Start with the inventory boundary
Identify the reporting entities, sites, energy types, period, ownership or control approach, and complete consumption data. On-site fuel combustion is a different emissions category from purchased electricity. Tenant, landlord, and shared-site arrangements need careful boundary treatment. Keep source records and conversion factors so the inventory can be reproduced. This educational page is not an assurance opinion or a determination of the reporting requirements that apply to a particular company.
Location-based and market-based methods differ
GHG Protocol’s published guidance distinguishes a location-based method using grid-average information from a market-based method using qualifying contractual instruments and relevant factors. The methods answer different questions and should not be merged into one unexplained figure. Renewable certificates and supplier products must satisfy the applicable quality criteria. A procurement contract alone is not enough if the attributes are not conveyed and retired appropriately. Unmatched electricity also needs the applicable accounting treatment rather than an assumed zero factor.
Track current guidance and claims carefully
The GHG Protocol source reviewed for this article describes the published Scope 2 Guidance and an ongoing update process following consultation. Use the standard and version applicable to the reporting period; proposals are not automatically final requirements. Annual matching should not be advertised as hourly carbon-free operation. Inventory results also differ from avoided-emissions impact claims. Reporting and public marketing can have different requirements, so qualified accounting and legal review may be appropriate for material disclosures.
Hypothetical inventory exercise
A company records 1,000 MWh of purchased electricity and retires 600 MWh of qualifying instruments for the defined boundary. The market-based calculation must address both the matched and unmatched quantities under the applicable method; it cannot simply label all 1,000 MWh zero. The location-based result is calculated separately using its appropriate factors. No emissions result is supplied here because actual factors and criteria are account- and framework-specific. Preserve records and explain the chosen method.
Practical review checklist
- Define organizational and operational boundaries, energy types, period, and complete consumption records.
- Keep location-based and market-based calculations distinct with documented factors and standard versions.
- Verify contractual instrument quality, quantity, geography, vintage, retirement, and unmatched-load treatment.
- Review evolving guidance and public claims with appropriate specialists before material reporting.
Questions & answers
Does buying RECs eliminate location-based emissions?
The location-based method uses its applicable grid information; qualified instruments are considered separately under market-based rules.
Are consultation proposals already final accounting rules?
No. Confirm the status and version of guidance applicable to the reporting period before changing the inventory method.
Sources & scope
Primary references reviewed October 15, 2026. These sources support the stated concepts; actual tariffs, program rules and signed agreements govern the account. Decision examples and operational worksheets are original educational analysis.
- GHG Protocol: Scope 2 Guidance
Purchased energy accounting, instrument quality criteria, and ongoing guidance review. - EPA: Renewable energy certificates
Renewable attributes, MWh certificates, retirement, and claims. - FTC: Green Guides
Qualification and substantiation of environmental marketing claims. - EPA: Offsets and RECs: What is the difference?
Different purposes and units for certificates and carbon credits.