Category: Blog

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.

The Clean Energy Buyers Institute’s NextGen CFE Initiative aims to expand the menu of carbon-free electricity procurement options available to clean energy customers, to help customers optimize the decarbonization impact of their procurement decisions and send more targeted demand signals that accelerate systemic grid decarbonization.

Over the past decade, voluntary purchases of carbon-free electricity (CFE) hastened the deployment of 60 gigawatts of new wind, solar, and storage capacity to the U.S. grid. With mounting pressure to achieve the next level of deep decarbonization, energy customers want more solutions to achieve more differentiated impacts through CFE procurement decisions. Clean hydrogen is one of the solutions customers may want to procure, to achieve their CFE procurement goals and advance economy-wide decarbonization. 

With U.S. federal incentives for clean hydrogen through the Inflation Reduction Act (IRA) taking effect this month, along with parallel policy developments in the European Union and other international markets, we need new ways to verify the clean electricity credentials underpinning clean hydrogen production. As the U.S. Department of Energy prepares to fund regional hydrogen hubs and finalize requirements for the Clean Hydrogen Production Standard (CHPS) that will jumpstart the U.S. clean hydrogen economy, it is critical that energy customers have the opportunity to engage and transact clean hydrogen, to achieve their individual goals and send powerful market signals that unlock greater and swifter investments in clean hydrogen. 

Policymakers must create this market infrastructure that establishes self-sustaining voluntary markets and scales commercial clean hydrogen transactions, verifiable claims, and new investments. 

CEBI recently sat down with RMI, the Center for Houston’s Future, and EnergyTag to better understand opportunities, challenges, and functional requisites to enable a voluntary market for verifiably clean hydrogen, ranging from the use cases for clean hydrogen to how to get the incentive design and carbon accounting right. Here are some key insights from that discussion:

Hydrogen can serve as a transportation fuel, a grid stabilizing storage reserve, and perhaps most promisingly, as a low-cost way to decarbonize several emission-intensive industries that are hard to abate. With incoming tax credits from the IRA that may help make clean hydrogen production more cost-competitive, the green premium of adapting this new technology may significantly decline. These production tax credits may bring the cost of green hydrogen-based production close to parity with fossil-based alternatives in industries that now contribute up to 20% of global carbon emissions, including shipping fuel, fertilizer feedstock, and steel production. 

The European Union’s recent decision to include hydrogen on the list of imports subject to its Carbon Border Adjustment Mechanism (CBAM), a carbon tariff, also highlights the growing relevance of verifiably clean hydrogen production in markets outside the United States. 

With the opportunity clean hydrogen presents to scale industrial decarbonization, it is critical that system stakeholders urge decision makers to move quickly to put voluntary market frameworks in place that include the right provisions. The question of how to “get it right” rests on expanding the voluntary market system to introduce verifiably clean (meaning carbon-free) hydrogen. Energy customers must be able to discover, procure, and verify procurement of clean hydrogen so they can achieve their goals and advance broader decarbonization across the economy. 

Access to a consistent, tradeable, and certified commodity for each kilogram of clean hydrogen will unleash further investment and drive additional clean energy generation. This means the United States can and should follow the lead of stakeholders abroad in developing an energy attribute certificate (EAC) for clean hydrogen, such as CertifHy in the European Union and the I-REC for Hydrogen Code.

Commercializing clean hydrogen solutions through EACs can expedite the uptake of this new technology by creating real customer markets. EACs in electricity markets provide proof that one megawatt-hour of CFE was generated and delivered to the grid. These market instruments underpin voluntary CFE procurement by creating a transactable commodity that customers can procure. 

By linking the EACs associated with clean electricity production to the associated kilograms of clean hydrogen production, the resulting clean hydrogen EAC will create an auditable product that gives customers confidence that their clean hydrogen is in fact carbon-free. EACs for clean hydrogen will unlock a voluntary market and, in turn, increase investments. 

Clean hydrogen production will also create new load on electric grids. To optimize the decarbonization impact of this new load and avoid unintended grid impacts that could increase local grid emissions, clean hydrogen production could send time-sensitive market signals through hourly EACs, known as granular certificates (GCs), to optimize for grid decarbonization impact. 

Clean hydrogen also creates new questions that require clarification from the Greenhouse Gas Protocol around how customers should account for their procurement and use of clean hydrogen. CEBI details various initial recommendations addressing these issues in our comments to the U.S. Internal Revenue Service (IRS) and forthcoming related recommendations to the Greenhouse Gas Protocol’s Scope 2 and 3 updates process currently underway. 

If you are interested in engaging in CEBI’s work to expand voluntary markets for clean hydrogen, reach out to Kate Harrison at kharrison@cebuyers.org. Stay tuned for more information about CEBI’s clean hydrogen insights in the coming months.

The Clean Energy Buyers Alliance continues to be inspired by the ingenuity and passion of the energy customer community as they continually innovate for grid decarbonization.

