Transforming greenhouse gas accounting: CATF reports call for overhaul of GHG Protocol’s Corporate Standard and Scope 2 Guidance
New reports from Clean Air Task Force call for critical updates to the Greenhouse Gas (GHG) Protocol’s Corporate Standard and Scope 2 Guidance. The series, “Modernizing Greenhouse Gas Accounting Rules and Climate Leadership Programs,” explores how GHG accounting rules can enable companies to more accurately report emissions from purchased supplies serving their electricity use and better report the real-world emissions impacts from their actions.
“While the Greenhouse Protocol has been instrumental in guiding companies toward climate progress, current accounting rules fall short of achieving global net-zero emissions,” said Armond Cohen, Executive Director at Clean Air Task Force. “To meet our decarbonization goals, we need an array of clean energy technologies to clean up the electric grid and electrify other sectors as much as possible. Here in the U.S., we need to double electric generation, triple electric capacity, and double the transmission grid compared to current levels. This will demand a remarkable level of investment and development, far surpassing what we’ve seen in the past 30 years.”
The GHG Protocol is the world’s most established and widely used accounting standard for companies, cities, and countries to measure, manage, and report GHG emissions. Thousands of companies have adopted its guidelines over the past decade, particularly for reporting emissions linked to electricity use. According to the report series, the current Scope 2 Market-Based method faces three significant limitations:
- It does not accurately measure the emissions associated with electricity use.
- It fails to recognize the value of firm carbon-free electricity (CFE) and flexible balancing resources such as storage.
- It does not estimate and prioritize actions that actually reduce emissions.
“We need to carefully track our progress ann ensure that clean power is reliably and affordably available on all grids, hour by hour,” said Neil Fisher, Partner at The NorthBridge Group. “We also need to encourage a balanced mix of existing and new carbon-free resources to replace fossil fuels and stabilize our grid, and it’s crucial to prioritize actions that have the biggest climate impact. The reexamination of the GHG Protocol presents an opportunity to empower companies to report their climate progress using more complete, transparent, and accurate information.”
“Resolving these accounting issues could unleash a rapid acceleration in the deployment of the technologies most needed to decarbonize our energy system,” said Toby Ferenczi, Co-Founder of Granular Energy. “Over $10 billion was spent on clean energy attribute certificates (EACs) last year, a number which is set to rise to $100 billion by 2030. By ensuring the value of clean energy is more reflective of real-world supply and demand, this funding will go toward technologies that deliver clean energy when it is most needed, including energy storage.”
With updates to the Greenhouse Gas Protocol underway, the reports call for the following improvements to GHG accounting:
- Scope 2 Market-Based inventories (MBIs) should accurately reflect purchased supply deliverable to the location and timing of customer consumption.
- Customers should be able to equitably count all energy attribute certificates (EACs) purchased and retired, either directly or through their load-serving entity.
- EACs should substantiate claims of CFE use, with ownership rights fairly allocated to customers without any double counting, double paying, or cost shifting.
- Required CFE purchases should not reduce the MBIs of customers who have not purchased EACs. In the absence of EAC purchases, fossil emission factors should be applied based on the best available information.
Implementing these improvements would enable companies to more accurately report emissions from purchased supply serving their electricity use and stimulate demand to accelerate the growth of all CFE needed to fully decarbonize electricity grids reliably and affordably.
In addition to an improved MBI, the reports call for new and separate disclosures to be added to estimate and prioritize real-world emissions impacts. These improvements in attributional and consequential measures can increase the accuracy and climate relevance of GHG accounting and disclosures, while allowing energy customers to be empowered with a range of options to drive impact and accelerate grid decarbonization. New accounting measures could also be used to evaluate all forms of electricity procurement, distinguish higher-impact from lower-impact procurement approaches, and allow the most beneficial strategies to be recognized.
Last year, CATF submitted a joint letter to calling for critical updates to the GHG Protocol Scope 2 guidance for corporate electricity purchase. As regulatory bodies such as the U.S. Securities and Exchange Commission and the European Commission continue to scrutinize corporate climate disclosure norms, CATF’s insights offer a roadmap for recalibrating accountability and transparency in corporate climate action.
Read the reports here on our website.
Press Contact
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About Clean Air Task Force
Clean Air Task Force (CATF) is a global nonprofit organization working to safeguard against the worst impacts of climate change by catalyzing the rapid development and deployment of low-carbon energy and other climate-protecting technologies. With more than 25 years of internationally recognized expertise on climate policy and a fierce commitment to exploring all potential solutions, CATF is a pragmatic, non-ideological advocacy group with the bold ideas needed to address climate change. CATF has offices in Boston, Washington D.C., and Brussels, with staff working virtually around the world. Visit catf.us and follow @cleanaircatf.
