The consultation period for this update began in October 2025 and has a deadline on January 31, 2026. A second consultation period is expected to take place in 2026, where additional topics such as Scope 2 and 3 interactions and purchased steam, heat, and cooling will be discussed. The final update is expected to be published in late 2027, where the GHGP aims to release it as a Standard, not only as a Guidance.
Note: References to emissions in this article denote greenhouse gases
Key concept: Scope 2 relates to emissions caused by a company’s consumption of energy that is produced outside its jurisdictional boundary (e.g., from the power utility). These are the emissions associated with the purchase of steam, heat, cooling, and most notably electricity, the focus of this article.
The consultation period for this update began in October 2025 and has a deadline on January 31, 2026. A second consultation period is expected to take place in 2026, where additional topics such as Scope 2 and 3 interactions and purchased steam, heat, and cooling will be discussed. The final update is expected to be published in late 2027, where the GHGP aims to release it as a Standard, not only as a Guidance.
Reasons for the update
The GHGP is revising both its location-based and market-based Scope 2 Guidance to reflect a decade of market change, stakeholder input, and the need for more accurate, transparent, and comparable corporate electricity emissions reporting. Broadly speaking, the GHGP seeks to address the following concerns:
- Temporal granularity of renewable energy claims. Generated power can currently be matched to consumption at a much later time. In the AIB region, a certificate issued for power generated can be used to cover consumption up to a year after the electricity was produced. This means, for example, that daytime generation can be used to cover nighttime use.
- Unclear geographical boundaries. A concern for certain stakeholders is that in some cases renewable power generated in one region can be claimed in another. For instance, the AIB region in Europe currently operates as a single market, allowing Energy Attribute Certificates (“EACs”) issued in Spain to be claimed and retired in Germany. Because registry boundaries don’t always align with the physical grid interconnections, EACs can travel across regions even if the underlying electrons cannot.
- Additionality concerns. While not mandated in current guidance, some stakeholders argue that many EACs lack additionality, as they derive from existing projects, potentially diluting the incentive for additional renewable investments.
Key concept: EACs represent 1 MWh of renewable electricity. They are referred to differently depending on the region: Guarantees of Origin (“GOs”) in the AIB region; Renewable Energy Certificates (“RECs”) in the US and Canada; and Renewable Energy Guarantees of Origin (“REGOs”) in the UK. Where national schemes are absent, companies rely on voluntary International-REC Standard certifications (“I-RECs”). Some countries have even recently made their own EAC schemes, like China, which uses Green Electricity Certificates (“GECs”) as of 2025.
Key concept: Location-based accounting reflects emissions based on the average carbon intensity of the power grid in which a company operates, regardless of renewable energy purchases. This average intensity is referred to as the location-based emission factor and is applied over the entirety of a company’s power consumed from the grid.
Key concept: Market-based accounting reflects emissions based on the specific electricity products a company purchases (represented with EACs). In practice, this means applying zero or generator-specific emission factors to the portion of electricity covered by contractual instruments and applying the residual mix emission factor (which represents the grid average after removing all claimed renewable energy) to any remaining uncovered electricity consumption.
The GHGP is simultaneously developing the Actions and Market Instruments Guidance to quantify the climate impacts of renewable energy procurement and investments such as avoided emissions or EAC additionality. Both this workstream and the update to the Scope 2 Guidance are being coordinated for publication together in late 2027.
Proposed changes to the Scope 2 Guidance
The GHGP’s proposed changes broadly revolve around implementing more detailed decision criteria and granular market boundaries when calculating Scope 2 emissions under location- and market-based methodologies. Reporting under both accounting methods is, and will remain, a requirement under the GHGP Scope 2 Standard (the dual reporting requirement).
In a nutshell, the proposed update adds greater specificity and constraints to the emission factors and power consumption data companies can use when calculating their Scope 2 emissions. Broadly speaking, the most impactful proposed revisions are the following:
1. Power consumption data collection:
The GHGP aims to introduce hourly-based accounting as the preferred temporal granularity, which necessitates companies to collect power consumption data at this level wherever possible.