Since 2008, when Walmart and SC Johnson became the earliest corporations to use their procurement power to buy utility-scale wind electricity through a Power Purchase Agreement, voluntary customers of clean energy have always pushed the envelope of creativity toward the goal of decarbonizing the U.S. power grid.

Today, voluntary purchases of carbon-free power account for more than a third of all new wind, solar, and storage capacity deployed since 2014 in the United States.

But companies want to do even more and have even more impact in their drive to decarbonize our power systems.  Whether it is today’s announcement of an “emissions first” approach to procurement, or coming together to create the global Clean Energy Demand Initiative with the U.S. State Department at COP27, or last year’s launch of the 24/7 compact with the United Nations, these efforts and others demonstrate that companies continue to lead the way toward the Clean Energy Buyers Alliance’s vision of customer-driven, clean energy for all.

With the commencement of the WRI process to evolve the Greenhouse Gas Protocol Scope 2 accounting methodologies, now is a time of tremendous opportunity to continue to unleash the power of energy customers’ demand and optimize the impact of voluntary carbon-free electricity (CFE) procurement to accelerate systemic grid decarbonization.

During the past year, the Clean Energy Buyers Institute (CEBI) has convened and facilitated discussions with over 100 customers, solution providers, registries, and others to discover what customers want and need to optimize the impact of their voluntary procurement strategies. CEBI also explored ways to develop and activate solutions to the challenges customers face in CFE procurement, through our Next Generation Carbon-free Electricity Initiative.

The emissions first principles echo the types of updates that CEBI has identified we need for the voluntary market system to enable next generation procurement solutions. By implementing the market system updates detailed in CEBI’s Next Generation CFE Procurement Activation Guide and expanding the CFE procurement menu to include next generation solutions, energy customers can send more powerful, targeted market signals that drive investments and hasten the deployment of carbon-free electricity in the most carbon-intensive locations and times of day to help decarbonize the grid.  

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Beyond the Megawatt is a Clean Energy Buyers Institute initiative and this is the first of a series of blogs that will highlight its stakeholders, priorities, and impact.

Corporate climate goals play an instrumental role in decarbonizing our economy, including the electricity sector. Since 2014, Clean Energy Buyers Association (CEBA) members have led the transition to a carbon-free energy system by adding over 54 gigawatts of new clean energy capacity to the U.S. electricity system. Such growth in clean energy procurement provides an opportunity to maximize positive impacts on the environment and communities.

More thoughtful clean energy procurement can advance equitable community wealth-building, protection of our environment, and an electricity system that is resilient against natural disasters and supply chain disruptions.  

Many companies have recognized these opportunities and have already leveraged their procurement process for impact. For instance, 

• A project in Indiana led by Bank of America enabled carbon emissions reduction of 95,000 metric tons annually and provided benefits to the local ecosystem through the use of pollinator-friendly habitat. 
• A 200 MW solar project to be built in Texas led by Procter and Gamble will support pollinators, such as butterflies and bees, as well as allow for sheep grazing which will be critical to the longer-term sustainability of the wider agricultural ecosystem.
• Wells Fargo partnered with utilities to invest in a community solar project in Colorado that will serve commercial and residential customers, as well as low- to moderate-income service organizations in the greater Colorado area. 

As more companies continue to advance investments in clean energy projects that prioritize carbon-impact a new market need has emerged for educational support to help identify projects that best fit company priorities. 

The Clean Energy Buyers Institute’s Beyond the Megawatt, launched in May 2022, is a stakeholder-driven initiative that provides guidance for companies pursuing clean energy projects with resilient, equitable, and environmentally sustainable priorities. Beyond the Megawatt focuses on creating and evolving energy procurement tools and standards in three key areas:

• Resilience: Enhance energy security and resilience along the supply chain to meet the needs of an economy rapidly undergoing electrification and an outdated power grid vulnerable to 21st century threats.
• Equity: Integrate diversity, equity, inclusion, and justice in the design, build, and delivery of all clean energy resources 
• Environmental sustainability: Minimize harm and maximize benefits for the environment and biodiversity. 

Beyond the Megawatt has two simple but critical goals:

1. To develop procurement tools to help maximize the positive impacts of renewable energy, and
2. To deepen understanding of clean energy impacts through learning opportunities.

To ensure a diversity of stakeholder voices is represented, Beyond the Megawatt partners with energy customers, energy and service providers, NGOs, academia, researchers, community organizations, and other businesses to realize our goals. These stakeholders have helped explore various solutions and tools to embed resilience, equity, and sustainability into procurement practices. 

Stay tuned for the next blog in this series to learn more about upcoming energy customer company focused tools, learning opportunities through webinars, and peer-to-peer convenings. Interested in deepening your engagement or stay in the know on all things Beyond the Megawatt? Fill out this form online or send us an email to learn more about how you can engage.