The Greenhouse Gas Protocol's proposed Scope 2 Guidance: Key Changes and Considerations for Stakeholders
In late October, the Greenhouse Gas Protocol (GHG Protocol) unveiled updated Scope 2 guidance for companies quantifying and reporting their greenhouse gas (GHG) emissions. These proposed changes, if finalized, could significantly impact how companies plan their renewable energy investments and measure progress toward their climate goals. The main updates include hourly matching of renewable energy purchases and stricter criteria for contractual instruments, as well as a new emission factor hierarchy for location-based methods.
This comprehensive overview highlights the proposed changes and their potential effects on stakeholders. The GHG Protocol invites public feedback on these proposals, with a deadline of December 19, 2025. The article provides a brief background on the GHG Protocol and its role in establishing standards for GHG emissions reporting. It also discusses the existing Scope 2 guidance and the proposed updates, focusing on both location-based and market-based methods.
The GHG Protocol's Corporate Accounting and Reporting Standard categorizes emissions into three scopes, allowing companies to use market-based instruments like RECs and VPPAs for reporting purposes. However, some critics argue that unbundled RECs do not directly reduce GHG emissions, prompting calls for increased temporal and geographic granularity. The proposed Scope 2 updates aim to address these concerns.
The location-based method revisions include a new hierarchy based on spatial boundaries, temporal granularity, and emission factor types. Organizations must use the most precise emission factors accessible, prioritizing location and time matching. The market-based method updates introduce hourly matching requirements for contractual instruments, sourced from 'deliverable' generators. The guidance also clarifies accounting for publicly funded resources and updates residual mix factors.
Implementation measures include exemption thresholds for smaller organizations, load profiles for hourly data approximation, and a phased implementation timeline. The GHG Protocol seeks feedback on these updates, considering feasibility, regional challenges, and administrative considerations. These changes could impact companies' renewable energy claims, requiring them to purchase clean energy within their geographical boundaries and potentially increasing costs or storage investments.
To address concerns about decarbonization impacts, the GHG Protocol plans a consequential accounting framework. This framework would evaluate the benefits of clean energy investments, considering displaced gas generation and overall grid emissions reductions. Stakeholders are encouraged to provide feedback on these proposals, as the finalized guidance will significantly influence companies' energy transition strategies and reporting practices.
