Data · Scope 2 emissions
Scope 2 emissions: location-based vs market-based in the UK
Scope 2 emissions come from the electricity, heat, steam and cooling a company buys, and the GHG Protocol Scope 2 Guidance counts them two ways.
The location-based figure uses the grid average; the market-based figure uses the contracts and certificates you hold, such as REGO-backed supply.
UK rules do not agree on which to report: UK SRS S2 requires only location-based, and the SECR regulations name no method at all.
The two methods
Two answers to two questions
In the Scope 2 Guidance’s words, a location-based method “reflects the average emissions intensity of grids on which energy consumption occurs”.
A market-based method “reflects emissions from electricity that companies have purposefully chosen (or their lack of choice)”.
Its factors come from contractual instruments: energy attribute certificates such as REGOs, direct contracts, supplier-specific emission rates, and a residual mix for the rest.
One figure shows the grid you drew from; the other shows the procurement choices you made, and they are meant to be read together.
The Guidance warns against reading them as gross and net, because “a net calculation typically implies that external reductions such as offsets have been applied”.
Nor is market-based a renewables-only method: contracts for fossil or mixed supply carry their own factors too.
| Location-based | Market-based | |
|---|---|---|
| Reflects | The grid you are connected to | The electricity you contracted for |
| UK factor | DESNZ UK electricity (generation) | Contracts, supplier rates, residual mix |
| Effect of buying renewables | None | Can lower it, if the Quality Criteria are met |
| UK SRS S2 | Required (¶29(a)(v)) | Permitted (¶B31) |
The UK position
Which Scope 2 figure a UK company must report
| Framework | Location-based | Market-based | Provision |
|---|---|---|---|
| GHG Protocol Scope 2 Guidance | Required | Required where operations are in markets with contractual instruments | Table 1.1 (reporting requirements) |
| UK SRS S2 | Required | Permitted, not required | ¶29(a)(v), ¶¶B30–B31 |
| SECR | No method named | No method named | Sch 7 ¶15(3) quoted; ¶20D(2) unquoted |
| PPN 006 carbon reduction plan | Scope 2 reported in full | — | Technical Standard |
GHG Protocol. Where a company has “any operations in markets providing product or supplier specific data in the form of contractual instruments”, it shall report both, each labelled by method.
The Guidance’s list of example markets does not name the UK, but REGOs and supplier fuel mix disclosure make it such a market in practice.
UK SRS S2. ¶29(a)(v) requires the entity to “disclose its location based Scope 2 greenhouse gas emissions”, with information about contractual instruments where needed.
¶B30 adds, “for the avoidance of doubt”, that location-based is required and contractual information only “if such instruments exist and information about them informs users’ understanding”; ¶B31 says an entity “might” disclose market-based.
Under the FCA’s final rules (PS26/19), listed companies in scope report against UK SRS on a comply-or-explain basis for accounting periods beginning on or after 1 January 2027.
SECR. The regulations name no method: quoted companies report emissions from purchased “electricity, heat, steam or cooling”, and large unquoted companies from purchased electricity.
The DESNZ factors supply the location-based figure and are published for the government’s SECR guidance; the calculation is set out in SECR carbon reporting.
Carbon reduction plans. The PPN 006 Technical Standard asks for Scope 1 and Scope 2 in full and five Scope 3 categories; our guide to the carbon reduction plan covers when one is asked for.
The number UK SRS asks for
Location-based Scope 2: the DESNZ factor
For UK consumption, the location-based factor is the UK electricity generation factor in the DESNZ set: 0.13096 kgCO2e per kWh for activity in 2026, from Table 9 of the methodology paper.
The same paper, ¶3.1, says the electricity factor excludes “the emissions associated with the transmission and distribution of electricity”, and that the separate T&D factor reports those losses in Scope 3.
So Scope 2 takes the generation factor, and grid losses go to Scope 3, category 3; putting the consumed figure in Scope 2 double-counts the losses if they are also in Scope 3.
The 2026 factor is 26% lower than 2025’s 0.17700, mostly because of grid decarbonisation, as our page on the DEFRA emission factors 2026 explains; a lower location-based figure this year is not a procurement achievement.
