Category: Blog

With large amounts of carbon emissions associated with global value chains, energy customers are paying increasing attention to opportunities to reduce these emissions and verify the reductions.   Emerging regulations like the European Union’s carbon-border adjustment mechanism (CBAM) and the U.S. Securities and Exchange Commission’s forthcoming rule for climate-related disclosures for investors add greater urgency to addressing these Scope 3 emissions generated by customers’ upstream and downstream value chain partners.

Based on recent workshops, interviews, and additional research, the Clean Energy Buyers Institute (CEBI) has identified three types of current leadership programs that focus on electricity-related emissions and/or value chain decarbonization:

1. Leadership in green electricity purchases: These programs recognize voluntary procurement of carbon-free electricity (CFE) resources in a variety of formats. The recognition for CFE may sometimes be applied to value-chain partners’ energy use in specific regions, beyond a customer’s direct energy procurement. However, these partners’ CFE use is less common and hard to quantify. As a result, current programs still focus primarily on participating entities’ green-electricity procurement for direct operations.
   
2. Leadership in green products: Some programs provide recognition for products that meet a variety of environmental and social standards that can include supply chain measures. However, electricity seldom appears as a single category in these standards, because the life- cycle assessment for a product’s carbon footprint rarely generates a specific category for that product’s carbon emissions associated with electricity usage. For products that are currently certified for their use of CFE during the manufacturing phase, the emissions usually fall under the company’s Scope 2 emissions, instead of Scope 3.
   
3. Leadership in value chain-specific, issue-specific, and/or sector-specific initiatives: These programs emphasize value chain decarbonization efforts. Here again, however, difficulties arise in identifying and quantifying specific electricity usage in a value chain and its related emissions, and current programs struggle to recognize leadership in this area. Some programs also are designed to focus narrowly on only certain issues and/or sectors.

To promote nascent efforts to decarbonize value chains and increase global CFE demand (including the untapped potential of small- and medium-size enterprises, or SMEs, found across value chains), CEBI research suggests a qualitative approach can help customers better set value chain goals, join peer communities of learning and best practice, and receive recognition for demonstrated leadership. Our best practice guidance builds on 2022 U.S. Environmental Protection Agency (EPA) guidance as well as information sharing and early leadership examples. We also anticipate the eventual formation of more comprehensive and/or quantitative-oriented leadership programs. 

The formation of a new leadership program focused on supporting the adoption of CFE across global value chains should include:

• A casebook, or collection of best practices, published annually to highlight energy customers’ work to promote CFE procurement among their value chain partners. The casebook would be open for submissions from all businesses across all industries, including business groups. The customer efforts recognized in the casebook could include:
  • effective awareness- and capacity-building that contributes to a suppliers’ CFE procurement, 
  • central coordination efforts that group multiple suppliers for collective virtual power purchase agreement (vPPA) signings, 
  • innovative ways of estimating electricity-related emissions along the value chain, and
  • energy attribute certificate (EAC) procurement on behalf of upstream and downstream value chain partners to increase CFE demand and support accelerate CFE deployment.
    
• An annual industry event where customers highlighted in the casebook gather with other relevant stakeholders to discuss lessons learned. The attendees could discuss what worked and what didn’t, as well as persistent challenges for value chain CFE procurement, the regions where those challenges occurred, and types of value chain partners experiencing the challenges. The event would provide an opportunity for businesses to learn from each other and explore paths forward.
  
• Formation of working groups among value chain decarbonization leaders recognized in the casebook, to address roadblocks to reducing electricity-related emissions along global value chains. This could also include coordinating efforts to expand EAC use to cover value chain electricity consumption, evolve standards to quantify related impacts, or develop other actions the leaders might decide to pursue.

The formation of this new leadership program would also complement one of CEBI’s four main recommendations on ways to improve the Greenhouse Gas Protocol. If the Greenhouse Gas Protocol can provide clarity around how to conduct greenhouse gas accounting for CFE procurement across value chains and create a new program recognizing leadership in value chain decarbonization, organizations will have greater motivation to scale the adoption of CFE across their value chains and integrate this into their annual greenhouse gas inventories. 

