Scope 2 emissions: location-based, market-based and what UK rules ask for

Scope 2 emissions are the indirect emissions from the electricity, steam, heat and cooling a company buys or acquires and then consumes. The GHG Protocol Scope 2 Guidance sets the rules. It was published in 2015 as an amendment to the Corporate Standard, and GHG Protocol calls it required reading for anyone following that standard.

The emissions happen somewhere else, at a power station or heat plant. They sit in your inventory because your demand caused them. The Corporate Standard requires every inventory to report at least Scope 1 and Scope 2; Scope 3 is optional under that standard. Our guide to the three scopes sets out the boundaries.

People often search for “scope 2 and 3 emissions” together, because energy straddles the line. Generating the electricity you use is Scope 2. The electricity lost in transmission and distribution, and the emissions from producing the fuels the power stations burn, are Scope 3, in the fuel- and energy-related activities category. Those are covered in our Scope 3 guide.

The Scope 2 Guidance introduced two methods. The location-based method uses the average emission intensity of the grid where the energy is consumed. The market-based method uses the emission factors carried by the contracts and certificates the company holds.

The Guidance requires dual reporting where a company operates in markets with product or supplier-specific data. Every contractual instrument used for the market-based figure must meet its eight Scope 2 Quality Criteria.

For UK sites, the location-based factor is the UK electricity factor in the government's GHG conversion factors. The 2026 set was published on 11 June 2026. Table 9 of the 2026 methodology paper gives 0.13096 kgCO2e per kWh for Scope 2, against 0.17700 in the 2025 set.

The UK's contractual instruments are Renewable Energy Guarantees of Origin. According to Ofgem, which runs the REGO scheme, one REGO is issued per MWh of eligible renewable output, and their main use is fuel mix disclosure by electricity suppliers. The EU stopped recognising UK REGOs on 1 January 2021, and EU Guarantees of Origin have not been recognised for GB fuel mix disclosure since the period starting 1 April 2023.

"The prevailing guidance from the UK government is to report using the locational-based approach, in part due to concerns regarding subsidy levels for renewables and double counting."GHG Protocol Scope 2 Guidance (2015), section 7.4

Do not confuse the annual factor with live grid intensity. NESO's Carbon Intensity API forecasts carbon intensity for Great Britain half-hour by half-hour. It is useful for timing demand, but it is not the reporting factor.

Three sets of rules ask about Scope 2, and they ask different questions. The GHG Protocol is a voluntary accounting standard. SECR is UK company law, with government guidance beside it. UK SRS S2 is a disclosure standard that applies when a regulator or the law brings an entity into it. Read them separately.

SECR.Quoted companies must report emissions from “the purchase of electricity, heat, steam or cooling by the company for its own use” under paragraph 15(3) of Part 7 of Schedule 7 to SI 2008/410. Large unquoted companies report emissions from purchased electricity under paragraph 20D(2) of Part 7A. Neither paragraph names a method. The Environmental Reporting Guidelineswere last updated on 29 March 2019 to say dual reporting is “still our preferred approach” and to encourage location-based reporting for anyone who reports one figure. Our SECR guide covers the rest of the report.

The guidelines go further in their section on reporting renewable energy. In the March 2019 guidelines, organisations are “encouraged to use location-based grid average emission factors to report the emissions from electricity”. Where a company wants to show a reduced figure from PPAs or REGOs, the guidelines recommend that the market-based figure “is presented alongside the ‘location-based’ grid-average figures”, and that the report says whether the renewable energy is additional, subsidised and supplied directly. The template is guidance, not a legal form. The same passage says time-specific, for example hour-by-hour, grid-average factors “should be used” where available.

GHG Protocol.The Scope 2 Guidance requires both figures where a company has operations in markets with product or supplier-specific data. The UK, with REGOs and supplier fuel mix disclosure, is such a market in practice, although the Guidance's own list of examples does not name it.

UK SRS S2. Paragraph 29(a)(v) of UK SRS S2requires an entity to “disclose its location based Scope 2 greenhouse gas emissions” and to give information about any contractual instruments needed to understand them. Paragraph B30 adds, “for the avoidance of doubt”, that location-based is required and contractual information is needed only where such instruments exist and matter. Paragraph B31 says an entity “might” also disclose market-based Scope 2. UK SRS S2 does not require dual reporting.

