What's Changing in 2026: Emission Factors, the GHG Protocol Overhaul, and the Grid Decarbonisation Trend

Most years, an emission factor update article is a straightforward technical exercise: here's what changed in DEFRA, here's the new NGA electricity factor for Queensland, here's what EPA added to the Hub. 2026 is not that kind of year.

This year, the methodological foundations underneath emission factor practice are shifting. The GHG Protocol — the framework that defines how approximately 92% of Fortune 500 companies calculate their emissions — published its first major Scope 3 revision proposals since the original standard was released in 2011. The electricity grids that underpin most Scope 2 calculations are decarbonising faster than any prior forecast. And a coming shift in data quality requirements is about to make the choice between a supplier-specific emission factor and a spend-based proxy a disclosure decision, not just a methodological preference.

This article covers it all: the proposed Scope 3 changes and what they mean for inventory design, the acceleration in grid carbon intensity decline, what to expect from the major annual database releases in 2026, and the practical steps practitioners should be taking now — even before the new standards are finalised. If you need a primer on emission factors themselves, start with our emission factors explainer.

Why 2026 is a different kind of year

The last time the GHG Protocol materially revised its core Scope 3 accounting standard was 2011. In the decade and a half since, voluntary disclosure has become mandatory reporting in dozens of jurisdictions. Scope 3 has gone from a supplementary disclosure to the category that drives the majority of most organisations' reported emissions — and the most scrutinised by investors, regulators, and assurance providers.

The 2026 revision proposals address structural problems that have accumulated over that period: companies excluding categories without rigorous justification, spend-based proxy data masking inventory gaps, and inconsistent treatment of investments and facilitated activities. The proposed changes are substantive, and while the final standard won't be in effect until 2027 at the earliest, the direction of travel is clear enough that inventory design decisions made today will either age well or need expensive rework.

Layered on top of this methodological shift is a physical one. The electricity grids that determine location-based Scope 2 emission factors, and that flow through into countless Scope 3 upstream energy calculations, are now decarbonising fast enough that the lag between grid reality and published factors is becoming a meaningful source of inventory error. Understanding the direction and magnitude of these changes matters as much as knowing the specific factor values.

2026 changes at a glance

The dominant theme of 2026 is tightening. Factor values are generally falling (grids are getting cleaner), but the expectations placed on how factors are selected, documented, and reported are rising. The two trends are on a collision course: it will become harder to hide behind low data quality at the same time that lower factor values reduce the incentive to do so.

The GHG Protocol Scope 3 revision: what's proposed

On 31 March 2026, the GHG Protocol published its Scope 3 Standard Revisions: Phase 1 Progress Update — the first substantive signal of where the revised standard is heading. A full public consultation draft is expected mid-2026, with the final standard targeted for late 2027. Nothing is binding yet, but the proposed changes are significant enough to warrant serious attention now.

The 95% coverage floor

Under the current standard, companies can exclude Scope 3 categories they consider "not relevant" or "not significant" with relatively flexible justification. The proposed revision replaces this with a hard floor: organisations reporting in conformance with the revised standard must account for and report at least 95% of their total required Scope 3 emissions. Exclusions — including de minimis omissions — cannot cumulatively exceed 5%, and every exclusion must be quantified, disclosed, and justified — not merely described as immaterial.

This is a structural shift. Under current practice, a company can say Category 4 (upstream transportation) is "not relevant" because they use third-party logistics and don't believe they have sufficient data. Under the proposed revision, that omission must be quantified — you need to know, at least approximately, how big the thing you're leaving out is. That requires doing the work of estimating the category even when you're not including it in your headline number.

New Category 16: facilitated activities

The proposed revision introduces a new Scope 3 Category 16: other value chain activities (facilitated activities). Category 16 captures emissions from activities a company facilitates — enables, initiates, or earns transactional income from — without directly owning the underlying activity.