CEBI is working with various industry stakeholders in 2023 to further define and explore opportunities to initiate the formation of a new customer program that recognizes leadership in value chain decarbonization.

By Kerri Metz and Doug Miller

Energy customers rely on regulatory guidance from the U.S. Federal Trade Commission (FTC) to inform how to advertise their clean energy claims. The FTC’s Guides for the Use of Environmental Marketing Claims (Green Guides) provide environmental marketing recommendations aimed at shielding consumers from potentially deceptive claims, and the FTC has begun a process to update the guidelines, which have not been revised since 2012. 

With the growing clean energy market, the greater diversity of carbon-free electricity (CFE) procurement solutions available to energy customers, and increasing consumer interest in purchasing environmentally friendly products, the FTC this past December announced it was seeking public comment on various issues related to environmental marketing claims. The FTC sought feedback on topics including carbon offsets, renewable energy procurement, recycled content, and compostable materials. The agency accepted comments through April 24. 

The Clean Energy Buyers Institute’s (CEBI’s) Next Generation Carbon-free Electricity Initiative began work with more than 35 stakeholders in early 2023 to develop Green Guides recommendations that would both help energy customers understand how they can advertise their next generation procurement strategies and provide additional protections and clarity for American consumers. Through these stakeholder discussions, CEBI developed three guiding principles and three recommendations on ways to enhance the Green Guides. 

The three guiding principles shaped the recommendations that CEBI submitted to the FTC:

• Principle #1: The FTC Green Guides updates should help clarify how energy customers can advertise and substantiate their CFE procurement.
• Principle #2: The FTC updates should create the opportunity for energy customers to make more types of verifiable marketing claims based on their respective CFE procurement strategy and provide new examples illustrating how to make these claims for a broader range of CFE procurement strategies. 
• Principle #3: The updates should use plain language to avoid creating confusion among consumers and energy customers, refrain from unduly limiting or narrowing the menu of CFE procurement options available to energy customers, and prioritize updates that enable the maximum number of energy customers to participate in CFE procurement markets. 

These three principles serve as the foundation for the recommendations that CEBI submitted to the FTC to inform the Green Guides updates:

Recommendation #1: Broaden current Green Guides language from renewable energy to carbon-free electricity. 

The FTC should broaden its existing language around renewable energy claims to include technology-neutral CFE and all CFE-related marketing claims. Given the increased interest and investment in diverse CFE resources since the previous Green Guides revision, the guidelines should acknowledge the present greater diversity of CFE procurement options, clarify how marketers can make accurate marketing claims about their CFE procurement, and advise marketers on how to avoid making unqualified or misleading CFE claims. 

Recommendation #2: Maintain a requirement for marketers to substantiate CFE claims with energy attribute certificates (EACs) and additional disclosures. 

The FTC should continue to require that marketers use customers’ EACs and, where needed to validate differentiated claims, additional disclosures to substantiate CFE procurement claims. This guidance is especially important as new CFE procurement solutions become available to energy customers. The FTC should continue to clarify that energy customers must own EACs that align with any CFE-related marketing claims, including differentiated claims. In cases where EACs do not yet contain sufficient attributes that could be used in making specific CFE marketing claims, energy customers should have high-quality, detailed data — in addition to the EACs they own — to substantiate these differentiated claims.

Recommendation #3: Differentiate between EACs and carbon offsets in marketing claims. 

The Green Guides should include new language that provides clarification between the purpose and role of EACs versus carbon offsets in clean energy marketing claims. The FTC should clarify that marketing claims made around an energy customer’s CFE procurement and associated emission reductions in that energy customer’s respective greenhouse gas inventory must be verified through the customer’s completed CFE procurement and ownership of EACs that align with any marketing claims.

