Scope 2 greenhouse gas emissions — the indirect emissions from purchased electricity — are the area of corporate carbon reporting that generates the most confusion and the most controversy. The GHG Protocol Scope 2 Guidance introduced dual reporting in 2015, requiring organisations to calculate their Scope 2 emissions using two different methods. A decade on, the distinction still trips up many organisations preparing their first carbon footprint or SECR disclosure. Here is a clear explanation of both methods and what they mean in practice.
What Scope 2 emissions are
When your organisation purchases electricity from the grid, the generation of that electricity produces greenhouse gas emissions — at the power station, not at your premises. These are your Scope 2 emissions. You did not directly cause them by burning fuel on site (that would be Scope 1), but they are attributable to your electricity consumption.
The challenge is that the carbon intensity of grid electricity varies — by country, by region, by time of day, and increasingly by the specific tariff or contract your organisation holds.
The location-based method
The location-based method calculates your Scope 2 emissions using the average carbon intensity of the electricity grid in the region where you consume the electricity. For UK organisations, this means applying the DEFRA UK grid average emission factor — currently 0.17700 kgCO₂e/kWh for generation (2025 factors).
This method reflects the physical reality of the electricity system. When you plug something in, you draw power from a grid that is a mix of gas, nuclear, wind, solar, and other sources. The location-based factor represents the average carbon content of that mix.
The market-based method
The market-based method allows organisations to reflect the specific contractual arrangements they have made for their electricity supply. If your organisation holds a renewable electricity contract — a Power Purchase Agreement, a green tariff with Renewable Energy Guarantees of Origin, or direct generation from on-site renewables — the market-based method allows you to apply a lower emission factor reflecting the renewable source of your electricity.
Under the market-based method, electricity supplied under a credible renewable contract with matching certificates can be reported with a near-zero emission factor. This is why organisations with renewable PPAs report dramatically lower Scope 2 emissions on a market basis than on a location basis.
Why both are required
The GHG Protocol requires dual reporting precisely because both methods reveal something different and important. The location-based figure shows your physical contribution to grid emissions — the actual carbon content of the electrons you consumed. The market-based figure shows the outcome of your procurement decisions — whether you have chosen to source renewable electricity and can substantiate that claim with certificates.
Reporting only the market-based figure without the location-based figure would allow organisations to claim very low Scope 2 emissions simply by purchasing cheap renewable certificates, without any information about their actual grid impact. Dual reporting provides transparency on both dimensions.
The green tariff question
Many UK organisations pay a premium for a "green" electricity tariff from their energy supplier. Whether this substantiates a low market-based Scope 2 factor depends on the quality of the certificate backing the tariff.
The GHG Protocol requires that certificates used for market-based Scope 2 reporting be issued on a temporal and geographic basis that matches consumption — meaning the renewable generation occurred in the same market and broadly the same time period as your consumption. Generic, unbundled certificates from distant markets do not meet this standard.
We advise organisations to check with their energy supplier what certificates back their green tariff and whether those certificates meet the GHG Protocol quality criteria before applying a reduced market-based factor.
The Scope 2 Guidance revision
The GHG Protocol published a public consultation on a revised Scope 2 Guidance in early 2026, with the revised standard anticipated around 2027. The proposed changes include stricter requirements for hourly matching of certificates to consumption and deliverability requirements — meaning the renewable generation must be connected to the same grid as your consumption.
These changes, if adopted, will tighten the criteria for market-based reporting and may require organisations to revisit their renewable procurement arrangements. Our current recommendation is to continue dual reporting with a standard caveat noting that the revised guidance is pending, and to ensure any new renewable energy contracts are structured to meet the anticipated stricter criteria.
What to report
Both figures. Always. The location-based figure in your SECR disclosure and GHG Protocol inventory, with the market-based figure reported alongside it where you have qualifying renewable contracts. This is the most transparent, most credible, and most investor-ready approach — and it is what sophisticated ESG analysts and lenders will expect to see. Get in touch to discuss our GHG Protocol carbon reporting service.