What is Scope 2, and what are location-based and market-based figures?

Scope 2 is indirect emissions from generating the electricity, steam, heat or cooling that a company buys and uses. The power station burns the coal, but the emissions go into the buyer's Scope 2 because the buyer's demand caused them.

The Scope 2 Guidance (2015) sets out two methods:

Method	What it shows	Emission factor used
Location-based	The average emissions of the grid where the power is used	A grid-average factor (in India, from the CEA CO2 Baseline Database)
Market-based	The power the company chose to buy through contracts	Factors from contractual instruments such as renewable energy certificates, power purchase agreements, green tariffs or supplier-specific rates

A company with operations in markets that offer such contracts must report both figures, each clearly labelled. The Guidance calls this "dual reporting". Instruments used for the market-based figure must meet the Guidance's Scope 2 Quality Criteria. Where no contract or residual-mix factor is available, the Guidance's data hierarchy allows a grid-average factor instead.

Illustrative example: dual reporting

A software office uses 1,000 MWh of grid electricity in a year. It buys renewable energy certificates covering 400 MWh.

• Location-based: 1,000 MWh x 0.675 tCO2/MWh = 675 tCO2. The 0.675 is the national weighted-average grid factor for FY 2025-26 in the CEA CO2 Baseline Database, Version 22.0 (August 2026). A real inventory must use the CEA version and financial year that match its reporting year.
• Market-based: 400 MWh covered by certificates x 0 = 0, plus 600 MWh x 0.675 = 405 tCO2, using the grid-average fallback for the part not covered by any contract.

The first figure shows the grid the office actually sits on. The second shows the effect of its purchasing choices. Both are needed for an honest picture. Our guide to renewable energy certificates explains how these instruments work in India.