The GHG protocol is a methodology for companies to measure and report their GHG emissions. During the past ten years, the GHG Protocol organisation noticed that companies measured and reported electricity emissions using different methods, which didn’t help comparisons.
Companies have been calculating their GHG emissions using two different methods:
- The location based method, which takes into account emissions from power plants on the grid where the companies are located.
Pro: Shows the regional relationship between companies and power plants.
Con: Only way to reduce emissions is to reduce consumption.
- The market based method, which takes into account emissions from individual power plants not necessarily in the same region.
Pro: Incentive to purchase low carbon emission energy (ex: renewable energy production).
Con: Difficulty to select the right instruments for the GHG inventory.
Early 2015, the GHG Protocol organisation published a “Scope 2 guidance” which is an amendment (an update) of the “Corporate standard” published back in 2004. This new guidance contains three main features:
- Companies should now report emissions using both methods (location-based and market-based). This makes GHG accounting complete and transparent.
- The GHG Protocol introduced the “Quality Criteria” for the market-based method. Companies can verify if their contractual instruments meet these new criteria for the market-based method.
- The GHG Protocol issued recommendations on what companies should disclose about their electricity consumption: power plant features, policy context etc. This allows a better understanding of the different electricity markets around the world.
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