Scope 2, RECs and Carbon Credits: What Indian Companies Can and Cannot Claim in 2026
Your electricity bill is probably the easiest part of your footprint to shrink on paper, and the easiest to get wrong in a disclosure. In 2026, Indian companies buying Renewable Energy Certificates (RECs) or signing green power deals are facing a sharper question from auditors and global customers: what exactly are you claiming, and does the accounting hold up?
This guide explains how Scope 2 works, where RECs and carbon credits each belong, and what is changing in the GHG Protocol.
Scope 2 in one paragraph
Scope 2 covers emissions from purchased electricity, steam, heat and cooling. The GHG Protocol asks you to report it two ways. The location-based method uses the average emission factor of the grid where you consume power. The market-based method reflects your contractual choices: a power purchase agreement, a green tariff, or energy attribute certificates such as RECs. If you need a refresher on the wider scopes, see our Scope 1, 2 and 3 explainer for Indian companies.
What a REC actually is
In India, one REC represents one megawatt-hour of renewable electricity generated and injected into the grid, with the environmental attributes separated from the power itself. A company buys the certificate, retires it in the registry, and can then claim that MWh as renewable in its market-based Scope 2 figure. It does not change the physical electrons you receive.
Two things follow. First, a REC is an electricity-sector instrument, so it only makes sense against Scope 2. It cannot offset your diesel, your process emissions or your supply chain. Second, price and quality vary widely between domestic RECs and international I-RECs, and oversupplied certificates from old plants say little about new renewable capacity being built. Check vintage, plant age and retirement evidence before buying.
Where carbon credits fit instead
A carbon credit represents one tonne of CO2e avoided or removed by a project. It is measured in tonnes, not MWh, and it belongs outside your inventory as a separate, disclosed claim. It does not reduce your Scope 2 number. Mixing the two is the most common error we see: a company retires carbon credits and then reports lower Scope 2, or buys RECs and calls itself carbon neutral.
The clean sequence is: measure, cut, procure renewable power for Scope 2, and only then use high-integrity credits for the residual, reported transparently. Our data centres guide shows this sequence for one of India's most electricity-heavy sectors.
What is changing in 2026
The GHG Protocol has been revising its Scope 2 guidance. Proposals put out for consultation (closed 31 January 2026) include hourly matching of certificates to consumption, a deliverability requirement so instruments come from the same grid or market, and stricter rules against double-counting a single claim. These are proposals; current guidance stays in force until final updates are published, and no effective date has been confirmed.
For Indian buyers this matters because annual-volume RECs could become a weaker basis for a renewable claim over time. Flexibility is the sensible response.
A quick worked example
Imagine a manufacturer using 10,000 MWh a year. If it retires 10,000 RECs, its market-based Scope 2 can fall sharply, while its location-based figure stays unchanged because the grid did not change. Both numbers belong in the report. If the same company then buys credits for its remaining fuel emissions, those credits sit beside the inventory as a disclosed claim, not inside it.
Six steps for your Scope 2 procurement
Report both location-based and market-based Scope 2 every year, with the emission factors stated.
Map your consumption by site and, where you can, by hour, so you know how well any renewable supply matches demand.
Prioritise on-site solar, open access or group captive supply from new plants before certificates.
Use RECs for residual demand, favouring recent vintages and registry-retired, serial-numbered certificates.
Keep carbon credits out of your Scope 2 arithmetic; disclose them as a separate line.
Retain retirement records for assurance, especially if BRSR Core or a customer audit will examine your energy and GHG figures.
Getting the claim right
Good disclosure names the instrument and the metric: "X MWh covered by retired RECs" is defensible; "carbon neutral electricity" usually is not. If your residual emissions justify credits, our team can help you choose them; for verified options across price tiers, see our carbon credits page. For inventory, BRSR and assurance-readiness work, our ESG services cover the accounting side.
Next step: if you want a second opinion on how your Scope 2 claims will read to an auditor or a global buyer, talk to the Csquare team.
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