The Climate Hub enables the automated calculation of Scope 2 emissions using a market-based and location-based approach.
The Scope 2 categories electricity, district heating and other (steam, cooling, compressed air) are listed in the Climate Hub.
A distinction is made between the market-based and location-based approach to calculating Scope 2 emissions. They are explained below.
Market-based approach:
The market-based method reflects the GHG emissions generated by a consumer's specific decisions regarding their electricity supplier or the electricity product they choose. These choices are defined in the form of contractual agreements between the consumer and the supplier. The underlying emission factors can either be provided directly by the electricity provider or come from Renewable Energy Certificate System (RECS) certificates or Power Purchase Agreements (PPAs).
If the company has market-based emission factors that meet the Scope 2 quality criteria, it should report these in the Climate Hub.
Location-based approach:
The location-based method uses average emission factors for the electricity grids that supply the reporting company with electricity.
Companies that source their electricity from the grid should use regional or sub-regional emission factors to calculate their emissions in the Climate Hub. This is because the generation of electricity varies by region, resulting in varying emission factors.
In summary, this means that the location-based approach takes into account the average emission intensities at the locations where electricity is used, while the market-based approach takes into account the emission intensities of the electricity products that the reporting company has specifically selected.
Rules to be observed when calculating Scope 2 emissions:
- Companies should report the market-based and location-based Scope 2 emissions total.
- If a company enters into a supplier-specific contract (or other contract) where no credible emission factor can be identified, the reporting company should use the average emission factor of the electricity grid as a proxy. This emission factor is applied to the specific amount of contracted energy.
- All contractual instruments must meet the Scope 2 quality criteria in order to be included in the calculation of the market-based method. A list of the Scope 2 quality criteria can be found on page 60 of the Scope 2 Guidance of the Greenhouse Gas Protocol.
- When setting Scope 2 targets, the reporting company should choose the market-based or location-based method. The selected Scope 2 method can be specified in the Climate Hub under “Basic data” and is shown in bold in the balance sheet table.