Examples the GHG Protocol has cited include:

• Insurance underwriting: emissions from activities an insurer underwrites
• Brokerage and financial advisory: transactions and assets a broker facilitates
• Advertising and media: emissions from products and activities a media company promotes
• Licensing: products manufactured under a company's licensed technology or brand

Most Category 16 sub-categories are proposed as optional disclosure — unlike Categories 1–15, which are required if relevant. However, optional does not mean unimportant: for financial services firms, insurers, and media companies, Category 16 may represent the largest emissions in their value chain by an order of magnitude. As climate-related financial disclosure frameworks mature, voluntary disclosure of Category 16 is likely to become a de facto expectation for these sectors.

Data quality tiers

Under the proposed revision, reported Scope 3 emissions must be disaggregated into tiers based on data type:

• Primary data: supplier-specific, activity-based data obtained directly from value chain partners
• Secondary data: industry averages, published emission factors, and spend-based proxies

Companies would need to disclose what proportion of their Scope 3 inventory is based on primary versus secondary data — and the direction of travel is clearly toward primary. The spend-based approach that has been the default for Categories 1, 2, and 4 in most corporate inventories is not going away, but it is being recast as a lower-quality data tier that requires explicit disclosure rather than silent use.

The practical implication: supplier engagement programs that generate activity-based emission factors are no longer just a nicety for ambitious reporters. They are the path toward inventory quality that will satisfy both the revised standard and the assurance providers who certify conformance.

Category 15 expansion: all companies with investments

Category 15 (investments and financed emissions) has historically been treated as the domain of financial institutions. The proposed revision makes explicit what was always implied: all companies with equity stakes, bonds, or project finance must include those investments in their Scope 3 inventory, not just banks and asset managers.

For large industrial companies and multinationals with substantial joint ventures, minority stakes, or project finance arrangements, this represents a material new reporting obligation. The emission factors and calculation methods used for financed emissions — based on PCAF (Partnership for Carbon Accounting Financials) methodology — are well established for financial institutions but will be new territory for many non-financial corporates.

Verification disclosure requirements

The proposed revision adds a requirement to disclose verification status for Scope 3 emissions. If a company verifies any portion of its Scope 3 inventory, it must disclose whether the emissions are "Fully verified", "Partially verified", or "Not verified". This mirrors the transparency requirements already common in third-party assurance engagements under ISAE 3410 and its equivalents.

The full public consultation draft is expected mid-2026. The GHG Protocol has been explicit that all Phase 1 content remains subject to revision based on consultation feedback. Organisations should monitor the process rather than designing to the draft — but the direction of travel is clear enough to begin preparing.

The accelerating grid decarbonisation trend

The structural driver of downward-trending electricity emission factors is well known: renewable energy is getting cheaper, is being deployed faster, and is displacing fossil fuel generation at a pace that continues to outrun forecasts. What's notable in 2026 is the magnitude of the shift — and the degree to which it is now reflected in published factor values.

Global picture: 3.7% annual decline

The IEA's forecasts for global electricity carbon intensity show a sustained decline of approximately 3.7% per year through 2026, with global intensity falling from an estimated 445 g CO₂/kWh in 2024 to around 415 g CO₂/kWh by end of 2026. For context, the IEA's 2030 forecast is 360 g CO₂/kWh — a trajectory that would have seemed optimistic as recently as 2022.

The global headline masks significant regional variation:

A particularly striking signal: in 2025, solar PV alone met more than one quarter of all global primary energy demand growth — the first time in history that a modern renewable source has contributed the largest share of global energy demand growth in a single year. Growth in renewables and nuclear combined exceeded the entire global increase in electricity generation in 2025, meaning fossil fuel generation fell slightly in absolute terms for the first time.

What this means for Scope 2

For location-based Scope 2 accounting, the implication is straightforward: if you're using electricity emission factors from two or three years ago, you are likely overstating your emissions. The lag between grid reality and published factors — typically 12–24 months — means that even diligent reporters using the most recent published factors are working with data that slightly overstates current grid intensity. This is by design (lag is inherent in how national energy statistics are compiled), but practitioners should understand it.

