Introduction

These guidelines, developed under the Greenhouse Gas Protocol initiative by the World Resources Institute and World Business Council for Sustainable Development, support consistent, policy-neutral GHG accounting. They apply to projects that either supply electricity to the grid or reduce grid electricity consumption. Users include project developers and programme designers. Developers can follow detailed accounting methods, while designers may use the guidance to derive standardised baseline emission rates. Projects that require specific GHG quantification must follow the full protocol, including baseline estimation, boundary definition, monitoring, and reporting. The guidelines are structured into four parts: Key concepts, accounting procedures, example calculations, and supplementary information.

Key concepts

GHG reductions are calculated by comparing project emissions with baseline emissions from displaced grid electricity. Baseline emissions derive from the operating margin (OM)—existing generation—and build margin (BM)—new capacity that would otherwise be constructed.

The combined baseline emission rate is: ERbaseline = wBM + (1–w)OM,
where w is the weight assigned to BM displacement. Accurate baseline estimation depends on defining proper grid boundaries (based on grid operations, not political lines) and assessing primary and secondary GHG effects.

Electricity reduction project activities

These include efficiency upgrades or onsite generation that reduce demand for grid electricity. Reductions are quantified by estimating electricity savings against an adjusted baseline, accounting for variables like output changes and external influences. Savings must also be corrected for transmission losses—typically 7–10%—to estimate avoided generation. Once avoided generation is calculated, BM and OM emission factors are applied using the same methods as for generation projects.

Defining the GHG assessment boundary

The boundary includes all primary and significant secondary effects. While many projects have no notable secondary effects, some—such as those involving construction or biofuels—may introduce additional GHG sources. These should be included if they exceed a few percent of total reductions. Estimations for secondary effects can be based on standard emissions data or project-specific calculations.

Determining the extent of build margin and operating margin effects

Projects that meet new capacity demand displace BM emissions. Firm power projects usually result in w = 1. Projects not recognised by grid operators or with minimal capacity value may only affect OM (w = 0). The ratio depends on capacity value and expected output. Default weights can be applied if precise estimates are unavailable, but justification must be provided.

Selecting a method to estimate build margin emissions

Three options are provided:

• Project-specific procedure – using baseline candidates with lowest barriers

• Conservative proxy – selecting the lowest-emitting viable candidate

• Performance standard – calculating a weighted average across candidates

Choice depends on data quality, desired accuracy, and applicability across projects.

Identifying the baseline candidates

Candidates are generation technologies that could reasonably be built in place of the project. These are identified within specific grid boundaries and time ranges, typically the most recent 20% of new capacity, but not older than 5–7 years. Legal, regulatory, or geographic constraints (e.g. siting laws) may exclude some technologies.

Justifying the baseline scenario and characterising the build margin

Projects must show they face greater implementation barriers, or lower net non-GHG benefits than viable alternatives. If this cannot be demonstrated, the project is not considered additional and cannot claim GHG reductions. If BM emissions are estimated using the project-specific approach, one representative baseline candidate is selected.

Estimating the build margin emission factor

Emission factors are based on actual or projected data for identified baseline candidates. Calculations can use measured GHG emissions or fuel usage and conversion factors. The result is expressed as tonnes of CO₂-equivalent per MWh.

Estimating the operating margin emission factor

Four methods are provided:

• Average load-following – simple average for non-baseload plants

• Average marginal – using load-duration curve analysis

• Marginal historic – based on past hourly grid data

• Marginal modelled – using dispatch simulation models

Selection depends on data availability and project needs. Import adjustments apply if external power exceeds 5% of grid consumption.

Estimating baseline emissions

Total baseline emissions are calculated by multiplying the combined OM/BM emission rate by the electricity generated or avoided over time.

Monitoring and quantifying GHG reductions

A monitoring plan is required, covering project output and emission factors. For most electricity reduction projects, project emissions are zero. Reductions are calculated annually using observed activity data.

Reporting GHG reductions

Reports must document the baseline scenario, emissions factors, boundary definitions, and all calculations. Transparency ensures that results can be verified and are consistent with the Protocol’s principles.