The marked increase in the number of individual consumers using their purchasing power to buy products from businesses that can prove they are adopting sustainable practices creates a need for clearer guidance on the wider-ranging types of claims consumers are now seeing. As more types of CFE procurement solutions become available and energy customers pursue these diverse solutions, guidance is also needed about how customers can communicate the differentiated decarbonization impact of their procurement strategies. Between 2012 and 2020, customers’ global voluntary procurement increased from about 300 million megawatt hours (MWh) of CFE to over 1 billion MWh of CFE, and this CFE market growth trend has only intensified since 2020.

The FTC Green Guides clarify how energy customers communicate their leadership in taking voluntary action to accelerate investments in electric grid decarbonization. CEBI’s recommendations for improvements to the FTC Green Guides serve as an example of our broader work to improve customer leadership programs, one of four interdependent market evolutions that CEBI is advancing through the Next Generation CFE Initiative. To learn more about CEBI’s research on the four market evolutions needed to broaden the menu of CFE procurement options and enable customers to optimize their procurement strategy for grid decarbonization impact, check out the Next Generation CFE Procurement Activation Guide.

CEBI presented its FTC Green Guides revisions principles and recommendations in a public webinar on March 29 and submitted them formally before the April 24 deadline. To get involved in CEBI’s NextGen Activator community or learn more about CEBI’s recommendations for the FTC Green Guides, please contact Doug Miller at dmiller@cebuyers.org.

Energy customers and providers have a powerful role to play in advancing an equitable and just transition by leveraging the large scale of their clean energy procurement and market influence to advance co-benefits for historically marginalized communities. While concerns still exist about the perceived lack of feasibility and prohibitive cost premiums associated with advancing equity, access to tools, financial incentives, and lessons learned from market leaders illustrate that an equitable clean energy future is more feasible than ever.

Over two years ago, the Clean Energy Buyers Institute (CEBI) began its journey to embed diversity, equity, inclusion, and justice (DEIJ) across its programming and engagement through a partnership with Groundswell, a community-centered non-profit advancing equitable clean energy initiatives. Initial outcomes included a listening tour co-led by Groundswell, The Solutions Project, and Hummingbird that convened  corporates and communities to highlight the potential shared benefits from respecting and centering the values and lived experience of communities, and was followed by a Corporate and Community Engagement Primer providing guidance for meaningful community engagement. The Beyond the Megawatt initiative was launched shortly after and is building on this work by convening a growing group of diverse stakeholders to create tools and resources to build awareness and momentum for action on DEIJ. 

Here are some of our key findings:

Increased access to new data tools 

There’s an emergence of data tools that can help energy customers and providers identify communities historically impacted by environmental injustice and poised to benefit most from an equitable and just transition. For instance, the White House Climate and Economic Justice Screening Tool helps identify disadvantaged communities that have been underserved and overburdened. 

The Energy Equity Project (EEP) provides a framework for measuring equitable outcomes beyond job creation and air quality improvements, such as evaluating  Pursuing clean energy co-benefits that support healthy homes, community resilience, and alleviating financial stress from disproportionate energy burden and low-quality jobs can all lead to public health improvements in historically marginalized communities. 

BTM is creating a due diligence framework, including procurement guidance to facilitate accessibility and application of these tools and establish a clear framework for what data needs to be collected and evaluated to integrate equity in procurement processes. 

It’s good for business 

Embedding equity and justice in clean energy procurement isn’t just the right thing to do, it can also maximize access to economic incentives. The Inflation Reduction Act provides additional tax benefits for solar and wind projects developed in low-income, tribal, and environmental justice communities. There’s never been a better time to think about impactful siting of projects. 

Early and inclusive public engagement is essential to achieving a social license to operate in these communities. While deep engagement may appear more costly and time-consuming up-front it can help address costs from potential project delays and opposition in the long run.

Creating and supporting high-road jobs—those that promote practices like prevailing wage standards and equitable workforce development— can have significant quality-of-life impacts on workers and their families, while having a marginal cost increase on utility-scale clean energy development. A Princeton University study found that a 20% increase in installation and construction labor costs from improved standards would only increase the installed cost of solar PV and wind projects by 3% and 1%, respectively. 

More thoughtful clean energy procurement enhances your brand and strengthens your stakeholder relationships. A 2017 Cone Communications CSR study found that 87% of surveyed consumers make purchasing decisions based on values, 76% will boycott based on values, and 88% are more loyal to a company when it supports a social or environmental issue.

It’s already being done

The days of theoretical scenarios are over. This work is already being done by several market leaders.

• Microsoft and Volt Energy Utility, a Black-led solar energy development firm, partnered to advance a groundbreaking Environmental Justice Power Purchase Agreement (EJPPA). A portion of the project’s revenue will be invested in community initiatives and equitable workforce development.
• Sol Systems and Google have announced a first-of-its-kind tax equity investment that will provide capital investments to organizations serving communities of color and historically under-resourced communities to reduce energy burden and promote healthy homes through weatherization and home repair services.
• Equity and justice can also be advanced through Renewable Energy Credits (RECs). Salesforce partnered with Powertrust to purchase 280,000MWh of Distributed Renewable Energy Certificates (D-RECs) that increase clean energy access in emerging markets that have been traditionally excluded from corporate procurement. 

You can be a leader too

A decarbonized grid for all means we can’t leave any communities behind. At BTM, we want to ensure that corporate energy customers and providers have the tools and information necessary to advance an equitable and just transition. Are you ready to join us? Learn more here

Want to join the amazing group of energy customers and providers helping to lead the way? Email Phoebe Romero at promero@cebuyers.org to join our equity working group or find other ways to get involved.

By Hanna Ye and Doug Miller

To meet organizational goals, emerging regulations, and stakeholder demands, energy customers are beginning to assess solutions to reduce greenhouse gas emissions across their value chains. These Scope 3 emissions originate from upstream and downstream sources and on average represent 75% of an organization’s total emissions.

At the beginning of 2022, energy customers identified the ability to procure carbon-free electricity (CFE) on behalf of value chain partners as one of their top objectives for next generation energy procurement. During workshops convened last year by the Clean Energy Buyers Institute (CEBI) as part of its NextGen Initiative Activator series, customers, solution providers, and market system stakeholders aligned around the opportunity to scale voluntary CFE demand and hasten grid decarbonization investments by empowering energy customers to procure CFE, covering the subset of their Scope 3 emissions originating from their value chain partners’ electricity use. The U.S. Environmental Protection Agency (EPA) last year also issued guidance detailing how customers may procure CFE on behalf of value chain partners and allocate energy attribute certificates (EACs) to them.

These discussions elevated practical challenges hindering broader adoption. At the top of the list: How can energy customers determine the volume of CFE to procure on behalf of their respective value chain partners, given limited access to quality data? CEBI conducted numerous interviews in late 2022 with large commercial and industrial energy customers from diverse industries to investigate this challenge and identify potential solutions. 

Three key themes emerged about the real-world challenges that customers face in reducing emissions from their value chain partners: 

1. Value chains’ complexity: Energy customers often have different value chain partners; these partners range from large resource-strapped manufacturers and dispersed small- and medium-size enterprise suppliers to diverse downstream partners that vary based on a customer’s product or service. Customers also likely have different contractual arrangements with different value chain partners that often vary across geographies.
2. Limited data access: Customers have limited access to quality data about their value chain partners’ respective electricity use and emissions. In the absence of quality data, customers seeking to better understand their Scope 3 emissions associated with value chain partners must estimate partners’ respective electricity use and emissions.
3. Resource constraints to develop and implement a CFE procurement strategy: Upstream suppliers and downstream users across an energy customer’s value chain have limited internal resources, capacities, skillsets, and practical options to develop and implement a CFE procurement strategy. 

CEBI asked customers about currently available methods and stakeholder concerns around procuring CFE on behalf of value chain partners given these challenges, particularly about limited quality data access. Based on those conversations, CEBI identified potential solutions to address value chain data access and accounting challenges and promote CFE procurement on behalf of value chain partners:

• Short-term: Energy customers could use best-effort estimation methods to evaluate their upstream and downstream value chain partners’ electricity usage and related emissions. Customers then could procure CFE on behalf of value chain partners and decide how to allocate ownership over the energy attribute certificates (EACs) across value chain partners.
  