For market-based Scope 2 accounting using residual mix factors or energy attribute certificates (EACs), the picture is more complex. As grid intensity falls, the environmental premium of renewable EACs decreases — a certificate representing "zero emissions" electricity is less differentiated from grid electricity as the grid itself decarbonises. This is one driver behind the emerging interest in 24/7 carbon matching, which ties renewable energy procurement to the specific hours when a company consumes electricity, rather than an annual average match.

Australia: continued NEM decarbonisation

Australia's National Electricity Market continues its rapid renewable buildout. The trend visible in the 2025 NGA Factors — where most states saw reductions in Scope 2 electricity emission factors, with coal-dependent states converging slowly toward the frontier set by South Australia and Tasmania — is expected to continue in the forthcoming 2026 edition. Large-scale battery storage deployments and the accelerating retirement of coal capacity are structurally reducing grid emission intensity across the NEM, and these shifts will flow through into NGER-aligned factors as the data is updated.

Database updates: DEFRA, NGA, and EPA in 2026

Data quality tiers and the shift away from spend-based proxies

The single most consequential long-term implication of the proposed GHG Protocol revisions is the formalisation of data quality tiers. This shift deserves more attention than it typically receives in coverage of the revision.

Currently, a company can calculate its Scope 3 Category 1 (purchased goods and services) emissions using spend-based factors — multiplying procurement spend by economy-sector emission intensities derived from economic input-output models — and report this figure with no particular flag that it reflects proxy data rather than actual supplier emissions. Under the proposed revision, this figure would need to be disclosed as secondary-tier data, distinguishable from primary-tier figures derived from supplier-specific activity data.

The practical consequence is that companies with heavily proxy-dependent inventories will face explicit disclosure of that dependency, rather than having it buried in methodology footnotes. For stakeholders — investors, customers, regulators — this will make it immediately visible how much of a company's Scope 3 inventory is based on measurement versus estimation. This visibility creates pressure to improve data quality, which in turn creates demand for supplier-specific emission factors.

What changes in emission factor selection

In a world of formalised data quality tiers, the criteria for choosing an emission factor shift:

• Supplier product-level factors (primary data) move from "aspirational" to "disclosure-determining" — how many you have determines your primary-tier inventory share
• Industry-average activity-based factors (from databases like ecoinvent or the IEA) become the preferred secondary tier, preferred over spend-based proxies where available
• Spend-based factors (USEEIO, EXIOBASE, DEFRA per-spend factors) retain utility for coverage and materiality estimation, but their use must be declared
• Documentation of why a particular tier was used — not just which factor was applied — becomes a standard expectation

The 24/7 carbon matching signal

A separate but related development is the growing interest in 24/7 carbon matching — or hourly matching — as a more granular approach to market-based Scope 2 accounting. Under annual matching (the current norm), a company can purchase renewable energy attribute certificates (RECs, GOs, or LGCs) for a full year of electricity consumption and claim market-based Scope 2 emissions of zero, even if their actual consumption pattern is heavily weighted toward fossil fuel generation hours (typically evenings and cloudy winter days).

Hourly matching ties the renewable energy claim to specific hours of consumption, requiring the energy attributes to match temporally with when the electricity was actually consumed. The methodology is more data-intensive — it requires hourly smart meter data and time-stamped energy attribute certificates — but it reflects a more accurate representation of the actual emissions associated with corporate electricity consumption.

The GHG Protocol's ongoing Scope 2 Guidance revision is expected to address hourly matching, and several major corporates (including Google, Microsoft, and large European energy consumers) have already adopted 24/7 matching as internal policy. While it remains outside mainstream mandatory reporting requirements, it is on a trajectory toward becoming a best-practice standard that emission factor practitioners should understand and prepare for.

