GHG guidance launched to help companies reporting emissions
The World Resources Institute (WRI) has updated its Greenhouse Gas Protocol Accounting Guidance, which helps businesses measure their emissions from electricity used.
The GHG Protocol Scope 2 Guidance, originally produced in 2003, has now been updated to reflect the rapid growth of renewable energy and other shifts in the electricity market over the last 12 years, with the framework recommending how companies can measure and report their greenhouse gas emissions.
The WRI has worked to improve and harmonise guidance for how companies account for greenhouse gas emissions from purchased electricity, steam, heat and cooling (known as Scope 2 emissions).
However, recent changes in global energy markets have made this accounting increasingly complicated, with organisations now facing 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.
With grid electricity that has been generated from renewables, different countries adopt different approaches, for example, UK Guidance has advocated using ‘grid averaged’ emissions, in contrast to the use of contractual emissions in the US (which in some cases leads to zero emissions accounting).
According to the WRI this new guidance will: “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”.
Lead Author, Mary Sotos, added:
“Currently, companies consume half of all electricity produced so any solution for reducing global emissions has to address the electricity sector.
“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 firms to demand low-carbon electricity.”
The guidance has been developed with input from more than 200 companies, utilities, Government officials, NGOs and academics to ensure it best reflects the challenges that firms face when measuring their power sector emissions.
Following last week’s launch of the new GHG Guidance, the Institute of Environmental Management and Assessment (IEMA) has “broadly welcomed” the publication, but warns of some potential challenges for environment and sustainability professionals with GHG responsibilities.
IEMA contributed to the working group development of the WRI’s GHG Protocol Scope 2 Guidance throughout the four-year international collaboration, commenting on draft proposals and testing these with IEMA Members.
The industry body revealed that its members are broadly supportive of a dual accounting approach, which could provide more complete information for decision making and greater transparency.
IEMA’s Policy and Practice Lead on this issue and working group member, Nick Blyth, commented:
“Given the complexity of this area, I am pleased to see that the published WRI guidance has sought to address key principles such as transparency through its dual reporting approach.
“The guidance should ultimately help decision-makers and wider stakeholders to understand the full picture with respect to GHG emissions, and most importantly the scope for reducing overall energy consumption and for improvements through contracts and tariffs.”
Whilst IEMA insists the final guidance should help organisations to produce more transparent and useful GHG reports, it warns that the area is complex and concerns remain around how the guidance might be used. An example IEMA gives is how it could be used across different geographies, stating that in the UK, there are differing approaches between the current schemes such as the CRC and mandatory GHG reporting.
Nick Blyth added:
“Environment and sustainability professionals will have a critical role to play in advising organisations on these issues and in implementing the new guidance to ensure fair, credible and transparent GHG data and accounting.”
The guidance also includes a report which offers case studies of 11 companies that have already used the new guidance, including Mars, Facebook, Google and EDF Energy.
Mars Incorporated is a food and beverage company with net sales of more than $33bn and includes six business segments including Petcare, Chocolate, Wrigley, Food, Drinks, Symbioscience, and more than 75,000 associates worldwide.
Part of Mars’ Sustainable in a Generation (SiG) commitment is to achieve carbon neutrality for its direct operations. To achieve this, Mars has established a 25% GHG reduction target by 2015 compared to 2007 levels and a 100% reduction by 2040.
The case study on Mars revealed that the firm has pursued efficiency upgrades and small-scale onsite renewables, but meeting a 100% renewable goal in an economically viable way across nearly 400 sites, including more than 130 manufacturing facilities, necessitated the addition of more centralised energy projects.
Mars wanted to ensure that any renewable energy project it supported contributed to reducing both its market-based scope 2 emissions and contributing to significant GHG reductions in the grid where the project was located.
With a large share of Mars’ business in the US (70 sites including 37 factories), it did this through establishing criteria for their use of Renewable Energy Certificates (RECs), specifying that they come from:
- A new energy project rather than existing energy stock
- A project where Mars’ financial participation was material to the project happening
- A project in a region with higher CO2e/MWh than Mars’ US weighted average CO2e/MWh (based on annual eGRID data), ensuring that the project could have a significant emissions reduction impact.
Last year, Mars entered into a 20 year contract to support development of 200MW wind project in Texas, producing electricity equivalent to 100% of Mars’ total US annual electricity consumption. Mars retains the RECs.
Commenting, Kevin Rabinovitch, Global Sustainability Director for Mars, said the new GHG Scope 2 guidance played a key role in helping to reach a final decision.
"This guidance is a powerful tool to help corporations achieve ambitious, science-based climate targets.
"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."
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