An overhaul of emissions reporting guidance is on the way. In the meantime, big corporations are divided on the best strategy. Who is right?
Amazon recently announced a climate milestone: transitioning to 100% renewable energy in 2023, seven years ahead of target. But a group of Amazon employees argue that celebrations are premature. According to Amazon Employees for Climate Justice, Amazon is actually powered by just 22% renewables. Why the disparity?
Emissions First versus Granular Certificates
It all comes down to a difference in methods of reporting emissions. Amazon is part of the Emissions First Partnership (EFP), which focuses on “impactful clean energy projects”. This means supporting the build-out of new renewable capacity wherever it makes sense to do so – even if this is not where the business is actually consuming its energy.
Rather than sourcing from places with greener grids (like Sweden), an EFP company might seek to build renewables in places where the grid is fairly dirty, on the grounds that this makes a bigger difference.
The logic is that the emissions arising from a corporation’s energy consumption can be balanced by its purchase of renewable energy, even if generated elsewhere. The “22% renewables” figure from Amazon’s employees is based on the grid intensity of the utilities actually supplying Amazon. But Amazon is claiming 100% renewables because it purchases an amount of green electricity equivalent to what it consumes, just in other places.
Opponents reject this logic and argue that corporations need to focus on the sourcing of the energy they actually consume. The Granular Certificate Trading Alliance (GCTA) focuses on “granular procurement” and the use of granular certificates (GCs) to verify the location and time that carbon-free energy is generated. Yes, this may sound on the surface a bit like REGOs. But the current REGO system allows for annual reconciliation – that is, a supplier only needs to “match” the energy consumed by its customers with green certificates on an annual basis.
The point of GCs is that they track carbon-free energy in half-hourly chunks, allowing for a much clearer picture of where a corporation’s power comes from. The logic is that this granularity is a driver of market signals, incentivising the development of renewables where demand exceeds supply.
Changing standards
The official standards reflect the fact that there are two possible approaches. The UK’s Streamlined Energy and Carbon Reporting (SECR) scheme encourages participants to use location-based figures when reporting consumption of purchased electricity. This means using figures on the average intensity of the grid to calculate emissions. Ideally, they want those grid averages to be measured hourly for more granular data.
At the same time, the SECR guidance reflects the fact that many companies in scope have a PPA with a renewable generator, or are buying REGOs to brand their purchased electricity as green. They may be using the same grid as everyone else, but they are using their buying power to support renewables. So the guidance recommends “market-based” reporting alongside the location-based grid average figures, and explaining exactly how their renewable purchasing works. Rather than requiring companies to pick a method, it asks for them to use both. The more data and detail the better.
The Greenhouse Gas Protocol, the international framework for measuring emissions, recommends “source- and supplier-specific emission factors” for calculating Scope 2 emissions. It acknowledges that when a business invests in green energy without a direct connection to that energy source, it influences the energy market. But the link is “complex and non-linear”. It is currently working on updating its guidance for market-based approaches. For now, like SECR, it recommends a dual reporting approach.
Our verdict
The ENTRNCE verdict on the debate may surprise you. We think both approaches to carbon accounting are valid. We also believe that the Emissions First approach and GC trading have more similarities than differences.
- Both approaches use corporate purchasing power to support new renewables.
- Both seek to find the most impactful ways to do this.
- Both understand the need to avoid accusations of greenwash through clear reporting.
Taking either approach is better than doing nothing about your organisation’s electricity emissions. Whichever method you use, the ENTRNCE Matcher can help. It delivers half-hourly data on the carbon intensity of the grid and allows you to match that with your company’s energy consumption. This means highly accurate reporting.
The simulation functionality lets you assess the results of future investment decisions, whether that’s a green CPPA or on-site renewables. You finally see your true Clean Energy Score and then work on driving it up.
Book your free one-hour demo of the Matcher, and find out how it can greenwash-proof your clean energy reporting.
