Better accounting for emissions related to the purchase of green electricity

Introduction

Direct emissions from a company’s operations (Scopes 1 and 2 as defined by the GHG Protocol) consist primarily of emissions associated with energy consumption (stationary combustion sources, mobile sources with internal combustion engines, electricity, steam, heat, and cooling)[1].

Three key drivers can be enabled to reduce them:

• Reduce energy consumption (e.g., energy efficiency and conservation)
• Replace a carbon-intensive energy source with a less carbon-intensive one (e.g., electrify)
• Reduce carbon intensity for a given type of energy (e.g., purchasing low-carbon electricity)

Activating all of these measures constitutes a comprehensive emissions reduction strategy. In order to prioritize them, it is necessary to quantify their potential emissions reductions.

With regard to reducing emissions associated with electricity supply, various low-carbon energy contracts are available: self-consumption, Power Purchase Agreement (PPA), "green" contracts, etc. The GHG Protocol’s current accounting framework treats them all the same, regardless of their quality, which prevents companies from distinguishing the actual carbon reduction potential of these different contracts.

This document describes the methodological framework used by Carbone 4 to to assess the decarbonization potential of each energy source in greater detail, taking into account consistency criteria:

• the spatial consistency to promote electricity generation close to the point of consumption
• the temporal consistency to help align production with consumption
• theadditionality to promote the development of new low-carbon electricity generation methods

The goal is to align all the levers and prioritize them appropriately.

This work builds on Carbone 4’s previous research on the carbon compatibility of green electricity supply. Initial proposals had been put forward as part of the Net Zero initiative[2]. This document replaces the recommendations for 2024 regarding Pillar A of the market-based system.