Revisions to Scope 2 Emissions Reporting: GHG Protocol Consultation Opens

The GHG Protocol is consulting on updates to its guidance on Scope 2 emissions, the indirect greenhouse gas emissions from purchased electricity, steam, heat, or cooling. The consultation, which is open until 19 December 2025, aims to make emissions reporting more accurate, transparent and analogous for organisations worldwide.

On 20 October 2025, the GHG Protocol launched a 60-day public consultation seeking views on proposed updates to its corporate suite of greenhouse gas (GHG) emission reporting standards. The proposals (out for consultation) have the stated aim of improving the accuracy, transparency and comparability of emissions reporting through an update to the decade-old Scope 2 Guidance (2015).

The Scope 2 consultation is open until 19 December 2025 and will we suspect be of particular interest to generators, electricity suppliers and major energy users.

Who will the changes impact if implemented and how will emissions reporting change?

The GHG Protocol standards are the global benchmark for GHG emissions reporting.[1] 

Any updates to the Scope 2 Guidance will therefore impact organisations across the globe who voluntarily align their carbon emissions reporting to the GHG Protocol standards, and organisations operating in markets where reporting emissions is mandated under law, for example companies in the UK captured by the Streamlined Energy and Carbon Reporting framework and the EU via the Corporate Sustainability Reporting Directive. 

Practically, the proposed changes will from a GB perspective (if implemented) potentially require an evolution in certain aspects of the renewable energy market, and additional compliance burden, but also new and sharper pricing signals for reliable clear power (or equivalent) that can reliably offer time-matched clean energy. 

What is changing?

While the structure of Scope 2 reporting is intended to remain the same, the aim is to revamp the calculation of Scope 2 emissions through changes to the location-based and market-based methods. It is hoped that introducing greater temporal and spatial granularity to physically link emissions from electricity generation processes to the reporter’s value chain will closer align reported emissions with actual grid operations. 

1. Location-Based Method (LBM): improved precision and accuracy

The consultation outlines proposals to refine the LBM to ensure that reported emissions reflect generation of electricity actually delivered to the location of use. 

The proposed updates to the LBM include:

• Emissions factor hierarchy: the proposals include a mechanism to prioritise emissions factors using the most precise location information available first (spatial boundary) over the time matching (temporal granularity). The hierarchy prioritises consumption-based factors to approximate the mix of resources used, including imports and exports, above production-based factors which are calculated using an average of the generation resources within a region. It is hoped that the proposals will promote consistency in reporting.

• Accessible data requirement: a new concept of accessibility is proposed, to ensure that data is publicly available, free and from credible sources. This will prevent organisations from using factors which are not freely available. Guidance on sources deemed ‘credible’ will be developed in due course.

• Matching activity data: reporters must use the most precise location-based emission factors accessible to them whilst matching these to the precision of their activity data. For example, if an organisation can access hourly emission factors but only annual activity data, they will be required to report on annual emissions factors.

• Feasibility measures: to support the feasible implementation of the updates by reporting organisations, the consultation includes options for improving the LBM by including load profiles and an option for phased implementation of the updates.  

2. Market-Based Method (MBM): strengthening credibility

Proposed revisions to the MBM aim to ensure that renewable energy claims are grounded in physical reality. The intention is to ensure closer alignment between how grids operate and the impact of Scope 2 reporting on supporting climate action. The hourly and deliverability requirements could create sharper pricing signals for renewable energy production in locations or times where renewables are lower. Hourly pricing signals for renewable electricity could also create additional financial incentives for energy storage technologies and demand response technologies which are essential for the decarbonisation of the electricity sector. 

Key proposals to update the MBM include:

• Temporal correlation: updating the Scope 2 Quality Criteria 4, to ensure that all contractual instruments used in MBM, such as historically REGOs, are issued and redeemed contemporaneously on an hourly basis with the energy consumption the instrument is applied to, unless an exemption applies (which is something many have been pushing for for a while). 

• Market boundaries and deliverability requirements: by updating the Scope 2 Quality Criteria 5 to ensure that all contractual instruments used are sourced from the same market in which the entity’s electricity consumer’s operations are located or otherwise meet deliverability criteria such as (i) price-based indications of available transmission capacity between adjacent grids or (ii) contracts/instruments showing physical delivery from generation to load. 

• Standard supply service (SSS): new guidance for SSS, the regime which aims to ensure that electricity from publicly funded, mandated or shared resources are accounted for, and a requirement that a reporting entity shall not claim more than its pro-rata share of SSS.

• Residual mix composition and boundaries: the factor reflects a default value for any electricity use not covered by contractual instruments which meet the quality criteria. The updates aim to reflect the GHG intensity of electricity within the market boundary and time interval that is not claimed via contractual instruments and provide a new requirement for the use of fossil-based emission factors where residual mix emission factors are not available.

Who will be most affected?

Scope 2 Reporters

Those reporting their Scope 2 emissions may find that there is an increased resource requirement for reporting on a more granular level, however the use of load profiles may help bridge gaps. Separately, the use of temporally based requirements may increase the effectiveness of instruments such as granular renewable energy tags to drive reductions in GHG emissions, as energy consumers are driven to ensure that their emissions claims are more aligned with the actual state of the energy on the grid at the time of the consumption. 

Separately, the LBM may mean that organisations in regions where electricity is sourced to the grid through higher carbon-intensive processes may see their Scope 2 emissions increase. Further, the proposals to calculate uncovered loads by using residual mix or fossil fuel factors could raise reported emissions if organisations are not able to cover their consumption via contractual instruments.

This is particularly relevant for large energy users, such as data centre operators, vertical farming operators and manufacturers. Electricity use is typically the largest source of Scope 2 emissions for such companies and therefore a move (among other things) to more granular matching requirements could have a significant impact on renewable energy procurement and the pricing of renewable output from intermittent sources outside of wholesale power markets. 

Electricity Generators

We anticipate that electricity generators will also be watching the outcome of the consultation closely, particularly any proposals around hourly matching of output with consumption as this may lead to revised and sharper pricing signals for reliable clean electricity (or equivalent propositions).

Next Steps

The consultation period is open until 19 December 2025 and we recommend that all interested stakeholders review the consultation and respond to it.

The revised standard is then expected to be finalised in late 2027 and is intended to be brought in via phased implementation.

Please do get in contact with our market leading Energy and Utilities team if you have any questions in relation to the consultation or how it might impact you. 

This article was written by Alec Whiter and Sasha Anisman.