Location-Based vs Market-Based Scope 2: The Difference, with a UK Worked Example
In brief
- Scope 2 emissions come from the electricity you buy. The GHG Protocol asks companies to report them two ways.
- Location-based uses the average emission factor of the grid where you use the power. Market-based uses the factor from your own electricity contract, backed by certificates such as REGOs in the UK or Guarantees of Origin in the EU.
- A UK office using 30,000 kWh had location-based Scope 2 of 3,929 kg CO₂e in 2026. On a fully certificate-backed renewable tariff, its market-based Scope 2 can be close to zero.
- The GHG Protocol is revising its Scope 2 rules, but the current guidance stays in force until a final standard is published, which is not expected before 2027.
Your footprint can show two very different Scope 2 numbers, and both can be correct. Customers, tenders and standards ask for one, the other or both. This guide explains the difference in plain terms, with UK and EU examples, and when to use which.
The two methods
| Location-based | Market-based | |
|---|---|---|
| What it shows | The average emissions of the grid you draw from | The emissions of the electricity you chose to buy |
| Factor used | National grid average (UK: DESNZ factor) | Supplier-specific factor, or certificates (REGOs, Guarantees of Origin), or the residual mix |
| Changes when | The grid gets cleaner, or you use less | You change tariff or buy certificates, or you use less |
| Required by | GHG Protocol (both), SECR (location-based), VSME B3 | GHG Protocol (both), SBTi targets, many customer requests |
A worked example
Take a UK office that used 30,000 kWh of electricity in 2026. Location-based, at the 2026 UK Government factor of 0.13096 kg CO₂e per kWh, that is 3,929 kg, or 3.9 t CO₂e. Now suppose it is on a renewable tariff where the supplier backs every kWh with REGOs. Market-based, using the supplier’s zero-emission factor for that tariff, Scope 2 is close to zero. If instead it is on a standard tariff, the market-based figure uses the supplier’s published fuel mix, which may be higher or lower than the grid average.
You report both. The location-based figure shows the real grid you depend on; the market-based figure shows the effect of your buying choices.
What makes a market-based claim credible
| Check | Why it matters |
|---|---|
| Certificates cover your consumption | Each REGO or Guarantee of Origin represents 1 MWh; you need enough for the kWh you claim |
| Same market | UK REGOs for UK use, EU Guarantees of Origin for EU use |
| Same period | Certificates should match the reporting year as closely as possible |
| Cancelled for you | The supplier must retire the certificates on your behalf, so no one else can claim them |
| Residual mix where no certificates | Without contractual instruments, use the residual mix (in Europe, published by the AIB), not the grid average |
Some renewable tariffs buy cheap certificates separately from the power, which is why some customers prefer power purchase agreements or tariffs from generators. Both are allowed under the current rules, as long as the quality criteria are met.
The Scope 2 revision
The GHG Protocol consulted from October 2025 to January 2026 on new Scope 2 rules, including a proposal to require hourly matching of certificates with consumption. Reports of the consultation results suggest strong opposition to hourly matching from companies. A further draft and consultation are expected, and the final standard is not expected before 2027. Until then, the existing Scope 2 Guidance applies.
Our footprint guide covers the location-based calculation, and the free carbon footprint calculator uses the location-based method for every country.
Frequently asked questions
What is the difference between location-based and market-based Scope 2?
Location-based uses the average grid emission factor where you use electricity. Market-based uses the emission factor of the electricity you contracted, backed by certificates, or the residual mix if you have none.
Which Scope 2 method should I report?
Under the GHG Protocol, both. SECR and the VSME Basic Module require location-based; science-based targets and many customers also look at market-based.
What is a REGO?
A Renewable Energy Guarantee of Origin, issued by Ofgem for each MWh of renewable electricity generated in Great Britain. Suppliers use REGOs to back renewable tariffs.
Can market-based Scope 2 be zero?
Yes, if all your electricity is covered by valid renewable certificates or contracts that meet the quality criteria.
Is the GHG Protocol changing Scope 2?
A revision is under way, but the final standard is not expected before 2027. The current Scope 2 Guidance applies until then.
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