There are three methods provided in the IPCC Guidelines: Tier 1 method (i.e., top-down approaches) and the Tier 2 and Tier 3 methods (i.e., bottom-up or Sectoral approaches). The Tier 2 and Tier 3 methods provide more detailed results for those Parties whose energy consumption data are collected at a detailed level. The Tier 1 Reference Approach provides only aggregate estimates of emissions by fuel type distinguishing between primary and secondary fuels, whereas the Sectoral Approach allocates these emissions by category.

The Reference Approach (Tier 1) estimates only CO₂ emissions from fuel combustion. The Reference approach for CO₂ can be performed quickly provided that the basic energy balance sheet for a country is available.

The Reference Approach provides a valuable way for cross-checking emission estimates of CO₂ with the Sectoral Approach and thus helps identify inconsistencies or mistakes. The Sectoral approach provides greater detail as to the combustion activities responsible for emissions and is used for reporting by most Parties.