Scope 2 Emissions

Scope 2 emissions are the indirect emissions from the generation of purchased or acquired electricity, steam, heat and/or cooling consumed by the reporting company. Usually, the most significant contributor to Scope 2 emissions is purchased electricity from the grid.

Located-based Vs. Market-based

In 2015, the GHG Protocol updated its guidance regarding Scope 2 reporting. One of the main changes in the update was the introduction of location-based and market-based Scope 2 reporting.

• Location-based: This refers to the average emission factors for the local grid.
• Market-based: A more complex look at emissions, which considers any contractual instruments that may be used in competitive energy markets. This means that any green tariffs, power purchase agreements (PPAs) or renewable energy certificates are considered in the final market-based emission calculation.

This has resulted in a dual-reporting requirement for most multinational companies.

The diagram below demonstrates the different aspects included in Scopes 1, 2 and 3 emissions: