The World Resources Institute (WRI) has unveiled new guidance for companies to measure emissions from purchased electricity.
The first major update to the GHG Protocol Corporate Accounting and Reporting Standard responds to the rapid growth of renewable energy and other major shifts in the electricity market, WRI says. The GHG Protocol Scope 2 Guidance provides a consistent, transparent way for companies to show how different types of electricity purchases count toward their emissions targets, and will inform corporate decisions on what kind of energy should power their business.
Using the GHG Protocol Scope 2 Guidance, corporations can compare electricity procurement choices based on their emissions profile and set science-based GHG reduction targets; Utilities can calculate and disclose accurate carbon footprint performance to customers; and Industry associations can use the guidance to set sector targets and compare performance of different actors within a whole sector.
Four years in the making, the Scope 2 Guidance was developed in consultation with over 200 representatives from companies, electric utilities, government agencies, academics, industry associations and civil society groups in 23 countries. The report offers case studies of 12 companies that have already used the new guidance, including Mars, Facebook, Google and EDF Energy. The U.S. Environmental Protection Agency has been part of the process and supports the new guidance.
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Generation of electricity, steam, heating and cooling accounts for 40 percent of global greenhouse gas (GHG) emissions, WRI says. When companies purchase this electricity for their facilities, they report the emissions in the scope 2 category. Accurately accounting for scope 2 emissions is essential for companies to manage and reduce them, but recent changes in global energy markets have made this accounting increasingly complicated.
Companies now face many choices for low-carbon electricity supply, such as power purchase agreements, electricity contracts, on-site versus off-site projects and renewable energy certificates, all of which can vary by country. Companies have not had standards that address whether and how emissions from these different instruments should be accounted for in their emissions reports. However, companies depend on accurate emissions reports to develop GHG targets.
Investment in renewable energy expanded to $310 billion in 2014, compared to $60 billion a decade ago, WRI says. But companies have lacked certainty on how to report emissions from the renewable energy they purchase and consume. This uncertainty has impeded corporate investment in, and demand for renewable energy. With the Scope 2 Guidance, companies can clearly understand how electricity purchases count towards emissions targets, informing both short and long-term investment decisions.
Last summer, 12 leading US companies signed the Renewable Energy Buyers’ Principles, created by the World Wildlife Fund (WWF) and the WRI, to better communicate their purchasing needs and expectations to the marketplace. The companies — Bloomberg, Facebook, General Motors, Hewlett-Packard, Intel, Johnson & Johnson, Mars, Novelis, Procter & Gamble, REI, Sprint and Walmart — hoped the principles will open up new opportunities for collaboration with utilities and energy suppliers to increase their ability to buy renewable energy.
A report released this month by RE100, an initiative of The Climate Group in partnership with CDP, found that consumer products, manufacturing and heavy industry sectors are getting the best financial returns on solar power—the most popular renewable power technology for corporates.
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Founder & Principal Consultant, Hower Impact
Mike Hower is the founder of Hower Impact — a boutique consultancy delivering best-in-class strategic communication advisory and support for corporate sustainability, ESG and climate tech.
Published Jan 27, 2015 7am EST / 4am PST / 12pm GMT / 1pm CET