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New Scope 2 Guidance Update for the GHG Protocol

The GHG Protocol released its “Scope 2 Guidance” this week to clarify how companies should report their GHG Scope 2 emissions. Scope 2 includes emissions from the purchase of electricity, steam, heating, and cooling. Until now, there was no widespread set of standards to shed light on how to account for scope 2 emissions. This produced inconsistent reports across companies.

Diverse stakeholders from the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) developed the GHG protocol. It provides a framework to assess greenhouse gas impacts. The new Scope 2 Guidance assigns requirements for accounting and reporting, defines a set of quality criteria for Scope 2 sourcing, and has recommendations for additional disclosure about energy purchases.

The Guidance defines “contractual instruments” as a contract between two parties for buying energy, with details about how the energy was generated. It establishes certain criteria with which contractual instruments have to comply. There are recommendations for disclosing key features and the context of policies for contractual instruments.

The Guidance also distinguishes two methods of accounting for emissions. Location based methods look at the emissions on the grids where the energy is consumed. Market based methods consider emissions from the energy that companies specifically select. The guidelines give companies using the market based approach several data options. They could include energy attribute credits, supplier emission rates, and other emission factors.

Details like the type of resource produced, the location of the generating facility, its age, and whether it’s being affected by policies like cap and trade can help give stakeholders a clearer picture of the company’s scope 2 emissions. This update to the protocol promises to make reporting more accurate and allow for better benchmark goals in the future.

The World Resources Institute (WRI) provides an executive summary here. You can also access the full report here and case studies here.