Skip to content
Contact us
  • There are no suggestions because the search field is empty.

Does Trace use the location- or market-based methodology for electricity calculations?

Trace uses the location-based approach by default and offers market-based calculations where renewable energy instruments have been purchased.

How does Trace calculate electricity emissions?

Trace calculates Scope 2 electricity emissions using the two methods required under the GHG Protocol:

  • Location Based method

  • Market Based method

These methods answer two different questions:

  • Location Based: What are the emissions from the electricity grid where you operate?

  • Market Based: What are the emissions based on the electricity you have chosen to purchase?

Both approaches are recognised under the GHG Protocol Scope 2 Guidance.

If a company purchases EACs/RECs, they should disclose emissions using both methods. If not, the location-based method is used.

According to AASB S2 (Australia's mandatory climate reporting standard), the location-based method is required and market-based is optional.

How each approach works

1. Location-based method

  • This shows the emissions from the electricity grid in the area where you are physically located.

  • It ignores the type of contract you signed or whether you bought renewable certificates.

  • Total Scope 2 emissions (CO2e) = (total electricity consumption x local grid average emissions factor)
  • If you do not purchased renewable energy products  or contracts, this is the recommended calculation method.

2. Market-based method

  • This shows the emissions based on the specific electricity products or contracts your company has purchased.

  • If you buy renewable energy through energy attributable certificates (EACS), Power Purchase Agreements (PPAs), or supplier renewable contracts (such as GreenPower in Australia), which match the electricity consumed, then the market-based Scope 2 emissions for that portion can be reported as zero tCO₂e.

  • In Australia, EACs are called Large-scale Generatation Certificates (LGCs), and in the UK they are called Renewable Energy Guarantees of Origin (REGOs), but they have different names in different countries.
  • Total Scope 2 emissions (CO2e) = (electricity purchased through contracts x 0) + (remaining electricity consumption x Residual Mix Factor)
  • The Residual Mix Factor is an emission factor representing the average emissions of electricity generation resources left on the grid after contractual instruments (such as EACs) have been claimed and removed. Residual mix factors are not as easily accessible as grid-average factors. Where an RMF is not available, Trace uses the best available grid-average factor, while disclosing the limitation.

Which is better?

If you actively purchase EACs or other renewable contracts, you can claim reduced emissions under the market-based method, which will look better for companies that are leverage renewables to decarbonise. However, because the residual mix factor will be applied to any non-renewable electricity ('residual electricity'), where you don't purchase renewables the emissions will be higher under this method.

Therefore, if you do not purchase any renewables, it is better to report location-based emissions if you want lower emissions overall, so that you get the benefit of the total grid mix.

Note that if you are following the GHG Protocol closely and looking to report your emissions publicly, it is expected that you report both location- and market-based emissions so that others can fairly assess your emissions profile. This is called 'Dual Reporting'.

Inputting your electricity data into Trace

Electricity bills are often complex and difficult to interpret. Different retailers use different formats, labels and summary tables. 

For each location/ premise, Trace requires the following data:

  • Total electricity purchased from the grid (in kWh). This is electricity that you have purchased (you have a bill for it). It does not include behind the meter (BTM) electricity or on-site generated electricity (e.g. from solar).

  • Total renewable electricity purchased (in kWh), such as GreenPower, Energy Attribute Certificates or Renewable Energy Certificates. 

  • % electricity offset electricity purchased, if applicable. Carbon neutral energy plans or 100% offset plans only, this does not include Green Power

You can enter your electricity data via two methods:

Option 1. Upload your electricity bills

  • Trace uses AI powered data extraction to identify and map relevant fields

  • This removes manual data entry and reduces errors caused by inconsistent bill layouts.

Option 2. Manually enter your data

If you are not uploading bills, you must enter usage data by location or premise. You can enter any EACs in the 'Self-sourced renewables' column (blue arrow), and any renewables from your provider, e.g. GreenPower, in 'Supplier renewables' (green arrow). Ensure you enter this in kWh.

Plan inclusions

Trace will show you either your market-based emissions or location-based emissions based on your consumption and your plan.

If you are on our 'Starter' or 'Pro' plan, by default:

  • If you do not purchase any renewables, you will see your 'location-based' emissions.
  • If you do purchase renewables, you will see your 'market-based' emissions.

You can see which one has been included on your 'Measure' dashboard.

 
If you are on our 'Enterprise' plan you will see:
  • Either market-based or location-based shown on your dashboard, as above.
  • An additional tab showing the comparison of your location- and market-based emissions, as required by dual reporting.

This feature is also available as an add-on for any companies that wish to see their breakdown.

Additional notes and definitions

  • Energy Attribute Certificates (EACs) are tradeable instruments that prove one megawatt-hour of electricity was generated from a specific renewable source. Examples include
    • RECs (Renewable Energy Certificates) in the US
    • GOs (Guarantees of Origin) in Europe
    • I-RECs (International Renewable Energy Certificates) in many other countries
    • To count in the market-based method, EACs must be valid for the correct year, retired in the same market as your consumption, and used only once (no double counting). 
  • Behind the meter (BTM) usage of renewable generation (e.g. on-site solar) is treated as zero emissions under both location- and market-based methods, provided no LGCs were created, transferred or on-sold for that generation.
  • If the electricity supplier makes a “carbon neutral” claim by using carbon offsets (e.g. purchasing CERs, VERs to counterbalance grid emissions), this does not reduce Scope 2 emissions under the GHG Protocol. Trace shows the impact of carbon neutral products in your 'Net emissions' only.
  • Electrcity generated on site and exported to the grid can be converted into CO2e and deducted from gross electricity emissions under the market-based method only.
  • Australia Renewable Power Percentage: Australia has a mandatory Renewable Power Percentage under the Large scale Renewable Energy Target. Under Market Based accounting, this portion can be treated as zero emissions. Companies reporting Market Based emissions in Australia should apply this across Australian locations. Trace will manually apply the latest RPP % to your calculation, if you require this as part of your reporting (it is not applied by default). Note this regime is not common globally but similar schemes exist in jurisdictions such as California.