• Medium-term: Energy customers could rely on self-reported figures from a selection of value chain partners and use best-effort estimation methods for those that do not report directly. Some value chain partners procure CFE themselves and report evidence. For other non-reporting value chain partners, customers procure CFE on behalf of their partners and decide how to allocate ownership over the EACs among their partners.
  
• Long-term: All value chain partners could report their electricity use and associated emissions to energy customers, and a growing group of value chain partners could procure CFE themselves and deliver this evidence. For other non-reporting value chain partners, customers could procure CFE on behalf of their partners and decide how to allocate ownership of the EACs among their partners.

Wider market evolutions would also empower customers to procure CFE on behalf of value chain partners’ respective electricity use. CEBI explained those evolutions in its Next Generation CFE Procurement Activation Guide. 

For example, the Greenhouse Gas Protocol, currently undergoing an updates process, could make changes to clarify acceptance of reducing Scope 3 electricity-based emissions by procuring CFE on behalf of and assigning the associated EACs to customers’ value chain partners. This clarification in greenhouse gas accounting, which is one of four recommendations that CEBI is submitting to the Greenhouse Gas Protocol for this updates process, would enable more customers to address their Scope 3 electricity-based emissions and create significant growth in voluntary CFE procurement. 

CEBI’s NextGen CFE Initiative this year is focused on solving barriers to activating the market evolutions specified in our guide. This means finding opportunities to enrich EACs with more attributes, increase access to consistent and more granular data, update the Greenhouse Gas Protocol, and enhance customer leadership programs. Each of those endeavors will help create an evolved voluntary market system where customers have increased options to advance systemic grid decarbonization.

By Priya Barua and Doug Miller

The Greenhouse Gas Protocol—the preeminent global framework for greenhouse gas inventory accounting—is under revision. The protocol’s Scope 2 and 3 standards have not been updated in eight and 12 years, respectively, and clean energy markets have evolved significantly in that time. World Resources Institute (WRI), which oversees the protocol with World Business Council for Sustainable Development (WBCSD), late last year began a revisions process for updating the Scope 2 and 3 standards. CEBI has worked in recent months to develop key recommendations for the update.

WRI in December began seeking comments through stakeholder surveys to evaluate needs and opportunities for updating and improving its guidance for Scope 2 and Scope 3 emissions accounting, and those comments are due by March 14. In anticipation of this revision, the Clean Energy Buyers Institute (CEBI) initiated a stakeholder process in late 2021 that included participation from more than 100 energy customers, solution providers, and key voluntary market stakeholders from the NextGen Activator community. 

CEBI’s extensive stakeholder engagement process resulted in three community-developed guiding principles and four recommendations on ways to enhance the Greenhouse Gas Protocol. The following three guiding principles underpin the recommendations that CEBI then developed with the NextGen Activator community:

• Principle #1: Greenhouse Gas Protocol updates should help expand carbon-free electricity (CFE) procurement options for energy customers rather than narrow them.
• Principle #2: Greenhouse Gas Protocol updates should encourage ambition without unduly limiting options for energy customers, given customers’ diverse skillsets, resources, and geographic dispersal.
• Principle #3: Greenhouse Gas Protocol updates should maintain yet enhance the momentum of the current voluntary CFE procurement market—enabled by market-based accounting—that is demonstrably complementing policymaker action in decarbonizing the grid.

These three principles guided the four recommendations that CEBI is submitting to inform updates to the Greenhouse Gas Protocol:

Recommendation 1: Maintain the market-based method under Scope 2, but update the market-based method in accordance with sub-recommendations 1a-d. 

