E - Environmental (Carbon, Energy, Resources, Climate) 5 min read

What is Market-Based Method? Definition and Context

Credibility Check & Framework Comparison

To ensure absolute regulatory accuracy and reliability, we verify definitions across leading international frameworks before presenting our synthesized SME context.

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GHG Protocol

"A method to quantify Scope 2 greenhouse gas emissions based on greenhouse gas emissions emitted by the generators from which the reporter contractually purchases electricity."
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EFRAG / ESRS E1

"The contractual emissions reporting method reflecting green energy purchases, power purchase agreements, and guarantees of origin."
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EcoVadis

"Carbon performance evaluation that accounts for a company's specific renewable energy contracts and certificates."

ExecutESG Consolidated Definition

Market-Based Method

The market-based method is a calculation protocol under the GHG Protocol that determines Scope 2 emissions based on the specific greenhouse gas emission intensity of the electricity contracts that the company has actively purchased.

Acceptable Evidence Options:

  • Guarantees of Origin (GoO) in Europe or RECs in North America.
  • Direct Power Purchase Agreements (PPAs) with renewable energy facilities.
  • Supplier-specific green retail tariffs.

SME Relevance & B2B Inbound Action:

If your SME purchases 100% renewable electricity backed by Guarantees of Origin, your market-based Scope 2 emissions will be zero, even if your location-based emissions are positive. Tracking both methods is required by the ESRS. Automate your dual-method reports via Aura Understand.

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