If this is not possible, there is a proposed provision that allows companies to collect their power consumption data on a monthly basis, and if that is also not possible, then on a yearly basis. The latter protocol for reporting power consumption reflects the current status quo.
2. Temporal granularity of location- and market-based reporting:
Similarly to how companies should collect power consumption data at the highest temporal granularity possible, emission factors for both location- and market-based accounting should be used at the highest temporal granularity as well.
The GHGP acknowledges that these emission factors should be “publicly available, free to use, and from credible sources”, and thus the temporal granularity of location- and market-based emission factors should be at the highest available level that meet these criteria. When reporting, there may be a mismatch between the granularity of consumption data collected and the available location- and market-based emission factors. In these cases, the lowest shared granularity should be used. For example, a company collects hourly data, but emission factors are available monthly – in this case the hourly data should be aggregated to a monthly granularity and paired with the monthly emission factors.
The GHGP has made one further distinction when using location-based emission factors, where they highlight the preference for consumption-based factors over production-based factors, the latter being the current status quo. Production-based factors reflect the electricity produced in a specific geography and time period, though do not reflect the contributions of electricity imports and exports, or of power storage. Consumption-based factors cover these and thus, more accurately reflect local grid realities.
3. Renewable power procurement:
Many companies procure renewable energy, represented via EACs, through Unbundled EAC contracts, Power Purchasing Agreements, Green Tariffs, and so on. Currently, EACs can be matched to power consumption over a relatively wide timeframe. For instance, Guarantees of Origin (“GOs”) can be retired for consumption that took place up to a year after their issuance (the point at which the renewable power was generated).
The GHGP is proposing to make it mandatory for companies that procure EACs to match their hourly consumption to the generation of the renewable power they purchased (i.e., EAC retirement in the same hour as EAC issuance).
However, it is also proposing a threshold from which certain companies would be exempt from hourly matching of EACs, though this is yet to be finalised. The exemption criteria are:
- If a company consumes below [x] GWh per year within a deliverable market boundary (this specific value has not yet been determined), and/or (not yet decided)
- If a company meets the SME categorisation criteria (this definition is still being evaluated)
Those that do not meet exemption criteria will need to collect or estimate hourly power consumption and match this to hourly contractual instruments. If these are not available, monthly or annual contractual instruments combined with hourly production profiles may be used.
Those that are exempt may match their monthly or annual consumption with monthly or annual contractual instruments, respectively, with annual granularity being the least preferred.
It is important to note that, while the procurement and accounting of EACs (if not exempt) must be hourly, there is no indication that reporting market-based emissions must be too. Even when EACs (and therefore consumption) are matched hourly, market-based emission factors may still have a lower (e.g., monthly) granularity. For reporting purposes in a case like this, both EAC procurement and consumption would be aggregated to the lower granularity.
4. Deliverability and market boundaries:
The GHGP is redefining market boundaries for the purpose of using contractual instruments and claiming EACs. Market boundaries are meant to reflect deliverability (i.e., that the electricity from a generator could plausibly be part of the mix serving the reporting entity through an electrically connected grid) and are defined by the GHGP as power pricing/bidding zone boundaries. However, if these are not available, the GHGP allows country borders or the synchronous grid serving the load to be used, whichever is smaller.
To determine deliverability and, thus, the validity of claiming renewables, the GHGP has proposed the following three methodologies:
- Primary Methodology: EACs can only be claimed within the market boundary that consumption is taking place.
- Alternative Methodology 1: EACs may still be claimed across directly adjacent and connected markets only if lack of congestion between these markets can be demonstrated during the hour/s EACs are claimed. This is to demonstrate that power could have plausibly flowed from one market to the other at that time and is demonstrated by comparing power prices between the points of generation and consumption at the same hour.
