Missteps in Proposed Updates to GHG Protocol’s Scope 2 Guidance

Posted on by Jeff Swenerton

Two new proposed requirements threaten to drive up the cost of clean power, damage markets, reduce revenue, and restrict access
 
The Greenhouse Gas (GHG) Protocol is conducting a public consultation on the first set of proposed updates to its corporate scope 2 accounting guidance for emissions from indirect electricity, extended through January 31, 2026. Because these rules determine how emissions from purchased electricity are calculated and reported, the changes could reshape clean energy procurement and voluntary renewable energy markets globally. Center for Resource Solutions (CRS) strongly encourages all participants in the renewable energy ecosystem—buyers, sellers, developers, and advocates for a sustainable future—to engage in the consultation period.

 

Requirements for Physical Delivery and Hourly Matching in Market-based Accounting

While the GHG Protocol wisely retained much of the foundation of the 2015 Scope 2 Guidance—including maintaining attributional accounting and dual reporting in both the location-based and market-based methods—some proposed updates to market-based accounting risk significantly reducing overall voluntary demand, and should be revised or rejected:

  1. “Physical deliverability” should not be required for electricity
  2. Hourly matching of electricity consumption and generation should be recommended rather than required

 

Issue 1: “Physical Deliverability” Should Not Be Required for Electricity

Market boundaries and “physical delivery”

Under the 2015 guidance, contractual instruments must be sourced from the “same market” as the reporting entity’s load—generally interpreted as national boundaries with recognition of some multinational markets, such as the European Union. The proposed update redefines this boundary based on “physical deliverability”—that is, it must be plausible that electricity from the source of purchased generation is physically able to reach the reporting consumer’s grid region. This would typically limit sourcing to smaller regions defined by physical grid interconnection. In the U.S., proposals could result in 10, 14, 27, or more separate market regions, severely complicating procurement decisions and reporting.

In the current proposal, there are no exceptions to physical-delivery requirements for smaller loads or businesses. All procurements that are ineligible for legacy recognition and do not fall within a physically deliverable region (or meet limited additional requirements) would have to be assigned either the emissions of a residual mix, a fossil-only mix, or a default fossil-emissions rate.

 

Restricting market access and REC emissions claims

Requiring physical deliverability is wrong for the market-based method, particularly in markets like the U.S. By restricting eligible generation to a limited geographic area closer to electricity consumption, this requirement would shrink the available pool of generators precisely where U.S. consumers who choose to purchase renewable electricity are located. A physical-deliverability requirement also limits incentives for companies with lower on-site electricity use to invest in new impactful renewable energy projects for their multi-region aggregated load. This method would nullify credible zero-emission claims by assigning a residual mix or default fossil emissions rate to contractual purchases that will continue to be made by customers or by electricity suppliers on behalf of customers outside of as-yet-undefined regions. Bundled renewable energy contracts, RECs, and utility green power programs all risk being rendered worthless as companies are forced to report market-based emissions that are not based on their purchases.

In reality, electricity does not carry the emissions attributes of its generation. In the U.S., renewable energy certificates (RECs) were created precisely because physical delivery of renewable electricity on the grid is impossible. In the 2015 guidance, the market-based method allocates generation to customers based on what they purchase untethered from the physical realities of the grid, while the location-based method allocates aggregated generation to the load it is likely serving based on grid dynamics. Artificially attempting to match market-based accounting to ‘physically deliverable’ regions effectively tries to allocate generation to emissions based on a mix of two incompatible approaches, ultimately limiting the accuracy of market-based allocation.

 

Far-reaching negative consequences

Restricting clean electricity procurement to smaller geographic regions would not only constrain access to clean electricity but also risks slowing renewable energy deployment and dampening overall demand for voluntary clean electricity purchases. This would undermine market growth, innovation, and customer participation. Key impacts include:

  • Limiting companies’ ability to aggregate sufficient demand to bring new clean energy projects online
  • Undercutting flexible procurement structures, such as virtual power purchase agreements (VPPAs), that have driven large-scale renewable growth
  • Constraining opportunities to finance new local generation through REC arbitrage
  • Limiting Standard Supply Service (SSS) or green power product emissions claims to the portion of the clean energy being supplied by a utility that does geographically match procured generation to customer load
  • Removing clean energy access to corporate and residential customers who face substantial regulatory, geographic, and logistical barriers, especially in vertically integrated utility territories

 

Market boundaries should align with electricity sectors

Market boundaries for the market-based method should align with the geographic boundaries of electricity sectors—typically national or multinational boundaries—and linked regions where active energy and attribute trade occurs. This definition ensures integrity, impact, and feasibility by maintaining clear, objective, and functional boundaries that support scalable clean electricity markets. It enables buyers to support renewable development where it is most efficient and impactful—accelerating decarbonization across the entire sector.

 

Issue 2: Hourly Matching of Electricity Consumption and Generation Should Be Recommended Rather than Required

The current 2015 guidance allows annual matching of electricity consumption with generation. The proposed update would require hourly matching under the market-based method, though some degree of exemption, significant data estimation options, and a time-limited legacy clause are also being proposed.

