The Greenhouse Gas Protocol (GHGP) is the foremost corporate greenhouse gas (GHG) emissions accounting standard in the world, providing guidance on reporting carbon emissions and documenting clean energy purchases. The GHGP Scope 2 Guidance - which harmonizes methods for how companies report GHG emissions from purchased electricity, steam, heat, and cooling (scope 2 emissions) - was previously updated in 2015 and served as a catalyst for launching the global voluntary renewable energy market. According to the Clean Energy Buyers Institute (CEBI), since 2014, commercial and industrial customer-led procurement of wind, solar, and battery storage has amounted to 64.5 gigawatts (GW) of new carbon-free energy (CFE) capacity in the United States alone—equivalent to 41% of all new clean energy capacity additions during this timeframe. The GHGP Scope 2 guidance laid the foundation for market instruments to gain in popularity and use, creating the right set of circumstances for Energy Peace Partners to launch the Peace Renewable Energy Credit (P-REC) as a high quality renewable energy certification (REC).
Through the P-REC, EPP has helped to extend environmental market mechanisms to a group of fragile, climate-vulnerable and least electrified countries and which struggle to attract renewable energy investment despite growing unmet electricity demand These countries face unique peace and development challenges, and their emerging renewable energy sectors would not otherwise benefit from access to corporate demand for environmental market instruments.
Based on our accumulated experience over the past seven years, working to leverage environmental markets mechanisms to support renewable energy market development in regions such as sub-Saharan Africa, we recently provided comments as part of the current public stakeholder consultation process to revise and update GHGP Scope 2 Guidance. We are sharing these comments publicly to draw wider attention to the unique characteristics of the markets in which we work and the opportunity for global standard setting bodies to take into consideration a more inclusive and equity-focused approach. Our comments were focused on a few key areas:
1. Scope 2 Guidance should continue to support market-based accounting methods
Location-based Scope 2 emissions are emissions typically calculated based on the average emissions intensity of a local power grid. Market-based Scope 2 emissions are emissions calculated based on a specific purchase contract or agreement for energy. Energy Peace Partners believes organizations should continue to be allowed and encouraged to use market-based methods to match electricity consumption with contractual instruments for renewable energy on a per-MWh basis and count that electricity consumption as zero emissions. Unlike location-based methods, market-based methods allow for instruments such as P-RECs to be used to support new and high-impact clean energy projects from countries with low levels of electrification and nascent renewable energy markets. Relying only on location-based methodologies would eliminate opportunities for the voluntary market to use tools like the P-REC to help drive new investment into fragile, conflict-affected areas and off-grid energy solutions.
2. Accounting frameworks should include more impact-based metrics:
We believe the GHG Protocol should encourage more impact-related metrics associated with market-based instruments. In particular, we support exploring new methods to capture and report social and community co-benefits associated with the market-based instruments. For example, P-REC projects have seen multinational corporations with net zero and clean energy commitments support first-time renewable electrification projects in some of the least electrified countries in sub-Saharan Africa. These companies are integrating impact considerations into their sustainability practices and demonstrating that environmental market mechanisms can be leveraged to have outsize community impact. We believe that the GHG Protocol can play an important role in integrating such impact considerations and harmonizing practices in this area.
3. Market boundaries guidance should be flexible
In markets where credible and robust certificate markets exist and market boundaries are well-defined, standard practice is that certificates should be sourced in-market. However, many locations globally do not have established certificate markets, well-defined market boundaries, or credible certificate markets. There are also many geographies where distributed generation is the preferable and more realistic pathway to achieve universal access to electricity than central grid extension. In these situations, we believe that the guidance should allow for flexibility in the application of certificates across markets.
As the global voluntary renewable energy market has evolved, so too should the GHG Scope 2 Guidance to include and involve voices and perspectives from those active in some of the least developed markets. EPP will continue to track and participate in the guidance revisions and encourage market participants in the countries where we are focused to engage in the process.
Link to full survey on Scope 2 Updates: Scope 2 Survey Memo.pdf (ghgprotocol.org)
Link to full EPP comments:https://docs.google.com/document/d/1x__hcDknoXK5h7xFLxvVRRMXaWv5drn-lc3xc1kLl_I/edit?usp=sharing