The GHG Protocol's Scope 2 Guidance (2015) requires companies to report electricity emissions using two parallel methods:
- Location-based method: uses the average emission factor for the electricity grid in the country where consumption occurs (e.g., the UK national grid average).
- Market-based method: reflects the emissions from electricity that companies have purposefully chosen, via contractual instruments such as REGO certificates, Power Purchase Agreements, or supplier-specific tariffs. Where no such instrument exists, a residual mix factor is used.
Why it matters
The two methods can produce very different numbers for the same kWh of electricity. A business on a verified renewable tariff might report close to zero under the market-based method while still showing a meaningful figure under the location-based method.
Reporting both is important because location-based emissions reflect the physical reality of the grid you draw from (and the impact of demand-side reductions), while market-based emissions reflect the procurement decisions you have made (and the impact of switching to renewable supply).
A practical example
A retailer consuming 100,000 kWh per year on a standard UK tariff would report roughly 20 tCO₂e using a typical UK location-based grid factor. If it switches to a 100% REGO-backed tariff, the market-based figure could fall to near zero, but the location-based figure stays at ~20 tCO₂e until the underlying grid decarbonises. Both numbers belong in the report.
See how we calculate and present both on the methodology page.