Location-based and market-based
The GHG Protocol requires emissions from electricity to be reported in two ways: location-based, using the grid average, and market-based, using your actual electricity purchases.
Location-based and market-based are the two methods the GHG Protocol requires when companies report emissions from their electricity consumption. This is sometimes called dual reporting, but the purpose is transparency, not double counting. Both figures must be included in reporting, and this also applies under CSRD.
Location-based method
The location-based method uses the average emission factor for the grid where consumption takes place, meaning the official electricity mix for the country or region. It shows the average carbon intensity of the grid and provides a comparable point of reference.
Market-based method
The market-based method is based on the company’s actual electricity purchases and contracts. If you have bought electricity with guarantees of origin from renewable sources, that share can be reported with an emission factor close to zero. The rest is calculated using the emission factor for the residual mix, meaning the electricity production that remains after green certificates have been sold. The residual mix typically has a higher emission factor than the national average.
Guarantees of origin are not offsets
Guarantees of origin and green electricity certificates apply only to scope 2 calculations and must not be confused with offsets. There is no requirement to buy green certificates, but without them market-based emissions will normally be higher. The difference between the two figures therefore often becomes a clear indicator of a company’s energy strategy and purchasing policy.
Both methods in Enity EMS
Enity EMS distinguishes between location-based and market-based emissions and can apply multiple scope values per resource type, so you can follow the totals for both methods in your carbon accounting.
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See it in action
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