An office uses 500,000 kWh of grid electricity in calendar year 2026. The 2026 factor applies because the consumption falls in 2026. The factors are from Table 9 of the DESNZ methodology paper.

If the office buys a tariff backed by REGOs, the market-based figure is worked out from the supplier's disclosed emission rate or the instrument, not from the grid average. The location-based figure does not move. A UK SRS S2 report must show the location-based number either way.

The same company, laid out the way SECR asks for it

Now take that office as a large unquoted company with all its operations in the UK, reporting calendar 2026 under Part 7A. Three inputs are assumed for the example and are not official figures: gas and fleet fuel of 320,000 kWh producing 60.00 tCO2e of Scope 1 (calculated separately from the fuels worksheet), revenue of £12 million in both years, and a switch on 1 January 2026 to a tariff the supplier discloses as 100% REGO-backed, at 0 kgCO2e per kWh. Electricity use is 500,000 kWh in both years. The row labels and their [mandatory] and [optional] tags follow the example report for unquoted companies in the Environmental Reporting Guidelines.

What the methodology note must carry. Location-based Scope 2 fell by 23.02 tCO2e with no change in use, because the 2026 electricity factor is calculated on a one-year data lag instead of two. Say so, or restate 2025 on the new basis. The market-based line reflects a contract, not a change in the grid, and the guidelines ask you to say whether that renewable supply is additional, subsidised or supplied directly. The intensity ratio uses gross location-based emissions, as the example report does; a second ratio on the market-based total is optional.

GHG Protocol consulted on revising the Scope 2 Guidance from 20 October 2025 to 31 January 2026. According to its executive summary of the feedback, published on 29 July 2026, the proposal kept dual reporting but would have required large organisations to match certificates to consumption hour by hour, required instruments to be deliverable to where electricity is used, and introduced a hierarchy of location-based factors.

The consultation drew nearly 1,100 responses from 56 countries. The summary's own heading is “Low support for hourly matching and deliverability as proposed”. Support was lowest among companies and industry groups, and higher among GHG reporting programmes and data providers. In July 2026 the Independent Standards Board “called for further work on multiple market-based method reporting approaches” and tasked its technical working group with refining the approach. Hourly matching has not been adopted.

On 29 July 2026 GHG Protocol also announced that it and ISO will combine their corporate standards, including Scope 2, into a single co-branded standard. The Standard Development Plan v2.0 estimates a consultation on the consolidated draft in Q2 2027 and publication in Q4 2028, and says the timeline may change. Our GHG Protocol guide covers the wider revision.

Until then the 2015 Guidance is the text in use, and UK SRS S2 still points to the Corporate Standard.

For how Scope 2 fits a full inventory, see our guide to carbon accounting, and for choosing the right factor set, our explainer on which year of conversion factors to use.

The same electricity bill produces different obligations depending on which rules you report under. Pick the description that fits; each tab says what applies, what to do next and by when.

The timeline marks what has passed and what comes next as of the day you read it. The GHG Protocol's own next steps are quarter estimates, so they sit in the revision chapter above rather than here.

Scope 2GHG Protocol

Indirect emissions from purchased electricity, steam, heat and cooling that you consume.

Location-based methodScope 2 Guidance

Consumption multiplied by the average emission intensity of the grid you draw from.

Market-based methodScope 2 Guidance

Consumption multiplied by the factors carried by your contracts and certificates.

Dual reportingScope 2 Guidance

Publishing both figures. Required by the Guidance where contractual data exists; not by UK SRS S2.

Contractual instrument¶B30

A contract or certificate conveying claims about the energy supplied, such as a tariff, a PPA or a REGO.

REGOOfgem

Renewable Energy Guarantee of Origin: one per MWh of eligible renewable output.

Residual mixmarket-based

The factor for consumption not covered by any instrument, once claimed attributes are removed.

Scope 2 Quality CriteriaScope 2 Guidance

The eight tests every instrument used in the market-based figure must meet.

Transmission and distribution lossesScope 3

Electricity lost on the grid; reported in Scope 3, not Scope 2.

Intensity ratioSECR ¶17 / ¶20G

At least one ratio of annual emissions to a quantifiable factor the company chooses.

Hourly matchingproposal

Matching certificates to consumption hour by hour. Proposed in 2025; low support; further work.