Location-based method

“Where electricity is consumed matters, even when renewable attributes are purchased elsewhere. ”

The location-based method estimates Scope 2 emissions using the average emissions intensity of the electricity system serving the point of consumption. It answers a physical-system question: what is the average emissions profile of the grid associated with this load? The method is generally calculated by multiplying electricity consumed by an appropriate grid factor.

The appropriate geography may be a national, regional or subnational grid depending on how the system is interconnected and how factors are published. Annual averages are common, although more granular hourly data can reveal patterns concealed by yearly totals. Location-based reporting does not reflect contractual renewable energy purchases. That is intentional.

It shows exposure to the actual grid mix and allows users to see whether reductions came from lower consumption, cleaner grids or operational shifts.

The method has limitations. Average factors do not show the marginal generator responding to an incremental change in demand. A facility operating at noon and at night may receive the same annual factor even though system emissions differ by hour. Grid boundaries and imported electricity can also complicate the estimate. Even so, location-based results remain important.

A company with a low market-based total but operations in carbon-intensive grids still depends on those systems. Electrification strategies, site selection and demand management should therefore consider local grid conditions rather than contractual totals alone. The most useful interpretation comes from dual reporting.

A widening gap between market- and location-based results may indicate ambitious procurement, weak local grid decarbonisation or both. Neither number should be used to erase the other.

Practical application

Use the most geographically and temporally appropriate grid factors available. Track electricity quantity separately from factors so changes can be attributed to demand or grid decarbonisation. Where material, supplement annual averages with hourly or marginal analysis for decisions.

Why it matters

The method connects consumption to local electricity-system conditions. It prevents contractual accounting from obscuring dependence on high-emitting grids.

Common misconception

Location-based emissions are the exact emissions caused by a facility’s electricity use. They are estimates based on average grid factors, not direct causal measurements.

Connections

Market-Based Method reflects contractual choices. Grid Emission Factor supplies the coefficient. Hourly Matching seeks closer temporal alignment between load and clean generation.

A question worth asking

Would your electricity strategy still look credible if stakeholders saw only the location-based result?

Selected references

GHG Protocol, Scope 2 Guidance. International Energy Agency, electricity statistics and emissions factors. ISO 14064-1, indirect greenhouse-gas emissions reporting.