A Higher Path Ahead
Persevering with progress requires collaboration. We name on WRI to emphasise the sensible proof from clear vitality patrons, builders, financiers, and our trade associations within the new accounting steering so these guidelines assist (not prohibit) the clear vitality transition. We additionally name on the clear vitality practitioner group to proceed actively partaking on this important debate and sharing their insights.
We advocate accounting frameworks and insurance policies that assist:
- Emissions discount claims that in the end combine carbon depth into any reporting; firms ought to be given the choice of the way to report relying on their capabilities
- Flexibility of differentiating the influence of their emissions discount claims by a hierarchy of voluntary contractual devices underneath market-based accounting to bolster motion
- Reframing ‘additionality’ to ‘emissionality’ as a disclosure function to permit for transparency and adaptability whereas driving ambition.
All of us desire a sustainable vitality future that drastically reduces carbon emissions. Carbon accounting just isn’t a objective in itself – world emissions discount is. To get there, we’d like conducive accounting frameworks and supportive insurance policies, not prohibitive ones, to inspire the clear vitality transition for numerous firms that may present instant influence towards reaching our collective local weather targets.
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Why Additionality Ought to Not Be a Requirement for Company Clear Power Targets
Electrical energy era accounts for 25% of world CO₂ emissions, and addressing this by a transition to renewable vitality sources – like photo voltaic or wind – is important to fixing the local weather disaster. The excellent news is that firms are stepping as much as procure large quantities of unpolluted vitality to reduce their carbon footprints, documented by retiring renewable vitality certificates (RECs). The Greenhouse Gasoline Protocol establishes the worldwide ‘guidelines of the highway’ for emissions accounting. However these guidelines – particularly its Scope 2 Steerage on oblique emissions from bought electrical energy, steam, warmth, or cooling – are underneath evaluation to be modified, and the implications might be catastrophic to the progress of the clear vitality transition.
What’s at Stake
These new proposed guidelines will make accounting for voluntary purchases of renewable vitality, particularly of unbundled RECs, way more difficult for companies and threatens REC markets which are important for the transition to renewable vitality. These new guidelines, whereas well-intended, will truly decelerate clear vitality procurement at a time once we want it most.
Perspective from the Practitioners
Clear vitality practitioners who develop, finance, construct, function, put money into, or buy energy from renewable vitality tasks broadly agree {that a} tougher course of for companies to make emissions claims just isn’t a path ahead that can bolster clear vitality procurement – actually, it’s going to set us backward. In distinction to the proposed adjustments, the next ideas symbolize a consensus amongst most practitioners – and the proof included in our detailed white paper presents sensible examples and explanations for why these ideas ought to be adopted:
- Market-Primarily based Devices are Important and Enabled by REC Markets: Market-based devices, akin to Digital Energy Buy Agreements (VPPAs), or contracts that make sure the long-term monetary backing of unpolluted vitality tasks, and unbundled RECs, are important to allow and inspire firms to satisfy GHG emissions accounting necessities. REC markets are important enablers for voluntary procurement. The brand new guidelines think about eliminating market-based accounting; this might discourage voluntary procurement of renewable vitality.
- An Additionality Requirement is Not Cheap: A binary ‘additionality take a look at’, or the requirement of unpolluted vitality tasks to be new versus present ones as a way to “rely” (as some teachers suggest), shouldn’t be a prerequisite for making an emissions discount declare however might voluntarily be disclosed alongside such declare. Firms merely received’t have the ability to purchase as many ‘extra’ RECs, and the clear vitality trade received’t have the ability to finance and construct as many tasks. Requiring additionality is a mistake and can be detrimental to the clear vitality transition.
- Time and Location Knowledge Monitoring is Important: Time and site information monitoring related to buyer load and renewable vitality era is important to match, measure, and account for the underlying emissions impacts. There may be broad consensus for working in direction of adapting GHG accounting steering for emissionality, which displays the averted emissions. Renewable vitality markets, significantly REC markets, will in the end higher replicate underlying carbon depth and direct clear vitality investments and procurements into carbon-intense markets the place emissions reductions are most wanted. A lot of our suggestions to combine emissionality into REC markets and Scope 2 necessities, shared in 2023 in our perspective on “Reimagining REC Markets,” are actually being mentioned for implementation.
A Higher Path Ahead
Persevering with progress requires collaboration. We name on WRI to emphasise the sensible proof from clear vitality patrons, builders, financiers, and our trade associations within the new accounting steering so these guidelines assist (not prohibit) the clear vitality transition. We additionally name on the clear vitality practitioner group to proceed actively partaking on this important debate and sharing their insights.
We advocate accounting frameworks and insurance policies that assist:
- Emissions discount claims that in the end combine carbon depth into any reporting; firms ought to be given the choice of the way to report relying on their capabilities
- Flexibility of differentiating the influence of their emissions discount claims by a hierarchy of voluntary contractual devices underneath market-based accounting to bolster motion
- Reframing ‘additionality’ to ‘emissionality’ as a disclosure function to permit for transparency and adaptability whereas driving ambition.
All of us desire a sustainable vitality future that drastically reduces carbon emissions. Carbon accounting just isn’t a objective in itself – world emissions discount is. To get there, we’d like conducive accounting frameworks and supportive insurance policies, not prohibitive ones, to inspire the clear vitality transition for numerous firms that may present instant influence towards reaching our collective local weather targets.
Obtain White Paper
