How to Choose the Right Emission Factor: A Decision Framework for GHG Practitioners

There is no universal "correct" emission factor. For most activities, multiple factors exist — from different databases, at different geographic scales, based on different methodologies. Choosing the wrong one doesn't just introduce error; in regulated reporting contexts like NGER, it can constitute a compliance failure.

This article walks through a structured decision process that practitioners can apply to any emission source. It's built on the same logic I've used across large Australian mining and resources operations — where the stakes of getting the factor wrong are material at the scale of millions of tonnes of CO2-e.

If you're new to emission factors and want the foundational context first, read our emission factors explained guide before continuing.

Why emission factor selection matters

The formula is simple: Emissions = Activity Data × Emission Factor. The emission factor is often the less-scrutinised input — organisations spend considerable effort measuring activity data accurately, then apply whatever factor they find first. That's a mistake.

Consider two practitioners calculating the Scope 2 emissions of a Queensland facility. One uses the NGA state-level factor for Queensland. The other uses a global average electricity factor from an industry report. The difference in the final number can exceed 40%. Same activity data. Same formula. Entirely different answer — and only one is appropriate for Australian NGER reporting.

The same problem appears across all scopes: freight emission factors that mix tonnes-per-km and tonne-km denominators incorrectly, Scope 3 spend-based factors applied to the wrong economic sector, or fuel combustion factors from the wrong GWP vintage. Each error compounds across a large inventory.

Step 1: Match your reporting framework

Before you look at any emission factor database, identify which reporting framework governs your disclosure. The framework often prescribes the source.

For most Australian organisations, the primary driver is NGER. Even for voluntary disclosures (CDP, sustainability reports), using NGA Factors for Australian operations is almost always correct — it's the most geographically and methodologically appropriate source, and it aligns your voluntary and mandatory reporting.

For a full breakdown of what each database covers and when to use it, see our emission factor database comparison.

Step 2: Location-based vs market-based for electricity

This is the question I'm asked most often in Scope 2 reporting, and it's the area where the most errors occur.

Location-based method

The location-based method uses the average emission intensity of the grid where the electricity is consumed. For Australia, this means the NGA Scope 2 state-level electricity factors — one for each NEM state and the WA SWIS. For the UK, it's the DEFRA UK grid factor. For the US, it's the EPA's eGRID subregional factors.

Location-based is the default and always required. It represents the actual physical emissions associated with the electricity you drew from the grid, regardless of any contractual claims.

Market-based method

The market-based method uses contractual instruments to determine the emission factor. If your organisation has purchased renewable energy certificates (RECs), large-scale generation certificates (LGCs in Australia), power purchase agreements (PPAs) with renewable generators, or supplier-specific green tariffs, you may be able to claim a lower emission factor — potentially zero for fully certified renewable electricity.

The market-based factor is the supplier's disclosed emission rate for the contracted electricity, or if none is available, the residual mix factor for your grid region (the average intensity of electricity that has not been contractually claimed elsewhere).

When market-based claims are valid

Not all "green energy" arrangements qualify for market-based accounting. For a market-based instrument to be valid under the GHG Protocol, it must meet these criteria:

• Uniquely issued and retired: Each MWh of generation must have a corresponding certificate that is cancelled on your behalf (not double-counted)
• Matched temporally and geographically: Ideally from the same grid and time period as your consumption (matching standards are tightening globally)
• Disclosed emission rate: The supplier or certificate must carry a disclosed emission factor — not just a claim of "renewable"

In Australia, Large-scale Generation Certificates (LGCs) are the primary instrument. Unbundled LGCs (sold separately from the electricity) have historically counted for market-based reporting, though this is an active area of methodological development as the market matures.

Step 3: National, regional, or site-specific?

Where multiple factors exist at different geographic scales, prefer the most specific available — provided the quality is equivalent. The hierarchy, from most to least preferred:

In practice, Australian NGER reporters should virtually never need to reach Tier 4 for common activities — the NGA Factors are comprehensive for the major emission categories. Tier 4 becomes relevant for unusual processes, imported inputs with no Australian-specific factor, or emerging fuel types not yet covered by NGA.

Step 4: NGA vs IPCC defaults for Australian reporting

Under NGER legislation, NGA Factors take explicit precedence over IPCC defaults. This is not a general principle — it is legally mandated for NGER reporters. If an applicable NGA factor exists for your activity, you must use it.

The IPCC EFDB defaults are appropriate in these specific situations:

• An activity category exists in NGER regulations but no NGA factor has been published yet (rare, but occurs for emerging fuel types)
• A Scope 3 category is relevant to your NGER disclosure and no NGA factor covers the upstream activity — for example, Scope 3 Category 1 factors for internationally sourced materials where no Australian-specific data exists
• You are doing voluntary reporting for an activity outside Australia, where Australian-specific factors don't apply

For voluntary reporting (CDP, sustainability report, TCFD disclosure), you have more latitude — but using NGA Factors for Australian operations is almost always the right choice. It's the most authoritative, most methodologically appropriate, and most frequently updated source for Australian activities. If you use IPCC defaults where NGA factors exist and are applicable, expect that to be flagged in assurance.

