Scope 2: ”Commence, commit and communicate”: Interview with Mary Sotos

Wednesday 10 December, the Greenhouse Gas Protocol Scope 2 Guidance is being announced in Taipei, Taiwan. The Scope 2 Guidance is an amendment to the Corporate Standard that aims to help companies report on their greenhouse gas emissions from electricity consumption. Mary Sotos, Project Manager, Green House Gas Protocol Scope 2 Guidance, WRI The World Resources Institute, sat down with us to share her ambitions and insights.

How can businesses use the Scope 2 Guidance?

“Businesses can embed the Scope 2 Guidance in their 2015 carbon and energy strategy. It will help them commence reporting on the emissions from the electricity they consume, commit to buying low-carbon and renewable energy and transparently communicate their ambitions and results year on year,” said Mary Sotos, Project Manager, Greenhouse Gas Protocol Scope 2 Guidance, World Resources Institute. “Because it is an accounting standard with a strong foundation and clear criteria, businesses can also compare their results with those of other companies.”

What are the three unique features of the Scope 2 Guidance?

“Firstly, the Scope 2 Guidance builds on and amends the Greenhouse Gas Protocol established in the 1990s. It adheres to the same principles; that the businesses’ green house gas inventories are complete, accurate, consistent, transparent and relevant,” said Sotos. “The new accounting and reporting requirements for scope 2 increase transparency, increase accuracy by reducing the likelihood for double counting, and provide companies with consistent reporting requirements. This way, businesses can measure year on year results and understand and communicate their performance over time.

Secondly, the Scope 2 Guidance classifies two methods for accounting electricity; the location-based method and the marked-based method. These two approaches provide different information that help inform decision makers and influence the market.

The location-based method calculates business’ greenhouse gas emissions based on average grid emissions from energy generated in a defined location; locally, regionally or nationally.

The second method is the market-based method. It reflects the emissions associated with the consumer choices from its electricity supplier or products. This includes choosing a specific generator, purchasing certificates alone or bundled with other contracts. We have not determined, only recommended, what these instrument are as they are location and market dependent.

In summary, the location-based system enables customers to trace their emissions from the electricity from the location-based grid, while the marked-based method allows customers to buy their preferred choice, which sends a signal to the market.

Thirdly, we have established Quality Criteria that determine what possible instruments that are appropriate for Scope 2 accounting. They help ensure that the instruments conveying emissions information to companies are accurate and reliable. The criteria are policy neutral and carry no recommendations on policy design – such as how a country should structure its market—or on resource eligibility, like what should qualify as “renewable”” 

So how did we get to where we are today?

The need for Scope 2 Guidance came from the Greenhouse Gas Protocol initiative. There was a great shift in the 1990s with the Kyoto Protocol, countries negotiating at a national level and it became evident that businesses could significantly contribute to the green house gas emissions. But there was no standard way to measure and report emissions, which were compatible with the official accounting decisions. The World Resources Institute and the World Business Council for Sustainable Development ran a stakeholder process and drafted the initial corporate standard in 2001 that was revised in 2004.

A decade later, electricity is a considerable operational cost for companies and has a significant impact on the environment. Businesses were asking how to calculate the electricity emissions. The ultimate driver for the Scope 2 Guidance was the inconsistent corporate reports. This inconsistency made it impossible to understand what year on year results meant, whether companies were reducing emissions or not, and how to compare companies’ performance.

In 2010 and 2011, the World Resources Institute co-hosted scoping workshops in Washington D.C., the UK and in Mexico City. We realized that markets were developing with different important differences, and companies were using different mechanisms to purchase and claim renewable energy—whether it’s GOs in Europe, RECs in the US, supplier-specific arrangements or power purchase agreements. Greenhouse Gas Protocol built the Scope 2 Guidance on in-depth research in 23 markets with more than 200 stakeholders over four years.

What will be the impact of the Scope 2 Guidance?

I hope that the Scope 2 Guidance will trigger a conversation in companies and create a movement in the industry: how can we contribute to the urgent climate crisis by commencing to report, committing to low- carbon and renewable energy and communicating our accurate greenhouse gas emissions? says Mary.

For any further questions, contact Mary Sotos, Project Manager, World Resources Institute

We congratulate Mary Sotos with the Green Power Leadership Award during REM14 in Sacramento. The annual Green Power Leadership Awards recognize outstanding commitments and achievements in the green power marketplace.