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 email@example.com.