- Alternative Methodology 2: EACs can still be claimed across non-adjacent borders only if physical transmission rights are acknowledged and accepted by all grid operators across all traversed markets, and if these markets all have compatible EAC systems. This is to demonstrate that power and EACs were delivered simultaneously and that physical power was scheduled across all markets.
The GHGP is proposing transition mechanisms, so companies aren’t penalised for long-term contracts while stricter hourly matching and deliverability rules are phased in. These mechanisms – either a time-limited legacy clause or a single effective date with lead time (TBD) – aim to respect existing long-term contracts while phasing in all market-based Scope 2 reporting onto stricter hourly matching and deliverability rules.
These revisions are meant to be implemented in stages over several years following the anticipated publication in late 2027, aiming to give stakeholders time to adapt and develop tools.
Key impact will be on data collection, reporting, and power procurement strategies
The GHGP expects that an increased focus on higher temporal granularity and stricter market boundaries will provide more accurate and comparable reporting.
It is also anticipated that the constraints introduced to EAC procurement will encourage new investment into renewable generation (i.e. additionality). For instance, there may follow an uptick in investment into battery technology to make renewables more available during hours of low production, or into additional regional capacity where renewables are in short supply.
The implementation of these changes would expose stakeholders to new operational realities:
- Upgrading capabilities. Companies may not have the ability to measure, match, and report their consumption on an hourly basis, which may require additional investment in capabilities and infrastructure – for instance, smart meters and energy data management platforms. Indeed, governments, Transmission System Operators (“TSOs”), generators, and other participants in the power sector will have to integrate similar changes to calculate their market’s emission factors on a more granular basis.
- Reporting complexity. Hourly matching of EACs will increase the burden of renewable power procurement and reporting.
- Exposure to changes in the availability of renewables. Under the revised deliverability definition, companies within a market boundary may have a reduced pool of renewable power to procure from. This may expose companies to price swings from supply constraints and require them to revise their procurement strategies.
- Contractual complexity. Hourly matching of EACs will require fundamental changes in how renewable procurement contracts are structured, e.g., unbundled EAC procurement agreements or Power Purchase Agreement (“PPA”) structuring.
- Changed emissions profile. Increased temporal granularity for consumption data and emission factors can expose companies to higher or lower yearly Scope 2 emissions based on their hourly load profile’s interaction with the hourly power mix in their market boundary – a company with higher consumption in hours with less renewables may see a higher yearly emissions profile.
What can you do?
While it is too early to say if these changes will be cemented (as of the publication of this information), companies can already inform themselves and prepare for the potential changes the next decade may bring.
These changes may impact fund managers through their portfolio companies, with impacts affecting emission profiles, procurement costs, reporting complexity, and emissions reduction strategies. Fund managers can proactively engage portfolio companies now to evaluate procurement strategies and exposure, and to begin planning decarbonisation roadmaps taking these changes into account. As a likely stakeholder, you can represent your company and bring your feedback directly to the GHGP before the public consultation period ends (January 31, 2026). Here, you can share your input about the revision and proposals to improve the document.
The structure of renewable power procurement contracts is likely to change significantly if all changes are enacted. Evaluate your current contractual instrument portfolio and discuss these changes with your utility and provider/s of renewable energy contracts (e.g., PPAs, vPPAs, EAC contracts, Green Tariffs) and prepare ahead of time.
Further, given the impact of more granular reporting on emission profiles, companies should address how their load profiles may be impacted by hourly emission factors, and what operational changes can be made to reduce this exposure.
The final version is not set to be implemented until at least late 2027, giving stakeholders time to prepare for this potential change in reporting and data collection granularity. Companies can take the time to investigate solutions for hourly reporting.
Ultimately, these changes will require greater involvement of ESG teams and experts. As this landscape evolves, we are eager to dedicate our 15+ years of expertise in carbon reporting and strategy, and ESG advisory to help companies become more resilient to uncertain regulatory environments, and more compliant with evolving reporting standards.
