Market-based vs location-based Scope 2 emissions
Scope 2 covers emissions from the electricity, heat, steam and cooling a company buys. Since the GHG Protocol Scope 2 Guidance (2015), companies are asked to report two Scope 2 figures, which can be very different. Many pages on polluer.com show "(market-based)" or "(location-based)" next to a value for this reason.
Location-based method
Multiplies the electricity a company uses by the average emission factor of the grid where it is consumed (for example a national or regional grid average). It reflects the physical reality of the grids a company draws power from and does not change when a company buys certificates.
Market-based method
Uses emission factors from the contracts and instruments a company has chosen, in a set order of preference:
- Energy attribute certificates: Guarantees of Origin (GOs) in Europe, Renewable Energy Certificates (RECs) in North America, I-RECs elsewhere
- Direct contracts such as power purchase agreements (PPAs) with a specific wind or solar farm
- Supplier-specific emission rates, such as a green electricity tariff
- A residual mix factor for any electricity not covered by the above (the grid mix after certificates sold to others are removed)
A company that covers all its consumption with renewable certificates or PPAs can report a market-based Scope 2 close to zero, even if its offices run on a coal-heavy grid.
Side by side
| Location-based | Market-based | |
|---|---|---|
| Emission factor | Average grid factor | Contracts, certificates, supplier rates, residual mix |
| Affected by buying RECs/GOs? | No | Yes |
| Shows | The carbon intensity of the grids used | The effect of the company's energy purchasing choices |
| Used for targets | Sometimes | Most corporate and SBTi-validated targets use it |
Which figure should you compare?
- Compare like with like: market-based with market-based, location-based with location-based.
- A large gap between the two usually means heavy use of certificates or PPAs. Look in the report for how much of it comes from PPAs (which can add new renewable capacity) versus unbundled certificates.
- When a headline "total emissions" number appears, check which Scope 2 method it includes.
The GHG Protocol has been consulting on revisions to the Scope 2 Guidance, including stricter rules on when and where certificates are bought (for example hourly matching), so methods may change in future reports.
Related: Scope 1, 2 and 3 explained · what tCO₂e means.
More guides
- Scope 1, 2 and 3 emissions explained
- The 15 Scope 3 categories
- What does tCO₂e mean?
- How to find a company's sustainability report and emissions data
- Sustainability reporting frameworks explained
- Limited vs reasonable assurance of emissions data
Last reviewed: October 2026. Spotted an error? Tell us.