Scope 2 Emissions

Scope 2 emissions are indirect GHG emissions from the generation of purchased or acquired electricity, steam, heat, or cooling that is consumed by a company but produced outside its direct control. The GHG Protocol Scope 2 Guidance (2015) requires companies to report Scope 2 using two methods: Location-based (using average electricity grid emission factors); and Market-based (using contractual instruments such as Energy Attribute Certificates (EACs), PPAs, or supplier-specific emission rates). Both methods must be disclosed where there is a significant difference. The GHG Protocol’s draft update (public consultation 2025) proposes hourly matching requirements for market-based claims.

GHG Protocol Scope 2 Guidance (2015); GHG Protocol Corporate Standard (under revision); IFRS S2, paragraph 29; ESRS E1.

Scope 2 is the primary emissions reduction lever for many manufacturers, since renewable electricity procurement (via PPAs or EACs) can dramatically reduce Scope 2 market-based emissions. Companies with RE100 or SBTi commitments must disclose Scope 2 under both location-based and market-based methods. The proposed GHG Protocol update introducing hourly matching will require companies to upgrade from annual to 24/7 renewable energy matching, significantly increasing data management requirements.