DEFRA updates its conversion factors annually
The UK Government's GHG Conversion Factors, published by DEFRA and DESNZ, are updated each year. The 2025 edition introduces a significant change to the electricity generation factor — a reduction of approximately 15% compared to 2024, reflecting the continued decarbonisation of the UK grid.
The 2025 electricity generation factor is 0.17700 kgCO₂e/kWh — down from 0.20493 kgCO₂e/kWh in 2024. For organisations with high electricity consumption, this produces a meaningful reduction in reported Scope 2 emissions on a location-based basis, even where actual consumption has not changed.
What this means for year-on-year comparisons
If your SECR report shows a reduction in Scope 2 emissions between 2024 and 2025, it is essential to distinguish between:
- Genuine reductions driven by energy efficiency measures or reduced consumption
- Factor-driven reductions resulting from the lower grid emission factor
Investors and analysts are increasingly scrutinising this distinction. A carbon footprint that appears to be falling due to grid decarbonisation alone does not demonstrate active management of energy risk.
Best practice is to restate prior year figures using current year factors — allowing a like-for-like comparison that isolates genuine consumption changes from factor changes.
Dual Scope 2 reporting — location-based and market-based
The GHG Protocol Scope 2 Guidance requires organisations to report Scope 2 emissions under both the location-based and market-based methods where market-based instruments are used.
Location-based — uses the average grid emission factor for the country or region (DEFRA 2025: 0.17700 kgCO₂e/kWh). This reflects the actual carbon intensity of the electricity grid.
Market-based — uses emission factors from contractual instruments: energy attribute certificates (EACs), supplier-specific factors, or residual mix factors. If your organisation purchases renewable electricity under a green tariff backed by REGOs or PPAs, the market-based factor may be zero or near-zero.
For SECR purposes, dual reporting is mandatory where market instruments are used. Reporting only the market-based figure — particularly where it is zero — without disclosing the location-based equivalent is no longer considered adequate disclosure.
Transmission and distribution losses — Scope 3
One area of persistent confusion is T&D losses. These are not included in the DEFRA generation factor. T&D losses (0.01853 kgCO₂e/kWh under DEFRA 2025) represent the electricity lost between the power station and the meter — classified as Scope 3 Category 3 under GHG Protocol, not Scope 2.
Organisations that have historically included T&D losses in their Scope 2 figure should correct this in their next submission.
Practical checklist for SECR submissions
Before finalising your next SECR submission:
- Confirm you are using DEFRA 2025 factors for the correct reporting year
- Apply dual Scope 2 reporting if market-based instruments are in use
- Assess green tariff validity against GHG Protocol criteria — not all REGO-backed tariffs satisfy dual reporting requirements
- Report T&D losses separately under Scope 3 Category 3
- Restate prior year comparatives on a consistent factor basis
- Include energy intensity ratios as required under SECR regulations
NZC Consultants provides GHG Protocol carbon reporting and SECR submissions. Get in touch to discuss your reporting requirements.