Location- & market-based approaches: Global relevance explained

International standards and the Greenhouse Gas Protocol

The framework in which these approaches are used is the Greenhouse Gas Protocol (GHG Protocol), an internationally recognized standard for carbon accounting. It was developed to provide companies worldwide with a uniform method for recording and reporting greenhouse gas emissions. Both the location-based and the market-based approach are an integral part of this protocol.

The GHG Protocol makes a clear distinction between the emissions caused by the consumption of the average electricity mix in a region (location-based) and the emissions caused by the actual, contractually regulated purchase of energy products such as green electricity (market-based).

Application in the EU and Germany

In Europe, particularly in the EU and Germany, the application of these two approaches is particularly widespread, as there is strong regulatory support for sustainable business models and climate protection measures. Companies are often required by law, such as the EU Taxonomy and the German Climate Protection Act, to measure and report their CO₂ emissions.

The market-based approach is particularly relevant for companies that specifically rely on renewable energy to reduce their emissions. By purchasing certified green electricity contracts, these companies can actively contribute to reducing global CO₂ emissions.

Global significance

Outside Europe too, in regions such as North America, Asia and Latin America, companies and governments are increasingly turning to these two approaches to carbon accounting. Companies that operate internationally can thus record their carbon footprint consistently and according to the same standards worldwide.

In countries such as the USA or China, which have very different energy sources, the location-based approach offers a transparent way of taking the different electricity mixes into account. At the same time, the market-based approach enables procurement decisions to be mapped accurately, especially for companies that are increasingly switching to renewable energies.

Conclusion: globally applicable methods

Location-based and market-based approaches are not specifically German or European methods, but globally recognized approaches to carbon accounting. Companies that operate internationally benefit from using these methods, as they ensure consistent and transparent reporting of their emissions. The global acceptance of these approaches gives companies the flexibility to make their sustainability strategies internationally visible and to optimize their carbon footprint worldwide.