Major Scope 2 Accounting Changes: What Businesses Must Prepare For

Corporate electricity emissions accounting is entering a significant period of change.

The Greenhouse Gas Protocol is revising its Scope 2 Guidance, potentially changing how organisations calculate emissions from purchased electricity and substantiate renewable energy claims. The proposed revisions focus on improving the connection between reported emissions, the time electricity is consumed and the electricity grid from which it is supplied.

For businesses, these changes could affect carbon inventories, renewable electricity contracts, science-based targets and reported progress towards net zero. For investors, they could alter how corporate climate performance is assessed across portfolios.

Although the revised GHG Protocol standard has not yet been finalised, organisations should begin preparing their data, contracts and reporting systems now.

What are Scope 2 emissions?

Scope 2 emissions are indirect greenhouse gas emissions associated with purchased or acquired energy consumed by an organisation.

They normally include:

• Purchased electricity
• Purchased steam
• Purchased heating
• Purchased cooling

The emissions physically occur at the facility where the energy is generated, rather than at the organisation’s own site. However, they are included in the consuming organisation’s greenhouse gas inventory because its energy demand contributes to those emissions.

For many service businesses, retailers, technology companies and commercial property operators, purchased electricity represents a substantial proportion of their operational carbon footprint.

How are Scope 2 emissions currently calculated?

The existing GHG Protocol Scope 2 Guidance uses two principal accounting methods.

Location-based method

The location-based method calculates emissions using the average emissions intensity of the electricity grid in the location where consumption occurs.

For example, a UK organisation may calculate its location-based emissions by multiplying electricity consumption in kilowatt-hours by an appropriate UK grid electricity emissions factor.

This method reflects the emissions intensity of the physical electricity system supplying the organisation.

Market-based method

The market-based method reflects electricity procurement choices and contractual instruments.

These instruments can include:

• Renewable Energy Guarantees of Origin in the UK
• Guarantees of Origin in Europe
• Renewable Energy Certificates in North America
• Power purchase agreements
• Green electricity tariffs
• Supplier-specific emissions factors

Under the existing approach, organisations can often match renewable energy certificates or contractual instruments against annual electricity consumption.

This means electricity consumed throughout a year may be matched with an equivalent quantity of renewable electricity generated at different times within that reporting period.

Why is the GHG Protocol changing Scope 2 accounting?

The present system has helped organisations report renewable electricity purchases, but it has also attracted criticism.

Annual matching can conceal important differences between when renewable electricity is generated and when electricity is consumed.

A company may consume electricity during hours when the grid depends heavily on fossil-fuel generation while purchasing certificates associated with renewable electricity generated during periods of abundant clean power. The total annual megawatt-hours may match, but the organisation’s consumption and renewable generation may not align in real time.

Geographic differences create another issue. A contractual instrument sourced from a relatively clean electricity region may be applied to consumption occurring in a more carbon-intensive grid, depending on the market boundaries and rules involved.

The proposed Scope 2 changes are intended to make renewable electricity claims more closely reflect the temporal and geographic characteristics of electricity consumption.

What Scope 2 accounting changes are being considered?

The GHG Protocol consultation proposed substantial revisions to both location-based and market-based reporting.

The most significant proposals concern hourly matching, deliverability, emissions-factor precision and the treatment of existing contracts.

1. Hourly matching of electricity consumption

Under annual matching, an organisation compares its total annual electricity use with the total volume of renewable electricity instruments purchased during the year.

Under hourly matching, the organisation would need to demonstrate that eligible renewable electricity generation occurred during the same hours in which its electricity was consumed.

For example, renewable generation recorded at midday would not automatically cover electricity consumed overnight.

This concept is often described as:

• Hourly matching
• Temporal matching
• 24/7 carbon-free energy matching
• Time-based energy attribute matching

Hourly matching could provide a more accurate picture of whether an organisation’s electricity demand is supported by clean generation throughout the day.

However, it would also require significantly more detailed data.

