GHG Protocol Scope 2 Guidance: What It Is & How to Report

The GHG Protocol Scope 2 guidance is the global standard for measuring and reporting emissions from purchased electricity, steam, heat, and cooling. Published by the Greenhouse Gas Protocol, it gives you a clear framework to account for the indirect emissions your operations generate when you buy energy from external sources. The guidance requires you to report emissions using two methods: location-based (reflecting the average emissions of your local grid) and market-based (accounting for the specific energy you purchase, including renewable energy certificates and power purchase agreements). This dual reporting approach helps you show both your physical footprint and your clean energy procurement decisions.

This article walks you through the essentials of Scope 2 reporting. You'll learn why the guidance matters for your business, how to measure and report emissions using both methods, and what recent updates mean for your reporting practices. We'll explain the key concepts you need to understand, including emission factors, contractual instruments, and residual mix calculations. If you work with energy or biogas projects, you'll also find specific guidance on how Scope 2 applies to your operations. By the end, you'll know exactly how to report your Scope 2 emissions accurately and in line with the latest standards.

Why GHG Protocol Scope 2 guidance matters

The GHG Protocol Scope 2 guidance shapes how thousands of companies worldwide measure and disclose their carbon footprint from purchased energy. This standardized approach gives you a consistent methodology that regulatory bodies, investors, and sustainability frameworks rely on when evaluating your environmental performance. Without this guidance, companies would report emissions using incompatible methods, making it impossible to compare performance across industries or validate progress toward climate goals.

Meeting regulatory and disclosure requirements

You need the Scope 2 guidance because mandatory disclosure regulations increasingly reference it as the required methodology. The European Union's Corporate Sustainability Reporting Directive (CSRD) and California's Climate Corporate Data Accountability Act both build their emissions reporting requirements on the GHG Protocol framework. If your company operates in these jurisdictions or plans to expand into them, you must report Scope 2 emissions using the dual reporting approach the guidance prescribes. Financial institutions and credit rating agencies also evaluate your climate disclosures based on this standard, which directly affects your access to capital and lending terms.

The GHG Protocol Scope 2 guidance serves as the foundation for climate-related financial disclosures across multiple regulatory frameworks worldwide.

Demonstrating clean energy procurement value

The guidance gives you the tools to quantify and communicate the impact of your renewable energy investments. When you purchase renewable energy certificates or enter into power purchase agreements, the market-based method lets you reflect these decisions in your reported emissions. This visibility matters because it shows stakeholders that your sustainability investments deliver measurable results, not just good intentions. For companies in the biogas and renewable energy sector, the guidance provides a recognized framework to demonstrate how your technology and projects help clients reduce their Scope 2 emissions. Investors and customers increasingly demand this level of transparency, and the standardized approach ensures your claims withstand scrutiny from auditors and sustainability rating agencies.

How to measure and report Scope 2 emissions

You measure Scope 2 emissions by multiplying your energy consumption data (in megawatt-hours or similar units) by the appropriate emission factors for your location and energy source. The GHG Protocol Scope 2 guidance requires you to calculate and report emissions using both the location-based and market-based methods, which means you'll produce two separate emission figures. This dual approach captures both the physical reality of your grid's emissions and the contractual choices you make about energy procurement. Your reporting must clearly distinguish between these two methods and explain any significant differences between them.

Gathering your energy consumption data

Your first step involves collecting accurate records of all electricity, steam, heat, and cooling you purchased during the reporting period. You need detailed consumption data from utility bills, energy management systems, or direct meter readings for each facility and energy type. Document the measurement units (kilowatt-hours, megawatt-hours, therms) and convert everything to a consistent unit before calculation. If you operate multiple facilities across different grids, you must track consumption separately for each location because emission factors vary by region. Companies with complex energy procurement arrangements also need records of all contractual instruments, including renewable energy certificates, power purchase agreements, and supplier-specific contracts.

Calculating your location-based emissions

The location-based method reflects the average emissions intensity of the grid where your facilities consume energy. You multiply your total energy consumption at each location by the grid-average emission factor published by your regional grid operator or national authority. Most countries provide official emission factors through environmental agencies or energy departments, and you should use the most recent data available for your reporting year. Calculate emissions separately for each grid region where you operate, then sum them to get your total location-based Scope 2 emissions. This method shows your physical footprint based on the actual energy mix serving your location, regardless of any clean energy purchases you make.

Calculating your market-based emissions

Your market-based calculation requires you to apply specific emission factors that reflect the electricity you contractually purchased. When you buy renewable energy certificates or enter power purchase agreements, you use the emission factor of zero for that portion of your consumption. For any remaining consumption not covered by contractual instruments, you apply the residual mix emission factor, which represents the emissions intensity of unclaimed energy on your grid. You must prioritize supplier-specific emission factors when available, then use residual mix factors, and only default to grid-average factors when no residual mix exists. This approach credits your clean energy procurement decisions while maintaining accuracy for the portion of your consumption without specific contracts.

