Glossary›Emissions accounting and measurement›Scope 2 emissions
Glossary term
Cluster D · D2
Tier 1
Scope 2 emissions
Definition
Scope 2 emissions are indirect greenhouse gas emissions from generating the electricity, steam, heating or cooling an organisation purchases and consumes. The emissions physically occur at the generating facility, not at the consumer’s site, but are attributed to whoever consumed the energy. For most Australian businesses this means purchased grid electricity.
· paragraphs 29(a)(i)(2) and 29(a)(v), Appendix B paragraphs B30 to B31 · in force from each entity’s first reporting period
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In practice
Scope 2 is usually the easiest of the three scopes to measure and the easiest to get structurally wrong, and the two facts are related: the data is clean enough that entities stop thinking early.
The activity data is kilowatt hours consumed, taken from retailer invoices or meter data. The completeness question is not whether the invoices are accurate but whether you have all of them. Three gaps recur. Embedded networks, where a landlord buys electricity in bulk and recovers it through outgoings, so there is no retail invoice in your name at all. Small and unmetered sites (car parks, signage, remote assets, small tenancies) that fall below the threshold anyone thinks to chase. And new or exited sites, where a part-year tenancy produces a part-year account that nobody reconciles to the lease schedule.
Then there is the part that decides the number, and it is the reason this term is worth reading past the first paragraph.
AASB S2 requires the location-based figure. Paragraph 29(a)(v) requires an entity to disclose its location-based Scope 2 emissions. Appendix B paragraph B30 removes any room for argument: “For the avoidance of doubt, an entity is required to disclose its Scope 2 greenhouse gas emissions using a location-based approach.” Market-based information about contractual instruments is provided in addition, and only where such instruments exist and information about them informs a user’s understanding.
That sentence has a commercial consequence a great deal of Australian vendor content obscures. A power purchase agreement, a GreenPower contract or a portfolio of surrendered large-scale generation certificates does not reduce the Scope 2 figure AASB S2 requires you to disclose. It cannot. The location-based method uses the average emissions intensity of the grid where the electricity was consumed, and a contract does not change the grid. What the contract does is support a separate, additional, market-based disclosure alongside the required one. Entities that signed a PPA on the understanding it would move the reported number have bought something real (an abatement outcome and a hedge) but not the thing they were told they were buying.
The state dimension is the other Australian specific. Grid intensity varies substantially between the National Electricity Market states and Western Australia and the Northern Territory, so the same consumption produces materially different emissions depending on where it happened. An entity with sites in several jurisdictions applying a single national factor has introduced an error it cannot quantify, and the NGA Factors publish the state-level factors precisely so it does not have to.
What the assurer does with it
Scope 2 attracts limited assurance from the first reporting year under ASSA 5010 paragraph 10. The assurer’s procedures are close to Scope 1 but the populations are different.
Completeness comes from three independent listings compared against each other: the utility account listing, the lease and property schedule, and the electricity expense accounts in the general ledger. The specific question they ask early, and that entities are least ready for, is what happens at sites where electricity is recovered through outgoings rather than invoiced directly. An entity that has excluded landlord-supplied electricity because it has no invoice has made a completeness error; an entity that has estimated it by floor-area apportionment has made an estimate, which is acceptable, but must be labelled as one with a stated method.
Accuracy testing is a vouch of sampled invoices to the inventory, agreeing kilowatt hours, the period and the entity named on the account, followed by recalculation using the factor edition cited in the basis of preparation.
The method test is where a first-year engagement most often produces a presentation finding. They confirm the location-based figure is the one disclosed as Scope 2. They confirm the state factors match the sites. Where a market-based figure is also presented, they confirm it is presented as additional information rather than as a substitute, and they test the contractual instruments behind it: the certificate surrender or cancellation records, the volume, the vintage and the period, agreed to the registry rather than to a purchase invoice.
They accept a retailer invoice or metered data agreed to the inventory, with the state-appropriate factor and its edition cited. They reject a market-based figure presented as the Scope 2 disclosure, a renewable claim supported by a supply contract with no certificate surrender evidence, a national factor applied to a multi-state portfolio with no disclosure of the simplification, and landlord-recovered electricity omitted rather than estimated.
Commonly confused with
Scope 3 Category 3. The generation of the electricity you consumed is your Scope 2. The emissions of extracting and delivering the fuel to the power station, and of the electricity lost in transmission and distribution before it reached you, are Category 3. Applying a full life-cycle electricity factor in Scope 2 double counts. Also confused with on-site generation: electricity you generate and consume from your own owned generator is Scope 1, not Scope 2, because you burned the fuel.
Timing and relief
No relief. Scope 2 is disclosed and assured from the first annual reporting period, on the same basis as Scope 1. The paragraph C4(a) measurement-method relief applies here as it does to Scope 1.
Sources
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Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004 revised edition)
GHG Protocol
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4
Review status
Review required
Last reviewed
15 September 2026
Editorial pass, unsigned
Reviewer required
Carbon accounting specialist and registered company auditor
Next scheduled review
1 August 2027
next expected National Greenhouse Accounts Factors release
Part of
Cluster D, Emissions accounting and measurement
49 terms from the head term carbon accounting down to individual Scope 3 categories and the mechanics of factors, boundaries and data quality. The largest cluster in the glossary.
Related terms
The two methods, and why only one of them is the required disclosure
The direct half of the pair assured alongside Scope 2 from year one
Where the state-level electricity factors come from
Related questions
We have sites in several states. Does that change our emission factors?
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Yes, for electricity. Location-based Scope 2 factors differ by state and territory because grid intensity differs, so you need electricity consumption split by site and state and then the matching factor for each. Scope 1 fuel factors are national and do not change from one state to another.
Where do Australian emission factors come from?
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The National Greenhouse Accounts Factors, published each year by the Department of Climate Change, Energy, the Environment and Water. They give Scope 1 factors by fuel and Scope 2 electricity factors by state and territory. NGER-registered corporations must use NGER measurement methods for their NGER reporting.
What evidence do we need for each emissions number?
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Every reported number needs a source document you did not create for the report, the activity data drawn from it, the emission factor and its published edition, and the calculation joining them. Fleet fuel needs litres from fuel card statements, electricity needs kWh by site from retailer invoices with the matching state factor, and refrigerants need kilograms by gas type from service records.
Other terms in this cluster
Scope 2 emissions