> For the complete documentation index, see [llms.txt](https://kb.bravegen.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://kb.bravegen.com/carbon/configuration/reporting-settings/scope-2-methodology.md).

# Scope 2 Methodology

Nominate market-based or location-based as your primary Scope 2 figure, and record why.

BraveGen Carbon always calculates Scope 2 both ways. The **Scope 2 Methodology** setting nominates which of the two is your *primary* figure — the one used as the default Scope 2 number in reports and in [target setting](/carbon/targets/reduction-targets.md).

It is a presentation and default-selection setting, not a calculation setting. Choosing one method does not switch the other off, and it does not affect dual reporting.

***

### What the setting does

| It does                                                                      | It does not                                                                              |
| ---------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------- |
| Set the default Scope 2 figure shown in reports.                             | Stop the other method being calculated.                                                  |
| Set which basis carries a target, pace, and variance in the Reduction table. | Remove the other method from reports — it remains available.                             |
| Record a disclosed rationale for your choice.                                | Change how any [Inventory Item](/carbon/core-concepts/inventory-items.md) is calculated. |
| Apply across every entity and every report.                                  | Vary by entity, site, or reporting period.                                               |

Which items feed each total is decided separately, by the **Reporting Inclusion** setting on each Inventory Item Template. See [Market & Location Based Reporting](/carbon/configuration/reporting-frameworks/ghg-protocol/market-and-location-based-reporting.md).

{% hint style="info" %}
If both totals are empty or one looks wrong, the cause is almost always Reporting Inclusion on your templates rather than this setting. This setting only chooses between totals that are already being produced.
{% endhint %}

***

### What the GHG Protocol requires

The GHG Protocol Scope 2 Guidance requires **dual reporting**: an organisation that holds any contractual instruments conveying energy attributes must report both a location-based and a market-based total. Reporting one method instead of the other is not a permitted substitution, which is why BraveGen Carbon calculates both regardless of what you select here.

The two methods answer different questions:

* **Location-based** reflects the average emissions intensity of the grid your consumption physically occurs on. It shows the physical impact of consuming electricity where you consume it, and it does not move when you buy certificates.
* **Market-based** reflects the contractual instruments you hold — certificates, guarantees of origin, PPAs, and supplier-specific tariffs — with the residual mix applied to consumption those instruments do not cover. It shows the effect of your purchasing decisions.

A market-based figure only holds up if the instruments behind it meet the Scope 2 Quality Criteria: the instrument must convey the energy's attributes, be an exclusive claim retired on your behalf, be sourced from the same market as the consumption, and relate to the same period. Keep that supporting documentation — the dialog flags market-based as requiring it.

{% hint style="info" %}
Reporting under a climate-related disclosure regime such as NZ CS or AASB S2 does not change the dual-reporting requirement. Disclose both totals, and state which one your headline Scope 2 figure and your targets use — that is what this setting records.
{% endhint %}

***

### Choose a primary method

Both choices are defensible. Pick the one that best represents how your organisation actually procures energy, then apply it consistently.

**Choose market-based when:**

* You hold certificates, guarantees of origin, or PPAs covering a meaningful share of consumption.
* Your supplier issues disclosures with supplier-specific emission factors.
* Your reduction strategy relies on procurement, and your targets should reflect it.
* You can produce the supporting documentation an assurer will ask for.

**Choose location-based when:**

* You hold few or no contractual instruments, so market-based would largely be residual mix anyway.
* Your reduction strategy is built on consumption reduction and efficiency rather than procurement.
* You want a figure that is insensitive to the certificate market year to year.
* Grid factors for your regions are well established and your sites are geographically concentrated.

{% hint style="warning" %}
Nominating market-based as primary while holding instruments for only part of your consumption makes your headline figure partly a residual-mix number. That is legitimate, but say so in the rationale — an unexplained gap between coverage and claim is a common audit finding.
{% endhint %}

***

### Set the Scope 2 methodology

Only Administrators can change this setting. See [User Roles](/carbon/configuration/user-management/user-roles.md).

