One of the key functions of sustainability reporting software like Envizi is to calculate emissions. To do so, we are guided by The Greenhouse Gas Protocol (GHG Protocol) as it is the most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions. For organizations aiming for Net Zero, understanding how to account for reduced emissions from green power purchases is essential.
The GHG protocol classifies emissions into three scopes for measurement and reporting, Scope 1, 2 and 3. Scope 2 emissions relate to emissions released to the atmosphere from purchased energy, including electricity from the grid or offsite solar or windfarms.
Changes to the GHG protocol in 2015 mean that for most companies, scope 2 reporting is no longer one number, it is two. The methods used for scope 2 accounting are:
- The location based method, which reflects the average emissions intensity of grids (using mostly grid-average emissions factor data), and
- The market-based method which reflects emissions from electricity that companies have purposefully chosen. It derives emissions factors from contractual instruments, which include any type of contract between two parties for the sale and purchase of energy bundled with attributes about energy generation, or for unbundled attribute claims.
CDP requires both numbers, and GRESB allows for market-based numbers. The market-based calculation method is essential for companies working towards Net Zero as it provides organisations with a mechanism to have their ‘green’ electricity purchases recognised. If you are interested in more detail on how to do this, you can read more on our blog post Are you Getting Recognized for your Green Power Purchases?
Reference: GHG Protocol Scope 2 guidance, WRI Greenhous Gas Protocol