The same electricity consumption produces two different scope 2 totals, sometimes twice as far apart. That is not a calculation error: the GHG Protocol asks you to produce both and label each one. The question is therefore not "which method should I pick" but "how do I build both properly, and which one anchors my reduction targets".

This article covers the boundary of scope 2, both methods, the quality criteria that instruments must meet, the traps that distort a result, and what BEGES, CSRD and SBTi require. Every rule comes from the GHG Protocol Scope 2 Guidance (2015). Every figure comes from its source database, with unit, year and record identifier.

What scope 2 covers

Scope 2 is the indirect emissions category covering greenhouse gases from the generation of purchased or acquired electricity, steam, heat and cooling consumed by the reporting company (section 5.3 of the Scope 2 Guidance).

Three points make the difference in practice.

  • Scope 2 captures emissions from generation only. Upstream fuel emissions and transmission and distribution losses belong to scope 3, category 3.
  • Purchased heat, steam and cooling follow the same rules as electricity. Appendix A requires both methods to be applied whenever contractual instruments exist.
  • In leased premises under the operational control approach, any energy purchased from a third party or from the grid is reported in scope 2, including heat from a boiler operated by the landlord.

    • Our article on scopes 1, 2 and 3 sets out the general definitions.

    The two methods and dual reporting

    The Scope 2 Guidance is an amendment to the GHG Protocol Corporate Standard. Section 1.5.1 states the core rule: a company with operations in markets that provide product or supplier-specific data in the form of contractual instruments shall report scope 2 emissions in two ways, labelling each result according to the method used. This is dual reporting.

    Three practical consequences:

  • a company operating only in markets without product or supplier-specific data reports a single total, on the location-based method;
  • missing contractual data at some sites does not create non-compliance. Each method has its own hierarchy of data sources, and falling back on a location-based factor in the absence of contractual information remains valid;
  • the two totals are not a gross/net pair. The market-based method also includes instruments representing fossil or mixed-resource generation.

    • If the company sets a reduction target, it must state which of the two totals the target is based on, and use the same method to set the goal and track progress.

    The location-based method

    This method values consumption with an average factor representing the carbon intensity of the grid across a geographic area. Table 6.2 sets out two tiers of sources:

  • regional or subnational factors, drawn on a real distribution area and adjusted for net physical imports and exports (eGRID output rates in the United States, the Defra annual grid average factor in the United Kingdom);
  • national production factors, drawn on administrative borders with no adjustment for cross-border flows (IEA national factors).

    • In France, the reference is the ADEME Base Carbone. For the record "Electricité, mix réseau électrique, France continentale, moyen, 2024" (identifier 43642, updated 24 April 2025, stated uncertainty 10%), the total factor is 0.0519 kgCO2e/kWh:

  • generation at the power station: 0.035 kgCO2e/kWh;
  • upstream: 0.0131 kgCO2e/kWh, a line that, per ADEME's own note on the record, aggregates upstream fuel, amortisation of the power station and ancillary operating emissions;
  • transmission and distribution: 0.0038 kgCO2e/kWh.

    • Only the generation line belongs in scope 2: table 6.2 states that data on the location-based hierarchy should convey combustion-only emission rates. The other two lines fall outside scope 2, upstream fuel and grid losses belonging to scope 3, category 3. Using the total in scope 2 pulls in emissions that do not belong there, with a double counting risk.

    Section 7.4.1 explicitly cites the French case: ADEME publishes factors differentiated by end use, derived from location-based logic but built on a different allocation. For heating, seasonalised method, 2023 (identifier 43276, uncertainty 30%), the total factor reaches 0.115 kgCO2e/kWh, of which 0.0891 is generation: close to twice the average mix in the same database. Factor selection matters as much as data quality. Our article on emission factors covers the selection rules.

    The market-based method

    This method values consumption with a factor derived from the contracts actually signed. Table 6.3 ranks sources from most to least precise:

  • energy attribute certificates: guarantees of origin in Europe, RECs in the United States, Canada and Australia;
  • electricity contracts, including PPAs (power purchase agreements) and contracts from specified sources, where certificates do not exist or are not required;
  • supplier or utility rates: the factor published for a standard offer or for a differentiated product such as a green tariff;
  • residual mix, national or subnational, calculated after voluntary purchases are removed;
  • other grid-average factors, as a last resort.

