What Is the Difference Between Market-Based vs Location-Based Scope 2 Emissions Reporting?

Since 2015, the GHG protocol has required that companies utilize the "dual" approach to scope 2 emissions disclosure. For some, this is where concepts can wobble or blur. However, confidently internalise the distinction between these concepts, and you've understood a core topic that poses difficulty.

This article will explore the difference between these terminologies, before taking a look at some of the GHG disclosure regimes that mandate dual-reporting (location-based + market-based).

Now let's dive into the distinction:

What are location-based emissions?

These are the emissions that use the average emissions intensity of the local grid where consumption happens, regardless of what you bought. Same building, same kilowatt-hour, same grid factor for everyone nearby. It is the physical reality of electrons on wires, meaning that a location-based emissions factor simply cannot be changed by a CSO.

This does not mean a company cannot consume less energy, and therefore reduce location-based emissions, but the emissions factors themselves are fixed by geography, calculated using the grid mix of the sites within your quantifying boundaries. You can contextualize them, but you cannot contract your way out of them or evade them. That is, unless, you were to contract physical generation to be built near you - they move at the pace of total renewable capacity in your region.

If you're keen to branch off at this stage to calculate the location-based emissions of your organisation, feel free. We've built a free location-based scope 2 emissions calculator with a specific focus on grid electricity consumption in the EU, US, and UK.

What are market-based emissions?

Conversely, a market-based method reflects the emissions tied to the energy products a company chooses to procure, as the grid is not intelligent infrastructure - it cannot inform consumers which specific electrons are arriving where, or whether any given one was from a renewable source. That's why contractual mechanisms like Energy Attribute Certificates (EACs) and PPAs exist.

Consider traceability mechanisms here as the policy attempt at credible renewable tracking within the grid, constructed as a separate market layer; measured with certificates that are issued to producers at production, and removed from circulation when corporations consume them - known as retiring certificates. If used correctly, renewable EACs set the market-based emissions factor of 1MWh of energy consumption to zero.

EACs represent the renewable "attributes" of energy, and not the underlying energy itself - they can be bought and sold alongside or independently to physical energy. Market-based emission numbers therefore find their basis in the contract structures underpinning energy purchasing - and are dependent on the cancellation of EACs that meet the quality criteria of the GHG protocol. For more information, visit our comprehensive guide to using EACs within market-based scope 2 compliance.

Which disclosure regimes mandate dual-reporting?

The GHG protocol is a private standard, not a law. And whilst it mandates dual reporting, not all regimes that align with or draw from the GHG protocol enforce dual-reporting.

‍

‍

It's clear that dual reporting is either here already or coming over the horizon, and for the majority of scope 2 regimes, neither reporting method can be ignored altogether.

Additionally, as of Feb 2026, the GHG Protocol has been actively consulting on updates to Scope 2 Guidance very recently. There's a great deal of market anticipation towards a shift toward stricter quality standards for market-based principles: particularly stricter temporal matching and geographic deliverability, requiring EACs to align with physical realities of grid consumption more. By the possible phasing out of annual, unbundled certificates from distant regions, the GHG protocol may spur disclosure regimes into action, moving market-based claims into a new era of integrity and impact.

Solidify the difference with a final review.

• Location-based uses the average grid emissions intensity for the geographic boundary.
• Market-based reflects a product choice via contractual instruments.

These are two parallel accounting views that produce two separate figures. They're not added together.

Our expertise: market-based instruments for complex requirements

Automatic EAC procurement sits at the very core of Soldera's platform. Our AI interprets usage patterns, digests corporate climate targets, and dissects compliance frameworks to find you the right certificates from a network that spans thousands of renewable generators. Once procured, cancellation records are assembled programmatically for your audit trails and disclosure filings. Sign up now to begin aligning your load profile with certificate inventory in real time.