Updates to the GHG Protocol
The GHG Protocol is consulting on significant revisions to its Scope 2 guidance, driven by concerns that existing approaches do not consistently deliver accurate, comparable or decision‑useful emissions information. The proposals focus on both the location‑based and market‑based methods, with an overarching aim of improving integrity, transparency and alignment between reported emissions and real‑world power systems and outcomes.
Problems with current rules
The consultation identifies fundamental weaknesses in the current market‑based method, centred on accuracy, impact and fairness. Key issues include:
1. Accuracy problem – There are currently no limitations on the timing or location of purchased certificates of generation (e.g., LGCs). This means that companies can currently purchase certificates from locations that can not possibly be supplied to the consumption location (e.g., purchasing LGCs generated in Iceland for electricity that is being consumed in Australia) as well as purchase certificates that produced during different periods of consumption (e.g., allowing night-time electricity use to be matched with day-time solar generation)
2. Impact problem – There is evidence demonstrating that the existing renewable energy certificate market often fails to drive additional renewable energy generation due to certificate prices being too low and uncertain to drive additional investment in renewables.
3. Fairness problem – There are current concerns over the fairness of reporting companies being able to claim publicly funded renewable energy projects through certificate purchases. This means that those that have indirectly funded these renewable energy projects currently do not have the right to claim their share of the renewable energy being produced.
Proposed Changes
Location-Based Method
Revisions to the location‑based method are intended to improve accuracy by encouraging the use of more representative grid emission factors, while recognising ongoing data availability challenges.
Key proposed changes include:
· A new hierarchy for selecting grid‑average emission factors prioritising spatially granular factors (e.g. local balancing areas), followed by temporally granular factors (e.g. hourly data), and then broader consumption‑based averages, including imported electricity.
· Application of these requirements only where data are publicly available, free to use and from credible sources.
· Staged implementation, acknowledging that more granular data are not yet available in all markets or regions.
Market-Based Method
To address the accuracy, impact, and fairness issues, the GHG Protocol is proposing more restrictive and conservative market‑based accounting rules.
Key proposed changes include:
· Time and location matching requirements, meaning certificates must align with the geography and time period of electricity consumption, subject to limited exemptions.
· Introduction of a Standard Supply Service (SSS) concept, covering mandated or publicly supported generation, with emissions attributes allocated to consumers on a pro‑rata basis and limits on purchasing beyond that share.
· If you have not purchased certificates and are using the residual mix factor to calculate emissions, you must make use of time‑ and location‑matched residual mix factors, with a fossil mix applied where no suitable residual mix exists—potentially increasing reported emissions where granular data are unavailable.
What happens next?
Following the close of the consultation period, the GHG Protocol Secretariat and relevant Technical Working Groups will review and synthesize feedback to inform further analysis and revisions to the Scope 2 Standard. A further public consultation on Scope 2 topics is planned for 2026, ahead of final publication of the updated standard in 2027.