The live, half-hourly grid intensity NESO publishes is a different, operational number, covered on our page on UK grid carbon intensity.
The UK certificate
REGOs: what they are and what they prove
Ofgem’s REGO scheme issues certificates “which demonstrate electricity has been generated from renewable sources”, and “one REGO certificate is issued per megawatt hour (MWh) of eligible renewable output”.
Their primary use in Great Britain and Northern Ireland is Fuel Mix Disclosure, which requires licensed suppliers to tell customers the mix of fuels used to generate the electricity they supply.
Ofgem’s REGO guidance adds that REGOs “can be traded with or without the electricity to which it was issued”, and have secondary uses in sustainability disclosures and carbon accounting.
Generators should transfer requested REGOs before 1 July each year, when those in suppliers’ accounts are redeemed for disclosure, according to Ofgem’s certificate management page.
Because a REGO can be bought separately from the power, a green tariff backed by REGOs says something about attributes, not about which electrons reached your meter.
That is exactly the distinction the two Scope 2 methods exist to keep apart.
- GenerationOfgem issues REGOs
One per MWh of eligible renewable output, to accredited generators.
- TradingTraded with or without the power
The certificate can move separately from the electricity.
- 1 JulyRedeemed for Fuel Mix Disclosure
REGOs in suppliers' accounts are redeemed for FMD.
Source: Ofgem REGO scheme pages and guidance
The test an instrument must pass
The eight Scope 2 Quality Criteria
The Scope 2 Guidance sets “eight Scope 2 Quality Criteria that all contractual instruments must meet” before they can be used in the market-based figure; the text below is Table 7.1 as restated in GHG Protocol’s revision framework.
| # | All contractual instruments used in the market-based method 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 cancelled 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. |
| 6 | Supplier- or utility-specific emission factors: conditions on how a supplier calculates its rate (see the Guidance, §7.5). |
| 7 | For direct purchases or on-site generation: all instruments conveying the claim are transferred to the reporting entity only. |
| 8 | An adjusted, residual mix characterising the GHG intensity of unclaimed or publicly shared electricity is made available, or its absence is disclosed. |
If an instrument fails the criteria, the Guidance says other data (listed in its Table 6.3) shall be used in the market-based total instead.
For a REGO-backed tariff, criteria 2 and 3 are where the questions sit: were the certificates retired for you, and is nobody else claiming the same megawatt hours?
Ask the supplier for evidence of redemption on your behalf, and describe the arrangement in words whichever figure you publish.
Electricity without a contract
The UK residual mix
Once certified renewable output has been claimed through REGOs, what is left on the grid is dirtier than the average.
Under the market-based method, electricity that no qualifying instrument covers takes a residual mix, and criterion 8 requires one to be available or its absence disclosed.
DESNZ publishes the residual fuel mix each year in the Fuel Mix Disclosure data table, under the Electricity (Fuel Mix Disclosure) Regulations 2005.
For April 2025 to March 2026 it is 65.3% natural gas and 10.8% renewables, against a UK fuel mix, on the same attribute basis, of 31.4% gas and 48.0% renewables.
DESNZ explains that coal’s share of the residual mix is higher than its share of GB generation partly because of the coal in the European Attribute Mix, which reaches the residual through imports.
The table gives fuel shares and a carbon intensity per fuel for UK generation; a supplier’s own fuel mix disclosure is the other source of a market-based rate.
| Fuel | Residual fuel mix | UK fuel mix |
|---|---|---|
| Natural gas | 65.3% | 31.4% |
| Coal | 11.4% | 4.7% |
| Renewables | 10.8% | 48.0% |
| Nuclear | 7.1% | 13.7% |
| Other | 5.4% | 2.2% |
Contracts
Power purchase agreements and green tariffs
The Scope 2 Guidance counts direct contracts “for both low-carbon, renewable, or fossil fuel generation” among contractual instruments, alongside certificates and supplier-specific rates.
A power purchase agreement can carry its generator’s emission rate into your market-based figure if the certificates for that output are transferred to you and to nobody else, which is criterion 7.
