How a Renewable Energy Tariff Reduces Your Scope 2 Emissions

Why Your Energy Tariff Affects Your Carbon Footprint

Scope 2 covers the greenhouse gas emissions from electricity you purchase from the grid. The critical word is "purchased." You are not burning anything — but the power station generating your electricity is. The question is: which power station?

If your electricity comes from wind and solar, the emissions are near zero. If it comes from a coal plant, they are high. The way you account for this depends on which Scope 2 accounting method your client or auditor requires.

Location-Based vs Market-Based: The Key Distinction

The GHG Protocol allows two Scope 2 accounting methods:

Location-based: Uses the average emission factor for the national grid — the mix of all generation in your country. This is what DeCarbonOPS calculates by default.

Market-based: Uses the emission factor of the electricity you specifically contracted. If you have a renewable tariff with certificates, your market-based factor can be zero.

A Polish manufacturer on a renewable tariff can report zero market-based Scope 2 despite being on one of Europe's most carbon-intensive grids.

What Are REGOs and Guarantees of Origin?

A Guarantee of Origin (GO) is a certificate issued in the EU under the Renewable Energy Directive confirming that 1 MWh of electricity was generated from a renewable source. In the UK, the equivalent is a Renewable Energy Guarantee of Origin (REGO).

When an energy supplier sells you a "100% renewable tariff," they are typically buying enough GOs or REGOs to match your annual consumption. This does not mean the electrons reaching your building come from a wind farm — they come from the grid like everyone else's. But the certificate proves that somewhere in Europe, a wind farm or hydro plant generated the equivalent amount.

For Scope 2 accounting, this matters: GOs and REGOs are the instruments that allow you to claim a market-based factor of zero under GHG Protocol rules.

What to Ask Your Energy Supplier

Before entering renewable_pct = 100% in your carbon report, verify that your supplier can provide:

1. Annual GO or REGO certificates matching your kWh consumption
2. Certificates from the same year as your consumption (vintage matching)
3. A written statement confirming you are receiving bundled certificates with your tariff

Without this documentation, you cannot legitimately claim a zero market-based Scope 2 in an audited report.

The Difference Between Bundled and Unbundled Certificates

• Bundled: The GO certificate comes included with your electricity tariff. The most common setup for business tariffs.
• Unbundled: You purchase GOs separately from the spot market, independent of your electricity supplier. Cheaper, but considered lower quality by most frameworks — SBTi and RE100 do not recognise unbundled certificates.

For credible carbon reporting, use bundled certificates from your electricity supplier.

How This Changes Your Carbon Footprint

A 50-person company in Germany consuming 120,000 kWh/year:

• Location-based Scope 2: 120,000 x 0.380 / 1,000 = 45.6 tCO2e
• Market-based Scope 2 (renewable tariff with GOs): 120,000 x 0.000 / 1,000 = 0 tCO2e

That is a 45.6 tCO2e reduction from one contract change — often the single biggest decarbonisation lever available to office-based businesses. For a company totalling 80 tCO2e before the switch, that represents a 57% reduction in total emissions.

What to Enter in DeCarbonOPS

If you have a documented renewable tariff with GOs: - Set Renewable energy share to 100% - The calculator will reduce your Scope 2 to zero accordingly - Note in questionnaire responses: "Market-based Scope 2 calculated at 0 kgCO2e/kWh per GHG Protocol market-based method; GO certificates held on file"