Which Approach Should You Choose for Scope 2 Emissions Calculations?

How to select electricity emission factors - Scope 2 guidance

Emissions from purchased electricity fall under Scope 2 of the Greenhouse Gas Protocol (GHGP). Note that upstream emissions are considered under Scope 3 of the GHGP; we will provide guidance separately for this aspect of emissions. According to the GHGP, Scope 2 electricity emissions should be reported using two calculation approaches:

  1. Location-based; and
  2. Market-based

The location-based approach reflects the average emissions intensity of the local electricity grids, while the market-based approach reflects emissions from electricity supplies that companies have purposefully chosen (or had no option but to use).

GHG Figure 6.1

Source: GHGP Scope 2 Guidance (opens in a new tab)

How does this apply when using the Climatiq API?

This document covers accounting for scope 2 reporting. The Climatiq API includes many emission factors suitable for location- and market-based reporting and subscribers are also able to add their own private supply-specific factors.  Climatiq is developing an automated approach to emission factor selection; this guidance will be updated once this is complete.

The location-based approach


The location-based approach reflects the connection between the collective demand for electricity from the grid and the emissions resulting from the generation of electricity supplied into the grid. Emissions vary according to the sources of the electricity: in the short term according to weather, relative fuel prices, fuel availability, and the balance between demand and supply; in the long term due to investments made in new generation capacity.

A location-based emission factor (expressed as kg CO2e / kWh) is calculated as emissions (CO2e) from the generation of electricity supplied to the grid (which includes on-grid generation plus imports and less exports) divided by the energy generated (kWh). It uses grid-average emissions data (based on fuels burned) and electricity output aggregated and averaged within a defined geographic boundary - typically a country - and during a defined time period - typically one year. It does not vary between electricity suppliers.

Which factors to use

There are three types of location-based emission factors available; reporting organizations should report using the most specific available factor.

National Grid-average Emission Factors

Most electricity consumers purchase energy through a grid that supplies part of a country (subnational), the whole country (national) or several countries (multi-national). Each grid has generation plants within it and it may also import and export to other grids.

National Grid-average Emission Factors

The most relevant factors are:

1. Grid-average (generation) mix

Total emissions from electricity supplied through the grid divided by the total energy supplied. This is the factor most often published by national government agencies like the US EPA (opens in a new tab) or the UK BEIS (opens in a new tab).

2. Production Mix

The AIB publishes Production Mix factors that represent electricity generated within a country and the EEA (Europe) publishes similar emission factors. These do not account for imports and exports but the GHG Protocol allows the use of these factors. Where Grid Mix factors (which account for imports and exports) are not available then Production Mix factors can be used.

Note that the AIB also publishes a Total Supplier Mix* that includes physical imports and exports but also includes inter-grid trading in Guarantees of Origin (GOs) / Energy Attribute Certificates (EACs - see below). The use of EACs that don't follow a physical flow is not appropriate for the location-based approach and this Mix is not therefore used. AIB Production Mix Factors (opens in a new tab).

*Note that this is a change to the choice of Mix previously suggested here.

Subnational (Regional) Grid-average Emission Factors

Where a subnational / regional emission factor is available then this should be used in place of the national factor.

There are several countries that have subnational grids and publish associated emission factors including the US (opens in a new tab), Canada (opens in a new tab) and Australia (opens in a new tab). As an example, in the US electricity is supplied via a number of subnational grids called NERC (North American Electric Reliability Council) regions with emission factors published by the EPA's Emission & Generation Resource Integrated Database (eGRID). Where a subnational / regional emission factor is available then this should be used in place of the national factor.

Direct Line Emission Factors

If an organization buys energy through a direct line from a power plant then this direct line is effectively a mini-grid. This may be a generation facility located at a central plant of a campus, or an on-site generation facility that is owned or operated by another organization. The fuel type and emissions are likely to be known and the associated emission factor should be applied rather than the national or regional grid average.

The market-based approach


The market-based approach reports greenhouse gas emissions using emission factors that are tailored to the reporting organization's electricity purchases. It takes into account any contracts that the organization has in place that provide specific information about the supply mix and hence emissions.

The GHGP requires organizations to report emissions under the market-based approach in addition to the location-based approach, even if they don't have complete information on supplies. Where an organization does not have any specific information for a particular supply, the residual mix factor (i.e. supplies in the grid not already accounted for) is used, if available.

Which factors to use

The GHGP provides a hierarchy of sources of information / evidence to support market-based reporting (see GHGP Scope 2 Guidance, table 6.3 (opens in a new tab)). In descending order of precision these are as follows:

1. Energy attribute certificates (EACs)

Where a reporting organization buys EACs then it should apply the emission factor (often, but not always, zero) associated with the EACs to the electricity purchases covered by EACs. The relevant information needed (MWh and generation source) should be on the certificates. The two most common types of EACs are Renewable Energy Guarantees of Origin (REGOs - Europe) and Renewable Energy Certificates (RECs - rest of the world).

2. Specific supply contracts

The supply contract (under which electricity is purchased) may contain a fuel mix or emission factor that is specific to that contract. More usually, the contract may be linked to a particular supplier (electricity reseller) tariff that has a specific fuel mix and emission factor. Where only a fuel mix is given then the emission factor should be estimated from the fuel mix information. Specific emission factors can be shared with Climatiq for publication into the API or, if sensitive, added as a private emission factor.

3. Supplier rates

Where there is no contracted fuel mix or emission factor then the supplier's residual emissions mix / emission factor (where available) or the supplier's total fuel mix / emission factor should be applied. The fuel mix / emission factors are normally published each year by each supplier often (as in Europe) as part of electricity market regulations. If not already available in the API, specific emission factors can be shared with Climatiq for publication into the API or, if sensitive, added as a private emission factor.

4. Country / region residual mix

Residual emission factors comes from the fuel mix left over after all claims on particular energy generation have been made under options 1 to 3 above. As the renewable energy is usually claimed first the residual factor is normally much higher than the grid average mix as it includes higher carbon (coal, gas) fuels. The calculation of the factor is complex as it takes into account imports and exports of renewable energy attributes (such as EACs) as well as imports and exports of the energy itself.  Residual factors are calculated and published by national governments and, in the EU, by the AIB (opens in a new tab).

5. Location-based

If nothing else is available then use the location-based factor - see the section above.