GHG Protocol
Scope 2 Guidance
executive summary
An amendment to the GHG Protocol
Corporate Standard

1. Introduction to scope 2 emissions
Since the publication of the Corporate Standard in 2004, companies around the world have been seeking innovative
strategies to measure and manage their greenhouse gas (GHG) emissions. For most companies, emissions from purchased
electricity, steam, heating, and cooling (termed “scope 2” emissions) represent a significant emission source and operationalcost. To reduce these emissions, companies typically turn to energy conservation, efficiency upgrades, and low-carbon
electricity supply. But the mechanisms that allow corporate consumers to choose a low-carbon grid-delivered energy supply
vary by electricity market. Some companies can work with their electricity suppliers to purchase a low-carbon product, or
enter into power purchase agreements with individual generators. Consumers can also separately buy electricity attributes
via certificates that conveys information about energy production.

2. The need for scope 2 guidance
and international consistency
Accurately accounting for scope 2 emissions is essential inorder to manage and reduce them. However, companies have
not had standards that address whether and how emissions
from these diverse instruments should be accounted for ina GHG inventory. As a result, scope 2 emission reports havevaried between companies significantly, leaving internal andexternal decision-makers unable to assess and compare
corporate performance. The uncertainty around whether
and how energy purchases contribute to meeting scope 2
emission reduction goals has impeded corporate investment
in, and demand for, low-carbon energy.

Box 1 How this Guidance was developed

The Greenhouse Gas (GHG) Protocol is a multistakeholder
partnership of businesses, nongovernmental organizations(NGOs), governments, and others convened by the World
Resources Institute (WRI) and the World Business Council
for Sustainable Development (WBCSD). Launched in
1998, the GHG Protocol seeks to develop internationallyaccepted GHG accounting and reporting standards andtools to promote their adoption in order to achieve a low
emissions economy worldwide. All GHG Protocol standards
and guidance are available at www.ghgprotocol.org.
This Scope 2 Guidance represents a policy-neutral,collaborative solution guided by GHG Protocol principles. It

3. What this Guidance provides

was developed over four years of international consultation

This Guidance provides a unified, internationally-consistent,transparent basis for companies to account for electricity
purchases in their GHG inventory. The Guidance acts
as an amendment to the Corporate Standard, revisingand updating the previously brief treatment of scope 2
accounting boundaries and methods. It introduces:

GHG reporting programs, energy utilities and retailers,and discussion with participation from businesses, NGOs,
renewable energy certification programs, government
agencies, and scientific and academic institutions
from around the world. It included scoping workshops
conducted in London, Washington DC, and Mexico Cityin 2010 and 2011; a Technical Working Group (TWG) that
contributed to discussion papers, conference presentations,•• Requirements: Accounting and reporting requirements
which companies must meet to be in conformance with
the Corporate Standard.

•• Quality Criteria: A list of Scope 2 Quality Criteriathat all electricity purchasing instruments—termed here“contractual instruments”—need to meet in order to be
used in market-based method accounting.

•• Recommendations: Additional features companies
should disclose about their electricity purchases, as

2 Scope 2 Guidanceand draft proposals on accounting and reporting solutions;and a public comment period in spring 2014, including
six webinars and three in-person workshops in London,
Dusseldorf, and Washington DC.

well as other metrics such as total electricity, steam,heating, and cooling consumed, and what percentage
of corporate operations have market-based methoddata available.

Executive Summary

4. Who should read this GuidanceThis Guidance amends and adds to the Corporate Standard
requirements on scope 2 accounting and reporting. All
organizations compiling a corporate GHG inventory following
the Corporate Standard—including companies, governments,
NGOs and other organizations—should use this Guidance.
The term “companies” is used throughout this document as
shorthand for any organization compiling a corporate inventory.
Electricity suppliers, advocates, and policy makers will also
be well served to understand the new GHG accounting
and reporting requirements, as well as the Scope 2 Quality
Criteria (see Chapter 7). These affect whether a given
energy label, green power program, or other instrument
can be used in corporate GHG inventories, and will
influence the type of energy products and informationcompanies request. Market-based electricity tracking andpurchasing programs inherently interact with policies
affecting the electricity sector, such as emission capand-trade regulations, supplier fuel mix and emissions
disclosure rules, supplier quotas to source renewableenergy, and specific subsidies or support schemes
for renewable energy. Policy makers play a key role indetermining the relationship between voluntary purchasing
programs and regulatory policies.

