# Location-based versus market-based Scope 2: why you report both > A green electricity contract moves one of your two Scope 2 numbers and not the other. What each method measures, why the gap between them is the first thing an auditor asks about, and what it has to do with where your heat comes from. Canonical: https://joulewise.com/insights/location-based-vs-market-based-scope-2 Publisher: jouleWise Advisory Services Pvt Ltd, Noida, India · Spain Reviewed: 2026-10-08 Status: company page ## In short Scope 2 is the carbon in the electricity a plant buys. The GHG Protocol asks for it two ways, and they answer different questions. The location-based figure applies the grid emission factor to every unit the plant drew, regardless of what it contracted. It describes the grid the plant is physically connected to. The market-based figure credits green supply whose instruments — renewable energy certificates or the contractual attributes of an open access PPA — have been retired in the plant's name. It describes what the plant chose to buy. Sign a green electricity contract and only the market-based number moves. The location-based number stays exactly where it was, because the wires did not change. Reporting one without the other is how disclosures get challenged. *Published 2026-10-08 · esgOS · the disclosure layer* ## Two numbers for one quantity of electricity Scope 2 is the carbon in the electricity a plant buys. The GHG Protocol asks for it two ways, and they answer different questions. The location-based figure applies the grid emission factor to every unit the plant drew, regardless of what it contracted. It describes the grid the plant is physically connected to. The market-based figure credits green supply whose instruments — renewable energy certificates or the contractual attributes of an open access PPA — have been retired in the plant's name. It describes what the plant chose to buy. Sign a green electricity contract and only the market-based number moves. The location-based number stays exactly where it was, because the wires did not change. Reporting one without the other is how disclosures get challenged. ## The factor is a disclosure, not a detail Grid emission factors differ by jurisdiction and by year, and the number you publish moves with them. The sector decks use 0.716 kg CO₂ per kWh for India; the right figure for a given plant and reporting year has to be stated alongside the result, because a carbon figure quoted without its factor and vintage cannot be checked, and a number that cannot be checked cannot be relied on. The same goes for the boundary. Which sites, which meters, which fuels, which year: change any of them and the total changes. esgOS Studio puts the factor and the boundary on the page as inputs for exactly this reason. ## Why Scope 1 is the one you own outright Scope 1 is fuel burned on site. No contract restructures it; only burning less does. That is why heat electrification shows up in Scope 1 and electricity contracting does not, and why a plant that has contracted 100% green electricity and still runs gas boilers has only done half the job. In the studio's default case — 63 GWh of electricity, 35% green, and 7.9 million SCM of piped natural gas — Scope 1 is about 15,400 tonnes, location-based Scope 2 about 45,100 and market-based Scope 2 about 29,300. ## Where the two stories meet Move the factory's hot-water duties from the boiler to a heat pump and Scope 1 falls. Run the heat pump on grid electricity and Scope 2 rises by about as much on the location-based method — at COP 3 and the grid factor, heat-pump heat emits roughly what gas does. Run it on contracted green electricity and the market-based figure stays low while Scope 1 has fallen. The only way to show that honestly is to report both methods, with the factor, and let the reader see which number moved and why. ## Scope 3, intensity and what an auditor wants Value-chain emissions depend on supplier data, which often does not exist; where it does not, the figure has to be estimated and labelled as an estimate rather than asserted. Intensity — carbon per litre, per kg, per batch — needs an agreed denominator, which is a commercial decision as much as a technical one. What an auditor wants from all of it is traceability: every figure back to a meter, an integration or a stated assumption. esgOS does the studio's arithmetic on fifteen-minute metered data so that trace exists. **Try it:** [Build the position in esgOS Studio](https://joulewise.com/studios/esgos) ## Questions and answers **What is the difference between location-based and market-based Scope 2?** Location-based applies the grid emission factor to every unit drawn and describes the grid you are on. Market-based credits green supply with instruments retired in your name and describes what you chose to buy. Only the market-based figure moves when you sign a green contract. **Does green electricity reduce Scope 1?** No. Scope 1 is fuel burned on site and only burning less changes it, which is what heat electrification does. **Which grid emission factor should I use?** The one applicable to your jurisdiction and reporting year, stated in the disclosure. The sector decks use 0.716 kg CO₂ per kWh for India. ## Related - [Build the position in esgOS Studio](https://joulewise.com/studios/esgos) - [esgOS](https://joulewise.com/solutions/esgos) --- jouleWise · https://joulewise.com/ · sales@joulewise.com · +91 84483 22771