Location-Based vs. Market-Based Scope 2: Why You Report Two Emissions Numbers, Not One
Scope 2 has two official methods, and eligible GHG Protocol reporters disclose both. Here is what location-based and market-based actually measure, why the same electricity produces two different totals, and how to keep them straight on one dashboard.
The first time someone builds a carbon footprint, Scope 2 throws a curveball: there may not be one number. For organizations operating where contractual instruments exist, the Greenhouse Gas Protocol asks for two — a location-based figure and a market-based figure — for the same purchased electricity. It looks like double-counting. It isn't. It is two honest answers to two different questions, and reporting only one when dual reporting applies is a common way to get a footprint quietly wrong.
Scope 2 covers the emissions from electricity, steam, heat, and cooling you buy. The reason it needs two methods is that "how clean was my power?" has two legitimate meanings: how clean was the grid you physically drew from, and how clean was the power you contractually chose to pay for. Here is how each method works, why they diverge, and what that means for anyone trying to keep a live footprint honest.
What is the location-based method?
The location-based method measures Scope 2 emissions using the average emissions intensity of the local grid you physically operate on. It answers: given where you are plugged in, what did your consumption emit on average?
It works by multiplying your electricity consumption by a grid-average emission factor for that region — published by grid operators and agencies such as the US EPA's eGRID or national equivalents. Because it uses a regional average, the location-based number is largely outside your control in the short term: it reflects the physical mix of the grid, not any contracts you sign. That is exactly its value — it shows your real exposure to the grid as it actually is.
What is the market-based method?
The market-based method measures Scope 2 emissions based on the electricity you have contractually chosen to purchase — renewable energy certificates (RECs), power purchase agreements (PPAs), green tariffs, or a supplier-specific rate.
Instead of a grid average, it applies the emission factor of eligible instruments in your contracts. Certified zero-emission power can carry a zero market-based factor for the covered portion; unmatched consumption uses a residual-mix factor where one is available, or the applicable fallback in the GHG Protocol factor hierarchy. As the GHG Protocol Scope 2 Guidance — the standard that introduced dual reporting — sets out, this method reflects the contractual sourcing decisions a company makes, which is what lets procurement choices actually show up in the footprint.
Why do the two methods produce different numbers?
Because one reflects the physical grid and the other reflects your contracts, and those two things rarely match. The gap between them is the whole point.
If you buy power on the standard grid with no green contracts, your location-based and market-based numbers will be close. But the moment you sign a PPA or buy RECs, the market-based number drops while the location-based number stays put — because the electrons on the wire didn't change, only what you paid for did. A wide gap tells a real story: it is the distance between the grid you sit on and the energy strategy you are funding. Reading them together is what stops a company from claiming "100% renewable" on paper (market-based) while ignoring that it still leans on a carbon-heavy grid in practice (location-based).
Do you have to report both?
Under the current GHG Protocol Scope 2 Guidance, yes — if you operate in any market where contractual instruments exist, you report both methods, each clearly labelled. This is called dual reporting, and it is not optional for a complete Scope 2 disclosure.
Worth flagging for 2026: the Scope 2 Guidance is itself under revision. The GHG Protocol ran a public consultation on Scope 2 that closed on 31 January 2026, and the methods could change once the update is finalized. Until that revision lands, dual reporting under the existing guidance remains the standard — but this is a live area, so anchor your process to the current official guidance rather than to a summary, and revisit it when the revised standard publishes.
How do you keep both numbers honest over time?
Track consumption once, then apply two factor sets to it — and refresh both as grids and contracts change. The consumption data is shared; only the emission factors differ between the two methods.
That is precisely why Scope 2 belongs on a live view rather than an annual spreadsheet rebuilt from scratch. Grid factors get updated, RECs and PPAs expire and renew, and a footprint that was correct in January drifts by December. The same activity-data-times-emission-factor discipline that keeps a whole footprint live applies here in duplicate: one consumption series, two factor sets, both visible side by side so the gap between your grid reality and your contractual strategy is always in plain sight — the same principle behind an ESG dashboard you can maintain without a sustainability team.
FAQ
Which number do I use to hit a renewable-energy target? The market-based number, because it reflects the contracts and certificates you procure. Location-based won't move from buying RECs — it tracks the physical grid.
Can the market-based figure really be zero? For the portion of electricity backed by valid zero-emission contractual instruments, yes. Unmatched consumption still needs the appropriate residual-mix or fallback factor, so a company rarely lands at a true zero across the board.
What if my region has no contractual instruments? Then you may only be able to report the location-based number for that operation. Dual reporting applies where market instruments exist; the guidance accounts for markets where they don't.
Is dual reporting going to change? Possibly. The GHG Protocol's Scope 2 revision was in public consultation into early 2026. Track the official guidance for the finalized methods rather than assuming today's rules are permanent.
Two Scope 2 numbers, one consumption dataset, factors that keep moving — this is exactly the kind of thing that rots in a spreadsheet and stays honest on a dashboard. Sifra builds live ESG and emissions views where location-based and market-based sit side by side, update themselves as factors change, and stay audit-ready. See our Impact reporting work, or take us up on a free mock dashboard built from a sample of your own energy data. Data, made visible.
Sources: GHG Protocol — Scope 2 Guidance, GHG Protocol — Scope 2 revision / public consultation, US EPA — eGRID.