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GHG Protocol Scope 2 changes: What companies need to know

For over a decade, the GHG Protocol’s Scope 2 Guidance has allowed organizations to use annual matching to claim renewable energy use. But as corporate climate goals mature and power grids become increasingly complex, the standard is undergoing its first major overhaul. Soon, companies may need to prove that the clean energy they claim to use was generated in the same region—and at the same time—they consumed it.

Here is what organizations need to know about the proposed changes, the recent public consultation, and how to prepare for a more granular future.

CURRENT REQUIREMENTS

What the current standard requires

Before unpacking what’s changing, it helps to understand what exists today. The GHG Protocol’s Scope 2 Guidance has been the global standard for how companies account for emissions from purchased electricity, heat, steam, and cooling since it was first published in 2015. For a decade, it has underpinned the sustainability disclosures of thousands of corporations, forming the backbone of CDP reports, Science Based Targets, and many mandatory frameworks including California’s SB 253 and the EU’s Corporate Sustainability Reporting Directive (CSRD).

Under the current guidance, companies are required to dual report using two distinct methods.

The location-based method
Calculates emissions based on the average grid emission factor for the electricity network in which the company operates. It reflects the physical reality of the grid, treating all consumed electricity as coming from the same blended regional source. Under current guidance, companies have significant flexibility in which emission factors they select, often defaulting to national averages even when more granular regional data exists.

The market-based method
Allows companies to use contractual instruments—such as Renewable Energy Certificates (RECs), virtual power purchase agreements (VPPAs), green tariffs, and other energy attribute certificates (EACs)—to reflect the specific renewable energy they have chosen to procure. Under current rules, companies can claim renewable energy usage and zero emissions by purchasing unbundled RECs from renewable generators operating anywhere in the country, at any point in the year, even if the electricity delivered to their facilities is generated by fossil fuels.

WHAT’S CHANGING

The proposed updates, and why they’re coming

As energy markets, grid infrastructure, and corporate climate ambition have evolved, scrutiny of renewable energy claims has intensified. The gap between what companies report and what is actually happening on the grid has widened, with critics calling for more transparency. In response, the GHG Protocol launched a major revision to its corporate suite of standards, including the Scope 2 Guidance, and released a public consultation draft in October 2025. The consultation period ran through January 31, 2026.

While dual reporting remains, the proposed updates introduce significant revisions to the criteria for both methods.

MARKET-BASED REVISIONS

New requirements for contractual instruments

Most consequential change
Hourly matching

The most consequential proposed change is that contractual instruments like RECs would need to be matched to electricity consumption on an hourly basis, rather than annually as permitted today. A wind energy certificate generated at 2:00 a.m. could no longer be used to offset electricity consumed during peak demand hours if no corresponding wind generation occurred in that same hour.

New constraint
Deliverability constraints

Under the proposed guidance, all contractual instruments would need to be sourced from generators that are “deliverable” to the consuming load—physically connected to the same grid in a way that makes it plausible that electricity from that generator could reach the company’s facilities. EACs from generators on physically separate or unconnected grids would no longer qualify.

New provision
Standard Supply Service (SSS) caps

New guidance would limit how much clean energy from publicly funded, mandated, or shared grid resources a company can claim. Each reporting entity may account only for its proportional share of electricity from Standard Supply Service resources, and that share cannot be transferred to or claimed by another entity. For example: if 20% of your deliverable power comes from clean SSS resources, you could claim 20% of your consumption as zero-emissions electricity—and would need qualifying contractual instruments for the remaining 80% to reach a zero Scope 2 figure under the market-based method.

Loophole closure
Residual mix updates

Today, if a residual mix emission factor is unavailable for a given market, companies may default to a standard location-based factor. The proposed guidance would eliminate this option. Where residual mix data is unavailable, companies would instead be required to use a fossil-only grid-average factor—more accurately representing the non-renewable nature of electricity for which no clean energy claim exists. This change is designed to prevent double-counting and close a common greenwashing loophole.

LOCATION-BASED REVISIONS

A new emission factor hierarchy

The proposed update introduces a new hierarchy for selecting location-based emission factors, prioritizing spatial and temporal granularity. Reporters would be required to use the most precise emission factor accessible to them—defined as publicly available, free to use, and from a credible source. Priority goes first to the most precise geographic scope (local over national), then to the most precise temporal granularity (hourly over annual). This is a meaningful departure from current practice, where companies routinely default to national annual averages even when more granular data exists.

