What are Scope 2 emissions?
Scope 2 covers emissions released when another company generates electricity, steam, heat, or cooling that you buy and use. They belong in your inventory even though the generator releases them.
The location-based method uses the average emissions of the grid or energy network serving each site. The market-based method uses qualifying information from your energy purchases, such as a supplier-specific rate, power purchase agreement, or renewable energy certificate (REC). It reflects your contractual claim, not a different set of electrons reaching the building. Under the current GHG Protocol Scope 2 Guidance, companies operating where this contractual information is available report two separately labelled totals.
Why do Scope 2 emissions matter to you?
A customer may ask which entities and sites your inventory covers, the reporting year, purchased-energy use, gross Scope 2 total, calculation method, factor source, renewable-electricity evidence, and any required targets. Intel's latest public SPARC environmental document, version 5 dated 17 April 2025, asks assigned suppliers for renewable-electricity and net-zero commitments through RE2030/GHG 2050. Check the assignment you received for the current year.
CDP 2026 Question 7.7 in the full questionnaire and 20.5 in the SME questionnaire ask for gross global Scope 2 emissions in metric tonnes of carbon dioxide equivalent (CO2e). CDP's technical note asks for both location-based and market-based figures where applicable. EcoVadis now collects separate total gross location-based and market-based Scope 2 metrics under Reporting, Energy Consumption & GHGs, and checks for documented support. This took effect on 7 May 2026 (official update).
For entities in scope of Australian climate reporting, AASB S2 paragraph 29(a) asks for absolute gross Scope 2 emissions in metric tonnes CO2e, the location-based figure, the measurement approach and emission factors, and relevant information about contractual instruments. It does not require every company to publish a second market-based total.
How are Scope 2 emissions calculated?
The calculation is energy consumed multiplied by the matching emission factor. For location-based reporting, map each site's kilowatt-hours to the grid factor for that geography and period, then convert kilograms to metric tonnes. For market-based reporting, use the emissions rate attached to each eligible energy contract or certificate for the electricity it covers. For the uncovered electricity, use the residual mix, which is the grid emissions left after claimed energy attributes have been removed, or the fallback allowed by the reporting rule. Keep the totals separate and retain bills, factor files, supplier documents, and certificate retirement records.
What mistakes should you avoid?
- Mixing methods by deducting RECs from a grid-average result and presenting one unlabeled total.
- Using a REC without proof that your company owns it, it covers the right quantity, market and reporting period, and it was retired or cancelled for your claim.
- Using the factor for the wrong country or year, or recording its publication year but not the underlying electricity-data year.
Are Scope 2 emissions mandatory?
Not for every company. A customer or rating request can make the answer commercially necessary. For legal reporting, first confirm that your entity meets the rule's size, listing, or jurisdiction tests; the Scope 2 calculation alone does not tell you whether you must report. Check the exact request before deciding which total and evidence you need.
What is the difference between location-based and market-based Scope 2?
Location-based shows the average emissions of the energy system where you operate. Market-based shows the emissions attached to qualifying energy contracts and certificates you hold. They answer different questions, so one should not replace or be blended into the other.
Can RECs make my Scope 2 emissions zero?
Only the covered part of a market-based calculation may use the certificate's emissions attribute, and only when the REC meets the applicable quality rules. Your location-based result stays based on the grid, and uncovered electricity still needs an appropriate factor.