How Should I Report Scope 2 Electricity In New Zealand Under The GHG Protocol?
In this blog, we explain how to report Scope 2 electricity emissions in New Zealand under the GHG Protocol Corporate Accounting and Reporting Standard.
The GHG Protocol (GHGP) is the most widely used international accounting framework for measuring, managing and reporting greenhouse gas (GHG) emissions, and is used by businesses and organisations worldwide.
Reporting your GHG emissions inventory and how you procure energy can support wider sustainability objectives, including:
Improving transparency around your operations and environmental impact.
Reducing reliance on fossil-fuel energy.
Setting ambitious targets to reduce electricity consumption and improve energy efficiency.
Aligning energy procurement with your business values and sustainability objectives.
Note: The Scope 2 guidance is currently under review, so established approaches to Energy Attribute Certificates (EACs) and Scope 2 reporting may change as the guidance develops.
Or:
Improving transparency around your operations and environmental impact. | Reducing reliance on fossil-fuel energy |
Setting ambitious targets to reduce electricity consumption and improve energy efficiency. | Aligning energy procurement with your business values and sustainability objectives. |
Note: The Scope 2 guidance is currently under review, so established approaches to Energy Attribute Certificates (EACs) and Scope 2 reporting may change as the guidance develops.
Key terms
Before getting into the details, it helps to understand three key terms the GHGP uses:
The term “shall” is used to indicate something is required. The term “should” is used to indicate a recommendation. The term “may” is used to indicate an option that is permissible or allowable. |
Do I need to use the dual reporting method?
The GHGP says that companies with any operations in markets providing product or supplier-specific data in the form of contractual instruments shall report Scope 2 emissions in two ways, labelling each result according to the method used: one based on the location-based method and one based on the market-based method. This is known as “dual reporting”. (GHGP Scope 2 Guidance, page 8)
In New Zealand, contractual instruments are available, for example through systems for buying and selling New Zealand Energy Certificates (NZ-ECs, often called RECs), such as BraveTrace’s New Zealand Energy Certificate System (NZECS).
What this means is that if you operate in New Zealand, you are required to dual-report scope 2 electricity under the GHGP.
What’s the difference between location-based and market-based?
Location-based:
The location-based method calculates electricity emissions based on the make-up of the national grid (e.g. the share of renewables, coal and gas). It is calculated by multiplying:
Your total annual kWh x the grid-average emission factor
(published by the Ministry for the Environment - MfE)
Your total annual kWh | x | the grid-average emission factor |
(published by the Ministry for the Environment - MfE)
Market Based:
The market-based method has two components:
1. Contractual instruments: electricity covered by contractual instruments you have purchased (e.g. RECs or power purchase agreements) is multiplied by an emission factor of 0 for renewables such as hydro, wind and solar[1].
2. Residual supply mix: any electricity not covered by contractual instruments is multiplied by the residual supply mix factor published by BraveTrace.
Confusion often arises when a business doesn’t purchase contractual instruments, which is the case for most SMEs. In this situation, your total kWh is multiplied by the residual supply mix factor for market-based reporting. For these businesses, the market-based total will usually be higher than the location-based total, because the residual supply mix excludes the renewable electricity already claimed by certificate buyers (see Example 2).
[1] This may not be exactly zero if the contractual instruments come from geothermal generation, which has some emissions. Check the emissions factor recorded on the certificate.
Consumers who do not make specified purchases (such as RECs) or who do not have access to supplier data should use the residual mix emission factor to calculate their market-based total. (GHGP Scope 2 Guidance, page 27)
To see what this means, see the three worked examples below.
So how do I report this?
The GHGP says you shall report both Scope 2 totals. Once you have shown and explained the methodology, you may use either two inventory totals (one for each method) or a single total based on one method when adding scope 1 and scope 2 together for the rest of your report.
If you report a single total, you must state which method you used, and it should be the same method you use for any reduction targets. For example:
"While both methods are disclosed in Table X, the [Location-Based / Market-Based] method has been selected as our primary approach for targeting and tracking emissions throughout the remainder of this report."
If a company sets a corporate inventory reduction goal and/or a scope 2-specific reduction goal, the company shall clarify whether the goal is based on the location-based method total or market-based method total. (GHGP Scope 2 Guidance, page 61)
In practice, this means that if you use the location-based figure as your main figure, you need to state this in your report and also show the market-based CO2e. You can then use the location-based Scope 2 figure and a total emissions figure that includes it, for the rest of the report, including any reduction targets.
* This may not be exactly zero if the contractual instruments come from geothermal generation, which has some emissions. Check the emissions factor recorded on the certificate.
Examples
All three examples use FY25 emission factors: 0.0787 kgCO2e/kWh for the location-based (grid-average) method and 0.108 kgCO2e/kWh for the BraveTrace residual supply mix.
Example 1: All electricity covered by RECs
A business consumes 20,000 kWh of electricity a year and purchases 20 RECs (1 certificate = 1 MWh), covering 20,000 kWh.
