and improve efficiency. The CSRD, coming into effect in phases from 2024 to 2028, will require over 50,000 companies to disclose detailed energy consumption, emissions, and reduction plans using the European Sustainability Reporting Standards (ESRS) (EU Commission).
In the U.S., while there is no federal carbon tax, the Inflation Reduction Act has introduced over $369 billion in clean energy tax credits and incentives, pushing corporations to adopt solar, wind, green hydrogen, and energy storage. States like California and New York are also implementing Cap-and-Trade systems and strict building energy codes. The U.S. Securities and Exchange Commission (SEC) is finalizing a rule that would require public companies to disclose energy-related emissions, including Scope 2, as part of climate-related financial risks (SEC Climate Rule).
Thus, while the EU relies more heavily on compliance mechanisms and penalties, the U.S. approach leans on incentivization and voluntary alignment—though this distinction is narrowing as regulatory and market pressures intensify.
In both regions, companies are deploying energy efficiency and electrification as foundational decarbonization strategies. According to the International Energy Agency (IEA), energy efficiency improvements alone could deliver more than 40% of the emissions reductions needed to meet the Paris Agreement goals.
In Europe, industrial firms like Siemens and BASF are implementing smart manufacturing systems, heat recovery, and electrification of heat processes. Retailers such as IKEA have transitioned their logistics fleets to electric or biofuel alternatives and electrified nearly all their store heating systems in Scandinavia.
In the U.S., corporations such as Walmart, Microsoft, and Amazon have committed to electrifying their building portfolios and fleet vehicles. For instance, Amazon has deployed over 10,000 electric delivery vans in partnership with Rivian and plans to fully decarbonize its last-mile delivery fleet by 2040 (Amazon Sustainability). Data center operators like Google and Meta are also investing in direct air cooling, advanced controls, and renewable power purchasing to reduce energy intensity per unit of compute.
The cost-competitiveness of renewable electricity, paired with smart energy management, makes this pathway both environmentally and financially beneficial. The levelized cost of electricity (LCOE) for solar PV in the U.S. dropped to around $30/MWh in 2023, undercutting fossil fuels in most regions (Lazard 2023 LCOE Report).
One of the fastest-moving fronts in energy-related emissions is Scope 2 decarbonization through renewable energy procurement, Power Purchase Agreements (PPAs), and energy attribute certificates. In Europe, Guarantees of Origin (GOs) allow companies to prove their electricity comes from renewable sources. In the U.S., Green-e® certified RECs (Renewable Energy Certificates) serve a similar role. As of 2023, global corporate renewable PPAs surpassed 43 GW in capacity, with the U.S. and Europe accounting for the majority (BloombergNEF).
However, scrutiny around the quality and impact of these instruments is rising. Organizations such as RE100 and the Science Based Targets initiative (SBTi) are urging companies to move toward 24/7 carbon-free energy matching, rather than annual offsets. Google has led this trend by matching electricity use with hourly renewable generation across select campuses, while newer tools such as granular certificates and blockchain-backed RECs are enabling greater transparency.
For companies operating in both markets, aligning with high-integrity Scope 2 practices is becoming a differentiator in ESG ratings and investor due diligence. Simultaneously, energy-intensive sectors like cement, steel, and chemicals are turning to emerging low-carbon fuels (green hydrogen, bioenergy) and carbon capture to tackle unavoidable combustion emissions (Scope 1).
Energy-related emissions have become a defining variable in corporate climate strategy. While regulatory and policy environments differ between the U.S. and Europe, the trend toward transparency, electrification, and decarbonization is unmistakable. Companies that proactively address their Scope 1 and 2 emissions through renewable procurement, energy efficiency, and operational transformation are not only complying with emerging rules—they are positioning themselves for long-term resilience, investor confidence, and market leadership.
Key steps companies should take include:
As climate and energy policies converge, energy-related emissions are no longer just an environmental concern—they are a barometer of business strategy in a net-zero world.
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In 2024, renewables made up 92.5% of new power capacity. Solar and wind, now dramatically cheaper than fossil fuels, have reached a tipping point—reshaping the global energy system at unprecedented speed.
