There are two methods for calculating and reporting Scope 2 emissions: the market-based method and the location-based method.
Market-based accounting method
The market-based method quantifies emissions “based on GHG emissions emitted by the generators from which the reporter contractually purchases electricity bundled with contractual instruments or contractual instruments on their own.” Simply put, it reflects the emissions of the electricity supplier purposely chosen by companies and allows them to prove the low-carbon origin of the power they use by purchasing EACs.
Location-based accounting method
Conversely, the location-based method evaluates emissions “based on average energy generation emission factors for defined geographic locations.” It considers the average carbon content of the electricity in the grid in a location – a country, region, or city – over a given time period.
Both methods are complementary and employed according to the reporting entity’s circumstances. If the organisation is located in an area where supplier-specific data is accessible, both methods should be used. If not, using the market-based is recommended.