Scope 3 Category 11 for Australian Manufacturers:...

Run the Scope 3 numbers for an Australian tool manufacturer for the first time and the spreadsheet looks wrong. Operations, fleet, electricity, business travel, freight, purchased goods (all the categories you'd expect) add up to a number. Category 11, the energy customers would draw through every cordless drill, rotary hammer and angle grinder sold that year over its assumed service life, lands at roughly eleven times that total.

That ratio isn't unusual. For most Australian manufacturers building anything that consumes energy in use (power tools, pumps, motors, HVAC units, vehicles, white goods, industrial machinery), Scope 3 Category 11 (Use of Sold Products) is the biggest emissions line in the entire inventory. For manufacturers of products that enable energy consumption rather than draw it directly (structural steel, cement, glass, building products), the answer is more contested but no smaller in practice.

And it's the line auditors will push hardest on under AASB S2 assurance. Because it's the one that's mostly assumption.

What Category 11 actually covers

The GHG Protocol Corporate Value Chain (Scope 3) Standard splits Category 11 into two halves that get conflated all the time.

Direct use-phase emissions are emissions from products that consume energy or fuel themselves during use. A Hilti tool drawing battery charge. An industrial pump moving liquid. A diesel generator burning fuel. A water heater. The product is the source of the emissions when it operates. You quantify these by multiplying expected energy consumption per unit of use, times intensity of use, times product lifetime, times the relevant grid or fuel emission factor.

Indirect use-phase emissions are emissions from products that don't consume energy themselves, but cause emissions because of how they're used. A structural steel beam in an office building enables decades of heating, cooling and lighting. A chemical input becomes part of a customer product with its own use phase. For chemicals manufacturers like Vital Chemicals, integrated steelmakers like InfraBuild, and the major cement producers, this is the category most of their products fall into.

The Protocol gives you three reporting options, and choosing the wrong one is where most inventories quietly go off the rails.

The three options and when each one fires

Option one is direct use-phase emissions, required for any company selling products that consume energy or fuel during use, full stop. If you make tools, machines, vehicles, appliances or fuel-burning equipment, you report this. There's no escape clause.

Option two is indirect use-phase emissions, required. This applies to products whose use necessitates the consumption of energy or other GHG-emitting inputs. Engine oil, lubricants, food (cooking energy), refrigerants that leak in normal operation. The product can't fulfil its purpose without causing emissions downstream. The Protocol says: report it.

Option three is indirect use-phase emissions, not required (but encouraged). This is where structural steel, cement, glass and most building products sit. The product enables a building or vehicle or system that consumes energy, but the link is indirect. Reporting it is optional under the standard. Companies under AASB S2 paragraph 29(a)(vi) Scope 3 disaggregation requirements still face questions about why the category is excluded, and a reasoned exclusion note carries real weight under ASSA 5010 limited assurance.

We've seen manufacturers default to option three to keep the number small. That's a defensible choice if your products genuinely fall in the indirect-not-required bucket, and you disclose the exclusion clearly. It is not defensible if your products consume energy directly. Cordless tools and battery chargers are direct use-phase, every time. So is anything with a motor, a heating element or an engine.

The lifetime energy assumption problem

Here's where Category 11 stops being an accounting exercise and starts being a forecasting one.

To calculate direct use-phase emissions for a power tool, you need to estimate: how many years the tool will be in service, how many hours per year it'll run, what charge cycles look like, what the grid emission factor will be in the country where it's used over that lifetime, and what proportion of units go to which markets. None of those numbers are sitting in your ERP.

The GHG Protocol's product standard accepts that this is unavoidably estimation. It asks you to document your assumptions, apply them consistently, and update them as better data becomes available. The 2025 edition of the NGA Factors gives you Australian grid factors by state, but if half your tools are sold into Southeast Asia, those don't apply. You need country-level grid factors from IEA or equivalent sources.

The honest version of this calculation includes an uncertainty range. Most we've seen don't. They report a single number with three significant figures, which is the kind of false precision that gets flagged in assurance review.

For product lifetime specifically, the cleanest approach is to use the warranty period as a floor and the design life as a ceiling. If your warranty is 3 years and your engineering team designed for 10, report a range or report 10 with documented justification. Don't pick 5 because it sounds reasonable.

How this lands under AASB S2

AASB S2 paragraph 29 requires Scope 3 emissions disclosure disaggregated by category. The Scope 3 categories are the fifteen GHG Protocol categories, and Category 11 is one of them. For most Australian manufacturers in ASRS Group 2 reporting from FY starting 1 July 2026, this is the first disclosure cycle where the use-phase number has to land in a regulatory filing rather than a voluntary CDP response.

The disclosure expectations are specific. You need: the absolute tonnes CO2-e for Category 11, the methodology and inputs used, the data sources and any significant assumptions, and a description of any exclusions with reasoning.

Auditors under ASSA 5010 limited assurance are looking for whether the methodology is consistent with the GHG Protocol, whether assumptions are documented and reasonable, whether emission factors are appropriate and current, and whether year-on-year movement can be explained. They are not (yet) checking whether your assumed product lifetime is correct. They are checking whether you wrote it down.

The trap most manufacturers fall into: they treat Category 11 as a single annual estimate and re-run it each year with new sales volumes but unchanged assumptions. That works until the auditor asks why the average grid factor used in the calculation hasn't moved for three years while the NEM has decarbonised significantly. At that point you need to be able to point to a methodology note showing when assumptions are reviewed and on what basis they're updated.