TRANSITION PROVISIONS

Accommodations built into the proposal

The GHG Protocol has included several provisions to make compliance more feasible: exemption thresholds to relieve smaller organizations from hourly matching requirements, a legacy clause to recognize investments made under existing Scope 2 accounting rules during a defined transitional period, and a phased implementation timeline to give organizations, data providers, utilities, and service platforms time to adapt.

More detailed descriptions of the proposed changes, along with FAQs, can be found in the GHG Protocol’s Public Consultation Materials.

TIMELINE

What happens next

The public consultation period closed January 31, 2026, with over 1,000 submissions received from stakeholders across 39 countries. The GHG Protocol’s next step is to analyze that feedback and publish a summary. The technical working group and independent standards board will then consider modifications before releasing a revised draft later in 2026. A final version of the revised methodology is expected in 2027, with implementation likely beginning in 2028 and a phased rollout to follow.

HOW TO PREPARE

Steps companies can take now

The proposed GHG Protocol Scope 2 changes would have a significant impact on emissions reporting, decarbonization strategies, and science-based targets. While the final standard is not expected until 2027, companies that begin preparing now will be substantially better positioned than those who wait.

  • 1

    Stay informed.
    Monitor GHG Protocol updates and subscribe to their notices. Further consultation rounds are expected as the standard develops. Companies can also participate to make their voices heard.

  • 2
    Audit your current REC and EAC portfolio.
    Identify what percentage of your market-based Scope 2 figure relies on unbundled, annual RECs that may not meet future deliverability or hourly-matching requirements. Model the potential emissions impact if those instruments become ineligible.
  • 3
    Review contracts and lock in terms.
    The proposed legacy clause would apply to pre-existing contractual agreements for a transitional period, but eligibility criteria are not yet finalized. Understand your current contract portfolio and its likely treatment before rules change.
  • 4
    Improve emission factor selection.
    Stop defaulting to national annual averages. Identify the most granular, spatially and temporally precise emission factors for each of your operational grids. Companies can begin aligning with the proposed hierarchy today, well ahead of any formal requirement.
HOW GREENPLACES HELPS

Building the data foundation for what’s coming

This shift represents a significant hurdle for sustainability and operations teams. Greenplaces’ team of carbon accountants, curated library of emission factors, data collection tools, and industry partnerships are built to ease this transition—whether you’re starting from scratch or refining an existing program.

Report with confidence

Contact Greenplaces today for a demo and discover how we can streamline your reporting journey.

Frequently asked questions

The GHG Protocol’s Scope 2 Guidance, first published in 2015, is the global standard for how companies account for emissions from purchased electricity, heat, steam, and cooling. It underpins CDP disclosures, Science Based Targets, and mandatory frameworks including California’s SB 253 and CSRD. The update reflects growing scrutiny of renewable energy claims and the gap between what companies report and what is actually occurring on the grid, particularly around the use of annual, unbundled RECs that may not correspond to real-time clean electricity consumption.

Hourly matching would require that renewable energy certificates be matched to electricity consumption hour by hour, rather than on an annual basis as currently permitted. Under today’s rules, a company can purchase a wind energy certificate generated at any point during the year and use it to offset consumption that occurred during a completely different time period. Hourly matching closes that gap by requiring temporal alignment between clean energy generation and consumption, producing a more accurate picture of actual grid emissions.

The Standard Supply Service (SSS) cap limits how much clean energy from publicly funded, mandated, or shared grid resources a company can claim as part of its market-based Scope 2 figure. Under the proposal, each company may only claim its proportional share of SSS clean energy, and that share cannot be transferred to another entity. If 20% of your deliverable power comes from SSS clean resources, you can claim 20% of consumption as zero-emissions and would need qualifying contractual instruments for the remainder to reach a zero Scope 2 figure.

The public consultation closed January 31, 2026. A revised draft is expected later in 2026, followed by another consultation round. A final standard is anticipated in 2027, with implementation likely beginning in 2028 under a phased rollout. Companies with existing renewable energy procurement strategies or science-based targets should begin assessing impact now, particularly regarding legacy contracts and current REC portfolios, well before mandatory adoption.

Greenplaces supports Scope 2 accounting under both the location-based and market-based methods, with access to a curated library of granular emission factors aligned with the proposed hierarchy. Our carbon accounting team can help companies audit their current REC and EAC portfolios, assess exposure to the proposed changes, improve emission factor selection, and build a Scope 2 program that is ready for the more rigorous requirements ahead, whether the 2027 final standard or the interim period leading up to it.

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