5. Key changes introducedby the Guidance
5.1 For most companies, scope 2
is no longer one number—it is two.
For companies with any operations in markets
providing product or supplier-specific data in the formof contractual instruments, companies shall report
scope 2 according to a location-based method and amarket-based method. Each method’s results reflect
different risks and opportunities associated withemissions from electricity1 use, and can inform different
decisions and levers to reduce emissions. Companies
shall choose which method’s results to use for goal
setting and other benchmarks.

Box 2 Key Terms
Some terms used in this guidance are used for precision but are synonymous with other more familiar terms. For example:
Contractual instruments: Any type of contract between

generator declarations. For the purpose of this guidance, thetwo parties for the sale and purchase of energy bundled withterm “energy attribute certificates” or just “certificates” will be

attributes about the energy generation, or for unbundled

used as the general term for this category of instruments.

attribute claims. Markets differ as to what contractual
instruments are commonly available or used by companies
to purchase energy or claim specific attributes about it, butthey can include energy attribute certificates (RECs, GOs, etc.),

Energy generation facility: Any technology or device thatgenerates energy for consumer use, including everything fromutility-scale fossil fuel power plants to rooftop solar panels.

direct contracts (for both low-carbon, renewable, or fossil fuel

Energy supplier: Also known as an electric utility,

generation), supplier-specific emission rates, and other default

this is the entity that sells energy to consumers and canemission factors representing the untracked or unclaimed

provide information regarding the GHG intensity ofenergy and emissions (termed the residual mix) if a company

delivered electricity.

does not have other contractual information that meets the
Scope 2 Quality Criteria.
Energy attribute certificate: A category of contractual
instrument that represents certain information (or attributes)
about the energy generated, but does not represent theenergy itself. This category includes a variety of instrumentswith different names, including certificates, tags, credits, orGenerators: Here used to mean the entity that owns oroperates an energy generation facility.
Green power product/green tariff: A consumer option
offered by an energy supplier distinct from the “standard”
offering. These are often renewables or other low-carbon
energy sources, supported by energy attribute certificates orother contracts.

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Methods for scope 2 accounting are “allocation”
methods—allocating generator emissions to
end-users. A location-based method reflects theaverage emissions intensity of grids on which energy
consumption occurs (using mostly grid-average emission
factor data). A market-based method reflects emissions
from electricity that companies have purposefully
chosen (or their lack of choice). It derives emission
factors from contractual instruments, which include any
type of contract between two parties for the sale andpurchase of energy bundled with attributes about theenergy generation, or for unbundled attribute claims.
Markets differ as to what contractual instruments arecommonly available or used by companies to purchaseenergy or claim specific attributes about it, but they can
include energy attribute certificates (RECs, GOs, etc.),
direct contracts (for both low-carbon, renewable, or fossil
fuel generation), supplier-specific emission rates, and otherdefault emission factors representing the untracked or
unclaimed energy and emissions (termed the residualmix) if a company does not have other contractual
information that meets the Scope 2 Quality Criteria.
In this way, all companies required to report according to
the market-based method will have some type of data
option. Not having contractual data for every site will notcause non-compliance with the GHG Protocol Corporate
Standard and Scope 2 Guidance. As with scope 3, a rangeof data may be available. Companies should consult thehierarchy of emission factors for both location-based andmarket-based methods. Any data on those hierarchies(including using location-based emission factors in theabsence of contractual information) are acceptable.
Contractual instruments recognized in themarket-based method include more than green
power purchases. These contractual purchases
include green power programs, any supplier-specificlabel or delivery metric, and fossil fuel contracts. Thosecompanies without specified purchases must use a
residual mix—a type of emission factor representing
the average emissions from all unclaimed energy.

