The Greenhouse Gas Protocol is changing, with updates to the way electricity emissions are measured and reported expected to impact thousands of businesses.
We take you through the key changes we can expect to see, and how these many affect your business, so you can stay informed and prepare for the transition to more accurate, hourly-based carbon reporting.
What is the GHG Protocol?
The Greenhouse Gas Protocol (GHG Protocol) is an internationally accepted standard for measuring, managing, and reporting greenhouse gas emissions. It provides a standard way for companies, governments, and organisations to figure out how much carbon dioxide and other greenhouse gases they are producing.
The protocol organises emissions into Scope 1, 2 and 3:
Scope 1 – covers direct emissions from sources a company owns or controls, like fuel burned in company vehicles.
Scope 2 – includes indirect emissions from the production of purchased energy, such as electricity, steam, heat, or cooling.
Scope 3 – accounts for all other indirect emissions that happen across a company’s value chain, including things like producing raw materials or employees commuting to work.
By measuring emissions this way, the GHG Protocol helps organisations be transparent about their carbon footprint and take steps toward sustainability.
Why is the GHG Protocol Changing?
The push to update the Greenhouse Gas (GHG) Protocol comes from growing criticism of the current standards, and the claim that they no longer fully reflect energy systems, climate goals and evolving new technologies.
Since the Protocol’s inception in 2001, the energy landscape has changed significantly, but many of its core accounting processes have remained the same.
One major concern is the lack of accuracy and comparability in Scope 2 emissions reporting. Under the current protocol, companies can use market-based methods that don’t always accurately reflect the emissions associated with their electricity consumption. This makes it difficult to compare performance accurately.
A significant issue is how companies can claim zero-emissions electricity use. In some cases, organisations purchase energy attribute certificates (EACs) from renewable generation that is not connected to the same grid or even the same time period as their electricity consumption.
For example, a building consuming electricity at night in one area could match that usage with renewable certificates generated during the day in another area. Although this is technically compliant with the current GHG Protocol, this is not an entirely accurate link between consumption and clean energy supply, which leads to double counting risks and undermines the credibility of reported emissions reductions.
Additionally, current market-based claims often do not send strong price signals for when and where clean energy is most needed. As a result, they may not sufficiently incentivise investment in renewable energy during periods of low supply.
There is also a growing gap between reported emissions and real climate impact. The GHG Protocol notes that emissions reports don’t directly reflect changes in the atmosphere. In practice, companies can report very low (or even zero) emissions using certificates that may not actually reduce grid emissions, making the real impact of their energy choices unclear.
The main goal of the GHG Protocol updates is to close the gap between corporate reporting and real-world energy use. A key target being discussed is ensuring that every kilowatt-hour of electricity consumption is matched with carbon-free energy sources on an hourly basis.
GHG Protocol Updates – What’s changing?
The proposed updates to the Greenhouse Gas Protocol mark a change in how electricity emissions are measured; moving from annual estimates to more precise, time-based accounting.
Under the current system, companies usually use annual matching of renewable energy certificates (such as REGOs). This approach provides a high-level view of emissions but and doesn’t accurately reflect how electricity is actually generated and consumed on the grid in real time.
The new approach introduces hourly matching, often referred to as 24/7 carbon-free energy (CFE). Instead of relying on annual averages, companies will need to match their electricity use with carbon-free sources hour by hour.
The overall structure of the framework will remain the same, with dual reporting continuing.
- The location-based method will require companies to use the most precise, location-specific emission factors available. In Europe, this will restrict the current practice where companies can purchase Green Certificates from other countries (e.g., a company in France buying certificates from Belgium), so that certificates are purchased within the country of operation. This restriction does not affect UK users, as certificates can only be purchased from the UK.
- The market-based method will see more substantial changes. Companies will need to ensure that all energy attribute certificates are matched hourly, not annually.
To make this transition possible, several implementation measures are being considered. These include using load profiles to convert annual or monthly energy data into hourly estimates and amended exemption thresholds to reduce the burden on smaller organisations.
The changes are expected affect larger businesses above a certain energy consumption threshold. Whilst timelines are not yet finalised, a full rollout is expected around 2028.
How will the GHG Protocol Updates affect my business?
The proposed changes to the Greenhouse Gas Protocol could have a significant impact on businesses, particularly when it comes to who is included and how energy use must be reported.
One of the biggest changes is the introduction of new consumption thresholds, which will determine whether a company must comply with the updated rules. These thresholds are still yet to be confirmed, but they are expected to bring many more businesses into scope, especially in the UK industrial and commercial (I&C) sector.
Although not confirmed, this is who is likely to be affected:
- Small consumers (<10 GWh/year)
Likely to be exempt, reducing the burden on smaller organisations
- Mid-market (10–50 GWh/year)
This threshold is currently up for consultation, but it is likely to become mandatory for users on the lower end of the spectrum (10/20 GWh/year)
- Large consumers (50+ GWh/year)
Expected to have full mandatory hourly matching across all electricity use
Note: All thresholds are approximate and may change as updates are finalised.
The key areas of impact in the update include:
- Updated threshold levels: The exact cutoff points will determine whether thousands of medium-sized businesses are included or excluded.
- Moving from annual matching to hourly matching: This fundamentally changes how companies procure and track renewable electricity.
- Procurement strategies: The treatment of forward hedging instruments, including both unbundled REGOs and bundled Power Purchase Agreements (PPAs), is still being debated and could significantly affect existing contracts.
Overall, for many businesses, especially those in the mid-to-large energy consumption range, the GHG Protocol updates could involve a fundamental shift in energy procurement, risk management, and sustainability strategy.
What Do Businesses Need to Do to Prepare for the GHG Protocol Updates?
It’s still early days for the proposed changes to the Greenhouse Gas Protocol, so the most important step right now is to stay informed as updates develop. Guidance and requirements are still changing and being published, so keeping up to date will help you avoid any surprises later.
Working with an energy consultant can also be beneficial in helping you stay compliant, make sense of new rules, and build an energy strategy that is both cost-effective and compliant.
Businesses should also continue to focus on reducing their emissions through energy efficiency measures and increasing their use of renewable energy. By doing this, not only can you set yourself up for success and compliance with the new GHG Protocol updates, but you can also lower energy costs and carbon emissions.
How Can Consultus Support Your Businesses with the GHG Protocol?
At Consultus, our team is continuously monitoring updates to the Greenhouse Gas Protocol, ensuring our customers are among the first to know when changes happen. We will provide regular updates to keep you informed as further information becomes available.
We understand that these changes can be difficult to navigate. That’s why we’re here to help. We can offer clear guidance, practical support, and tailored energy strategies to keep your business compliant and prepared.
If you’d like to discuss how these updates could impact your business, and how we can support you get in touch with our team today.