The market-based method lets you demonstrate the emissions impact of your renewable energy investments through your reported Scope 2 figures.

Documenting and reporting both methods

You present both location-based and market-based emissions in your public disclosures and sustainability reports, clearly labeling each figure. Your report must explain the methodologies you used, including the sources of your emission factors and the boundaries of your reporting. Document any assumptions you made, such as how you allocated shared energy consumption across different operations or how you treated missing data. Include information about your contractual instruments in the market-based calculation, specifying the types of certificates, their vintage, and the generating resources they represent. Most companies present this information in a table format showing consumption volumes, emission factors, and resulting emissions for each method, which gives stakeholders a transparent view of your energy-related carbon footprint.

Key concepts in the Scope 2 guidance

Understanding the core concepts in the GHG Protocol Scope 2 guidance helps you navigate the technical requirements and apply them correctly to your operations. These concepts define how you select emission factors, validate contractual instruments, and ensure your reporting meets the quality standards that auditors and stakeholders expect. Each concept builds on the others to create a comprehensive framework that balances accuracy with practical implementation across different energy markets and procurement arrangements.

Emission factors and their hierarchy

You need to understand emission factors as the conversion values that translate your energy consumption into greenhouse gas emissions, typically expressed in kilograms or metric tons of CO2 equivalent per megawatt-hour. The Scope 2 guidance establishes a clear hierarchy of emission factors that prioritizes the most accurate and relevant data sources for your reporting. For location-based calculations, you start with the most geographically specific and temporally precise factors available, moving from local grid operators to regional averages only when more precise data does not exist. In market-based reporting, you prioritize supplier-specific emission factors from your direct energy contracts, then residual mix factors that account for unclaimed grid energy, and only use grid averages when no other options exist in your market. This hierarchy ensures you report the most accurate representation of your emissions based on the data you can reasonably access, while the updated guidance increasingly emphasizes temporal precision through hourly emission factors where available.

Contractual instruments for market-based reporting

Contractual instruments represent the legal agreements and certificates that allow you to claim specific energy attributes in your market-based emissions calculation. The most common instruments include renewable energy certificates (which separate environmental attributes from physical electricity), power purchase agreements (direct contracts with generators), and supplier-specific contracts that guarantee a particular energy mix. You can only count an instrument in your Scope 2 reporting if it meets the guidance's quality criteria, which means the instrument must convey the energy attributes to you, apply to the same reporting period as your consumption, and come from a generating facility within a defined market boundary. Each instrument you use must be retired or canceled on your behalf to prevent double counting, and you need documentation proving you hold exclusive rights to claim those attributes. Your contractual instruments directly reduce your market-based emissions figure, making them the primary mechanism through which you demonstrate the impact of clean energy procurement on your carbon footprint.

The quality criteria for contractual instruments ensure that only legitimate, verifiable clean energy claims reduce your reported Scope 2 emissions.

Residual mix and its role in reporting

The residual mix represents the emissions intensity of unclaimed electricity on your grid after subtracting all the renewable energy certificates and specific contracts that other entities have claimed. You apply residual mix emission factors to any portion of your consumption that you did not cover with contractual instruments in your market-based calculation. Residual mix factors typically show higher emissions intensity than grid averages because they exclude the clean energy attributes that certificate buyers have claimed, preventing those attributes from being counted twice. Regional organizations calculate and publish residual mix factors annually, though availability varies significantly by country and grid operator. When no residual mix factor exists for your location, the guidance previously allowed you to default to grid-average factors, but upcoming revisions propose requiring fossil-only emission factors instead to maintain reporting integrity. Understanding residual mix calculations helps you see how your clean energy purchases affect not just your own emissions but also the baseline emissions that other companies report when they do not buy contractual instruments.

Recent updates and upcoming changes

The GHG Protocol opened a 60-day public consultation on proposed Scope 2 revisions in October 2025, marking the first major update to the guidance since its 2015 publication. These proposed changes address growing concerns about accuracy, transparency, and comparability in corporate emissions reporting as mandatory climate disclosure requirements expand globally. The revisions affect both location-based and market-based methods, introducing stricter criteria for contractual instruments and more precise emission factor requirements. You can expect these updates to change how you measure, report, and potentially procure energy for your operations if your company reports Scope 2 emissions.