The EPD route as the cleanest data basis

If you've already invested in an Environmental Product Declaration under ISO 14025 and the relevant Product Category Rules (for construction products, EN 15804 is the core PCR), most of the work for Category 11 is already done.

A cradle-to-grave EPD includes lifecycle modules A1 to C4, and module B6 covers operational energy use during the use stage. For products with direct energy consumption, B6 is your Category 11 input. For construction products where the use phase is indirect, B6 may be reported as zero or as the embodied energy of replacement parts over the service life, and that boundary decision is something EPD Australasia verifiers will scrutinise.

The EPD route is clean because the data has been third-party verified to ISO 14025. You're not asserting a number; you're citing a published declaration. EPD Australasia has over 3,400 current EPDs from 175 organisations as of early 2026, with construction products dominating (around 86% of global EPD output).

The honest limitation: producing a verified EPD costs money, takes months, and only works if the underlying LCA is sound. Carbonly's LCA module helps you build the cradle-to-grave inventory with bill of materials, energy inputs, transport modes and end-of-life treatment, each tied to an emission factor. It produces EPD-ready outputs. It does not issue verified EPDs. That requires a third-party verifier accredited by EPD Australasia or an equivalent program operator.

The double-counting trap with Category 1

This one bites manufacturers who supply other manufacturers.

You make a structural steel beam. Your Category 11 (option three, indirect, not required) calculation might include the energy a building draws over fifty years because that beam is part of it. Your customer (the building developer) also reports the same beam in their Category 1 Purchased Goods and Services. Then the building's operational energy lands in their Scope 2.

That's not strictly double counting in the GHG Protocol sense, because Scope 3 categories are deliberately overlapping across organisations. The Protocol is explicit that Scope 3 inventories from different reporters will sum to more than total global emissions, and that's by design. But for a single value chain conversation (say, a steel buyer asking InfraBuild for embedded emissions data to feed their own embodied carbon disclosure), you need to be very clear about what scope the number covers.

The convention we've settled on for Australian manufacturers: when you provide product-level emissions data to a customer for their inventory, you provide cradle-to-gate (A1 to A3 in EPD terms). That's what they need for their Category 1. Your Category 11 calculation is a separate exercise, for your own inventory, using whichever Protocol option fits.

Conflating them produces a number that's either wildly inflated or wildly understated depending on the direction of the error. Auditors notice.

CBAM and the export-driven pressure on use-phase data

For Australian steel, aluminium, cement and fertiliser exporters, the EU Carbon Border Adjustment Mechanism entered its definitive phase on 1 January 2026. CBAM doesn't directly demand Category 11 data. It focuses on embedded production emissions of covered goods at the point of import. But the broader supplier-data discipline CBAM has forced on Australian exporters is the same discipline Category 11 reporting requires: documented lifecycle thinking, traceable activity data, validated emission factors.

Manufacturers who built EPDs to satisfy European procurement requirements are finding the same data flows directly into AASB S2 Scope 3 disclosure. One investment, two regulatory outputs. That's the path that makes sense for any exporter who'll have to face both regimes.

The Future Made in Australia policy framework and the Capacity Investment Scheme are pulling in the same direction. Funded support for low-emissions manufacturing increasingly requires product-level carbon data as a precondition for participation.

How we approach this in Carbonly

The product-level footprinting workflow in our LCA module is built around three things: a structured bill of materials with quantities and supplier data, an energy and process input section with utility data and process emissions, and a transport and end-of-life section with mode-specific factors. Every input is tied to an emission factor from the material library, which pulls from NGA, EPD Australasia and other recognised databases.

For Category 11 specifically, the use-phase calculation sits as a separate stage. You define energy consumption per functional unit, intensity of use, service life, and the grid factor (or fuel factor) applicable to the use geography. The output is a Category 11 figure that flows into your Scope 3 inventory with full source tracking back to the assumptions.

The custom reports module lets you produce the disclosure note for AASB S2 with methodology, inputs, assumptions and exclusions structured the way auditors expect under ASSA 5010. The scenario builder lets you stress-test the number. What does Category 11 look like if average grid factor falls 30% by 2035, or if product service life is 8 years rather than 10?

And if your team uses ChatGPT or Claude for analysis work, you can connect those assistants directly to your product footprint data so the methodology, inputs and emissions outputs become queryable in plain language. That's what we mean by Carbonly Co-Pilot.

What we don't do: produce a verified EPD. We produce EPD-ready outputs. The verification step requires an accredited third party. That's a feature of the standard, not a limitation we'll be removing.

Where to start

If you're a manufacturer staring down a Group 2 deadline and Category 11 is currently a blank cell, start with one product line: your highest-volume direct-energy-consuming product. Build the use-phase model: energy per use, intensity, lifetime, geography mix, grid factor. Document every assumption. Get the methodology peer-reviewed internally before it goes to an auditor.

Then extend to the next product line, and the next. By the time you're a year out from your first AASB S2 filing, you'll have a model that holds up under assurance review. The companies that wait until six months out to start this are the ones running on consultant emergency rates.

Talk to us at hello@carbonly.ai if you want to see how the LCA module handles your product mix.

Scope 3 Category 11 for Australian Manufacturers: Use of Sold Products