Lee Taylor is cofounder and CEO of REsurety.<\/p>\n
Last month, the GHG Protocol dropped a bombshell on clean energy markets. Through a blog post<\/a>\u00a0and meeting minutes<\/a>, we learned that the GHGP Independent Standards Board, or ISB, had voted to disregard the recommendation of its experts, walk back expectations previously set publicly, and prioritize optics over impact.\u00a0<\/p>\n This explosive development relates to the GHGP\u2019s revision process for Scope 2 accounting that governs how organizations calculate the emissions associated with electricity use and clean energy purchases.\u00a0<\/p>\n And before you dismiss this concern as the realm of wonkish energy nerds, know this: In the U.S. alone, carbon accounting has supported the development of over $150 billion of clean energy infrastructure. Changes to the GHGP Scope 2 Protocol will absolutely shape how much clean energy infrastructure we build in the decade ahead \u2014 for better or for worse.\u00a0\u00a0<\/p>\n GHGP thumbs its nose at emissions experts and the public<\/p>\n There were two major decisions ahead of the ISB for a vote: whether to advance hourly matching as a mandate for inventory accounting, and whether to advance an impact accounting metric in parallel. Prior to the ISB vote,\u00a0nearly 40%<\/a>\u00a0of the expert Technical Working Group, or TWG,\u00a0that is tasked with developing the technical standards voted against hourly matching as a mandate, while 74% of TWG members voted to advance impact accounting in parallel as a critical, complementary methodology.\u00a0<\/p>\n Despite the widespread TWG support,\u00a0the ISB voted<\/a>\u00a0not to advance impact accounting to the public comment period in parallel with hourly matching, while all but a single dissenting ISB member voted to advance the plan to mandate hourly matching.<\/p>\n Some have argued that the ISB didn’t kill impact accounting, but merely sent it on a different path. This is nonsense. The public notes show the ISB prefers not to allow impact accounting for corporate target-setting of net emissions \u2014 which would render it functionally useless \u2014 and has delayed its public consultation, placing it on an uncertain timeline no longer in parallel with hourly matching. It also stated a need for an increasingly rigorous additionality test, raising doubts about real-world feasibility. So, while the ISB did not explicitly kill impact accounting, they did vote to mortally wound it.<\/p>\n So what happened? How did GHGP\u2019s revision process take such a late, wrong turn?\u00a0 And why do I care? Why should you care?<\/p>\n Why the world \u2014 not just Scope 2 \u2014 needs impact accounting<\/p>\n The world needs voluntary corporate action that leads to the fastest emissions reductions possible. To that end, we need a viable and useful impact accounting option under the GHG Protocol to maintain and expand the accessibility of voluntary clean energy procurement, and to maximize the real-world emissions impact of those actions.<\/p>\n It\u2019s widely accepted<\/a>\u00a0that consequential accounting<\/a>\u00a0(aka impact accounting<\/a>) is the best metric available to incentivize high-impact investment in new projects. That\u2019s because \u2014 as its name implies \u2014 it focuses on measuring the system-level impact\u00a0of energy consumption and clean energy procurement over simply allocating existing emissions to consumers of power.<\/p>\n Impact accounting calculates two fundamental numbers: the emission impacts caused by an organization’s electricity consumption, and the emission impacts caused by an organization’s procured clean energy generation. As soon as you embrace that basic premise, you empower and incentivize organizations to site and operate their consumption to minimize the negative impact of their consumption, and to site and operate their clean energy procurement to maximize the positive impact.\u00a0<\/p>\n Mandated hourly matching\u2019s costs outweigh the benefits<\/p>\n Hourly matching has its merits toward certain goals under specific conditions. It has the potential to yield a more rigorous attributional inventory. It can create an incentive for clean firm generation<\/a>, such as geothermal and nuclear. And at very high matching percentages (i.e., >90% hourly matching), it can achieve greater avoided emissions<\/a>\u00a0as compared to the current status quo of annual matching.<\/p>\n But that\u2019s about where the benefits stop and the long list of problems begins.\u00a0<\/p>\n Hourly matching incentivizes more renewable energy where clean energy is already abundant (e.g., Global North power grids where large corporations concentrate their loads<\/a>) at the expense of where that investment is most needed<\/a>\u00a0and most valuable<\/a>.\u00a0<\/p>\n Hourly matching can unintentionally incentivize poor grid citizenship,\u00a0per McKinsey<\/a>, when entities prioritize self-centric reporting over system-level needs. Hourly matching not only allows, but incentivizes procurement of RECs from existing clean, firm projects, such as legacy hydro<\/a>\u00a0and nuclear<\/a>\u00a0over investment in new infrastructure.\u00a0<\/p>\n Operationally, hourly matching is \u201cabsolutely impossible<\/a>\u201d for many distributed and variable load profiles. Hourly matching is expensive: analysis from experts such as TCR<\/a>\u00a0find a significant cost premium. And while many organizations have signaled a willingness to pay premiums to increase their impact, few have shown the same appetite to pay a premium for accounting benefits alone.\u00a0<\/p>\n Given all those challenges, mandating location and hourly matching is expected to be destructive to voluntary demand, as has been pointed out repeatedly by NGOs<\/a>\u00a0and a variety of trade groups<\/a>, including both the buyers<\/a>\u00a0and the sellers<\/a>\u00a0of clean energy.<\/p>\n Lastly, experts from Carnegie Mellon, Cornell, Johns Hopkins, Stanford, Minnesota, Texas and many others agree<\/a>\u00a0that hourly matching\u2019s on-paper benefits \u201crely on simplified assumptions that do not reflect the economic or physical realities of project development or grid operations.\u201d Harvard\u2019s renowned power market expert Bill Hogan was more blunt<\/a>: \u201c24×7 matching of individual generation and load is not workable.\u201d<\/p>\n A chorus of experts and stakeholders has been sounding the alarm on this issue with increasing urgency. Beyond the sources above, those shouting include non-profits (GHG Institute<\/a>,\u00a0RMI<\/a>), academics (MIT<\/a>,\u00a0University of Cologne<\/a>), consultants (E3<\/a>,\u00a0Green Strategies<\/a>), startups (Ever.Green<\/a>,\u00a0Clearloop<\/a>) and individual experts (Jigar Shah<\/a>).\u00a0\u00a0<\/p>\n Despite all these voices, the GHGP appears to be caving to a vocal minority of hourly matching advocates focused on ensuring their procurement preference becomes a requirement for the entire voluntary market.<\/p>\n It\u2019s not too late for GHGP to course correct<\/p>\n The lure of hourly matching is that it fights against a trope common among clean energy antagonists: How can companies claim to be powered 100% by renewable energy when the wind doesn\u2019t always blow and the sun doesn\u2019t always shine?<\/p>\n My response to that? Carbon doesn\u2019t care if it\u2019s emitted at night in California or during the day in Virginia: it warms the planet all the same. The focus of the GHGP should not be on backing usage claims about what power a company is consuming \u2014 something impossible to prove given grid dynamics \u2014 but to measure carbon emissions as accurately as possible.\u00a0<\/p>\n So, if you wake up in the morning passionate about allocating blame for existing emissions, then you should applaud the ISB\u2019s current trajectory. But if instead you care, as I do, about accelerating the development of valuable clean energy infrastructure and advancing our fight against climate change, then please join me in advocating for an about-face for the GHGP\u2019s current trajectory.<\/p>\n","protected":false},"excerpt":{"rendered":"Lee Taylor is cofounder and CEO of REsurety. 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