Updates to the GHG Protocol Scope 2 Guidance

The Greenhouse Gas (GHG) Protocol, the most commonly used standard of global carbon accounting, is evolving. For the first time in over a decade, the GHG Protocol organization, which is a partnership between the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), is starting to revise how organizations calculate and disclose GHG emissions. These initial updates focus on the GHG Protocol Scope 2 Guidance document. This guidance is incorporated into the Corporate Accounting and Reporting Standard by reference. Scope 2 emissions are those tied to the energy companies purchase from utilities rather than generating the energy themselves. Because electricity markets and renewable energy products have evolved significantly in recent years, the GHG Protocol is updating its guidance to reflect these changes. These changes are the start of a broader effort to bring harmony between the GHG Protocol and International Standard Organization (ISO) standards which have recently announced a strategic partnership. This blog will outline the changes to the GHG Protocol Scope 2 guidance document and how this will affect carbon accounting moving forward.

What Are Scope 2 Emissions?

Scope 2 emissions encompass the indirect emissions of purchased electricity, steam, heat, or cooling. These emissions do not include GHG emissions generated from a company’s own operations or vehicles.  Accurately reporting this data helps organizations make smarter energy purchase choices, where to source power, where to improve efficiency, and where their actions can make the biggest difference.

There are currently two different calculation methodologies for calculating Scope 2 emissions:

• Market-based Methodology: This calculation methodology reflects the emissions from the specific energy contracts with a company and includes any renewable energy credits (REC) in the contracts.
• Location-based Methodology: This calculation methodology reflects the average emissions from the local electricity grid and does not include RECs.

What’s Changing in the GHG Protocol Scope 2 Guidance Document?

The proposed updates aim to bring the GHG Protocol up to speed with the rapidly transforming grid, markets overflowing with RECs, and businesses under mounting pressure to tell a clearer climate story and to better align with ISO 14064 standards.

Key updates include:

• Location-based method emissions factor hierarchy
• Market-based method updates
  • Hourly matching and deliverability of contractual instruments used in the market-based method
  • Standard Supply Services (SSS) guidance
  • Residual mix emissions factors

The updates to location-based method emissions factor hierarchy add the “use of most precise location-based emissions factor accessible for which activity is also available” as a requirement. Accessible in this context means publicly available data that is free. This update would require companies to select an emissions factor that is the most “precise” to their area and activity data. For example, if there is an option between a national and local emissions factor the local emissions factor should be selected since it is the most precise data for the local grid. If there are emissions factors provided on an hourly and annual basis, a company should select the hourly factor since it is the most “precise,” but only if the activity data (e.g., electricity consumption) is also provided on the same cadence.

The goal of the updates to the market-based methods is to better align the GHG reduction claims with climate action as well as reduce the risk of double counting. In the revisions, any contractual instruments such as virtual power purchase agreements (VPPA) or RECs would be subject to hourly matching. Hourly matching is used to align a company’s clean energy purchases with its electricity consumption on an hourly basis rather than an annual basis. Accessibility to data at this frequency can be difficult, so the revisions allow companies to use load profiles to calculate these emissions retroactively and not in real time. There will be an exemption for smaller companies that do not have the capacity for this type of calculation, with the exact exemption to be determined after the public comment period.

There will also be bounds or limits on what electricity is considered to be plausibly part of the grid serving the company depending on where it is located. This will revise the current boundaries from being national borders to now being based on market boundaries, since some grids reach across national borders.

Under the current GHG Protocol, there was no detailed rule around Standard Supply Services (SSS). The goal of the SSS guidance is to ensure transparency of clean energy credits and prevention of double counting of these credits across multiple organizations. An entity purchasing clean energy from a utility provider can now only take credit for their proportional share of the clean energy. If a company wants to have more clean energy produced it must purchase additional clean energy credits.

The final revisions to the standard updates the residual mix emissions factors usage. This is to also avoid double counting of clean energy credits in the emissions factors and in contractual agreements. These revisions to the GHG Protocol guidance would eliminate the option to use grid-average emissions factors when no residual mix is available. When calculating market-based emissions, this must remove all claimed clean energy credits from the emissions factor. If there is no factor with the claimed clean energy credits removed, then a company will need to assume all the energy came from fossil fuel sources. This is to improve accuracy and transparency when disclosing information about energy sources and purchases.

Please note that all of these revisions are subject to change during the public comment period and are not considered final at this point.

How Could This Affect Companies’ GHG Goals?

For companies with active reduction plans or net-zero targets that utilize clean energy credits, these updates could shift how progress is calculated and communicated in the future. Organizations that rely heavily on RECs, for instance, may see changes in how their reductions are represented.

Potential impacts include:

• Changes in future Scope 2 emission totals based on revised rules
• More credibility of clean energy claims
• Reevaluation of clean energy credits for GHG emissions reduction pathways

This may be of concern for some companies that currently have clean energy credit or VPPA contractual agreements, but the GHG Protocol is proposing to have a legacy clause that would allow Scope 2 emissions reductions from existing contractual agreements to be properly recognized. This again will not be finalized until after the public comment period.

The alignment with ISO standards could simplify what has long been a tangled web of overlapping sustainability frameworks. A more unified approach means fewer redundancies, less confusion, and a clearer path toward credible, science-based progress. Overall, the goal is not to penalize companies but to improve comparability, reliability, and integrity in emissions reporting across the global economy.

What’s Next?

The GHG Protocol team has opened public comment until January 31, 2026. This allows for businesses, academia, policymakers, and sustainability professionals around the world to provide feedback on the proposed revisions. This open dialogue will shape the next evolution of the standard, with final updates expected in late 2027, but there is expected to be a phased approach with the implementation to ease reporting burdens. In the meantime, companies should begin:

• Reviewing current Scope 2 reporting processes
• Evaluating the role of RECs and renewable procurement programs
• Assessing data sources for completeness and quality
• Considering how updated guidance may affect targets and disclosures
• Ensuring contracts have clauses about the precision of the data provided
• Consider commenting on the standards to make them more appropriate for specific needs

It would be wise for companies to look inwards, reviewing their reporting process, understanding how their data is sourced, and identifying where these updates might ripple through their systems. Those that start preparing now will be better positioned for a smoother transition later.

The GHG Protocol Scope 2 updates signal a major milestone in the evolution of global climate reporting. By strengthening data quality, aligning methodologies with ISO standards, and clarifying renewable energy accounting, these revisions aim to create more transparent, credible, and globally consistent foundation for GHG disclosures. Climate reporting is no longer just about what is emitted, it’s about how we account for it, how we learn it, and how we build trust through transparency. Change always comes with adjustment, but in this case, it feels like progress.

ALL4 will continue to follow the changes to GHG Protocol standards closely, helping our clients navigate the evolving landscape of GHG reporting. For more information or support on preparing for the upcoming changes, please contact Daryl Whitt at dwhitt@all4inc.com, Louise Shaffer at lshaffer@all4inc.com or your ALL4 project manager.