Organisations may need access to:

• Hourly or sub-hourly electricity consumption
• Smart-meter data
• Time-stamped renewable generation data
• Energy attribute certificate records
• Data covering individual sites and electricity markets
• Controls linking consumption records to contractual instruments

2. Geographic deliverability requirements

The proposed rules also examine whether renewable electricity should be considered geographically deliverable to the location where electricity is consumed.

In practical terms, an organisation may no longer be able to purchase certificates from a distant or unconnected electricity market and use them to support a renewable electricity claim elsewhere.

The relevant geographic boundary could depend on:

• National electricity markets
• Regional transmission systems
• Grid interconnections
• Electricity bidding zones
• Demonstrated physical deliverability

The final requirements have not yet been confirmed. The principle, however, is clear: the renewable generation used in market-based accounting should have a credible relationship with the electricity system serving the consuming facility.

3. More precise location-based emissions factors

The proposed revisions could also strengthen location-based accounting by requiring organisations to use the most precise accessible emissions factor for which matching activity data is available.

Instead of relying only on a broad national annual average, organisations may increasingly need to consider:

• Regional grid factors
• Supplier or grid-area information
• Time-specific emissions factors
• Electricity import and export patterns
• Hourly load profiles

This could improve accuracy but make data collection and calculation more complex, particularly for organisations operating across multiple sites or countries.

4. Possible treatment of legacy contracts

Many organisations have entered long-term renewable electricity contracts under the current Scope 2 rules.

The GHG Protocol has therefore considered whether a legacy or grandfathering mechanism should apply to qualifying contracts agreed before the revised requirements take effect.

This remains an important area of uncertainty.

Businesses should not assume that every existing certificate, green tariff or power purchase agreement will automatically remain eligible. Contract dates, terms, generation sources, data availability and market boundaries may all become relevant.

5. Separation of inventory accounting and avoided-emissions impact

Another important development is the distinction between corporate emissions inventories and the broader impact of electricity procurement.

Scope 2 inventory accounting allocates emissions associated with purchased energy to an organisation.

Consequential accounting asks a different question: what emissions were caused or avoided because of a particular action or investment?

A renewable energy project in a carbon-intensive grid may avoid more emissions than a similar project in a grid that already has extensive low-carbon generation. However, avoided emissions are not necessarily the same as reductions within a company’s formal Scope 2 inventory.

This distinction matters because businesses may need to report separately:

• Their formal Scope 2 emissions
• Progress against corporate targets
• Renewable electricity procurement
• Wider avoided-emissions impacts
• Contributions to new renewable energy capacity

Clear separation can reduce misleading claims and improve the credibility of climate disclosures.

What do the Scope 2 changes mean for businesses?

The proposed revisions could affect far more than the calculation formula used in an annual carbon report.

Carbon footprints may change

A company that currently reports very low market-based Scope 2 emissions through annual renewable certificate purchases may report a different result under hourly and deliverability requirements.

The company’s physical electricity consumption may remain unchanged, but the eligibility and timing of its contractual instruments could change.

Existing climate targets may require reassessment

Organisations with 2030 electricity or net-zero targets should examine whether their current procurement strategy would remain effective under revised accounting rules.

Targets based primarily on annual certificate matching may need stronger supporting evidence or different procurement mechanisms.

Electricity procurement may become more strategic

Procurement teams may need to consider:

• Where renewable electricity is generated
• When it is generated
• Whether generation corresponds with consumption
• Whether the project adds new renewable capacity
• Whether hourly data is available
• Whether certificates meet revised quality criteria
• Whether contractual terms remain valid under future standards

Renewable electricity procurement may therefore become a joint responsibility involving sustainability, energy, finance, procurement, legal and data teams.

Reporting systems will require more granular data

Annual electricity totals may no longer be sufficient for leading Scope 2 accounting practices.

Organisations should assess whether their systems can collect and retain:

• Site-level electricity consumption
• Meter-level information
• Hourly consumption profiles
• Supplier-specific contractual data
• Certificate serial numbers and retirement evidence
• Generation technology and location
• Contract start and end dates
• Relevant electricity market boundaries

Climate claims will receive greater scrutiny

Statements such as “100% renewable electricity” or “zero Scope 2 emissions” may require more precise qualification.

