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Scope 2 emissions Purchased electricity Location- based Market- based RE100 commitment CDP disclosure SBTi targets Procurement instruments PPAs · VPPAs · RECs Green tariffs · Retail greenScope 2 emissions are the greenhouse gas emissions associated with purchased electricity — the carbon released at power plants to generate the electricity your facility consumes. For most commercial and industrial organizations, Scope 2 is the single largest category of controllable emissions. How you measure and report Scope 2 — and what you do to reduce it — is increasingly central to corporate sustainability strategy, investor disclosure, regulatory compliance, and customer and employee expectations.
Market-based and location-based accounting tell very different stories. A company with a clean PPA can report near-zero market-based Scope 2 while location-based reporting shows substantial emissions. The GHG Protocol requires both. Investors and sustainability frameworks increasingly scrutinize the quality and additionality of the instruments behind market-based claims.
The GHG Protocol Corporate Standard requires companies to report Scope 2 under both methods. Location-based accounting uses grid average emission factors — typically the EPA's eGRID regional emission factors — reflecting the carbon intensity of the grid regardless of what the company has contracted. Market-based accounting uses the emission factors of the specific electricity instruments the company has purchased: RECs, PPAs, green tariffs. If no specific instrument is held, the residual mix emission factor for the relevant grid applies — often higher than the grid average, since better instruments have been claimed by others.
The gap between market-based and location-based Scope 2 is the "benefit" of renewable procurement — but the credibility of that gap depends entirely on the quality of the instruments claimed.
RE100 commits signatory companies to 100% renewable electricity by a target year. Members report annual progress using market-based accounting. Renewable electricity must meet defined quality criteria: from a renewable source, generated in the same country or market, matched in time and geography, and ideally from new-build projects. CDP runs an annual climate questionnaire used by institutional investors — renewable energy percentage, Scope 2 emissions, and energy procurement strategy are key scoring metrics. Science Based Targets initiative (SBTi) sets emissions reduction targets aligned with 1.5°C climate pathways; Scope 2 reductions typically require renewable procurement meeting strong additionality and matching standards, combined with efficiency improvements.
Not all renewable energy instruments are equally credible. The quality hierarchy, from strongest to weakest: bundled PPAs from new-build projects with annual or hourly matching (strongest additionality, direct causality, clear REC provenance); green tariffs from new-build utility projects (strong additionality, simpler structure); bundled RECs from existing projects in the same region and year; and unbundled commodity RECs from distant existing projects (weakest — no additionality, poor geographic and temporal matching). Most advanced sustainability frameworks are moving toward requiring 24/7 hourly matching — aligning every hour of consumption with a corresponding hour of clean generation in the same grid zone — as the evolving gold standard.
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