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Location-Based versus Market-Based Emissions: Understanding the Difference

Understand the key differences between location-based and market-based emissions measurement to better grasp your organisation's environmental footprint.
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TLDR: The article explores location-based emissions, which calculate a company's carbon emissions from electricity based on a regional power grid's average, and market-based emissions, which focus on a company's specific energy choices. It discusses the broader perspective of the location-based method versus the detailed accuracy of the market-based approach, highlighting the advantages and challenges of each.

Calculating energy consumption emissions is vital for any organisation conducting a carbon footprint. There are two primary methods for measuring these emissions: the location-based method and the market-based method. So, which one do you chose? This article explains the differences between the two, the pros and cons, and unveils useful insights that will help you in your decision making.

What are Location-Based Emissions?

Average CO2e emissions released per unit of electricity across a region

Location-based emissions, often referred to as the "grid average method," calculate a company's emissions from purchased electricity usage based on the average emission factor of the regional power grid, i.e., the average amount of CO2e emissions released across the region per unit of provided electricity. Therefore, this approach does not consider the specific source of electricity a company purchases—it's a more generalised method, providing a broad view of the environmental impact.

What are Market-Based Emissions?

Average CO2e emissions released per unit of electricity by a specific source

Contrastingly, market-based emissions offer a more accurate approach. This method accounts for the specific choices a company makes regarding its electricity supply, including renewable energy purchases, low/no-carbon suppliers, and contracts. Market-based calculations use emission factors that reflect the specific energy providers' output, thus offering a more accurate representation of a company's emissions.

Pros and Cons


The location-based method offers a simplified calculation that is useful for broad comparisons across regions, and beneficial for businesses starting their sustainability journey without specific renewable energy contracts. However, it is significantly less precise and does not incentivise or reflect renewable energy purchases. This means it can potentially undermine the efforts of companies actively seeking greener alternatives.

Key Benefit: Useful for broad comparisons across regions.
Key Issue: Does not reflect efforts to choose low/no-carbon suppliers.


The market-based method provides a more accurate reflection of a company's emissions based on its energy choices, encourages the procurement of renewable energy, and aligns with global efforts to promote transparency in corporate sustainability. However, the method is more complex to calculate and requires access to information about energy procurement, which can be difficult to obtain from some energy suppliers.

Key Benefit: Accuracy
Key Issue: Difficulty in obtaining information.

Simplifying Emissions Measurement with FutureTracker

Navigating the complexities of location-based and market-based emissions can be daunting; however, FutureTracker offers an innovative platform that simplifies the measurement and management of both types of emissions. With FutureTracker, businesses can easily input their data and receive accurate, GHG Protocol and ISO 14064 quality emission estimates. The platform's user-friendly interface, combined with expert support, ensures that companies can effectively track their progress, set realistic targets, and plan actionable initiatives toward sustainability.

By providing coverage for both location and market-based electricity emissions, FutureTracker enables businesses to get a holistic view of their environmental impact, fostering informed decision-making. Whether you're looking to start small or aim for net-zero, FutureTracker's comprehensive suite of tools and services supports your journey every step of the way.

If you’d like to learn about how FutureTracker can help your business, book a demo here.

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