Step 5: When supplier-specific data wins

Published emission factors represent averages. They're designed to be generally applicable, which means they're not perfectly accurate for any specific situation. Supplier-specific data — direct disclosure from your supplier of the emission intensity of the goods or services you purchased — is always preferable to a published average, provided the data quality is adequate.

When to pursue supplier-specific data

The decision to invest in collecting supplier-specific data is a cost-benefit calculation. It's worth it when:

• The emission category is material — one of your top 3-5 Scope 3 sources by estimated magnitude
• The supplier is a credible reporter whose data has been (or can be) assured
• The supplier's actual emission intensity is likely to differ significantly from the average factor — for example, a steel supplier who uses Electric Arc Furnace technology has dramatically lower emissions than the sector average (which is dominated by blast furnace production)
• The supply relationship is stable enough to make annual data collection efficient

Common Scope 3 categories where supplier-specific data matters most

• Category 1 (Purchased goods): Steel, aluminium, cement, chemicals — sector averages can be 2-3x different from best-in-class producers
• Category 4 (Upstream freight): Logistics providers increasingly disclose per-tonne-km emission factors specific to your freight lanes
• Category 6 (Business travel): Airlines are beginning to provide customer-level emissions data using seat-specific fuel burn methodology rather than fleet averages
• Category 11 (Use of sold products): For energy products (coal, gas, LNG), the NGA Factors include specific combustion factors for sold product — use these in preference to generic international averages

Supplier-specific data needs to be treated with the same quality standards as any other input: verified, documented, and consistently applied. An unverified supplier "fact sheet" claiming implausibly low emissions is worse than a published average factor — it introduces both inaccuracy and audit risk.

Common unit conversion traps

The formula is simple but the units can trip you up. These are the errors I see most frequently in practitioner-prepared inventories.

Energy unit confusion: MJ vs kWh vs GJ

Different databases use different energy units. NGA factors for stationary combustion fuels are often expressed per GJ or per tonne. DEFRA factors for electricity are per kWh. The conversion is simple (1 kWh = 3.6 MJ = 0.0036 GJ) but applying a factor in the wrong unit is a common source of large errors — typically off by a factor of 277 (3.6 / 0.013) when kWh factors are mistakenly used with GJ activity data or vice versa.

Always check the units in the source database before applying any factor. Don't assume based on what units your activity data is in.

GWP vintage mismatch: AR4 vs AR5 vs AR6

Global warming potentials (GWPs) — the multipliers that convert methane, nitrous oxide, and other gases into CO2-e — have been revised with each IPCC Assessment Report. AR4 (2007) GWPs differ from AR5 (2014) GWPs, which differ from AR6 (2021) GWPs. Methane's 100-year GWP, for example, was 25 in AR4, 28 in AR5, and 29.8 in AR6.

This matters because the emission factor databases use different vintages. NGA Factors currently use AR5 GWPs. DEFRA 2025 also uses AR5. If you're using factors from multiple databases in the same inventory, ensure they use the same GWP vintage — or explicitly convert factors to a consistent basis and document the conversion.

CO2 vs CO2-e

Some databases — particularly older technical publications and some IPCC sources — publish factors for individual gases separately (a CO2 factor, a CH4 factor, an N2O factor) rather than a combined CO2-e factor. If you use only the CO2 factor and ignore CH4 and N2O, you'll undercount emissions for any source where non-CO2 gases are significant — combustion in general, and methane-intensive sources in particular.

Published emission factor databases like NGA and DEFRA report in CO2-e throughout. The risk arises when pulling factors from raw scientific literature or older technical reports.

Denominator confusion: per litre, per tonne, per tonne-km

Freight factors can be expressed per tonne transported, per km travelled, or per tonne-km (the product of both). Using a per tonne factor when you need per tonne-km, or forgetting to multiply by distance, is an easy error. DEFRA's freight factors are expressed per tonne-km; NGA's may differ. Check the denominator explicitly.

Frequently asked questions

Can I use a different emission factor database than my framework requires?

For NGER, NGA Factors are mandatory where applicable — you cannot substitute another database. For voluntary frameworks (CDP, GRI, sustainability reports), you have latitude but must document your choice, apply it consistently across years, and be prepared to justify it in assurance. Switching databases between reporting periods without restating prior years invalidates your trends.

What if the NGA Factors don't cover my activity?

If no applicable NGA factor exists, you should document this explicitly and use the next-best alternative in the hierarchy: regional or national factors from another credible source (DEFRA or EPA if applicable), followed by IPCC EFDB defaults. In your NGER reporting documentation, record the factor source, the value used, and the reason NGA wasn't applicable.

How do I handle activities that span multiple grid regions?

Apply state-level electricity factors to each state's consumption separately. If you have a large operation split across NSW and QLD, don't blend — calculate NSW consumption × NSW factor and QLD consumption × QLD factor, then sum. The same applies to operations spanning countries: apply jurisdiction-specific factors to each jurisdiction's activity data.

When do I need to restate prior years after changing my emission factor source?

The GHG Protocol recommends restating prior year figures when a methodological change — including a change in emission factor source — would materially affect the comparability of your inventory over time. "Material" is typically defined as greater than 5% impact on total reported emissions, but frameworks vary. NGER has specific recalculation provisions; CDP and GRI allow thresholds to be set by the reporter. When in doubt, restate and explain.