A green tariff is a supplier product, so its market-based factor depends on the instruments the supplier retires for you and how it calculates its rate, which is criterion 6.
Neither changes the location-based figure, which reflects the grid you drew from.
UK SRS S2 still asks for information about such instruments where it helps a reader understand the location-based number, even when no market-based figure is published.
Illustrative arithmetic
One site, two figures, worked through
Take an office that bought 100,000 kWh of UK grid electricity in 2026 on a REGO-backed tariff.
Its location-based Scope 2 is 100,000 × 0.13096 kg, or 13.10 tonnes of CO2e, whatever the tariff says.
Its grid losses add 1.30 tonnes in Scope 3, category 3.
Its market-based figure depends on whether the certificates meet the Quality Criteria: if they do, the covered kilowatt-hours carry the renewable source’s emission rate; if not, the residual mix applies.
Under UK SRS S2 it reports 13.10 tonnes and describes the tariff; under the GHG Protocol it reports both figures, labelled.
| Line | Calculation | tCO2e |
|---|---|---|
| Location-based Scope 2 | 100,000 kWh × 0.13096 kg | 13.10 |
| T&D losses (Scope 3, cat. 3) | 100,000 kWh × 0.01299 kg | 1.30 |
| Market-based Scope 2 | 100,000 kWh × supplier or residual rate | Depends on the instruments |
What is changing
The GHG Protocol Scope 2 revision: proposals, not rules
The GHG Protocol consulted on changes to the Scope 2 Guidance from 20 October 2025 to 31 January 2026.
Its summary of feedback, published on 29 July 2026, is headed “Low support for hourly matching and deliverability as proposed”, and its Independent Standards Board “called for further work on multiple market-based method reporting approaches”.
The work is now part of a single consolidated corporate standard with ISO: the development plan estimates a draft for consultation in Q2 2027 and publication in Q4 2028, and says the timeline is subject to change.
Until then, the 2015 Scope 2 Guidance is the text in force, and hourly matching is a proposal, not a requirement.
- 20 Oct 2025Scope 2 consultation opens
- 31 Jan 2026Consultation closes
Nearly 1,100 responses from 56 countries.
- 29 Jul 2026Feedback summary
"Low support for hourly matching and deliverability as proposed".
- Q2 2027 (est.)Consolidated draft for consultation
- Q4 2028 (est.)Revised standard published
Sources: GHG Protocol feedback summary (29 Jul 2026); SDP v2.0 §§7, 9
Frequently asked
Questions people ask
What is the difference between location-based and market-based Scope 2?
The location-based method reflects the average emissions intensity of the grid where the electricity is used, mostly from grid-average emission factors; for UK electricity in 2026 that is the DESNZ generation factor of 0.13096 kgCO2e per kWh. The market-based method reflects the electricity a company has chosen through contracts: energy attribute certificates such as REGOs, direct contracts, supplier-specific emission rates, and a residual mix for anything not covered by an instrument that meets the GHG Protocol's Scope 2 Quality Criteria.
Does UK SRS S2 require market-based Scope 2?
No. UK SRS S2 paragraph 29(a)(v) requires location-based Scope 2 emissions, plus information about any contractual instruments needed to understand them. Paragraph B30 says "for the avoidance of doubt" that location-based is required, and paragraph B31 says an entity might also disclose market-based. A company can comply with a single location-based figure; it cannot comply with a market-based figure alone.
Does SECR require location-based or market-based reporting?
The SECR regulations name no method. Quoted companies report emissions from "the purchase of electricity, heat, steam or cooling by the company for its own use" (Schedule 7 paragraph 15(3)) and large unquoted companies emissions from purchased electricity (paragraph 20D(2)). The DESNZ conversion factors, which supply the location-based factor, are published as relevant to the government's Environmental Reporting Guidelines for SECR.
What is a REGO certificate?
A Renewable Energy Guarantee of Origin is a certificate Ofgem issues to renewable generators to show electricity came from a renewable source. Ofgem issues one REGO per megawatt hour of eligible renewable output. Their primary use in Great Britain and Northern Ireland is Fuel Mix Disclosure by electricity suppliers, and once issued they can be traded with or without the electricity they relate to.
