What is the difference between the two methods?

The location-based method uses the average grid emission factor for the region, regardless of any contracts. The market-based method reflects the emissions of the specific electricity you chose to purchase, using energy attribute certificates and supplier-specific or residual-mix factors.

Why does the GHG Protocol require both numbers?

The Scope 2 Guidance mandates dual reporting so that stakeholders see both the physical grid reality of where you consume power and the contractual choices you made. Reporting only the lower market-based figure without the location-based one is not compliant.

What is a residual mix factor?

It is the emission factor of the electricity left on the grid after all certificates have been claimed by others. You apply it to the portion of your consumption not covered by your own certificates, so you do not double-count renewables already claimed elsewhere.

What counts as an energy attribute certificate?

REGOs in the UK, Guarantees of Origin (GOs) in the EU, and RECs in North America are the main instruments. Each certificate represents the attributes of one MWh of generation and lets you claim that electricity under the market-based method.

What does the coverage gap tell me?

The gap is the consumption not yet matched by certificates, valued at the residual mix factor. It shows the emissions you could still eliminate from your market-based figure by procuring certificates or a power purchase agreement for the remaining volume.

Scope 2 Market-Based vs Location-Based Emissions Comparator

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The GHG Protocol Scope 2 Guidance requires companies to report electricity emissions two ways: a location-based figure using the average grid factor, and a market-based figure reflecting the specific power you contracted for. This tool computes both from your own data and shows exactly how much of your consumption your certificates cover and what remains to be addressed.

Why dual reporting exists

The two methods answer different questions. The location-based number tells stakeholders about the physical carbon reality of the grid where you operate — useful for understanding systemic decarbonisation. The market-based number shows what choices you have made as a buyer through energy contracts and certificates. Reporting only the lower market-based figure without the location-based one is explicitly non-compliant with the GHG Protocol Scope 2 Guidance.

A common pitfall is assuming that buying REGOs (UK), Guarantees of Origin (EU), or RECs (North America) drives the market-based figure to zero automatically. It does, but only for the volume of certificates you actually hold. For any uncovered consumption the residual mix factor applies — and the residual mix is often higher than the grid average, because it is the factor left over after all the renewable certificates have been claimed by others.

How it works

Both methods start from the same consumption but apply different emission factors:

location-based = consumption (kWh) × grid factor (kgCO2e/kWh)

covered kWh    = min(certificate kWh, consumption)
uncovered kWh  = consumption − covered kWh
market-based   = covered kWh × certificate factor
               + uncovered kWh × residual-mix factor

coverage %     = covered kWh / consumption × 100
gap emissions  = uncovered kWh × residual-mix factor

If you hold certificates for every kWh at a zero emission factor, your market-based total falls to zero while the location-based total is unchanged — which is exactly why both numbers must be reported.

Worked example

Take 1,000,000 kWh on a grid factor of 0.20 kgCO2e/kWh. The location-based total is 200 tCO2e. Now suppose you hold zero-emission certificates for 600,000 kWh and the residual mix factor for your country is 0.45 kgCO2e/kWh:

Covered: 600,000 kWh × 0 = 0 tCO2e
Uncovered: 400,000 kWh × 0.45 = 180 tCO2e
Market-based total: 180 tCO2e — less than location-based, but the 40% coverage gap still contributes significantly

Note that 0.45 is higher than the 0.20 grid average. That is because the residual mix strips out the renewable generation already claimed by certificate holders. The uncovered consumption effectively carries the emission intensity of the fossil-heavy residual.

Closing the coverage gap

The gap shown — emissions from uncovered consumption — is precisely the amount you could remove from your market-based figure by procuring additional certificates or signing a power purchase agreement (PPA) for the remaining volume. The tool makes this explicit so you can set a concrete procurement target rather than reporting without knowing what 100% coverage would require.

For CDP and TCFD disclosures, the coverage percentage is increasingly reported alongside both Scope 2 figures as evidence of the quality of your renewable energy claims.