The World Resources Institute 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. 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.
“Currently, companies consume half of all electricity produced so any solution for reducing global emissions has to address the electricity sector,” said Mary Sotos, Associate, World Resources Institute and lead author. “This guidance will let companies know exactly how their energy choices count toward their emissions goals. By providing rigorous reporting methods, the Guidance gives a clear incentive for companies to demand low-carbon electricity.”
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.
“This guidance is a powerful tool to help corporations achieve ambitious, science-based climate targets,” said Kevin Rabinovitch, Global Sustainability Director, Mars Incorporated. “With the wide range of options for supplying renewable energy both on and offsite, this updated guidance is a welcome addition to the GHG Protocol that will accelerate progress. Case in point, this guidance helped Mars decide to create a 200 MW wind farm in the United States last year.”
Generation of electricity, steam, heating, and cooling accounts for 40 percent of global greenhouse gas (GHG) emissions. 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, like power purchase agreements, electricity contracts, on-site versus off-site projects, and renewable energy certificates, all of which can vary by country. Until now, companies have not had standards that address whether and how emissions from these different instruments should be accounted for in their emissions reports. Companies depend on accurate emissions reports to develop GHG targets.
“Acting now on climate change is a must for all actors in society,” said Anna Gedda, Head of Sustainability, H&M. “With electricity use in our stores accounting for over 80% of our operations’ GHG emissions, setting our 100% renewable electricity target and our science-based GHG reduction target would not have been possible without the clarity that this guidance provides. Now H&M, and every company, can transparently report its carbon footprint and determine the steps necessary to minimize it.”
Investment in renewable energy has expanded to $310 billion in 2014, compared to $60 billion a decade ago. 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 theScope 2 Guidance, companies can clearly understand how electricity purchases count towards emissions targets, informing both short and long-term investment decisions.
Going forward, CDP, The Climate Registry and other reporting programs will require thousands of companies to provide additional information about their scope 2 emissions using the new GHG Protocol guidance. In 2014, 86% of Fortune 500 companies responding to the CDP used the GHG Protocol.
“This guidance represents a critical evolution in corporate sustainability reporting. Investors and other stakeholders have been calling for companies to disclose more consistent, transparent data on their electricity emissions and renewable energy purchases. By using this guidance, companies reporting to CDP can now achieve this,” said Pedro Faria, Technical Director, CDP.
The Scope 2 Guidance has many practical applications:
- 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.
“The U.S. EPA welcomes the GHG Protocol Scope 2 Guidance, which will support organizations in reducing their carbon footprint and increase demand for renewable electricity,” said Matt Clouse, Director of Renewable Energy Policy and Programs, Energy Supply and Industry Branch, U.S. EPA Office of Air and Radiation.
For more information, visit http://ghgprotocol.org/scope_2_guidance
The World Resources Institute is a global research organization that turns big ideas into action at the nexus of environment, economic opportunity and human well-being. Our 450 experts and staff work with partners in more than 50 countries; we have offices in Brazil, China, Europe, India, Indonesia and the United States. www.wri.org
The Greenhouse Gas Protocol is a global collaboration led by WBCSD and WRI. It provides the foundation for sustainable climate strategies and more efficient, resilient and profitable organizations. GHG Protocol standards are the most widely used accounting tools to measure, manage and report on greenhouse gas emissions. www.ghgprotocol.org