The Greenhouse Gas Protocol (GHG-P), the leading standard for accounting and reporting corporate emissions, has launched a public consultation to gather stakeholders’ perspectives before revising its Scope 2 Guidance.
The document under review provides the foundation for how companies procure renewable energy to reduce emissions. Now, proposed changes appear to weaken the role of Energy Attribute Certificates, a move that will impact all organisations striving to shift to renewables.
Before the end of the survey on 14 March 2023, companies that use market-based instruments, such as Guarantees of Origin, RECs, and I-RECs, can comment on the success of these tools and how they have allowed them to tackle their carbon footprint. This is how you can make your voice heard.
What is the Greenhouse Gas Protocol Scope 2 Guidance and why is it being revised?
The Scope 2 Guidance is a rulebook for how organisations measure, report, and reduce emissions related to energy consumption. To quantify those emissions, it puts forward two methods: market-based, which relies on Energy Attribute Certificates (EACs), and location-based, which considers the carbon content of the grid in a determined area.
The goal of revising the document, first published in 2015, is to improve its guidelines and maximise the impact of all parties involved. However, there are concerns that the review process will not collect the voices of all relevant actors and thus will undermine market-based systems, which have allowed organisations worldwide to participate in the energy transition.
Why you should take part in the GHG-P survey
Most businesses with emissions targets rely on EAC systems – such as Guarantees of Origin, RECs, and I-RECs – to procure renewables and credibly report carbon reductions. The revision could reduce the importance of these market-based instruments, leaving businesses with limited options to act on their climate impacts.
Participating in the open survey will contribute to ensuring that the success of market-based systems is not overlooked. Organisations that have actively participated in these efforts can draw attention to the benefits of having a simple, effective, and credible system that allows the involvement of many.
The deadline to submit a response is 14 March 2023. You can find the survey on this link.
Key points: what we think the Scope 2 Guidance should consider
The GHG-P Survey delves into many relevant aspects of the reporting system. Some of its questions challenge the efficacy of EACs. These are three points that we consider essential to keep in mind during the consultation process.
EACs are not a perfect solution, but they are effective.
EACs, like any other tool to tackle the climate crisis, have room for improvement. However, these market-based systems are reliable mechanisms through which consumers can identify and choose the energy they want to pay for and to make verifiable claims about the attributes of that energy.
Moreover, mature EAC markets provide income that incentivises investments in new renewable energy production. A new analysis run by Ecohz shows Guarantees of Origin will bring substantial additional revenue for clean power producers and could underpin the EU’s climate strategy. You can read the full report here.
EAC markets need time to develop. We are just beginning to see their potential.
Companies and other stakeholders adapt gradually to new guidelines. Thus, even though the Scope 2 Guidance was published in 2015, we have not seen the full potential of EAC markets.
The numbers, however, are already impressive. In Europe, Guarantees of Origin issuance has grown steadily for over a decade, while surging demand could funnel billions in revenue to clean energy producers towards 2030. In the United States, the value of the RECs market is expected to double by the end of the decade. Simultaneously, International RECs issuance and cancellation rose 179% and 102%, respectively, in 2022.
Countries have also adopted national policies to build their EAC systems, which allow consumers to fund clean energy and credibly report consumption. Progress has been remarkable, but these processes take time. It is critical to let systems mature before assessing their effectiveness.
The Scope 2 Guidance must clarify the relationship between location-based and market-based reporting
There is a generalised misconception that entities can choose between market-based or location-based reporting. This not only creates confusion but also opens the door to the double counting of energy’s environmental attributes.
Further, the location-based method currently offers no clear criteria for border delimitation. While explaining these aspects is essential to avoid confusion, market-based instruments are already proven to effectively prevent double counting. Ecohz believes the document should support market-based reporting when a credible market-based system exists in a region.
Can I get assistance in drafting and submitting a reply to the GHG-P Scope 2 Survey?
Yes. Ecohz is happy to help you reply to the GHG-P Survey. If you are considering sending a response and have questions about the process, the meaning of the questions, or your role in the consultation, get in touch. Our advisors will be able to assist you.