Go to **Settings → Carbon Configuration → Reporting** and select the edit icon beside **Scope 2 Methodology**.

| Field            | Description                                                                                                                                                                                                                             |
| ---------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Primary Method   | **Market-based** uses emission factors from your electricity contracts, certificates, and supplier disclosures, and requires supporting documentation. **Location-based** uses the average grid emission factor for each site's region. |
| Why this method? | Your justification for the selection. Minimum 40 characters. Disclosed in your audit trail.                                                                                                                                             |

Select **Save Changes** to apply the method, or **Cancel** to discard it.

The dialog confirms the behaviour above at the top: setting a primary method sets your primary Scope 2 method across all reports, both methods are always calculated, and the other method remains available in reports.

***

### Write the rationale

The rationale is a disclosure included in your [audit trail snapshots](/carbon/audit-trail/snapshots.md). Write it for an external auditor or verifier, in the same way you write the rationale for your [Reporting Boundaries](/carbon/configuration/reporting-settings/reporting-boundaries.md).

Cover:

* Which method you selected, and why it best represents your energy procurement.
* For market-based, what share of consumption your contractual instruments cover, and what happens to the remainder.
* Where the supporting documentation for those instruments is held.
* Any programme or scheme requirement that constrained the choice.

The dialog's example shows the level of specificity to aim for: *"We hold certified renewable energy certificates covering 82% of consumption across our NZ sites, so market-based reflects our actual purchasing."*

***

### Activity Log

Every change to the primary method is recorded in the **Activity Log** on the dialog, with the user, the timestamp, and the rationale supplied at the time. Users can reply to an entry to add context, and pin an entry to keep it at the top.

Because a change of primary method changes your headline Scope 2 figure and the basis your targets are tracked against, the log is the record that shows the change was deliberate rather than incidental.

***

### What changes when you switch

Switching the primary method does not recalculate anything, but it does change what your outputs lead with:

* Reports show the newly selected basis as the default Scope 2 figure. The other basis remains available.
* In the [Reduction](/carbon/targets/reduction-targets.md) table, the selected basis is the one carrying Target (to date), Target Reduction, Pace, and Variance. The other basis continues to show Base Year and to-date actuals only.
* Existing targets are not rewritten. Review them after switching — a target set against location-based figures may not be the right target against market-based ones.

Check the change against your [Base Year Recalculation Policy](/carbon/configuration/reporting-settings/base-year/base-year-recalculation-policy.md). Switching primary method is a methodology change, and where it moves your reported Scope 2 by more than your significance threshold it may require a base year restatement and disclosure.

***

### Frequently asked questions

<details>

<summary>Does choosing a primary method stop the other one being calculated?</summary>

No. Both methods are always calculated. The setting chooses which figure is presented as your default and which basis your targets are tracked against.

</details>

<details>

<summary>Can different entities use different primary methods?</summary>

No. The primary method is set once for the organisation and applied across all reporting.

</details>

<details>

<summary>We hold no certificates. Should we still set a primary method?</summary>

Yes. Location-based is the natural choice, and recording that in the rationale documents why. If you later begin buying instruments, you have a dated record of the position you started from.

</details>

<details>

<summary>Why is my market-based total higher than my location-based total?</summary>

Usually because the residual mix factor applied to uncovered consumption is higher than the grid average — the grid average includes renewable generation whose attributes have already been claimed by someone else. It is a normal result, not an error.

</details>

<details>

<summary>Does this setting affect Scope 3?</summary>

Indirectly. Scope 3 categories derived from the same purchased energy — most notably Category 3 transmission and distribution losses — carry the same split, so they follow the same primary basis in reports. See [Market & Location Based Reporting](/carbon/configuration/reporting-frameworks/ghg-protocol/market-and-location-based-reporting.md).

</details>

<details>

<summary>How often should we review the method?</summary>

Each reporting cycle. Review it whenever your procurement changes materially — a new PPA, a large certificate purchase, or the lapse of an existing contract can all change which method better represents your position.

</details>

***

### Key points

* Both Scope 2 methods are always calculated. This setting nominates the primary one.
* Dual reporting is a GHG Protocol requirement and is unaffected by the choice.
* The primary method is the default figure in reports and the basis your targets are tracked against.
* Market-based requires supporting documentation for the instruments behind it.
* The rationale is a disclosure included in your audit trail. Write it for an auditor, and update it when the method changes.