Market-based Scope 2: Guarantees of Origin and Reporting
21 Oct 2026 in Carbon & energy reporting
Market-based Scope 2 is the greenhouse gas accounting approach that allows companies to report zero emissions for the part of electricity covered by cancelled Guarantees of Origin (GOs) from wind, solar, or hydro. Unlike location-based Scope 2, which uses grid averages, market-based Scope 2 is shaped by the purchase of certified renewable electricity. Understanding the difference is critical for accurate sustainability reporting. For an introduction to key terms, see Guarantees of Origin.
What is market-based Scope 2?
Market-based Scope 2 measures the greenhouse gas emissions from a company’s purchased electricity, taking into account contractual instruments like Guarantees of Origin (GOs). By cancelling GOs from renewable energy sources such as wind, solar, or hydro, a company can count those MWh as zero emissions in its market-based Scope 2 figure. The approach is defined by the GHG Protocol Scope 2 Guidance (current version).
How is market-based Scope 2 different from location-based?
Location-based Scope 2 uses an average emissions factor for the electricity grid where the company operates. It shows what emissions would look like without any contractual purchases for renewables. In contrast, market-based Scope 2 reflects the actual electricity purchased, based on supplier-specific contracts or energy certificates like GOs. The two figures must both be reported under GHG Protocol and ESRS rules, giving a clear view of impact through both physical supply and procurement strategy.
| Approach | What counts | When are emissions zero? |
|---|---|---|
| Location-based | Grid average emissions | Never (grid is never 100% renewable) |
| Market-based | Supplier contracts and certificates (GOs) | For every MWh covered by a cancelled renewable GO from wind, solar or hydro |
How do cancelled GOs affect market-based Scope 2?
Each Guarantee of Origin (GO) is an electronic document that represents 1 MWh of renewable electricity. When a GO from wind, solar or hydro is cancelled specifically for a company, that MWh is counted as zero market-based Scope 2 emissions. This is because the renewable attribute is transferred exclusively to that company. Biomass GOs, and some other sources, may require the use of specific emission factors rather than automatic zeroing. You must use one GO per MWh of consumption you want to cover.
What if I don’t have GOs for all my electricity?
If not all electricity is covered by GOs or qualifying supplier-specific contracts, the remaining consumption uses the residual mix—an annual figure published by the Association of Issuing Bodies (AIB). The residual mix reflects the attributes not claimed through certificates, and in several countries it can be more carbon-intensive than the regular grid average (AIB 2025 Residual Mix). This is especially relevant in places like Norway and Iceland, where most renewables are exported through GOs and the residual mix is therefore less renewable.
Market-based Scope 2 reporting: a simple worked example
Suppose a company in Germany consumed 5000 MWh in a year. It arranged for the cancellation of 3000 wind or solar GOs (one per MWh). In its market-based Scope 2 report:
- 3000 MWh are counted as zero emissions
- 2000 MWh (not covered by GOs) are assigned the AIB residual mix emission factor for Germany
This same reporting approach applies across the EU, where the grid is defined as a single "market" under the GHG Protocol. Without GOs or a qualifying supplier contract, all consumption is reported using the residual mix for that country.
Which GOs qualify, and what’s changing?
For market-based Scope 2 to reflect zero emissions on covered MWh, GOs must be cancelled in the name of the reporting company, within the right reporting year. The GHG Protocol lists these quality criteria and is in the process of revising its Scope 2 Guidance, with an update likely but not yet in force (source). Currently, annual matching is standard, but companies should monitor future changes to eligibility or matching timelines. Rules for GOs outside Europe (like REGOs in the UK or I-RECs elsewhere) differ—see the hub for details.
Frequently asked questions
What is the residual mix and why does it matter?
The residual mix is an annual calculation published by the AIB to show the emissions profile of electricity that is not backed by GOs or supplier-specific contracts. It is often more carbon-intensive in countries that export large numbers of renewable certificates.
Can I report only the market-based Scope 2 total?
No. The GHG Protocol and ESRS require both the location-based and market-based Scope 2 figures. Market-based shows what you procure, location-based shows what the grid supplies in your area.
Do GOs change my Scope 1 or Scope 3 numbers?
No. Electricity GOs only apply to market-based Scope 2 accounting. They do not reduce Scope 1 (direct) or Scope 3 (indirect, non-electricity) emissions.
How many GOs do I need to cover my electricity?
You need one GO for every megawatt-hour (MWh) you want to cover in your market-based Scope 2 report. To achieve full zero market-based emissions, you need to cover all MWh consumed.
What happens if I buy GOs from outside my market?
Market-based Scope 2 requires that certificates are valid in the same geographic market as your consumption. The EU is one market, but other regions have separate rules. Check with your auditor or see Guarantees of Origin for international details.
For more on applying GOs to your electricity reporting, visit the Guarantees of Origin hub or to request a proposal for your sites.