GHGP Scope | Source | Quantity (kWh) | EF FY25 (kgCO2e/kWh) | Total Emissions (tCO2e) |
Scope 2 - Location Based | Electricity | 20,000 | 0.0787 | 1.57 |
Scope 2 - Market-Based: Energy Certificates Purchased | Electricity | 20,000 | 0 | 0.00 |
Scope 2 - Market-Based: Residual Supply Mix | Electricity | 0 | 0.108 | 0 |
Example 2: No RECs purchased (typical SME)
A business consumes 20,000 kWh of electricity a year and purchases no RECs. Its market-based total (2.16 tCO2e) is higher than its location-based total (1.57 tCO2e).
GHGP Scope | Source | Quantity (kWh) | EF FY25 (kgCO2e/kWh) | Total Emissions (tCO2e) |
Scope 2 - Location Based | Electricity | 20,000 | 0.0787 | 1.57 |
Scope 2 - Market-Based: Energy Certificates Purchased | Electricity | 0 | 0 | 0.00 |
Scope 2 - Market Based: Residual Supply Mix | Electricity | 20,000 | 0.108 | 2.16 |
Example 3: Part of electricity covered by RECs
A business consumes 45,000 kWh of electricity a year and purchases RECs covering 20,000 kWh.
GHGP Scope | Source | Quantity (kWh) | EF FY25 (kgCO2e/kWh) | Total Emissions (tCO2e) |
Scope 2 - Location Based | Electricity | 45,000 | 0.0787 | 3.54 |
Scope 2 - Market Based: Energy Certificates Purchased | Electricity | 20,000 | 0 | 0.00 |
Scope 2 - Market-based: Residual Supply Mix | Electricity | 25,000 | 0.108 | 2.70 |
How this could look in your GHG Report
Option A: Location-based as the primary method. If, after showing dual reporting, the rest of your report uses the location-based total, it could look like this (using the business from Example 2):
Location-based purchased energy has been selected as our primary approach for targeting and tracking emissions throughout the remainder of this report.
Table 1: GHG inventory for Company X
Emission source | FY25 (tCO2e) |
Scope 1 | 8.12 |
Scope 2 | 1.57 |
Purchased energy (location-based) | 1.57 |
Scope 3 | 70.90 |
1. Purchased goods and services | 29.53 |
2. Capital goods | 10.24 |
3. Fuel and energy-related activities | 1.65 |
4. Upstream transportation and distribution | 8.08 |
5. Waste generated in operations | 3.29 |
6. Business travel | 4.27 |
7. Employee commuting | 6.03 |
8. Upstream leased assets | 1.94 |
9. Downstream transportation and distribution | 5.87 |
Total emissions (tCO2e) (location-based) | 80.59 |
Within-boundary removals | 0.00 |
The table below shows market-based electricity. As no contractual instruments were used to procure purchased energy, the residual supply mix factor was used to calculate market-based purchased electricity.
Table 1: Dual reporting of purchased energy
Dual Reporting of Purchased Energy | FY25 |
Purchased electricity (market-based) | 2.16 |
Total emissions (tCO2e) (scope 1 + scope 2 market-based + scope 3) | 81.18 |
Option B: Market-based as the primary method. If a company has matched all of its electricity consumption with NZ-ECs and, after showing dual reporting, uses the market-based total for the rest of the report, it could look like this (using the business from Example 2):
Market-based purchased energy is used for all results in this inventory and report, as contractual instruments were used to procure purchased energy.
Table 1: GHG inventory for Company X
Emission source | FY25 (tCO2e) |
Scope 1 | 8.12 |
Scope 2 | 0.00 |
Purchased energy (market-based) | 0.00 |
Scope 3 | 70.90 |
1. Purchased goods and services | 29.53 |
2. Capital goods | 10.24 |
3. Fuel and energy-related activities | 1.65 |
4. Upstream transportation and distribution | 8.08 |
5. Waste generated in operations | 3.29 |
6. Business travel | 4.27 |
7. Employee commuting | 6.03 |
8. Upstream leased assets | 1.94 |
9. Downstream transportation and distribution | 5.87 |
Total emissions (tCO2e) (market-based) | 79.02 |
Within-boundary removals | 0.00 |
The table below shows location-based electricity.
Table 1: Dual reporting of purchased energy
Dual Reporting of Purchased Energy | FY25 |
Purchased electricity (location-based) | 1.57 |
Total emissions (tCO2e) (scope 1 + scope 2 location-based + scope 3) | 80.59 |
Why match your electricity with NZ-ECs?
Matching all of your electricity use with NZ-ECs turns good intentions into something you can report and stand behind. You can say with confidence that every MWh your business uses is matched by a MWh from a verified renewable generator in Aotearoa New Zealand.
You can also report zero scope 2 emissions from purchased electricity under the market-based method, in line with leading global best practice, backed by a detailed BraveTrace verification report.
The benefits go beyond your own inventory. Your demand helps bring more renewable generation in line, and your claim stays clear of double counting. It also raises the carbon intensity of the residual supply mix, giving other businesses a stronger reason to act. For businesses that want credible emissions reporting and a real part in New Zealand’s renewable energy transition, NZ-ECs offer a practical way to do both.
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