Scope 2: Purchased electricity

Overview of Scope 2 calculation methods

According the GHG Protocol Scope 2 guidance from the World Resources Institute, there are two recommended methods for calculating your purchased electricity footprint: Location-based and market-based. 

 Method  Equation  Emissions factors  Renewable energy purchases/sales  Regions
 Location-based  (Total Purchased kWh) * (eGrid emissions factor)  eGrid  Not accounted for  eGrid
 Market-based  (Total Purchased kWh +/- Renewable kWh) * (Residual emissions factor)  Residual (2015-present) and eGrid (prior to 2015)  Accounted for  NERC*

*The NERC regions are used because they are the only scale at which the residual emission factors are currently available for the United States.

Below, please find more information about these two recommended methods. A third purchased electricity method (custom fuel mix) is no longer recommended as a best practice, but it is still an option in SIMAP for historical consistency with the CCC.

Location-based method

The “Location-based” method takes the total amount of power purchased from the grid and multiplies it by the regional eGrid factor.  The equation is:

(Total Purchased kWh) * (eGrid emissions factor) = Carbon or nitrogen scope 2 footprint

There are two important factors to note for the location-based method:

  1. Renewable energy purchase/sales NOT accounted for: The location-based method does NOT account for any renewable energy purchase/sales. This is because the location-based method does not include any market transactions (e.g., RECs and other grid-metered renewable energy purchases). To include renewable energy purchase/sales in your scope 2 electricity calculations, please see the market-based method below. 
  2. eGrid regions: The location-based method uses eGrid subregions, show below. The eGrid regions have different boundaries than the NERC regions used in the market-based approach below.

eGrid regions.png

For more information on the US EPA eGrid calculations and emissions factors, see this page.

Market-based method

The “Market-based” method does take your renewable energy purchase/sales into account, and it uses a different set of emissions factors that account for market transactions (residual mix emissions factors) from 2015 through present. The calculation is:

(Total Purchased kWh +/- Renewable kWh) * (Residual emissions factor) = Carbon or nitrogen scope 2 footprint

There are several important considerations for the market-based approach:

  1. Renewable energy: The market-based method does account for renewable energy purchase/sales.
  2. Residual factor definition: Residual emissions factors are factors that exclude electricity generation from any voluntary renewable energy transactions. Since those renewables are being subtracted from users’ utility consumption data, it is important not to “double-count those avoided emissions.
  3. NERC regions for residual emission factors: The residual emissions factors (2015-present) use different subregions (NERC regions, see below) than the location-based method (eGrid regions, see above). The NERC regions are more aggregated, which can affect the fuel mix included in your region's emissions factor. The NERC regions are used because they are the only scale at which the residual emission factors are currently available for the United States.
  4. Years available for residual emission factors: Because residual mix emissions factors are not available in the US before 2015, the market-based method uses the eGrid location-based eGrid emissions factors for your purchased electricity footprint prior to 2015.
  5. Residual emission factors only available for CO2: Residual mix emissions factors are only available for carbon dioxide. The other parts of your carbon and nitrogen footprints (methane, nitrous oxide, nitrogen oxides) will still be calculated using eGrid location-based emissions factors when you select the market-based method.
  6. Methodology change from CCC: A change from the CCC methodology is that the SIMAP calculation accounts for renewable energy purchase/sales directly in your scope 2 net kwh calculation. In the CCC, the emissions associated with renewable energy purchase/sales were subtracted/added to your total footprint. Now, in SIMAP, the net kwh purchased is first calculated (based on purchased kwh and the purchase/sale of renewable energy), and then the emissions factors are applied. This means that you will not see the emissions associated with renewable energy purchases calculated separately in your footprint results. This change is based on updated guidance from the GHG Protocol.

NERC regions.png

For more information on the Green-e energy residual mix emission rates, see these pages for 2015, 2016, 2017, and 2018.

Notice of important scope 2 calculation update [April 2018]

Until recently, the GHG Protocol guidance was to use the eGrid factors used for the location-based method in place of the residual factors needed for the market-based method. This was because residual emissions factors were not yet available for the United States. However, Green-E now offers more accurate residual factors for the United States and Canada for years 2015 and later, which we incorporated into SIMAP in April 2018.  Residual factors come from the same data source (EPA’s eGrid program) as the default eGrid factors, but the two calculations differ as follows:

eGrid EF = (Total CO2 emissions) / (Total MWh)

Residuals EF = (Total CO2 emissions – CO2 from renewables) / (Total MWh – MWh from renewable energy transactions)

The way that residual factors are calculated can result in dramatic annual changes.  Those are due to the following:

  • Residual EF calculations are done at the level of NERC region.  NERC regions are fewer and more aggregated regions than the ones used to provide the default eGrid factors.  The aggregation of the regions for residual EFs means that the fuel mix for your region will be different than that of your eGrid mix because it covers a wider area. This could result in your residual EF being either larger or smaller than your eGrid EF, depending on how your eGrid region’s fuel mix compares to your residual EF (NERC) region.
  • The residual EFs change from year to year due to both changes in fuel mix AND market changes for renewables (more or less renewable energy sales).  Because the renewable market is still very dynamic and growing and changing rapidly, the impact on regional emissions factors can also be dramatic.

In sum, you may see significant shifts and variability in your market-based scope 2 totals for the years 2015 onward; this is a reflection of the changing grid and energy markets (and is not an error.)

You can read the full GHG Protocol scope 2 guidance in this comprehensive report from the World Resources Institute.