4 Scope 2 GuidanceContractual instruments in the scope 2 marketbased method are not carbon offsets. Renewableenergy projects in some parts of the world may be eligible
to produce a carbon offset, which conveys with it a claim
about tons of GHG emissions avoided by the operation ofthat project compared to a business-as-usual scenario. By
contrast, contractual instruments convey an emission rate—that is, emissions per megawatt hour (MWh) associated withthat generation’s facilities. This emission factor is expressedin the same units used in location-based emission factors.

5.2 Instruments used as emission factors
in the market-based method mustmeet Scope 2 Quality Criteria.
These criteria ensure the overall integrity and reliabilityof reported market-based results. These eight Scope 2
Quality Criteria, designed around existing best practices
around the world, specify the mechanics that ensure
market-based accounting works in practice and prevents
double counting. These criteria are summarized in Table 1.

Executive Summary

Table 1 S cope 2 Quality Criteria
All contractual instruments used in the market-based method for scope 2 accounting shall:
1. Convey the direct GHG emission rate attribute associated with the unit of electricity produced.
2. Be the only instruments that carry the GHG emission rate attribute claim associated with that quantity of electricity generation.
3. Be tracked and redeemed, retired, or canceled by or on behalf of the reporting entity.
4. Be issued and redeemed as close as possible to the period of energy consumption to which the instrument is applied.
5. Be sourced from the same market in which the reporting entity’s electricity-consuming operations are located and to which the
instrument is applied.
In addition, utility-specific emission factors shall:
6. Be calculated based on delivered electricity, incorporating certificates sourced and retired on behalf of its customers. Electricity
from renewable facilities for which the attributes have been sold off (via contracts or certificates) shall be characterized as having
the GHG attributes of the residual mix in the utility or supplier-specific emission factor.
In addition, companies purchasing electricity directly from generators or consuming on-site generation shall:
7. Ensure all contractual instruments conveying emissions claims be transferred to the reporting entity only. No other instrumentsthat convey this claim to another end user shall be issued for the contracted electricity. The electricity from the facility shall notcarry the GHG emission rate claim for use by a utility, for example, for the purpose of delivery and use claims.
Finally, to use any contractual instrument in the market-based method requires that:
8. An adjusted, residual mix characterizing the GHG intensity of unclaimed or publicly shared electricity shall be made available for
consumer scope 2 calculations, or its absence shall be disclosed by the reporting entity.

5.3 Companies should disclose key
features and policy context of
their contractual instruments.
Contractual instruments can come from a variety ofenergy generation facilities depending on the market.
In some markets, only renewable energy facilities can
produce certificates, while in other markets all generation
may be eligible to produce certificates. Some voluntary
certificates are from single-instrument systems, meaningthat the voluntary certificate is inherently in addition to any
supplier quotas. Other markets use multiple instruments
simultaneously, meaning that multiple instruments may
be issued from a single MWh, for voluntary consumer
claims and to meet regulatory requirements.

These variations can make it difficult to compare andunderstand the procurement choices a company has madein different markets. This Guidance recommends companies
disclose information about the energy generation facilities
and policy context reflected in their contractual instruments,
in order for company decision-makers and stakeholders to
get a clearer picture about how well the purchase aligns withother company goals. In particular, stakeholders evaluating acompany’s contribution to mitigating global emissions may
be interested in how a company is driving change in supply.
Some of these key features are elaborated in Table 2.

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Table 2 Example instrument features and policy context
Instrument labels
Certification or label name (if applicable). This can include certification such as Green-e Energy (U.S.), EcoLogo (Canada), orlabels such as EKOenergy and Naturemade in the EU. The certification or label name should also specify what is being certified, e.g.
in the U.S. Green-e Energy certifies against a set of requirements described in their National Standard.
Incremental funding programs. This should specify whether the instrument is associated with a certification label or supplier
program that contributes incremental funding to new projects, and if so what quantity of funding is included with the company’scontractual purchase.
Energy generation facility features
Energy resource type. Instruments should clearly identify the resource generating the certificate. For supplier-specific emission
rates, the resource type could be “mix” for standard offers, “multiple renewable” for certain green power products, or cite the specificresource used. Residual mix will typically be a “mix.”
Facility location. Depending on the information available from the certificate, supplier, or contract, the generation facility location
could be identified at a national or subnational level (either geopolitical such as a U.S. state, and/or a grid region such as a North
American Electric Reliability Corporation (NERC) region.
Facility age. Stakeholders may wish to know whether the purchase consists largely of generation attributes from older facilities ormore recently constructed projects. Companies should note the year the generation facility that created the certificate/contract was
first operational or substantially repowered.
Policy context
Supplier quotas. The contractual instrument claimed will relate differently to instruments used for supplier quotas, depending on
the market. Companies should note the relationship between their contractual instruments following the list of options in Table 10.2.

