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).
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.
Outside Europe, in regions such as North America, Asia and Latin America, companies and governments are also 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.
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.
Find out how the location- and market-based approaches are used worldwide in carbon accounting and enable companies to achieve international transparency.
In today’s world, a transparent carbon footprint is crucial for companies. This guide explains the two common approaches: the location-based approach, which uses regional electricity mix data, and the market-based approach, which takes individual electricity contracts into account. Learn how you can combine both methods to effectively reduce your emissions and optimize your sustainability strategy.
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