Proposed changes to the GHG Protocol scope 2 guidance

In October 2025, the Greenhouse Gas Protocol (GHG Protocol) released new draft guidance around scope 2 emissions accounting, proposing significant amendments to the current standard. These revisions are expected to come into effect in 2027. How can companies start considering potential impacts on their GHG emissions accounting and decarbonisation strategies, and prepare for the new requirements?

Five key proposed changes to scope 2 guidance:

1. Location-based methodology to consider more precise location and time-matching requirements
2. Market-based methodology to require hourly time matching for contractual instruments
3. Market-based methodology to require that contractual instruments be sourced from the same market or geographic boundary
4. Updates to residual mix factors and the introduction of standard supply service method
5. New measures to aid feasible implementation

1. Changes to location-based methodology

Proposed change: Use the most geographically specific and time-precise emission factors accessible for which electricity consumption data is also accessible.

The new location-based method hierarchy prioritises calculating emissions based on the geography and time of power generation. The most precise method in the hierarchy involves hourly matching within a more localized geographic boundary where power is directly delivered.

• If both consumption data and emission factors are available at this level of granularity, companies should use this to report location-based emissions. If not, organisations may consider using alternative geographic and time boundaries in the hierarchy. GHG Protocol prioritises accessible, or public and freely available from a credible source, emission factors.
• Companies will need to prepare for an increase in data collection and reporting workloads. They must determine if they can acquire the necessary data to match power usage with power generation in the same time and geographic area. Further, they will need to understand which emission factor resources are available for their specific situation.

2. Market-based methodology hourly matching requirement

Proposed change: Use hourly matching of contractual instruments in market-based scope 2 calculations.

Contractual instruments (eg renewable energy credits, power purchase agreements) would be issued and redeemed for the same hour as the energy consumption to which they are applied. This will introduce new challenges for contractual instrument providers and their clients, as they must track, document and manage hourly data.

• Companies will need to prepare for hourly matching and engage with power providers and contractual providers to ensure they can provide reliable hourly data.
• Organisations should prepare for an increase in internal workload and data management capabilities to handle hourly data.

3. Market-based methodology geography matching requirement

Proposed change: Increased requirements around the contractual instruments’ geographical origin.

Under this proposal, contractual instruments would be sourced from within the same market boundary (ie grid region) as the energy consumption to which the instrument is applied.

How market boundaries are drawn varies from region to region; companies will need to examine the requirements for each country and grid region in which they operate. In Europe, boundaries will likely correspond to national boundaries with some sub-national exceptions. Other countries, such as the United States, may have new market boundaries with significant implications. Currently, power users in the US can purchase contracts from anywhere in the contiguous US, but the new guidance could split the lower 48 states into as many as 22 subregions. The US grid boundaries are still to be determined during the proposed revision consultation period

• Companies will need to ensure that contractual instrument suppliers are within the corresponding grid regions and can provide hourly-matched certificates.
• Companies will need to examine the requirements for each country and grid region in which they operate.
• Companies should compare the proposed US grid boundaries and be prepared to develop more-localised contractual instrument supply chains.

4. Introduction of standard supply service (SSS) and changes to residual mix factors

Proposed change: Amendment to how companies determine market-based scope 2 emissions after accounting for contractual instruments, including public SSS resources and residual mix factors.

In scope 2 accounting, SSS refers to electricity from publicly funded, mandated, or shared resources. The new guidance specifies that companies may only claim up to the proportional share of SSS generation; for example, if renewable energy accounts for 20% of SSS generation in the region, then a company could claim up to 20% of its consumption as zero emissions.

Once companies account for SSS and contractual instruments, the new guidance requires the use of residual mix emission factors, which deduct contractual instruments from the generation mix. Currently, if residual mix emissions factors are unavailable, companies are allowed to use the location-based method emissions factor. Under the new guidance, organisations are required instead to assume an entirely fossil-based generation mix if other residual mix emissions factors are unavailable.

• Companies should start identifying residual mix emissions factor resources or prepare for the more conservative all-fossil assumption in their scope 2.

5. Feasibility measures to aid implementation

Proposed change: Feasibility measures to help reduce the burden of implementation.

To support feasible implementation, the GHG Protocol has proposed “feasibility measures” for both location-based and market-based methods.

Defining “accessible” emissions factors as free, credible, and publicly accessible is intended as a feasibility measure. Organisations will also be allowed to use load profiles to estimate hourly emissions if hourly consumption data are not available. Another measure to smooth the transition is allowing phased implementation of new requirements over multiple years.

Additionally, feasibility measures specific to the market-based methods have been proposed. The GHG Protocol is considering exemption thresholds that would remove the hourly matching requirements for smaller organisations. Further, a legacy clause would exempt existing long-term contracts that comply with current quality criteria from compliance with the proposed hourly and geographic matching requirements.

Summary

This article outlines five potential changes companies need to be aware of and prepare for in anticipation of the GHG Protocol’s new scope 2 guidance. Although updates are still being finalised, it’s crucial to recognise the significant impact these changes will have on GHG inventories. Early awareness and proactive preparation are essential.

Not sure how these changes will affect your company, emissions report, or strategy? Interested in learning more about electricity sector avoided emissions? Reach out to our experts below with questions or for support to understand what the new draft guidance might mean for your company.