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Scope 2: market-based or location-based?

The GHG Protocol defines two ways to calculate Scope 2 emissions (purchased electricity): the location-based method and the market-based method. The result can differ greatly.

The two methods

Location-based uses the average grid factor of the geographic area. Market-based uses specific contracts (green electricity, guarantees of origin). A company on a renewable contract will show a lower market-based Scope 2.

Which to use

The GHG Protocol recommends reporting both (dual reporting). Market-based reflects purchasing choices; location-based reflects the actual grid. UltraCarbon applies the appropriate factor based on the contract and country.

Frequently asked questions

Which one is mandatory?

The GHG Protocol ideally asks for both. Many frameworks accept dual reporting.

Does green electricity change Scope 2?

Yes, market-based: a renewable contract strongly reduces the reported Scope 2.

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