The October 2025 proposed revisions

The consultation introduced hourly matching requirements for all contractual instruments used in market-based calculations, replacing the current annual matching approach that allows significant temporal misalignment between generation and consumption. You would need to ensure your renewable energy certificates or power purchase agreements match your actual electricity consumption on an hourly basis, though load profiles provide a practical approximation if you lack hourly consumption data. Deliverability requirements now define market boundaries based on electrical grid connectivity rather than national borders, meaning you can only count instruments from generators that could plausibly serve your load through connected transmission infrastructure. The updated ghg protocol scope 2 guidance also eliminates grid-average emission factors as a fallback when residual mix data does not exist, instead requiring you to use fossil-only emission factors for unclaimed consumption. These changes aim to strengthen the link between reported emissions reductions and actual grid decarbonization while reducing double counting risks.

The proposed hourly matching and deliverability requirements represent the most significant strengthening of Scope 2 quality criteria since the guidance's initial publication.

Implementation timeline and transition period

Your organization will have multiple years to prepare for these changes if the Independent Standards Board and Steering Committee approve the revisions in late 2027 as anticipated. The GHG Protocol plans a phased implementation with staged effective dates that give you, your data providers, and your energy suppliers time to adapt systems and develop necessary tools. Feasibility measures include exemption thresholds that may exempt smaller organizations from hourly matching requirements based on electricity consumption volume or company size, along with a legacy clause for existing contractual instruments that do not meet the new criteria. These new requirements will take effect on the same timeline as complementary guidance from the Actions and Market Instruments Working Group, ensuring you can report both inventory emissions and consequential impacts of your clean energy investments using aligned methodologies.

Scope 2 guidance for energy and biogas projects

The GHG Protocol Scope 2 guidance applies differently to energy and biogas operations because your emissions profile and reporting boundaries depend on whether you generate energy, process it, or help clients reduce their purchased energy footprint. If you operate biogas processing equipment like upgrading systems that convert raw biogas to biomethane, you report Scope 2 emissions for any electricity, steam, or cooling you purchase to run your equipment. Your clients who buy your biomethane can then use it to reduce their own Scope 2 emissions when they displace grid electricity or fossil fuels. Understanding how the guidance treats renewable gas and biomethane helps you position your projects accurately in sustainability markets and demonstrate the emissions reduction value you deliver.

How biogas processing affects your Scope 2 footprint

You measure Scope 2 emissions from your biogas processing operations by tracking the purchased energy required to run compression equipment, upgrading systems, gas treatment processes, and facility operations. Your biogas processing plant's Scope 2 emissions appear in your location-based calculation based on your local grid's emissions intensity, while your market-based figure can reflect any renewable energy certificates or power purchase agreements you use to power your equipment. The net emissions impact of your operation goes far beyond your own Scope 2 footprint because the biomethane you produce enables other organizations to displace fossil fuels and reduce their emissions. If you operate highly efficient processing equipment that requires minimal energy input per unit of biomethane output, you deliver better overall carbon performance for the entire value chain, which strengthens the business case for your technology with sustainability-focused clients.

Efficient biogas processing equipment with low energy requirements delivers superior net carbon performance across the entire biomethane value chain.

Enabling client Scope 2 reductions through biomethane

Your biomethane projects help clients reduce their Scope 2 emissions when they use your upgraded biogas as fuel for onsite power generation or sell it into gas networks where others consume it. Organizations that generate their own electricity from biomethane you supplied report zero Scope 2 emissions for that self-generated power under the ghg protocol scope 2 guidance, though the emissions from producing the biomethane appear in their Scope 3 calculations. Clients who inject your biomethane into natural gas networks and purchase it back through book-and-claim systems can use gas certificates similar to renewable energy certificates to reduce their market-based Scope 2 emissions. This application matters particularly for industrial facilities, agricultural operations, and municipalities looking to demonstrate tangible progress toward carbon reduction targets while maintaining reliable energy supply. Your ability to guarantee high biomethane recovery rates and provide documentation of the carbon intensity of your processing directly affects how much Scope 2 reduction your clients can claim when they use your output.

Bringing your Scope 2 reporting together

You now have the complete framework to measure and report your Scope 2 emissions accurately using the GHG Protocol Scope 2 guidance. Your reporting starts with collecting detailed energy consumption data, continues through calculating both location-based and market-based emissions, and finishes with transparent disclosure that shows stakeholders your carbon footprint and clean energy investments. The dual reporting approach gives you flexibility to demonstrate your sustainability progress while maintaining the accuracy that regulators and investors demand.

For companies working with biogas and renewable energy projects, accurate Scope 2 reporting creates competitive advantage. When you help clients reduce their emissions through biomethane solutions, your ability to quantify and document those reductions becomes a powerful sales tool. Equipment that delivers guaranteed performance with minimal energy consumption translates directly into better Scope 2 outcomes for your customers. If you're looking for biogas processing solutions that optimize both operational efficiency and emissions reporting, explore how 99pt5's BioTreater™ system delivers industry-leading methane recovery while minimizing your processing footprint.