What is Market-based Method?
A Scope 2 calculation method that reflects emissions based on the electricity an organisation has chosen to purchase, such as renewable energy tariffs. This method uses supplier-specific emission factors and renewable energy certificates.
Why it matters
The market-based method rewards businesses that actively choose lower-carbon energy. It allows companies to demonstrate the impact of switching to renewable tariffs and is a credible way to show Scope 2 reductions in carbon reports.
Example
The same Birmingham warehouse switches to a REGO-backed renewable tariff. Its market-based Scope 2 drops from 103.5 tCO₂e to 0 tCO₂e, while the location-based figure remains unchanged at 103.5 tCO₂e.
Related terms
Location-based Method
A Scope 2 calculation method that reflects the average emissions intensity of the local electricity grid. This method uses grid average emission factors and shows what emissions would be if no renewable energy was purchased.
Scope 2 Emissions
Indirect greenhouse gas emissions from the generation of purchased energy consumed by an organisation. This includes electricity, steam, heating, and cooling purchased from utility providers. Scope 2 can be calculated using location-based or market-based methods.
Put your knowledge into practice
Start measuring your carbon footprint with EcoHedge. Connect your accounting software and get your first carbon report in hours.