    • The residual mix is the link most often forgotten. It represents the carbon intensity of unclaimed electricity, what remains once guarantees of origin have been retired by other consumers. Without it, the same renewable electricity would be counted twice. The eighth quality criterion is explicit: to use a contractual instrument, an adjusted residual mix must be available, or its absence must be disclosed.

    In Europe, the Association of Issuing Bodies (AIB) publishes residual mixes by country each year. In the "European Residual Mixes" report covering calendar year 2025, published on 26 May 2026, France shows 17.11 gCO2/kWh with an untracked share of 81.94% of consumption. Mind the nature of the data: AIB states that all its CO2 values are direct CO2 emissions, excluding life-cycle emissions and other greenhouse gases, whereas ADEME publishes CO2e. The two are not interchangeable.

    The eight scope 2 quality criteria

    Table 7.1 requires every contractual instrument used in the market-based method to meet five criteria:

  • convey the direct GHG emission rate attribute associated with the unit of electricity produced;
  • be the only instrument carrying that claim for that quantity of generation;
  • be tracked and redeemed, retired or cancelled by or on behalf of the reporting entity;
  • be issued and redeemed as close as possible to the consumption period to which it is applied;
  • be sourced from the same market as the electricity-consuming operations concerned.

    • Three further criteria apply case by case:

  • a utility-specific factor must be calculated on delivered electricity, incorporating certificates retired on behalf of its customers; renewable electricity whose attributes have been sold off is characterised at the residual mix;
  • for direct purchases from a generator or on-site generation, all instruments conveying the claim must be transferred to the reporting entity alone;
  • an adjusted residual mix must exist, or its absence must be disclosed.

    • A non-compliant instrument does not drop out of the calculation: it is replaced by lower-ranked data.

    Traps that distort a scope 2 total

  • Double counting through a missing residual mix. Electricity left after its certificate has been separated, sometimes called null power, must not keep the original emission rate.
  • The wrong factor line. Taking the ADEME total instead of the generation line inflates scope 2 and doubles scope 3.
  • The stale factor. A factor frozen in a spreadsheet across three reporting years produces a trend that no longer means anything.
  • The multi-country shortcut. In the Base Carbone, the "mix réseau électrique, autres pays du monde" factors carry old validity periods, around December 2017 or December 2019 depending on the record. A multi-country group has to weigh them against national sources or the IEA, then document the choice.
  • Treating district heating as an average. No usable national average factor exists: within the single "Réseaux de chaleur / froid > Alsace" category of the Base Carbone, factors valid for 2023 range from 0.004 to 0.455 kgCO2e/kWh. The same care applies to waste heat: Appendix A requires it to be reported on the actual emissions of the process that produced it, rather than as zero on the grounds that it would have been vented anyway.
  • Mixing methods. A total built from some sites on location-based and others on market-based is neither one nor the other.

    • Running scope 2 across a multi-site estate

    Across a group of several entities, the difficulty is not the formula but keeping the reference data straight.

  • List delivery points, not sites. One site can carry several meters, a heat connection and a cooling contract.
  • Consolidate kWh before talking about CO2e. Wrong consumption invalidates both methods at once.
  • Map every delivery point to a country and a year, then to a single location-based factor for that pair.
  • Inventory contractual instruments point by point with proof of retirement, and apply the residual mix wherever no valid instrument covers consumption.
  • Keep both totals through to reporting, never adding or averaging them.

    • Our article on carbon accounting for corporate groups develops the consolidation issues specific to groups.

    What BEGES, CSRD and SBTi require

    BEGES. The greenhouse gas inventory required by article L. 229-25 of the French environmental code makes scope 2 mandatory, under the heading of energy-related indirect emissions: electricity, heat, steam. Decree no. 2022-982 of 1 July 2022 sets the current framework, the reference methodology is published by the ministry responsible for the environment, and inventories are filed on the ADEME platform.

