Potential Changes to Sustainability Reporting Standards: What Irish Businesses Need to Know

Q: 3. What is the difference between Location-Based and Market-Based methods?

The Dual Reporting Framework: LBM vs. MBMUnder the GHG Protocol, companies are required to report Scope 2 emissions using two distinct lenses. The 2026 revisions aim to bring these two methods closer to physical reality:Location-Based Method (LBM): This reflects the physical reality of the grid. It calculates emissions based on the average carbon intensity of the local power network where your facility is physically located (the “grid mix”). It tells you the carbon footprint of the actual electrons flowing through your meter.Market-Based Method (MBM): This reflects your contractual choices. It accounts for the specific electricity you have chosen to purchase via instruments like Power Purchase Agreements (PPAs) or Green Certificates (GOs).The 2026 Refinement: The core objective of the current updates is to increase the “integrity” of the Market-Based Method. By introducing hourly and regional matching, the Protocol ensures that MBM reporting can no longer be used to “mask” a high-carbon local grid with cheap, unrelated certificates. Instead, your contractual claims must now align with the time and place of your actual consumption

Widely recognised as the “gold standard” in corporate carbon accounting, the Greenhouse Gas (GHG) Protocol focuses on the technical standards for measuring emissions. While it is a joint initiative of the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), it is the standard itself, rather than the organizations that companies report against.

Since the first corporate standard was released in 2001, it has served as the global rulebook. Today, major frameworks like the CDP (formerly Carbon Disclosure Project) and the Science Based Targets initiative (SBTi) are built entirely on GHG Protocol foundations.

We are currently at a critical juncture. The GHG Protocol is undergoing a major revision process, with new rules expected to fundamentally change how businesses report emissions, particularly under Scope 2. These changes have significant implications for Irish energy policy, regulation, and corporate strategy.

The GHG Protocol Scopes: A Refresher for Irish Business

The GHG Protocol categorises emissions into three “Scopes” to prevent double-counting and provide a methodical framework for decarbonisation. For Irish businesses, these scopes are the basis for compliance with mandates like the CSRD (Corporate Sustainability Reporting Directive) and SECR.

Scope 1 (Direct Emissions): Emissions from sources owned or controlled by your company, such as burning gas in a boiler.
Scope 2 (Indirect Energy): Emissions from the generation of purchased electricity, steam, heat, or cooling. The 2026 revisions focus heavily here. For many Irish firms, especially in technology and pharma, electricity is their single largest emissions source.
Scope 3 (Value Chain): All other indirect emissions, from the carbon footprint of your suppliers to the end-use of your products.

The Big Shift: From Annual to Hourly Matching

The most transformative proposal currently under review is the move away from “Annual Matching” toward “Hourly and Regional Matching.” This shift could redefine how companies manage Power Purchase Agreements (PPAs) and Guarantees of Origin (GOs).

How it works today:

Currently, a company can buy renewable energy certificates (like Irish GOs) on an annual basis. If you use 1,000 MWh of power in a year, you buy 1,000 MWh of certificates, and you can claim “100% renewable” usage, even if your factory ran at night while your contracted solar farm was dormant.

What is changing:

Under the proposed 2026 updates:

Hourly Granularity: Certificates may need to match consumption hour-by-hour.
Regionality: The renewable power must come from the same physical grid (e.g I-SEM market in Ireland) to ensure the clean energy reached your operations.
Physical Reality: Claims must reflect what was happening on the grid at the time of use. If the grid was powered by gas at 2:00 AM, your report must reflect that unless you have a 24/7 CFE solution or storage in place.

Industries Under the Spotlight

With hourly matching, the market will likely move toward dynamic pricing for certificates. GOs generated during peak demand periods will command a significant price premium compared to those generated during periods of oversupply. This creates a “time-of-generation” value, where the specific hour an asset produces power becomes as important as the total volume produced.

This change will most impact:

Data Centres: Crucial for Ireland’s economy, these facilities require constant power and face increasing pressure to prove real-time decarbonisation.
Large-Scale Manufacturers: Firms with 24/7 production lines.

The Role of Captured Carbon

These revisions are not merely technical; they are financial. They will dictate the future of renewable procurement and corporate reputation.

At Captured Carbon, we assist Irish industries in navigating this complexity through independent, third-party verification of green energy claims. From managing the lifecycle of Guarantees of Origin to navigating Carbon Trading and EU Allowances (EUAs), we ensure your decarbonisation goals are both compliant and credible.

As the EU ETS continues to evolve and free allocations phase out, having a precise, data-driven carbon strategy is no longer optional, it is a competitive necessity.

Frequently Asked Questions

1. Why is the GHG Protocol moving away from annual matching?

In 2001, as global renewable projects were in their infancy, Guarantees of Origin (GOs) provided the essential tracking and investment incentives needed to jumpstart the transition. However, as we move toward high-penetration renewable grids, a legacy accounting system is no longer enough. The framework must now evolve to provide the granular, real-time price signals required to drive the next generation of clean energy investment

2. How will "Regionality" change procurement?

“Regionality” requirements shift renewable procurement from a global “paper” market to a local “physical” one by mandating that businesses source clean energy from the same grid where their electricity is consumed. This prevents the common practice of purchasing inexpensive certificates from oversupplied foreign markets (like Nordic hydro) to offset high-carbon consumption elsewhere. For Irish firms, this means procurement must happen directly within the I-SEM (Integrated Single Electricity Market), ensuring that corporate investments drive the construction of local wind, solar, and storage assets that physically displace fossil fuels on the Irish national grid.

3. What is the difference between Location-Based and Market-Based methods?

The Dual Reporting Framework: LBM vs. MBM

Under the GHG Protocol, companies are required to report Scope 2 emissions using two distinct lenses. The 2026 revisions aim to bring these two methods closer to physical reality:

Location-Based Method (LBM): This reflects the physical reality of the grid. It calculates emissions based on the average carbon intensity of the local power network where your facility is physically located (the “grid mix”). It tells you the carbon footprint of the actual electrons flowing through your meter.
Market-Based Method (MBM): This reflects your contractual choices. It accounts for the specific electricity you have chosen to purchase via instruments like Power Purchase Agreements (PPAs) or Green Certificates (GOs).
The 2026 Refinement: The core objective of the current updates is to increase the “integrity” of the Market-Based Method. By introducing hourly and regional matching, the Protocol ensures that MBM reporting can no longer be used to “mask” a high-carbon local grid with cheap, unrelated certificates. Instead, your contractual claims must now align with the time and place of your actual consumption

4. Will these changes make reporting more expensive?

Initially, yes. Moving from one annual data point to 8,760 hourly data points will require more complex systems to track claims. However, early adopters will gain a massive advantage in identifying renewable energy contracts that meet the new requirements and avoiding high-carbon “peak” costs.