Scope 2 emissions

Scope 2 covers the indirect greenhouse-gas emissions from the electricity, the heat, the steam, and the cooling the organisation purchases — the emissions that happen at the power station, not at the site, but that the site causes by drawing the load. The GHG Protocol requires two accounting methods, and both have to be reported. The location-based method uses the average emissions intensity of the grid the site sits on, so it reflects the actual carbon of the electricity the site burns. The market-based method uses the emissions of the specific contracts and instruments the site bought — the renewable energy certificates, the power purchase agreements, the supplier-specific rates — so it reflects the carbon the site paid to avoid.

The reason both numbers have to be disclosed is that they answer different questions, and a company that reports only the market-based number can show zero Scope 2 by buying certificates while the grid it draws from is coal-heavy — which is why the location-based number is the one that tracks the physical decarbonisation and the market-based is the one that tracks the procurement. The reduction levers are different for each: location-based Scope 2 falls when the grid decarbonises and when the site cuts the load, and market-based Scope 2 falls when the site buys renewable power or generates its own. The trap is the certificate that is not additional — the REC from a project that would have been built anyway — and the honest procurement policy is the one that chases the real megawatt-hour, not the paper one. See GHG Protocol, Scope 1, and ESG.