Scope 2 is the emissions from the electricity, heat, steam and cooling you buy. The GHG Protocol allows two ways to calculate the electricity part, and they can give very different answers for the same meter reading. Neither is wrong. They answer different questions.
Location-based: what the grid emitted
The location-based method multiplies your electricity use by the average emissions of the grid where the electricity was used. For a UK site you use the UK grid factor from the government conversion factors for that year.
It ignores what you signed with your supplier. Two offices with the same use in the same country get the same figure, whatever tariff each is on. That makes it a clean measure of how much electricity you use and how carbon-intensive the grid is around you.
Market-based: what you chose to buy
The market-based method reflects the contracts behind your supply. The GHG Protocol sets an order for the evidence you use:
- energy attribute certificates (in Great Britain, REGOs) and power purchase agreements
- contracts with a green tariff or a specific supplier product
- the supplier's own emission rate
- the residual mix, which is the grid average with the claimed renewable electricity taken out
A certificate must not be claimed twice. Any kilowatt-hours your instruments do not cover fall back to the next level down.
Market-based is the method that rewards a procurement decision. Buy certificated renewable electricity and the covered kWh count as zero.
Which one does SECR ask for?
Streamlined Energy and Carbon Reporting uses the location-based figure for the Scope 2 number it asks for. If you buy renewable electricity you can show the market-based figure beside it, as a separate line. Read the current government guidance for the exact wording, because it is the rule your report is checked against. Our SECR reporting guide covers the rest of the report.
Why report both
Location-based tracks efficiency at the site. If you cut your electricity use, it falls. If you only change supplier, it does not move.
Market-based tracks purchasing. Change supplier or buy certificates and it falls, even if your use does not.
Reporting both makes it clear which of the two moved, so a reader cannot mistake a tariff change for an efficiency gain. That is why the GHG Protocol asks for both where a company can choose between instruments.
Do not add them together
The two figures describe the same electricity. Adding them would count it twice. In MetricOra the headline Scope 2 total uses the location-based method, and the market-based figure is shown next to it, never summed with it.
A worked example
The location-based and market-based Scope 2 walk-through takes one office with a certificate-backed supply through both calculations, with the kWh, the factor and the formula shown for each.
Frequently asked questions
What is the difference? Location-based uses the average grid factor. Market-based uses your contracts.
Which does SECR use? Location-based for the figure it asks for, with market-based optional beside it.
Do I need both? If you buy certificated or contracted electricity, report both. If you do not, the figures match.
Can I add them? No. Report them side by side.
Sources
- GHG Protocol Scope 2 Guidance, WRI and WBCSD
- Environmental reporting guidelines including SECR, DEFRA and DESNZ
- Government GHG conversion factors for company reporting, DESNZ