Scope 2 Under Revision: Stricter Rules, Open Questions
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The Greenhouse Gas Protocol is revising its Scope 2 Guidance as part of its broader update of corporate accounting standards. For sustainability consultants, this is more than a technical adjustment. Scope 2 reporting underpins renewable electricity claims, target-setting strategies, and investor disclosures.
The proposed changes aim to improve credibility and consistency. Whether they resolve deeper structural tensions is less certain.
This article summarises the key developments and practical implications.
Why the Scope 2 Guidance is being updated
Three issues have driven the review.
Accuracy.
Companies can currently buy certificates from generation that could not have physically supplied their operations. Cross-border certificate purchases without interconnection, or matching solar certificates to night-time consumption, have weakened claim credibility.
Impact.
Evidence suggests low-cost certificate markets rarely drive additional renewable investment. Prices are typically too low and too uncertain to influence new build decisions.
Fairness.
In many European markets, renewable capacity is publicly financed via levies or regulated support. Yet voluntary buyers can purchase the associated certificates and claim the renewable attributes.
The revision attempts to respond to these concerns.
Location-Based Method: More Granular, More Structured
Changes to the location-based method are comparatively straightforward.
A hierarchy for emission factor selection is proposed:
- Most spatially granular factor available (e.g. balancing area rather than national).
- Most temporally granular factor available (e.g. hourly rather than annual).
- Preference for consumption-based over production-based factors.
These requirements apply only where factors are publicly available, free to use, and from credible sources. Implementation will be staged.
Implications for consultants:
- Growing need for hourly consumption data (especially for large energy users).
- Increased scrutiny of emission factor databases.
- Clearer internal governance on factor selection.
The direction is towards greater precision — without imposing requirements where data does not exist.
Market-Based Method: Tightening the Framework
The more complex reform concerns the market-based method.
Time and Location Matching
Certificates would need to match both:
- The grid region of consumption.
- The time period of consumption.
This addresses the most visible inconsistencies in the current system.
Standard Supply Service
Electricity supported through mandated schemes or regulated cost recovery would be allocated proportionally to consumers and removed from voluntary certificate markets.
The principle: those who financed renewable generation should retain the attributes.
Residual Mix Reform
If time- and location-based residual mixes are unavailable, a fossil-based fallback factor may apply.
This prevents silent underestimation of non-renewable consumption and creates a clearer incentive for robust procurement.
What Remains Unresolved
Despite these improvements, structural questions persist.
Value chain integrity.
Electricity delivered through a shared grid is a pooled system. Even with time and location matching, claiming exclusive use of a single generation technology remains conceptually challenging within a value chain inventory.
Limited additionality.
The proposal does not require proof of additionality. Companies may choose to match only during low-cost, high-supply periods, limiting potential system impact.
Investor relevance.
A company could contract long-term with a fossil generator, purchase renewable certificates separately, and report zero market-based emissions. Exposure to climate-related regulatory risk would remain invisible in Scope 2 reporting.
In short, the reforms improve procedural rigour but do not fully resolve the tension between attribute markets and value chain accounting.
Consequential Accounting: A Parallel Development
Alongside Scope 2 revisions, the GHG Protocol is exploring consequential accounting.
This would allow companies to report emissions changes caused by specific interventions — for example:
- Enabling new renewable capacity through a long-term PPA.
- Reducing emissions via load shifting.
- Avoiding high-emission infrastructure build-out.
Consequential reporting could provide a clearer channel for impact claims without distorting inventory boundaries.
For consultants, this may become a complementary disclosure alongside traditional inventory reporting.
Practical Considerations for European Consultants
Several operational questions remain.
- Client segmentation: Large corporates may manage hourly data already. SMEs may struggle with increased complexity. Exemption thresholds will be decisive.
- Spatial definitions: European grid regions, bidding zones, and synchronous areas do not always align with national borders. Practical guidance will be essential.
- Communication load: Explaining location-based versus market-based reporting is already demanding. Adding hourly matching increases complexity.
- Claim discipline: Clear distinctions will be needed between purchasing attributes, contracting physical electricity, and causing additional renewable generation.
The language used with clients will matter as much as the methodology.
Outlook
Final Scope 2 guidance is expected in 2027, with further consultations anticipated in 2026.
The likely outcome is not a radical redesign, but a tightening of existing structures: more granularity, stricter matching, and greater transparency.
The core tension between certificate markets and value chain accounting remains.
For sustainability consultants, the priority is preparation:
- Strengthen internal expertise on emission factors and grid structures.
- Monitor developments around additionality and consequential reporting.
- Prepare clients for more technically constrained claims.
Scope 2 reporting is becoming more rigorous. It is not becoming simpler.
Learn more about the Scope 2 guidance by watching the full webinar hosted by Kenneth Van den Bergh (Co-Founder & CEO Carbon+Alt+Delete) & Matthew Brander (professor in Carbon Accounting at the Edinburgh University).
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