GHG Protocol Scope 2 Guidance
The GHG Protocol Scope 2 Guidance (2015) introduced the dual reporting requirement — location-based and market-based methods. Understanding both is essential for any company purchasing electricity, heat or steam.
The GHG Protocol Scope 2 Guidance (2015) introduced the dual reporting requirement — location-based and market-based methods. The location-based method uses average grid emission factors for the electricity network(s) used by the reporting company.
Location-based method
The location-based method uses average grid emission factors for the electricity network(s) used by the reporting company. It reflects the actual carbon content of the electricity consumed, regardless of contractual arrangements.
Emission factors come from national or regional grid operators, the IEA, or the European Environment Agency (for EU member states). These are published annually — always use the factors for the reporting year, not the current year.
Location-based Scope 2 cannot be reduced by purchasing GOOs or RECs. It reflects the physical reality of the grid you are connected to.
Market-based method and qualifying instruments
The market-based method uses emission factors from contractual instruments — specific supplier tariffs, PPAs, or renewable energy certificates (GOOs/RECs).
For an instrument to qualify under the GHG Protocol Scope 2 Guidance, it must meet five criteria: the emission factor must be delivered through a system that tracks instrument creation, transfer, and retirement; no double counting (the certificate cannot be used by more than one company); the instrument must represent the actual emissions rate of the generation; market boundaries (GOOs from one country cannot be used for operations in another); and vintage (the certificate should be from the same year as consumption).
Many cheap GOO products from different countries or older vintages fail these quality criteria.
24/7 carbon-free energy matching
Traditional GOO/REC matching is annual — you purchase enough certificates to cover your annual electricity consumption. 24/7 CFE (Carbon-Free Energy) matching is an emerging approach where companies match each hour of consumption with a certificate from generation in the same hour and location.
24/7 CFE is not currently required by GHG Protocol or ESRS, but is considered best practice by leading companies (Google, Microsoft, Apple). It provides a more accurate picture of actual carbon-free electricity consumption.
The GHG Protocol is updating its Scope 2 guidance — monitor for changes that may make temporal and geographic matching more formal requirements.
Frequently asked questions
Which method gives a lower Scope 2 figure?
Market-based typically gives lower Scope 2 if you purchase GOOs or have a clean energy PPA. Location-based reflects the grid average. In high-renewable countries (Norway, Iceland), location-based may actually be lower.
Can we buy GOOs from a neighbouring country?
Under current GHG Protocol guidance, geographic matching is recommended but not mandatory. However, ESRS E1-6 and increasing investor expectations are moving toward country-of-consumption matching. Cross-border GOOs are increasingly scrutinised.
Do electricity bills automatically include Scope 2 data?
Not usually. Energy invoices show consumption (kWh) but not the associated emission factor. You must apply the appropriate emission factor separately — either the grid average (location-based) or your supplier's product-specific factor (market-based).