Businesses should clearly distinguish between:

• Electricity physically supplied through the grid
• Renewable electricity purchased contractually
• Location-based emissions
• Market-based emissions
• Hourly matched electricity
• Avoided emissions
• Investment in new renewable generation

Claims that fail to make these distinctions may create greenwashing, assurance and reputational risks.

What do the changes mean for investors?

Investors frequently use reported emissions and climate targets to evaluate corporate transition performance.

Changes to Scope 2 rules could affect this analysis in several ways.

Historical performance may become less comparable

A company’s reported Scope 2 emissions could increase after adopting revised accounting rules, even where its electricity consumption has not increased.

Investors will need to distinguish between:

• Genuine operational deterioration
• Methodological changes
• Improved data quality
• Changes in certificate eligibility
• More precise geographic or temporal accounting

Renewable electricity claims may require deeper analysis

A low market-based emissions figure does not automatically demonstrate that a company is driving electricity-system decarbonisation.

Investors may need to examine the quality of the company’s procurement, including:

• Additionality
• Contract duration
• Generation location
• Time matching
• Technology type
• Contribution to new capacity
• Dependence on low-cost unbundled certificates

Portfolio emissions could be affected

Changes in corporate Scope 2 reporting may flow into financed-emissions calculations, portfolio carbon intensity metrics and climate benchmarks.

Asset managers and financial institutions should prepare for potential restatements or breaks in historical datasets.

Engagement questions will need to become more specific

Investors can ask portfolio companies:

1. Does the company report both location-based and market-based Scope 2 emissions?
2. What proportion of electricity consumption is supported by contractual instruments?
3. Are renewable electricity purchases geographically deliverable?
4. Can electricity consumption and renewable generation be matched hourly?
5. How much procurement supports new renewable capacity?
6. Are existing contracts likely to meet revised GHG Protocol requirements?
7. Has the company assessed the effect of revised accounting on its climate targets?
8. Are material climate claims independently assured?

These questions provide more insight than relying on a single renewable electricity percentage.

How does this connect with the SBTi Corporate Net-Zero Standard V2.0?

The Science Based Targets initiative published Corporate Net-Zero Standard Version 2.0 in June 2026.

The updated standard strengthens the treatment of Scope 2 emissions and increases transparency around electricity procurement. It recognises hourly matching as an emerging leadership practice while acknowledging that the systems, data and market infrastructure needed for universal hourly matching are not yet equally available in every region.

The SBTi and GHG Protocol are separate organisations with different functions:

• The GHG Protocol establishes greenhouse gas accounting and reporting methodologies.
• The SBTi establishes criteria and pathways for science-based emissions-reduction targets.

Their standards need to work together. Companies setting or renewing science-based targets should therefore monitor both frameworks rather than treating Scope 2 accounting and target validation as separate exercises.

Scope 2 implementation timeline

The first GHG Protocol Scope 2 consultation opened in October 2025 and closed on 31 January 2026 after an extension.

The GHG Protocol is reviewing stakeholder feedback and continuing the standards-development process. Publication of the revised Scope 2 standard is expected in 2027, although final requirements and implementation dates remain subject to the formal approval process.

Businesses should avoid presenting the consultation proposals as final mandatory rules.

A sensible planning assumption is that more granular, transparent and geographically credible electricity accounting is coming, even though some technical provisions may change before publication.

What should organisations do now?

Waiting for the final standard would create unnecessary implementation risk.

1. Map electricity consumption

Create an inventory of all sites, meters, landlords, suppliers, tariffs and electricity contracts.

Record which facilities have half-hourly or hourly meter data and identify sites where consumption is estimated.

2. Review renewable electricity contracts

Examine power purchase agreements, green tariffs, renewable certificates and other contractual instruments.

Identify:

• Generation source
• Generation location
• Certificate market
• Contract duration
• Retirement arrangements
• Data granularity
• Evidence of generation
• Potential geographic-deliverability issues

3. Calculate both Scope 2 methods

Continue reporting both location-based and market-based Scope 2 emissions where required.

