What is the location-based method for Scope 2?

Quick Answer: The location-based method is an approach to calculating Scope 2 greenhouse gas emissions that uses the average emissions intensity of the electricity grid in the geographic area where energy is consumed. It reflects what is actually being generated and supplied across the grid, rather than any specific electricity product a company has chosen to purchase.

What Is the Location-Based Method?

The location-based method is one of two approaches defined by the GHG Protocol for calculating Scope 2 emissions (the emissions associated with purchased electricity). It uses grid average emissions factors, which represent the average carbon intensity of all the electricity generated within a given region or country.

In practice, this means your Scope 2 figure reflects the typical mix of energy sources on the grid you are connected to: coal, gas, nuclear, wind, solar, and so on. If your national grid is carbon-intensive, your location-based emissions figure will be higher. If the grid is cleaner, it will be lower.

The GHG Protocol requires companies to report both the location-based and market-based method figures when disclosing Scope 2 emissions. This dual reporting requirement has been in place since the GHG Protocol Scope 2 Guidance was published in 2015.

How Does the Location-Based Method Differ from the Market-Based Method?

The key difference between the two methods is what they measure.

The location-based method reflects the physical reality of the grid: the actual average carbon intensity of electricity in your region, regardless of what you have purchased. The market-based method, by contrast, reflects the emissions associated with specific electricity products a company has chosen to buy, such as renewable energy certificates (RECs) or power purchase agreements (PPAs).

A company that purchases 100% renewable electricity through certificates may report near-zero Scope 2 emissions under the market-based method, while still reporting a significant figure under the location-based method, because the physical grid it draws from remains a mix of energy sources.

This distinction matters for two reasons:

Both numbers are necessary for a transparent, GHG Protocol-aligned carbon footprint.

Why Does the Location-Based Method Matter for Your Carbon Footprint?

For many companies, particularly those without renewable energy contracts in place, the location-based and market-based figures will be identical or very close. In these cases, the location-based method is the more straightforward calculation: find the correct grid emissions factor for your country or region, multiply it by your electricity consumption in kWh, and you have your Scope 2 figure.

The quality of the result depends on using the right emissions factor. Grid average factors vary significantly by country and are updated annually. Using an outdated or geographically incorrect factor is one of the more common sources of error in Scope 2 reporting.

For companies operating across multiple countries, each site needs to use the factor that corresponds to its own grid, not a single global or regional average. This is where the data management side of carbon accounting becomes more involved.

Seedling handles this by matching electricity consumption data to the correct grid factor for each location, reducing the manual effort of sourcing and applying the right figures across multiple sites or countries.

What Are the Limitations of the Location-Based Method?

The location-based method is straightforward to calculate, but it has a recognised limitation: it does not reflect the impact of a company's energy purchasing decisions.

If a business invests in a solar PPA or purchases renewable energy certificates, none of that is visible in the location-based figure. The market-based method exists specifically to capture those choices. This is why sustainability frameworks and stakeholders increasingly look at both figures together, rather than treating either one in isolation.

The location-based method also cannot account for time-of-use variation. Electricity grids are more or less carbon-intensive depending on the time of day and season. Some advanced reporting approaches (sometimes called 24/7 carbon-free energy matching) go further than either standard method, but these remain outside the scope of standard GHG Protocol Scope 2 reporting for most companies.

For GHG Protocol compliance, stakeholder reporting, and frameworks like SECR, B Corp, and SBTi, the location-based method remains a required and well-understood component of a credible Scope 2 disclosure.