• Cap and Trade. Is the facility that produced the instruments you claim affected by a cap and trade policy? (Y/N)•• If yes, does the cap and trade program allocate allowances for retirement on behalf of voluntary renewable electricity
purchases from this facility? (Y/N)•• If yes, were allowances retired on behalf of your voluntary purchase of instruments from this facility? (Y/N) If so, these
allowances should be reported (in metric tons) separately from the scopes.
Funding/Subsidy Receipt. The funding disclosed here can highlight recent funding or subsidy policies directly and substantiallyaffecting the generation facility.
Offsets. Is the facility producing offset credits from the same MWh reflected in the contractual instrument? (Not applicable tocontractual instruments in most industrialized electricity markets.)
Other policy instruments. This includes any other policy instruments bundled/retired voluntarily by the company itself,
a certificate certification program, supplier label, etc.

Endnote
1. Electricity is used as shorthand to include purchased steam, heat,cooling, and electricity.

6 Scope 2 GuidanceExecutive Summary

AuthorMary Sotos

Ghg Protocol Team
Pankaj Bhatia, World Resources Institute
Cynthia Cummis, World Resources InstituteMark Didden, World Business Council
for Sustainable Development
Alex Kovac, World Resources InstituteFunders
This standard development process was generously
supported by Walmart, H&M, Microsoft, EY, the United
Kingdom Department for Environment, Food & Rural Affairs,
and the United States Environmental Protection Agency.

Josh Ryor, World Resources InstituteAmanda Stevens, World Resources InstituteWorld Resources Institute
WRI is a global research organization that works closelywith leaders to turn big ideas into action to sustaina healthy environment—the foundation of economic
opportunity and human well-being.

Our Challenge
Natural resources are at the foundation of economic
opportunity and human well-being. But today, we aredepleting Earth’s resources at rates that are not sustainable,
endangering economies and people’s lives. People dependon clean water, fertile land, healthy forests, and a stableclimate. Livable cities and clean energy are essential for asustainable planet. We must address these urgent, global
challenges this decade.

Our Vision

World Business Council for
Sustainable Development (WBCSD)
The WBCSD is a CEO-led, global coalition of some
200 companies advocating for progress on sustainable
development. Its mission is to be a catalyst for innovationand sustainable growth in a world where resources are
increasingly limited. The Council provides a platform
for companies to share experiences and best practices
on sustainable development issues and advocate for
their implementation, working with governments, nongovernmental and intergovernmental organizations.
The membership has annual revenues of USD 7 trillion,
spans more than 35 countries and represents 20 majorindustrial sectors. The Council also benefits from a
network of 60 national and regional business councils
and partner organizations, a majority of which are based
in developing countries.

We envision an equitable and prosperous planet driven by
the wise management of natural resources. We aspire tocreate a world where the actions of government, business,and communities combine to eliminate poverty and sustain
the natural environment for all people.
Printed on Chorus Art Silk, an FSC-certified paper with
30% pcw recycled content and with inks that are of soy content.
Stock photography: Shutterstock.com
Design: Alston Taggart, Studio Red Design, with assistance from
Elliott Beard and Alex Kovac.
ISBN: 978-1-56973-851-1
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Copyright 2015 World Resources Institute. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivative
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The Greenhouse Gas Protocol
provides the foundation forsustainable climate strategies.
GHG Protocol standards are themost widely used accounting tools
to measure, manage and reportgreenhouse gas emissions.

www.wri.org

www.ghgprotocol.org