Scope 2 reforms explained

The Greenhouse Gas Protocol (GHGP) is the most widely used methodology for emissions reporting in the world. It underpins frameworks such as the Science Based Targets initiative (SBTi), CDP, and many other corporate reporting and target-setting regimes.  

Important changes are being proposed that will change how electricity emissions are reported from 2027. In this article, we explain what is changing with Scope 2 reporting, and the action your business should take to stay compliant, credible and competitive. 

How are GHGP Scope 2 emissions currently reported? 

Under the GHGP, emissions are categorised into three Scopes: Scope 1 (direct emissions), Scope 2 (purchased electricity), and Scope 3 (value-chain emissions). 

The Scope 2 reporting rules were last updated in 2015, resulting in the establishment of two parallel reporting approaches: 

• Location-based reporting, which reflects the carbon intensity of the grid where electricity is used; and 

• Market-based reporting, which reflects the emissions associated with specific contractual arrangements. This includes supply contracts, power purchase agreements (PPAs), and renewable certificates like REGOs. 

Time for a change? 

11 years later, the electricity system has changed dramatically, and Scope 2 reporting has failed to keep up.  

At the time the current guidance was introduced, renewable generation accounted for around 19% of UK electricity supply. In 2024, that figure reached an average of 50% for the first time. But that word – ‘average’ – is doing a lot of heavy lifting, hiding significant variation over the year.  

At times, renewables can account for 80% or more of generation. At other times — cold, dark, still periods — renewable output can fall to single digits.  

This variability matters because today’s market-based reporting allows organisations to match electricity consumption and renewable certificates on an annual basis. REGOs generated at any point in the year can be used to account for electricity consumed at any other point in the year. 

In practice, that means solar generation on a sunny August afternoon can be used to “green up” electricity consumed at 5pm on a cold December weekday. 

While this may be technically compliant, it doesn’t accurately reflect impacts on the wider system, and the emissions that arise as a result. Nor does it provide any of the useful behaviour signals that are needed to support a lower-cost, lower carbon grid.  

The market has already left this approach behind; and a formal review of Scope 2 reporting began in 2023.   

What are the proposed changes to Scope 2 reporting? 

The GHG Protocol is consulting on moving Scope 2 reporting away from annual averages and towards what’s happening on the grid in real time. For UK organisations, this means: 

• For location-based reporting, using a combination of their own half hourly consumption data, and corresponding GB emissions factors published by NESO or another reliable source. 

• For market-based reporting, using a combination of their own half hourly consumption data with deliverable Guarantees of Origin from zero carbon generators – via supply contracts, CPPAs or other contractual instruments. Emissions factors are then applied to the resulting fuel mix, with any consumption left remaining assigned a share of the ‘Standard Supply Service’ – a mix of fossil and unclaimed zero carbon generation. 

Some caveats have been proposed to allow smaller organisations to remain compliant. Larger electricity users (potentially those consuming more than around 5 GWh per year) would be expected to match consumption and renewable generation on an hourly basis, while smaller users would move towards monthly matching.  

We believe that this is not necessary in markets such as the UK, where time matched supply contracts can facilitate compliance for the smallest business, at no additional cost. 

When will Scope 2  reporting change? 

The consultation closes on January 31^st, with revised guidance expected later this year and practical implementation from around 2027. 

There is likely to be a phased approach: 

• Existing long-term arrangements, such as CPPAs, are expected to be recognised for their duration to avoid undermining investor confidence. 

• Monthly matching may be introduced before hourly matching. 

• Larger organisations are likely to be in scope earlier than smaller ones. 

While 2027 may sound distant, organisations reporting under the GHGP are already starting to think about how they prepare. Any business signing a two year contract will need to consider how the proceed in light of the new arrangements. 

What is likely to change in practice? 

The proposed changes to Scope 2 reporting are likely to have a widespread positive impact for the UK electricity grid. Reporting organisations will be incentivised to align their consumption with periods of clean generation, as well as invest in their own on-site generation and storage. Suppliers will be pushed to contract with generators which better fit their customers’ demand shape.  

The market for electricity supply contracts and CPPAs will no doubt evolve in response to these changes. While crystal-ball gazing is somewhat of a fool’s errand, here are a few things to look out for: 

1. Broader changes in business supply offers: As Scope 2 expectations rise, business supply contracts will increasingly need to demonstrate not just that electricity is renewable, but when and how that renewable electricity is delivered. 

2. Pressure for reform of renewable certificates: The consultation also increases the likelihood of renewed scrutiny on the UK REGO scheme itself. As time-matching expectations grow, regulators and policymakers – including Ofgem and DESNZ – may be encouraged to consider whether timestamping or wider reform of REGOs is needed to support more accurate reporting and market integrity. 

3. Changes to flex procurement: While time matching is growing more common in the world of standard business supply, many renewable flex products continue to rely on large, annual purchases of REGOs, often from single assets. Under the proposed Scope 2 framework, that approach will not be sufficient for organisations seeking to make robust market-based claims. We’re working on this right now, so speak to us if you want to know more. 

Done well, these reforms can help align emissions reporting with real-world system impacts, sending better signals to the market, and supporting a cheaper, more resilient, lower-carbon electricity system. They also offer an opportunity to improve transparency and trust – not just for organisations reporting their emissions, but for all electricity consumers. 

How can Good Energy support your business? 

Good Energy is fully supportive of this move to accurate, time based reporting, with stronger behavioural signals, and better system outcomes.  

We launched the UK’s first hourly matched tariff for businesses back in 2023, and have since provided all of our half-hourly business customers to robust, auditable insights into how their consumption aligns with renewable generation in real time.  

We’re also working closely with businesses to develop procurement approaches that are fit for the future, including renewable flex tariffs. 

If you’d like to understand what the Scope 2 reforms could mean for your organisation, or how Good Energy can help you prepare for the new rules, then please do get in touch.