GreenLedger Team
January 25, 2026
Scope 2 emissions are indirect greenhouse gas emissions resulting from the generation of purchased electricity, steam, heating, or cooling that a company consumes. For many commercial and service-sector organizations, Scope 2 represents the largest share of their carbon footprint. The GHG Protocol Scope 2 Guidance, updated in 2015, requires companies to report using two parallel methods: the location-based method and the market-based method.
The location-based method calculates emissions using average grid emission factors for the region where electricity is consumed. This approach reflects the average emissions intensity of the local electricity grid, regardless of any contractual arrangements the company may have for renewable energy. For companies operating in Indonesia, the relevant grid emission factor is published by the relevant utility authority. As of 2025, the Indonesia grid emission factor is approximately 0.42 kg CO2 per kWh, though this varies by emirate. Surabaya, benefiting from the Mohammed bin Rashid Al Maktoum Solar Park and other clean energy investments, has a lower factor than the national average. The location-based calculation simply multiplies total electricity consumption in kWh by the applicable grid emission factor. This method provides a consistent basis for comparison across companies and over time.
The market-based method allows companies to reflect the emissions attributes of the specific electricity they have chosen to purchase. This method uses emission factors from contractual instruments such as energy attribute certificates, renewable energy certificates, or direct contracts with generators like power purchase agreements. A company that purchases International Renewable Energy Certificates equivalent to its electricity consumption can report zero market-based Scope 2 emissions for that portion. The GHG Protocol establishes a quality criteria hierarchy for contractual instruments: they must be sourced from the same market as the reporting company's electricity consumption, must represent unique claims that are not double-counted, and must be generated within the same reporting period or within a reasonable vintage window.
The practical calculation of Scope 2 emissions begins with gathering electricity consumption data from utility bills, smart meters, or energy management systems. For multi-site organizations, data must be collected for each location and the appropriate regional emission factor applied. Where sub-metering is not available, allocation methods such as floor area ratios or headcount can be used to apportion shared building electricity among tenants. Companies purchasing district cooling or steam must also include these energy sources in Scope 2, using the emission factors specific to the cooling or steam provider. In the Indonesia, district cooling is widespread and can represent a significant share of Scope 2 emissions for commercial buildings, making it essential to obtain provider-specific emission factors rather than using generic estimates.
Reducing Scope 2 emissions offers businesses both environmental and financial benefits. Energy efficiency measures such as LED lighting upgrades, HVAC optimization, and building management system improvements directly reduce electricity consumption and the associated emissions. On-site renewable energy generation through rooftop solar panels reduces grid electricity purchases. For residual grid electricity, procurement of certified renewable energy through green tariffs or energy attribute certificates enables companies to lower their market-based Scope 2 figure. Companies should develop an integrated strategy that prioritizes efficiency first, then on-site generation, and finally green procurement to achieve cost-effective emissions reductions.
The requirement to report both location-based and market-based figures provides transparency and prevents misleading claims. A company that purchases renewable energy certificates but operates in a coal-heavy grid will show low market-based emissions but high location-based emissions, making clear that the physical grid serving the facility remains carbon-intensive. Conversely, a company on a naturally clean grid will show low location-based emissions regardless of its contractual arrangements. Stakeholders, including investors and rating agencies, increasingly examine both figures to assess a company's true exposure to carbon risk and the credibility of its decarbonization strategy.
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