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

Are your Scope 2 calculations location-based or market-based?

When companies measure the climate impact of their electricity use (Scope 2 emissions), there are two different ways to calculate it. Both are required, and they tell slightly different stories.

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.

  • It’s like saying: “If I just plugged into the local grid like everyone else, this is the carbon footprint of my electricity.”

  • Total Scope 2 emissions (CO2e) = (total electricity consumption x local grid average emissions factor)

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) or a special contract, that match the electricity consumed, then the market-based Scope 2 emissions for that portion can be reported as zero tCO₂e.

  • It’s like saying: “Here’s the footprint of the electricity I chose to buy, based on the deals and certificates that prove where it came from.”

  • Total Scope 2 emissions (CO2e) = (electricity purchased through contracts x 0) + (remaining electricity consumption x Residual Mix Factor)

Trace Methodology

Trace applies the two different approaches depending on whether the company purchases EACs or renewable energy contracts or not.

Where no contracts are purchased, Trace uses the location-based approach.

Where a company purchases contracts, Trace use the market-based approach, applying the relevant RMF where available, or the grid average if not.

Additional notes and definitions

  • If a company purchases EACs, they should disclose emissions using both methods. If not, the location method is used.
  • 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'.
  • Exported electricity can be converted into CO2-e and deducted from gross electricity emissions under the market-based method only.
  • 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.
  • 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).