The Greenhouse Fuel Protocol is contemplating emissions accounting rule revisions that may make the method of claiming reductions from company renewable power contracts extra difficult, particularly for corporations with smaller electrical energy hundreds or extremely distributed operations, in accordance with these with data of the discussions.
The GHG Protocol is the nonprofit that manages the rules that 97 % of corporations use to calculate and report on greenhouse fuel emissions. Lots of its guidelines are being overhauled after a main name for suggestions two years in the past, together with the one masking Scope 2, emissions related to power purchases.
Many clear power patrons agree that an replace is overdue: the Scope 2 steering was initially created in 2015. These conversant in proposed adjustments within the present revision, nonetheless, fear that making them necessary will make it harder for company patrons to justify new offers.
Two influential commerce teams, the Clear Vitality Consumers Affiliation (CEBA) and the American Council on Renewable Vitality (ACORE), despatched letters to the chair of the GHG Protocol’s requirements board urging it to not make the revisions too strict.
“The Clear Vitality Consumers Affiliation is deeply involved with the present path of the Scope 2 steering revision course of,” the group’s CEO, Wealthy Powell, stated in a two-page letter, made public Could 23. “If the method stays this course, we concern that many company clear power patrons might pull again on investments in clear power.”
ACORE’s six-page missive, dated April 25 (shared with Trellis however not made public), sounds the same alarm: “At a time when clear power corporations face vital world and home headwinds, a very restrictive strategy for GHG reporting necessities that shrinks the variety of voluntary purchasers could possibly be a breaking level for a lot of corporations within the clear power market.”
Why the steering issues
The present Scope 2 rule lets corporations declare emissions reductions by shopping for sufficient renewable power certificates from photo voltaic, wind and different zero-carbon sources to match their annual electrical energy load in the identical broad market. For instance, an organization might declare credit from a wind farm in Nebraska or photo voltaic set up in Texas to scale back its U.S. emissions, no matter the place their operations are positioned.
This framework has impressed tons of of companies to signal contracts that put greater than 100 gigawatts of unpolluted electrical energy on the U.S. grid since 2014 — 21.7 gigawatts in 2024 alone.
Each supporters and critics of the methodology say an replace is lengthy overdue, and welcome adjustments that will give company claims about renewable electrical energy purchases extra integrity.
“There’s a lack of rigor within the present guidelines,” stated Lee Taylor, CEO of REsurety, a agency that facilitates transactions. “The gaps between the dirtiest grids and the clear ones is getting greater. The carbon depth of grids is altering. That actuality has been true for a while and it’s solely rising.”
What’s on the desk
The proposed adjustments as of April 30 are undoubtedly extra rigorous.
One revision being thought of would require massive power shoppers to match precise electrical energy hundreds to renewable sources on an hourly foundation; these utilizing lower than 5 gigawatt-hours per 12 months might nonetheless report on a month-to-month or annual foundation.
One other potential modification would chop market boundaries, requiring corporations to make their renewable power purchases on the identical regional grids that serve their bodily places.
Alongside the larger adjustments, a subgroup is debating metrics to acknowledge company offers which might be “consequential.” That may embrace, for instance, offering a strategy to account for power storage installations or to acknowledge contracts that add extra renewables in locations the place grids are closely depending on fossil fuels, even when the customer doesn’t have a bodily presence there.
Minutes of conferences by the technical working group creating the Scope 2 revisions are publicly out there and embrace extra particulars about adjustments being thought of.
GHG Protocol declined to touch upon the report, citing the continued nature of the method.
What patrons want to see
Company renewable patrons, talking on background, recommended that the longer term guidelines be tiered and a few components made non-obligatory. This may give refined patrons a framework for making extra particular emissions discount claims with out discouraging corporations with smaller hundreds or which might be new to company renewable procurement from taking part, they stated.
“I do assume the following part of procurement must be extra significant than simply an annual match and placing it wherever the economics make sense,” stated Joey Lange, senior managing director for world renewable power advisory providers at consulting agency Trio. “However you may’t penalize the businesses that performed by the foundations to start with.”
If GHG Protocol makes the ideas for extra hourly matching and narrower market boundaries necessary, a majority of CEBA’s 400-plus members would face “severe implementation challenges,” the group stated in its letter. “These accounting adjustments would basically change the sensible context of voluntary procurement.”
A separate survey of unpolluted electrical energy practitioners carried out between November and February underscores CEBA’s place: 80 % “lacked confidence” they might be capable to adjust to eventualities being thought of.
“There are corporations that really feel caught,” stated Roger Ballentine, president of consulting agency Inexperienced Methods, which carried out the survey. Uncertainty over each the rule change and broader macroeconomic situations is paralyzing the market, he stated: “In the event that they need to execute a giant deal, are they certain that deal will likely be okay? It actually makes it very powerful on procurement folks to determine what they need to do proper now.”
Each CEBA and ACORE urged the GHG Protocol requirements board to hunt extra enter from company practitioners and renewables builders because the technical working group finalizes its draft. A few of their concepts:
- Solicit extra suggestions from company practitioners.
- Tackle considerations of renewable power patrons earlier than a draft is finalized for public session.
- Speed up growth of metrics for “consequential” offers, so they’re aligned with the broader Scope 2 adjustments.
- Provide extra readability instantly about how current contracts will likely be acknowledged, so corporations don’t postpone new contract negotiations.
- Make a number of the stricter proposed revisions non-obligatory.
GHG Protocol is anticipated to publish a draft outlining high-level adjustments to Scope 2 within the fourth quarter of 2025. Revisions based mostly on that suggestions will likely be circulated in 2026, in accordance with the GHG Protocol web site. A ultimate draft isn’t anticipated till 2027, and it’s seemingly that there will likely be a grace interval earlier than the adjustments take impact.