    CSRD and ESRS E1. Disclosure requirement E1-6 is direct: under paragraph 49, the undertaking discloses gross location-based scope 2 and gross market-based scope 2 separately, in tonnes of CO2eq. Paragraph AR 45 sets out the method: apply the Scope 2 Guidance in its 2015 version, including the chapter 7.1 quality criteria relating to contractual instruments; include purchased electricity, steam, heat and cooling; avoid double counting with scopes 1 and 3; disclose the share and types of contractual instruments used. AR 47 applies the same split to total emissions, AR 53 to intensity per net revenue.

    SBTi. Criterion C9 of the SBTi Corporate Net-Zero Standard (version 1.3.1, April 2026) requires companies to disclose which of the two approaches they use to calculate base year emissions and track performance, with a single consistent approach used both to set the target and to track progress against it. Section D.7.2 recommends detailing the instruments used and showing how they meet the quality criteria. SBTi states that version 1.3.1 remains the applicable framework for target validation throughout 2026 and stays open for target setting until 31 January 2028; validation under version 2.0 opens in Q1 2027, and every new submission must follow it from 1 February 2028.

    Scope 3 follows a different logic, covered in our article on upstream and downstream scope 3 emissions.

    Scope 2 in Kabaun

    Kabaun covers scope 2 with a calculation engine aligned with the GHG Protocol, backed by several public databases including the ADEME Base Carbone and Defra, with a direct integration to the Base Carbone for factor updates. It also supports adding specific factors (a supplier factor, a district heating network factor) with administrator validation and full traceability, linking every data point to its source with supporting documents attached, and managing multiple entities and sites with group-level consolidation.

    FAQ: scope 2 market-based and location-based

    What is the difference between market-based and location-based scope 2?

    The location-based method values energy consumed with the average grid factor for the geographic area concerned, ignoring contracts. The market-based method values it with factors derived from the contracts signed: guarantees of origin, PPAs, supplier offers, and failing that the residual mix. Both cover the same kWh of consumption and differ only in the factor applied.

    Do both scope 2 totals have to be reported?

    Yes, whenever the company operates in a market where contractual instruments exist: Scope 2 Guidance section 1.5.1 requires both results to be reported and labelled by method. With no contractual instruments in any market, a single location-based total is reported. CSRD carries the same obligation through disclosure requirement E1-6.

    Does a guarantee of origin reduce my scope 2?

    It reduces the market-based total, never the location-based total, which stays on the average grid factor. The instrument still has to meet the quality criteria: emission rate conveyed, uniqueness, retirement on the company's behalf, closeness in time, same market. Otherwise it is replaced by lower-ranked data.

    Which electricity emission factor should I use for France?

    The France continentale average consumption mix from the ADEME Base Carbone, taking the generation line rather than the total. For 2024 (identifier 43642) that line is 0.035 kgCO2e/kWh out of a 0.0519 total. The upstream line (0.0131), which also carries amortisation of the power station, and transmission and distribution losses (0.0038) fall outside scope 2.

    What is the residual mix and where do I find it?

    The residual mix describes the carbon intensity of electricity that no retired guarantee of origin covers. It prevents the same renewable generation from being claimed twice. In Europe the Association of Issuing Bodies publishes it annually by country: for France, the 2025 results published on 26 May 2026 give 17.11 gCO2/kWh of direct CO2, with 81.94% of consumption untracked.

    How should purchased district heating and cooling be handled in scope 2?

    Like electricity: both methods apply as soon as contractual instruments exist, and the location-based factor must reflect the carbon intensity of the fuels used by the network along with generation efficiency. No reliable generic factor exists: within the single Alsace category, Base Carbone factors valid for 2023 range from 0.004 to 0.455 kgCO2e/kWh.

    Resources

  • GHG Protocol Scope 2 Guidance, 2015
  • ADEME Base Empreinte and Base Carbone open data
  • European Residual Mix, Association of Issuing Bodies
  • ESRS Set 1, EFRAG rendering and SBTi Corporate Net-Zero Standard

    • Conclusion

    Scope 2 is not a choice between two methods, it is built twice. The location-based total measures real exposure to the grid, the market-based total measures what the energy contracts say about that consumption. Reporting both together is a requirement, not an option.

    First action: take your last scope 2 calculation and check, on a single line, which part of the factor was applied, generation or total. It is the most common error and the fastest to fix.

    Talk through your scope 2 with the Kabaun team → www.kabaun.com/en/contact