Do not rely exclusively on a market-based result when evaluating operational exposure to grid emissions.

4. Test an hourly calculation

Select a major facility and conduct a pilot analysis using hourly electricity consumption.

Compare the consumption profile against available renewable generation or certificate data. This will expose data gaps before new requirements take effect.

5. Assess target sensitivity

Model how corporate emissions and target performance could change under different scenarios.

These may include:

• Current annual matching
• Monthly matching
• Hourly matching
• Stricter geographic matching
• Exclusion of certain certificates
• Changes to supplier-specific emissions factors

6. Strengthen governance

Assign clear responsibility across sustainability, procurement, facilities, finance, legal and data teams.

Scope 2 reporting should not depend on a single annual spreadsheet assembled shortly before disclosure deadlines.

7. Review public claims

Check whether statements concerning renewable electricity, carbon neutrality or zero Scope 2 emissions accurately describe the accounting method and contractual evidence used.

Remove claims that cannot be supported by traceable data.

How Sustainzone can support Scope 2 readiness

Sustainzone helps organisations prepare for changing carbon-accounting and electricity-reporting requirements.

Our support can include:

• Scope 2 inventory assessment
• Location-based and market-based calculations
• Electricity and meter-data validation
• Renewable tariff and certificate reviews
• Scope 2 data-gap analysis
• Hourly matching readiness assessments
• Climate-target sensitivity modelling
• Carbon-reporting controls
• Evidence and audit-trail development
• Renewable procurement strategy
• Green-claims reviews
• Scope 1, Scope 2 and Scope 3 reporting support

The objective is not simply to produce a carbon figure. It is to establish a transparent, repeatable and defensible reporting process that can adapt as standards evolve.

Frequently asked questions

Are the new Scope 2 rules already mandatory?

No. The GHG Protocol is still revising its Scope 2 standard. Consultation proposals should not be treated as final requirements. The revised standard is expected in 2027, subject to the standards-development and approval process.

What is hourly matching in Scope 2 accounting?

Hourly matching means matching electricity consumption with eligible renewable electricity generation or contractual instruments during the same hour, rather than balancing total consumption and procurement over an entire year.

Will renewable energy certificates still be accepted?

Renewable energy certificates are unlikely to disappear, but their eligibility may depend on stronger temporal, geographic and quality criteria. The final requirements have not yet been confirmed.

What is the difference between location-based and market-based Scope 2 emissions?

Location-based emissions reflect the average emissions intensity of the electricity grid serving the organisation. Market-based emissions reflect eligible contractual electricity purchases, supplier products and energy attribute instruments.

Could a company’s reported emissions increase?

Yes. Reported market-based emissions could rise where existing instruments do not meet revised hourly, geographic or quality requirements. This would not necessarily mean that physical electricity consumption had increased.

Do small businesses need hourly electricity data?

Final applicability and potential exemptions have not yet been determined. However, businesses should determine whether hourly or half-hourly data is available and improve their electricity records where feasible.

How will Scope 2 changes affect investors?

The changes could affect corporate emissions data, portfolio comparisons, financed-emissions calculations and assessments of renewable electricity claims. Investors may need to analyse procurement quality rather than relying only on reported market-based emissions.

When should businesses start preparing?

Businesses should begin preparing now by mapping meters, reviewing contracts, improving electricity data and testing how more granular accounting could affect reported emissions and climate targets.

Conclusion

Scope 2 accounting is moving towards greater precision, transparency and connection with the physical electricity system.

Annual renewable electricity matching has enabled widespread corporate participation in renewable energy markets, but it does not always show whether clean electricity was available when and where consumption occurred.

The proposed GHG Protocol revisions seek to address this through hourly matching, geographic deliverability and improved emissions-factor requirements.

The final rules remain under development. The direction of travel, however, is established.

Organisations that improve their electricity data, evaluate renewable procurement quality and assess their exposure now will be better positioned to maintain credible climate targets and disclosures under the revised framework.