 

Precision vs. accuracy

At any given hour, the electricity powering a facility comes from the local grid mix as reflected in the location-based method. In the market-based method, hourly matching increases the precision of reported emissions by narrowing the temporal alignment between matched generation and consumption. Under certain market conditions, this may sharpen demand signals and create demand in hours where clean energy supply is scarce, signaling the need for new clean generation or storage to fill hourly gaps.

However, narrowing the timeframe of matching from annual to hourly does not increase the accuracy of market-based emissions information. There is no physical truth to measure accuracy against in a system where a specific megawatt-hour of electricity cannot be physically tracked or directed to individual users. Annual matched procurement to load continues to be a credible—although less precise—reporting framework, and it has a proven record of impact in the U.S.: voluntary procurement has driven an estimated 17–60% of non-RPS renewable development since 2014 (EPA 2025).

 

Today’s market infrastructure cannot adequately support credible hourly matching at scale

Most U.S. energy attribute certificate (EAC) tracking systems are not yet equipped for hourly tracking and few suppliers are willing or able to provide hourly data to their customers. Tracking in other markets faces similar or greater limitations. Implementing an hourly matching requirement across markets would force reliance on secondary data in the form of third-party load profiles that are not specific to the reporter’s value chain instead of primary monthly or annual data that is, ultimately, reducing the accuracy of matching claims.

Companies that feel overwhelmed by increased purchasing complexity or uneasy about relying on estimated data for reporting may scale back their participation in clean energy markets and climate commitments as a result of this change. Such a pullback would slow progress toward decarbonization and constrain opportunities for new sustainable energy development.

 

Hourly matching should be recommended (but not required) for scope 2 accounting

Hourly matching is a valid procurement strategy and already supported under the 2015 guidance. The GHG Protocol should support increased temporal precision in the market-based data hierarchy and require that organizations use the most precise data accessible to them. This approach would have the added benefit of presenting consistent direction to use the most precise emission factor accessible across both the location-based and market-based methods.

 

Where the Proposal Gets It Right: Preserving the Market-Based Method

In the market-based method, proposed updates continue to align emissions accounting for purchased electricity with retail transaction practices. In markets like the U.S., where specified electricity is contractually transacted, attributional market-based accounting remains essential for credible scope 2 reporting—it accurately reflects purchasing behavior, supports corporate accountability, and drives real clean energy investment.

New guidance on matching procurement to load on an hourly basis will help standardize and encourage new types of clean energy transactions and market infrastructure. CRS is building on these ideas through our stakeholder-driven Clean Energy Accounting Project (CEAP) with initiatives focused on hourly utility product design and guidance on secondary transactions of hourly certificates. Our newly launched Clean Energy Tracking Collaborative (CETC) is also working to identify and align emerging energy tracking functionalities and data needs, beginning with the hourly data and certificate tracking.

There may be a future time when feasibility concerns are reasonably diminished to support requirements for hourly matching. One of the benefits of the recent agreement between the GHG Protocol and ISO to develop joint global standards for greenhouse gas emissions accounting is the opportunity to leverage ISO’s standard review process to periodically evaluate the need to update the GHG Protocol Corporate Accounting and Reporting Standard. With a framework for continuous maintenance, there will be future opportunities to assess the maturity of market infrastructure and increase requirements for precision.

 

Why It Matters

Every year, thousands of businesses and millions of individuals voluntarily purchase billions of kilowatt-hours of renewable electricity, supporting thousands of renewable generators in every state. This voluntary demand drives innovation and investment—representing roughly 8% of total U.S. electricity sales and growing by 17% annually (NREL, 2025). More than 60% of new renewable generation capacity is installed outside of state-mandated programs, thanks largely to voluntary purchasing (LBNL, 2025). This market is powered by corporate climate commitments and the rules that govern corporate GHG emissions reporting—most importantly, the GHG Protocol Scope 2 Guidance.

CRS supports clear, consistent GHG accounting rules that uphold the integrity of energy-related emissions claims, ensure customers can claim the clean energy they have paid for, and prevent double counting.

Electricity and its environmental attributes are not physically tied. Requiring physical deliverability or hourly matching at all costs misinterprets the purpose of market-based accounting and risks replacing credible reporting with a false appearance of accuracy. Annual and national procurements remain valid and effective tools for driving renewable growth; restricting them would constrain markets, raise costs, and slow the pace of decarbonization at a time when we need clean energy deployment to accelerate.

The role of a standard like the GHG Protocol is to enable multiple credible approaches to impact—not to limit them. Updates to the guidance must maintain voluntary clean energy demand by supporting all credible approaches to clean electricity procurement. CRS urges all stakeholders to participate in the consultation by January 31, 2026, to help ensure the next generation of the guidance advances the global transition to clean electricity without imposing unnecessary and inaccurate reporting rules.

 

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