GHG Protocol proposes breakthrough revisions to Scope 2 emissions reporting for greater accuracy and transparency

The Greenhouse Gas (GHG) Protocol, the preeminent global standard for greenhouse gas emissions measurement and reporting, has opened a significant public consultation running until December 19, 2025. The focus lies on two key amendments: revisions to the Scope 2 Guidance, which pertains to emissions from purchased electricity, and the introduction of consequential accounting methods intended to estimate system-wide impacts and “avoided emissions” related to electricity-sector projects. Particularly, the proposed refinements to Scope 2 emissions calculations stand to reshape how organisations globally account for their indirect emissions tied to electricity consumption.

Scope 2 emissions relate to indirect greenhouse gases released during the generation of purchased electricity, steam, heating, or cooling consumed by an organisation. The GHG Protocol currently allows two methods for reporting these emissions: the location-based method and the market-based method. The location-based method calculates emissions based on the average emissions intensity of electricity grids in a given area, while the market-based method accounts for emissions from electricity procured through contractual instruments, such as power purchase agreements (PPAs), enabling companies to claim renewable energy use.

The proposed location-based method revision moves away from broad average emission factors and instead demands higher spatial and temporal resolution. Emissions reporting would be linked strictly to the electricity physically delivered at the time and place of consumption. A clear hierarchy for selecting emission factors is introduced prioritising location precision over time precision, and time precision over factor type, favouring consumption-based factors which include cross-border power flows rather than average regional production factors. This change aims to enhance the accuracy and comparability of location-based emissions reporting and adapt it to the increasingly interconnected nature of modern electricity grids. Recognising practical constraints, organisations without hourly data will be permitted to approximate emissions using monthly or annual load profiles, balancing rigor with accessibility.

On the market-based method front, the revisions tighten the requirements surrounding the procurement of renewable energy claims. Contracts for electricity must now demonstrate physical deliverability from generators within a realistically connected grid network, restricting claims to power that can be directly or indirectly supplied simultaneously with consumption. For Canada, provincial power markets will define these boundaries, reflecting actual grid configurations. Contracts involving generators outside these boundaries must demonstrate deliverability through evidence such as transmission capacity pricing. Temporal alignment is also stricter, ideally requiring hourly matching of electricity consumption and generation. A transition mechanism for existing contracts is under consideration to accommodate legacy agreements, either via a phased approach with disclosure or a fixed compliance date with lead time.

The implications of these proposed revisions are particularly pertinent in jurisdictions like Canada, where the Competition Bureau recognises the GHG Protocol as an internationally recognised methodology supporting substantiation of environmental claims under the Competition Act. While amendments to the Act itself propose shifting from an “internationally recognised methodology” requirement to one of “adequate and proper substantiation,” embracing the updated guidance remains vital for cementing credibility and compliance. The stricter Scope 2 reporting criteria also hold business consequences in Alberta’s renewable power market, where “out of market” PPA purchasers play a key role in financing renewable projects. Parties involved must now consider their ability to include financed generation within their Scope 2 inventories under the new rules and potential transitional provisions.

The GHG Protocol has underscored these revisions as part of a broader effort to strengthen the accuracy, transparency, and integrity of corporate greenhouse gas emissions inventories. Stakeholders worldwide anticipate finalisation of the updated Scope 2 standard by 2027, following public feedback. Corporations and sustainability professionals are encouraged to participate in the consultation to shape the future of emissions accounting amidst accelerating global climate action mandates.

The update builds on the Protocol’s existing suite of standards, which already feature eight Quality Criteria for contractual instruments and promote transparent disclosure of energy purchases. It complements consultations on consequential accounting methods designed to assess avoided emissions system-wide, reflecting an evolving landscape where corporate climate accountability is scrutinised across multiple dimensions. Together, these advances may play a crucial role in guiding businesses toward more credible and comparable climate reporting frameworks in the years ahead.