In the realm of corporate responsibility, the way companies measure and report their carbon emissions has been undergoing scrutiny since 2015. The World Resource Institute’s GHG Protocol has been the guiding force, but recent questions have surfaced, especially regarding the role of energy attribute certificates (EACs) in accounting for emissions from electricity use, known as Scope 2 emissions. Amidst the debate, Schneider Electric, drawing on its extensive experience, sheds light on common misconceptions and offers insights into the future of emissions reporting.
The Current State of Emissions Reporting
Currently, emissions reporting revolves around two main methods: location-based and market-based. While location-based reporting is accurate, it offers limited opportunities for private actors to drive decarbonization beyond onsite efforts. On the other hand, market-based reporting allows for voluntary actions to be acknowledged, utilizing instruments like energy attribute certificates (EACs). These certificates play a vital role in accounting for zero-carbon electricity generation from renewable sources.
Critics argue that EACs have limited potential to drive change, misunderstanding their primary purpose. EACs are not meant to directly drive renewable energy growth but serve as tools for accurate carbon accounting. They ensure that the environmental impact of clean energy is properly attributed and prevent double-counting.
The Power of Market-Based Reporting
Market-based reporting has fueled the corporate Power Purchase Agreement (PPA) market, enabling companies to receive credit for voluntary actions. By signing credit-backed long-term agreements, businesses can claim Scope 2 emissions reduction, a crucial factor in deciding to move forward with renewable PPAs. The ability for corporations to receive credit for such actions accelerates the global clean energy transition.
Addressing Criticisms and Reforming GHG Protocol Guidance
Calls for reform in the GHG Protocol guidance have led to three main perspectives. Some suggest devaluing existing accounting rules for unbundled EACs, arguing that it allows businesses to circumvent actual emissions reductions. Others propose updating the accounting methodology to reward only renewable energy that perfectly matches end-users' load profiles in time and location. Lastly, there's support for a methodology that considers the relative carbon intensity of the grid where renewable energy is produced.
Schneider Electric advocates preserving market-based emissions reporting on a one MWh to one EAC basis. This proven system encourages real decarbonization efforts. Additionally, the company proposes adding a layer of "extra credit" claims to recognize impact criteria beyond emissions reduction, accommodating diverse approaches without discouraging smaller buyers.
The Path Forward
Schneider Electric suggests a path forward that preserves what works while allowing ambitious actors to make faster progress. This includes maintaining market-based emissions reporting, adding extra credit claims for impact criteria beyond emissions reduction, and focusing criticism on entities that do nothing. By celebrating leaders and encouraging progression, the goal is to drive deeper impact and positive change in the corporate pursuit of emissions reduction and sustainability.
No matter the outcome of the GHG Protocol revision, Schneider Electric remains committed to supporting clients in their unique journeys towards emissions reduction and sustainability impact. The company looks forward to continued collaboration with corporates, NGOs, and other influencers to drive positive change through renewable energy procurement while respecting the diversity of market participants.