Under current rules, a company can match any megawatt-hour of its electricity consumption with renewable/clean electricity that it buys over the course of a year and across broad geographies (potentially the whole United States or Europe). This flexibility allows companies to source clean electricity on a cost-competitive basis and from locations where project development is feasible–and allows companies to choose to buy clean/renewable projects from the dirtiest grids to maximize decarbonization impact. In contrast, the proposed rewrite of the rules would require companies to purchase clean electricity that matches the time (hourly) and location (regional grid) of their electricity use (facility or equipment location).
Most organizations are likely to slow down or completely stop buying clean electricity if required to match the location of the renewable energy projects to where they have electricity load and match the purchases to their use on an hourly basis. Projects might not exist where companies have facilities; markets in those locations might prohibit direct procurement of power; the costs will increase significantly; and the deals will be dramatically more complex.
Requirements for load-matched 24/7 reporting will limit the options companies have to buy clean electricity to meet purchased electricity GHG goals. For example, most companies use annual “virtual power purchase agreements” (VPPAs) with large-scale wind and solar projects to cover their electricity use across the United States or Europe. Under load-matched 24/7’s location matching requirements, a company could only match its electricity use within the same region as the wind or solar project. For locations where companies already have few opportunities to buy clean electricity, load-matched 24/7 may leave companies with few or no options to address Scope 2 emissions.
There are critical gaps in the availability of data to do load-matched 24/7 accounting. Companies typically do not have hourly consumption data, while other inputs (hourly grid emissions data, hourly project production data) are often not available. GHGP may propose that companies use modeling or proxy data to supplement data that is available, but these sources are relatively unfamiliar to companies and untested.
Rather than require 24/7, the ISB could consider “Alternative #5” put forward by the Technical Working Group and make it optional while adding a requirement that energy procurement be matched annually. GHGP will likely propose other updates and reforms to GHG accounting rules, but anticipated provisions are unlikely to disrupt procurement options.
Requiring different approaches for different size loads does not ease these load-matched 24/7 requirements; it makes the requirements harder. For companies with varying load sizes in varying regions (think large-load in TX and small load in WY), they wouldn’t be allowed to aggregate their own load for scale of procurement. Long-term PPAs at scale are needed for new carbon free power to get finances.
Likewise, the 10 GWh “limit” reduces or eliminates any perceived accounting-specificity benefits because companies cannot be compared with one another if some parts of some companies have the 24/7 requirement while others do not.
Additionally, reputational risk hits all companies of all sizes. If the GHGP ignores expert evidence that load matched 24/7 is not the best solution for the climate, and instead tells the world that load-matched 24/7 is the new best-practice standard, companies will immediately re-consider long-term PPAs that aggregate their company’s load across regions–a tool absolutely critical to financing of new carbon free energy projects.
Reputational risk starts immediately. If the GHGP ignores expert evidence that load matched 24/7 is not the best solution for the climate, and instead sends a signal to the world that load-matched 24/7 is the new best-practice standard, companies will immediately re-consider long-term PPAs that aggregate their company’s load across regions – a tool absolutely critical to financing of new carbon free energy projects.
Required load-matched 24/7 does not improve GHG outcomes, and we know that global matching systems work for solving atmospheric level challenges.
Because hourly consumption and production data is not yet available in most places, the current proposal is still based on estimates, thereby not increasing the accounting integrity of MWh “matching”. Likewise, the GHG Protocol should seek to increase the integrity of the GHG impact of procurement, which may or may not be related to matching the electricity to consumption geographically and hourly.
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