• Recommendation 1a: Additional guidance should be provided that offers a locational and temporal data hierarchy to help users prioritize electricity consumption data, emission factors in existing hierarchy, and energy attribute certificate (EAC) granularity, where granular certificates should be listed as the highest-precision EAC within the top category of an EAC hierarchy.
• Recommendation 1b: Language should be broadened throughout the Scope 2 Guidance to become technology-neutral for all types of CFE generation and complementary technologies.
• Recommendation 1c: New guidance should prescribe how to account for CFE procurement through energy storage systems, including clean hydrogen.
• Recommendation 1d: The order of operations in which users account for the combination of purchases and grid-supplied CFE should be updated to more accurately reflect and value utility decarbonization.

Recommendation #2, Explore Potential for New Third Impact-based Number: CEBI recommends that the GHG Protocol explore the pros and cons of options to add a required avoided carbon emissions impact-based number and where to put that value in addition to the location-based and market-based methods. CEBI is furthering conversations around the merits of this approach and any prerequisites needed to feasibly calculate, utilize, and report this figure.

Recommendation #3, EACs for Value Chains: CEBI recommends that the GHG Protocol should extend the use of EACs to decarbonize the measured or estimated electricity-based components of an energy customers’ Scope 3 greenhouse gas emissions. By extending to Scope 3 the use of EACs and a market-based accounting framework for CFE procurement currently used for Scope 2, this will encourage and enable customers to take verifiable action to decarbonize the electricity-based components of their value chains.

Recommendation #4, GHGP Process Improvements: CEBI recommends that WRI develop a new process and governance structure for updating the GHG Protocol so that the process is more dynamic, updated more frequently, allows for piloting new approaches, considers the negative market implications of GHG Protocol changes, elevates the needs of and options available to market stakeholders outside the United States and European Union to attract investments, and does not require multiple years per update.

The framework for market-based accounting in the Greenhouse Gas Protocol’s Corporate Standard, which clarifies that customers can apply an emission factor of zero to each megawatt hour (MWh) of CFE they procure and associated energy attribute certificate (EAC) they claim to reduce emissions from their electricity use. This standard has served as a key enabler of the rapid growth in voluntary markets that has helped accelerate grid decarbonization across the globe. 

Today, more than 1,600 companies have net-zero goals under the Science Based Targets Initiative, and nearly 400 companies have set 100% renewable energy commitments under RE100. Customers worldwide now procure over 1 billion megawatt hours of carbon-free electricity annually, creating about $10 billion in addition revenue in 2020 for CFE resources and reducing investment risks. 

Customers’ impact in accelerating grid decarbonization is significant. Since 2014, commercial and industrial customer-led procurement of wind, solar, and battery storage has amounted to 64.5 gigawatts (GW) of new CFE capacity in the United States alone—equivalent to 41% of all new clean capacity additions during this timeframe.

CEBI’s work to identify and develop areas of improvement for the Greenhouse Gas Protocol is one of four interdependent market evolutions under the Next Generation Carbon-free Electricity initiative. This initiative is driving change across global voluntary CFE markets that are necessary to expand the menu of CFE procurement options available to energy customers and enable customers to send more powerful, targeted market signals optimized for grid decarbonization impact. 

The other three market evolutions include measures to enrich energy attribute certificates (EACs) with key new attributes; enable access to more consistent, reliable, and granular data; and enhance customer leadership programs to incentivize customers to implement next generation strategies. 

CEBI published its comprehensive Next Generation CFE Procurement Activation Guide in 2022 that specifies customers’ eight objectives for next generation projects and defines the specific changes that voluntary CFE market stakeholders must make to enable solutions that help customers achieve these objectives and, as a result, accelerate systemic grid decarbonization.

CEBI presented its Greenhouse Gas Protocol revisions principles and recommendations in a public webinar on February 8 and will submit them formally before the March 14 deadline. CEBI encourages all market participants to submit their own recommendations to the Greenhouse Gas Protocol and, where possible, highlight examples about the importance of voluntary CFE markets to accelerate grid decarbonization around the world. 

To support stakeholders with developing their respective recommendations to submit to the Greenhouse Gas Protocol, CEBI is making its detailed recommendations available to the public, upon request. If you would like access to CEBI’s full recommendations to support your submission, please contact Doug Miller at dmiller@cebuyers.org.