Do REGOs reduce my Scope 2 emissions?
Only the market-based figure, and only if the instruments meet the GHG Protocol's eight Scope 2 Quality Criteria. They never change the location-based figure, which is the one UK SRS S2 requires. Whether a REGO-backed tariff meets the criteria depends on how the certificates are tracked and retired for you, and it should be described in words in the report.
What emission factor applies to electricity without a contract in the UK?
Under the market-based method, electricity not covered by a qualifying instrument takes a residual mix, which represents the grid after certified renewable output has been claimed. DESNZ's Fuel Mix Disclosure data table for April 2025 to March 2026 gives the residual fuel mix as 65.3% natural gas, 11.4% coal, 10.8% renewables, 7.1% nuclear and 5.4% other fuels. The GHG Protocol requires a company that has no residual mix available to say so.
Is market-based Scope 2 the same as net emissions?
No. The Scope 2 Guidance says the two method totals should not be viewed as gross and net, because a net figure usually means offsets have been applied. The market-based method is also not only a renewables method: contracts for fossil or mixed supply carry their own emission factors.
Are transmission and distribution losses part of Scope 2?
No. DESNZ's methodology paper says the UK electricity factor excludes the emissions associated with transmission and distribution, and that the separate T&D factor should be used to report the Scope 3 emissions of grid losses. In the 2026 set that is 0.01299 kgCO2e per kWh.
Is the GHG Protocol changing Scope 2?
It is revising it, and nothing has changed yet. The Scope 2 consultation ran from 20 October 2025 to 31 January 2026 and drew nearly 1,100 responses. GHG Protocol reported "low support for hourly matching and deliverability as proposed", and its Independent Standards Board called for further work. A consolidated draft standard is estimated for consultation in Q2 2027 and publication in Q4 2028; until then the 2015 Scope 2 Guidance applies.
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner. Secondary commentary is never the source for a number.
- GHG ProtocolScope 2 Guidance (2015), Chapters 1, 6 and 7
The two methods, dual reporting, the eight Scope 2 Quality Criteria, and "not gross/net".
- GHG ProtocolScope 2 Guidance — landing page
"Eight Scope 2 Quality Criteria that all contractual instruments must meet".
- GHG ProtocolScope 2 Revision — Guide Framework for Phase 1 (16 Dec 2024)
Restates the Quality Criteria, Table 7.1, and the residual-mix requirement.
- GHG ProtocolScope 2 public consultation: summary of feedback (29 July 2026)
"Low support for hourly matching and deliverability as proposed".
- GHG ProtocolConsolidated Corporate Standard — Standard Development Plan v2.0, §9
Consultation estimated Q2 2027; publication estimated Q4 2028.
- Department for Business and TradeUK SRS S2 Climate-related Disclosures, ¶29(a)(v), ¶¶B30–B31
Location-based required; contractual-instrument information where it matters; market-based permitted.
- DESNZ2026 conversion factors methodology paper, ¶3.1 and Table 9
The generation factor is Scope 2; T&D losses are Scope 3.
- DESNZGreenhouse gas reporting: conversion factors 2026
The location-based factor, and its relevance to the SECR guidelines.
- DESNZFuel Mix Disclosure data table, 1 April 2025 – 31 March 2026
The residual fuel mix and the UK fuel mix, under the Electricity (Fuel Mix Disclosure) Regulations 2005.
- OfgemRenewable Energy Guarantees of Origin (REGO)
One REGO per MWh; primary use is Fuel Mix Disclosure.
- OfgemREGO guidance for generators, agents and suppliers
REGOs can be traded with or without the electricity; secondary uses in carbon accounting.
- OfgemREGO: submitting data and managing certificates
REGOs in suppliers' accounts are redeemed on 1 July for Fuel Mix Disclosure.
- legislation.gov.ukSI 2008/410 Schedule 7, ¶15(3) and ¶20D(2)
SECR's purchased-electricity limbs, which name no Scope 2 method.
- Cabinet OfficePPN 006 Technical Standard for Carbon Reduction Plans
Scope 1 and Scope 2 in full, plus five Scope 3 categories.