Market-based method
The Market-based method is a Greenhouse Gas Protocol approach for quantifying Scope 2 emissions from purchased energy using emission factors associated with qualifying contractual instruments or supplier-specific information. It reflects the electricity products and suppliers an organization has chosen, subject to the Scope 2 quality criteria, data hierarchy, and residual-mix rules.
In simple terms
Under the Market-based method, a reporter matches purchased energy with information conveyed through contracts or instruments, such as supplier products, power purchase agreements, or energy attribute certificates. Each instrument must meet the applicable quality criteria. If qualifying product or supplier data are unavailable, the current hierarchy may lead to residual-mix or other prescribed factors. The method represents contractual claims, which can differ from the physical generation mix serving the site. Where market-based reporting applies, the Greenhouse Gas Protocol requires the organization to report a Location-based method result as well.
Why it matters
The method makes procurement choices visible in a Scope 2 emissions inventory and can distinguish contracted electricity attributes from grid averages. Comparability depends on transparent instrument quality, geographic and time matching, factor selection, and disclosure of both results. A lower market-based total does not by itself show that a purchase caused new renewable generation or reduced emissions outside the inventory boundary.
Example
For example, a fictional company buys electricity for several sites and retires qualifying energy attribute certificates for part of that use. It applies the certificates’ eligible factors to the matched volume, follows the hierarchy for unmatched consumption, and reports the resulting market-based total beside its location-based total.
How it differs
Location-based method
The Market-based method uses qualifying contractual and supplier information for purchased energy; the Location-based method uses average generation emission factors for the geographic grids where consumption occurs.
References
Current status
- As of
- Issuer
- Greenhouse Gas Protocol
- Instrument or version
- GHG Protocol Scope 2 Guidance (2015)
- Status
- The current published method is in the 2015 Scope 2 Guidance; the guidance is undergoing revision.
Applicability: Organizations with operations in markets offering qualifying contractual instruments apply dual reporting and use the current quality criteria and data hierarchy.