The Clean Energy Buyers Institute’s NextGen Activator workshop series is identifying the market system updates necessary to broaden the suite of carbon-free electricity procurement options so customers can optimize the decarbonization impact of their procurement decisions.
Leadership programs play a critical role in shaping the goals that energy customers set for their voluntary carbon-free electricity (CFE) procurement and cultivating communities of energy customers around these goals. The goals and resulting CFE procurement strategies these programs incentivize are important because they direct billions of dollars in voluntary procurement spending that send market signals for and resulting investments in specific types of CFE resource solutions to decarbonize the grid.
These programs—such as RE100, Science-Based Targets Initiative (SBTi), Green Power Partnership, UN 24/7 CFE Compact, and similar—establish the criteria that customers use to set their goals around CFE procurement, grid decarbonization, and emissions reductions. They also recognize the demonstrated leadership of customers that achieve the marks of success based on these criteria.
Among the top updates necessary to evolve the current CFE market, common to all eight customer-identified objectives for next generation CFE procurement is the need for updated or new leadership programs. There is an opportunity for existing programs to make updates and/or new programs to form that motivate new communities of customers to send more targeted and differentiated market signals with their CFE procurement that drive systemic grid decarbonization. These updated or new programs will complement other needed evolutions in the voluntary CFE market system around capturing new attributes with underlying data in energy attribute certificates (EACs), enabling EAC registries to better serve as a platform of platforms for solution and data providers, and clarifying the role of avoided carbon emissions in CFE procurement-related decision making and greenhouse gas accounting.
In the latest workshop in the NextGen Activator series on July 19th, CEBI convened representatives from various customer leadership programs as well as solution providers who work with numerous customers and inform customers’ participation in these programs. This workshop focused on understanding how and where leadership programs can play their role in enabling customers to set and achieve next generation procurement goals.
This workshop generated insights addressing the following three central questions:
Question #1: Based on the overall experience and industry uptake of existing leadership programs recognition programs, what are the drivers of program success?
Insight #1: Existing programs have catalyzed participation by making customer success straightforward, consistent, achievable, measurable, comparable and marketable.
Leadership programs must balance motivating customers to set and achieve ambitious goals that send important market signals for grid decarbonization while also ensuring that the customer “ask” is clear, actionable, feasible, and appealing. Otherwise, if the customer ask is too complex or costly in the near-term, the program risks low or no customer participation.
Existing programs have expanded their communities by creating a strong brand that industry recognizes and creating peer pressure for customers to lead and/or keep up with industry peers and competitors. They have created robust goal setting and reporting criteria and have defined programmatic governance with clear processes and protocols to make updates. Relatedly, existing programs also attempt to integrate applicable greenhouse gas accounting standards like the Greenhouse Gas Protocol into their criteria, which provides synergies across programs. Each leadership program drives CFE procurement but differs in the goals that define success.
Taken together, these factors help motivate customers to pursue CFE procurement strategies that fulfill the criteria of a given program or multiple programs.
Question #2: What are the gaps between existing leadership programs and customer-identified next generation procurement objectives?
Insight #2: Each of the eight next generation procurement objectives require updated or new programs to incentivize more customer action.
Leadership programs have an opportunity to make updates that create new communities of customers that set and achieve next generation procurement objectives. Without updated or new leadership programs, it is unlikely that a critical mass of customers will gain the internal approvals and resources necessary to implement the range of next generation procurement objectives that they would like to pursue to maximize decarbonization impact.
Table 1 below summarizes the overall opportunities to incorporate next generation procurement objectives into existing leadership programs and/or new programs. While there is some clarity around the opportunities for leadership programs to incentivize next generation procurement, what remains less clear is which existing programs are best suited to incorporate which, if any, of these next generation objectives. What also remains unclear is how and when to determine if a new program should be formed and who should lead with taking new programs forward.
Table 1: Opportunities for Updated or New Leadership Recognition Programs for Next Generation CFE Procurement
|Next Generation Procurement Objective
|Opportunities for Updated or New Leadership Programs
|1. Procure any complementary or carbon-free electricity resource.
|New or updated existing program that recognizes procurement that leverages complementary resources (e.g., CFE storage, efficiency energy, etc.) or makes use of any CFE (e.g., not only “renewable” resources)
|2. Match energy consumption with carbon-free electricity procurement on a 24/7 basis.
|Updates to existing program to recognize verified achievement of 24/7 matching in addition to initial 24/7 commitment
|3. Procure carbon-free electricity at the most carbon-intensive times of day.
|New or updated existing program that recognizes verified procurement based on CFE procured at times with the highest grid-carbon-intensity OR highest avoided emissions impact
|4. Procure carbon-free electricity in the most carbon-intensive locations.
|New or updated existing program that recognizes verified procurement based on CFE procured in locations with the highest grid-carbon-intensity OR highest avoided emissions impact
|5. Procure carbon-free electricity to cover electricity use across value chains.
|New or updated existing programs that permit and recognize EAC procurement to cover certain Scope 3 categories (i.e., the electricity use across a company’s value chain, both upstream and downstream)
|6. Apply over-procurement of carbon-free electricity from certain regions to places without procurement options.
|Updates to existing programs to broaden market boundaries and recognize the application of CFE over-procurement to compensate for CFE access limitations in different geographies
|7. Motivate systemic grid decarbonization beyond the organization’s operations.
|New program that establishes and recognizes engagement metrics, lobby dollar percentages, or similar toward climate and energy policy that decarbonizes the grid for all (i.e., beyond the company’s own operations)
|8. Deliver social and community benefits that promote further decarbonization of the grid.
|New or updated existing program that establishes and recognizes various social/community benefit credentials, certifications, etc.
Question #3: What are the enablers and considerations for making updates to existing leadership programs and/or forming new programs to motivate and recognize next generation customer leadership?
Insight #3: Any updated or new program will only progress and scale if that program attracts a critical mass of customers and if it establishes straightforward, consistent, achievable, measurable, and marketable success metrics.
For existing programs to make updates to support next generation procurement, a diverse, cross-industry group of customers (as well as solution providers and other stakeholders) should come together to request that a program makes certain specified updates, where they support these requests with evidence about the desirable impact of these updates along with potential performance indicators. These requests should leverage the existing technical group and advisory procedures for making program updates.
For new programs to form, it is important that any new program doesn’t compete with existing programs (to avoid market confusion) and establishes credible goal-setting criteria grounded in grid decarbonization impact. New programs will only scale if they make program success straightforward, consistent, achievable, measurable, and marketable for customers and if they reach a critical mass of diverse customers early to form a community.
These insights will inform the forthcoming NextGen Activator Community Guide that CEBI will publish in late September that maps the updates needed to the current voluntary CFE market system and the roles and implementation pathways among key market system stakeholders to activate next generation procurement. CEBI is holding two more workshops in August in the NextGen Activator series before publishing this Guide.