# If I rent my factory or office, are its electricity and diesel emissions my Scope 1 and 2 or Scope 3?

Canonical: https://senseible.earth/answers/leased-factory-emissions-which-scope

Under operational control, the approach most companies use, a factory you rent and run is yours: diesel, gas and boiler fuel go in Scope 1, purchased electricity in Scope 2. Only under financial control or equity share, with an operating lease, do they move to Scope 3 Category 8, upstream leased assets.

## The decision table

- Operational control, any lease type, you run the site: Scope 1 for fuels burnt, Scope 2 for electricity.
- Financial control or equity share, finance lease: Scope 1 and 2, because a finance lease is treated as owning the asset.
- Financial control or equity share, operating lease: Scope 3 Category 8.
- Pick one consolidation approach for the whole company and use it for every lease, owned site and joint venture.

## Fuel and power you never see a bill for

- Landlord runs the backup diesel generator and charges you per unit: you are buying electricity, so report it under Scope 2 using the generator's fuel per kWh if the landlord shares it.
- Your own generator in the rented shed, your diesel: Scope 1 under operational control.
- Electricity included in rent: still your Scope 2. Ask for sub-meter readings, or allocate the building bill by area and label it an estimate.

## Why this matters in a buyer questionnaire

Many MSMEs leave rented sites out because the bills are in the landlord's name. That understates Scope 1 and 2, and a buyer comparing you with peers who own their plants will see an unusually low figure. Who holds the discom connection does not decide the scope; control does.

## What to record

Note the consolidation approach, each lease and its type, who operates each energy-using asset, and the source of every quantity: your bill, the landlord's sub-meter, or an area-based estimate. The landlord, if it reports, puts the same energy in its Category 13, so the two reports do not overlap.

## Worked example: a rented unit under operational control

- Electricity on the landlord's bill, sub-metered to you: 18,000 kWh a month
- Scope 2: 18,000 x 0.710 = 12,780 kg CO2 a month, about 153 t CO2 a year
- Your diesel generator: 1,500 litres a year; Scope 1 = 1,500 x 2.68 = 4,020 kg CO2
- Category 8: nothing, because both are already in your Scope 1 and 2

12,780 x 12 = 153,360 kg. Under financial control with an operating lease, the same 157 t or so would be reported in Category 8 instead.

## What Senseible does here

Senseible reads tenant-paid electricity bills and fuel slips under your account as Scope 2 and Scope 1, with the source document on each line. Electricity bundled into rent needs readings or an allocation you provide.

- [Indonesia manufacturing Scope 2](https://senseible.earth/climate-intelligence/indonesia-manufacturing-scope-2-electricity-emissions)
- [Rented warehouse electricity](https://senseible.earth/answers/rented-warehouse-electricity-scope-2-or-scope-3)
- [Operational control vs equity share](https://senseible.earth/answers/operational-control-vs-equity-share)
- [Sub-metered electricity in a rented unit](https://senseible.earth/answers/sub-metered-electricity-rented-unit)

Sources: [GHG Protocol Corporate Accounting and Reporting Standard, revised edition (2004), Chapter 3 and Appendix F on leased assets](https://ghgprotocol.org/corporate-standard), [GHG Protocol Corporate Value Chain (Scope 3) Standard (2011), Category 8 upstream leased assets](https://ghgprotocol.org/corporate-value-chain-scope-3-standard)

Last reviewed 2026-10-15.