What this means for your reporting now

The combination of falling factor values, a forthcoming Scope 3 standard overhaul, and rising data quality expectations creates a clear set of practical priorities for GHG practitioners in 2026.

Update your factor set for the current reporting cycle

This is evergreen advice, but the magnitude of recent changes makes it more important than ever. If you are a UK reporter using pre-2025 DEFRA factors, you may be overstating your Scope 2 emissions by more than 14%. If you are an Australian NGER reporter, your state-level electricity factors from two years ago could be materially wrong. The downward trend is real, is continuing, and results in systematic overstating of emissions when stale factors are used.

Audit your Scope 3 inventory against the proposed 95% threshold

Even before the revised standard is finalised, it is worth running your current Scope 3 inventory against the proposed 95% coverage requirement. This means:

1. Estimating the magnitude of every excluded category, including those you currently deem "not relevant"
2. Calculating what percentage of your estimated total Scope 3 your current reported inventory represents
3. Identifying which excluded categories are largest and would most need to be addressed to reach 95%

For most organisations, this exercise will reveal that a handful of excluded categories account for the majority of the gap. Prioritising engagement and data collection for those categories is the right response — not waiting for the final standard.

Assess Category 15 and Category 16 exposure

If your organisation has equity investments, joint ventures, or project finance, begin assessing how the Category 15 expansion would affect your reported inventory. For organisations in financial services, insurance, media, or professional services, assess whether Category 16 facilitated activities would be material. These assessments take time and require data that may not currently be collected.

Separate factor-driven changes from operational changes

With factors moving as sharply as they have in 2025–26, the annual change in your reported emissions will include a significant factor-driven component. Best practice — and increasingly an assurance expectation — is to present a bridge analysis that separates:

• Operational change: actual changes in activity levels, processes, or procurement
• Factor update effect: the change in reported emissions attributable solely to updated factor values
• Boundary or methodology changes: changes due to scope expansions or revised calculation methods

This decomposition is what distinguishes credible emissions reporting from number reporting. It is what allows your board, investors, and regulators to understand whether real progress is being made.

Frequently asked questions

When will the GHG Protocol revised Scope 3 standard be finalised?

The Phase 1 Progress Update was published in March 2026. A full public consultation draft is expected mid-2026, with the final standard targeted for late 2027. Nothing is binding yet — organisations should monitor the consultation process and begin assessing what the proposed changes mean for their inventory approach.

What is the new GHG Protocol Category 16?

Category 16 is a proposed new Scope 3 category for "other value chain activities", designed to capture emissions a company facilitates without directly owning the underlying activity — including insurance underwriting, brokerage, advertising, and licensing. Most Category 16 sub-categories are proposed as optional. Financial services, media, and professional services firms are most likely to be affected.

How fast are electricity emission factors falling globally in 2026?

According to IEA forecasts, global electricity carbon intensity is declining at approximately 3.7% per year, from 445 g CO₂/kWh in 2024 to an estimated 415 g CO₂/kWh by end of 2026. The EU is leading with reductions of around 10% per year. The UK's 2025 DEFRA electricity factor fell 14.5% in a single year. India is the notable outlier, with rising intensity driven by coal-dependent demand growth.

What does the 95% Scope 3 coverage rule mean in practice?

Under the proposed revision, companies must account for and report at least 95% of total required Scope 3 emissions. Exclusions cannot cumulatively exceed 5% and must be quantified, disclosed, and justified — not simply described as immaterial. This is a significant tightening from current practice, where many reporters exclude categories without rigorous quantification.

When will DEFRA 2026 and NGA 2026 be published?

DEFRA/DESNZ conversion factors typically publish in June each year — the 2026 edition is therefore expected around June 2026. Australia's NGA Factors are typically published in August — the 2026 edition (covering the 2026-27 NGER year) is expected around August 2026. The US EPA Emission Factor Hub typically updates in January, so the 2026 update incorporating eGRID 2024 data should be available now or shortly.