Abstract To achieve the decarbonisation of the energy sector in Europe, the CO₂ emission profile of energy consumption must be fully understood. A new methodology for accounting for CO₂ emissions is required for representing the dynamics of emissions. In this article, a dynamic integration of CO₂ emissions due to the electricity production and trade was developed. Electricity consumption and related CO₂ emissions are studied for a typical Finnish household. A model detached house is used to simulate the effect of home automation on CO₂ emissions. Hourly electricity production data are used with an hourly electricity consumption profile generated using fuzzy logic. CO₂ emissions were obtained from recorded data as well as estimated based on monthly, weekly, and daily generated electricity data. The CO₂ emissions due to the use of electric appliances are around 543 kgCO₂/y per house when considering only the generated electricity, and 335 kgCO₂/y when balancing the emissions with exported and imported electricity. The results of the simulation indicate that home automation can reduce CO₂ emissions by 13%. Part of emission reduction was achieved through peak shifting, by moving energy consumption load from daytime to night time. The paper highlights the role of home automation in reducing CO₂ emissions of the residential sector in the context of smart grid development.