Overview of GHG Protocol Power Accoun+ng Guidelines Pla$orm for Climate Compa/ble Consump/on Germany February 23, 2012 Mary Sotos Project Lead, GHG Protocol World Resources InsDtute Who is the GHG Protocol? Why, and how, is the GHGP addressing renewable energy accoun/ng ques/ons? How has the GHGP framed the accoun/ng ques/ons? What is the intended outcome of the publica/on? Next steps
understanding, tracking and communicadng emissions Technical basis for voluntary and mandatory corporate reporting programs worldwide WBCSD/WRI GHG Protocol
Technical basis for voluntary and mandatory corporate reporting programs worldwide WBCSD/WRI GHG Protocol EPA Climate Leaders Guidance Global ReporDng IniDaDve repordng guidelines ISO 14064 Standards Public Sector Protocol basis for EO 13514 repordng Carbon Disclosure Project survey The Climate Registry Protocol Basic AccounDng Framework of the Corporate Standard Which GHG emissions? Which opera1ons/equity shares/ financial opera1ons to inventory? How categorize and dis1nguish emissions? How to perform basic calcula1ons? How adjust base year over 1me?
Basic AccounDng Framework of the Corporate Standard Which GHG emissions? Which opera1ons/equity shares/ financial opera1ons to inventory? How categorize and dis1nguish emissions? How to perform basic calcula1ons? How adjust base year over 1me? Areas LeU Flexible/Unspecified Repor1ng format Calcula1on procedures Emission Factor defaults Consolida1on approach Specified scope 3 s Base year significance threshold Reduc1on targets and instruments De minimis Basic AccounDng Framework of the Corporate Standard Which GHG emissions? Which opera1ons/equity shares/ financial opera1ons to inventory? How categorize and dis1nguish emissions? How to perform basic calcula1ons? How adjust base year over 1me? Areas LeU Flexible/Unspecified Bearing on renewable energy accoun/ng Repor1ng format Calcula1on procedures Emission Factor defaults Consolida1on approach Specified scope 3 s Base year significance threshold Reduc1on targets and instruments De minimis
Plattform Klimaverträglicher Konsum
Who is the GHG Protocol? Why, and how, is the GHGP addressing renewable energy accoun/ng ques/ons? How has the GHGP framed the accoun/ng ques/ons? What is the intended outcome of the publica/on? Next steps WHY the GHG Protocol is addressing accoundng for renewable energy purchases: #1. Current guidance in the Corporate Standard is vague Scope 2 GHG emissions will primarily be calculated from metered electricity consump/on and supplier specific, local grid, or other published emission factors (Chapter 6, Iden1fying and Calcula1ng GHG Emissions, p. 42) Alcoa purchases RECs to offset some of the company s GHG emissions RECs, which represent the environmental benefits of renewable energy unbundled from the actual flow of electrons, are an innova/ve method of providing RE to individual customers. RECs represent the unbundled environmental benefits, such as avoided CO2 emissions, generated by producing electricity from renewable rather than fossil sources (Alcoa side bar case study of US RECs in Chapter 8, Accoun1ng for GHG Reduc1ons, p. 61) It is important for companies to report their physical inventory emissions for their chosen inventory boundaries separately and independently of any GHG trades they undertake (Chapter 9, Repor1ng GHG Emissions, p. 61 2)
Reduce electricity consump1on Conserva/on, efficiency improvements Companies in emerging economies Calcula1on procedures, ownership requirements Some jurisdic1ons without explicit purchasing mechanism Different addi1onality and other eligibility criteria, expecta1ons Repor1ng prac1ces vary locally Buy a lower GHG electricity product Growth in purchasing op1ons locally Unbundled purchasing Supplier green tariffs/ premiums/ labels Need clear, common means to assess and account for purchases The HOW: Develop stakeholder process for crea/ng accoun/ng guidelines based on Corporate Standard, presen/ng a consistent framework for accoun/ng and repor/ng emissions related to energy purchases and produc/on, with focus on renewable energy purchasing mechanisms 1. Survey instruments and purposes 2. Define informa1on key for disclosure and claiming to achieve accurate accoun1ng 3. Iden1fy elements in systems suppor1ng those claims 4. Iden1fy policy considera1ons for programs
Plattform Klimaverträglicher Konsum Project Timeline Scoping Workshops Washington D.C., US Dec 2010 US market issues London, U.K. Jan 2011 Primarily focused on UK issues, some EU Mexico City, Mexico May 2011 Overlap of CDM offsets/contracts Technical Working Group Draes and Discussion 3 work streams Started Aug 2011, hiatus, start back in Dec 2011 Survey instruments/jurisdic/ons, examine case studies Public comment March 2012 Dra\s for wider circula/on Summer 2012 Further outreach, smaller publica/ons possible therea\er, pending funding Publica1on STAKEHOLDERS
Who is the GHG Protocol? Why, and how, is the GHGP addressing renewable energy accoun/ng ques/ons? How has the GHGP framed the accoun/ng ques/ons? What is the intended outcome of the publica/on? Next steps Grid average emission factors Other contractual mechanisms MWh consumed x Grid Average Emission Factor = Total Scope 2 GENERATORS SUPPLIERS END USERS
Grid average emission factors Other contractual mechanisms MWh consumed x Grid Average Emission Factor = Total Scope 2 300 tons 100 MWh 200 tons 100 MWh 0 tons 100 MWh GENERATORS SUPPLIERS END USERS Grid average emission factors Other contractual mechanisms MWh consumed x Grid Average Emission Factor = Total Scope 2 300 tons 100 MWh 200 tons 100 MWh 1.66 tons CO2e/ MWh 0 tons 100 MWh GENERATORS SUPPLIERS END USERS
Other Contractual Mechanisms: Alloca/ng Genera/on Emissions to End Users 300 tons 100 MWh 200 tons 100 MWh 1.66 tons CO2e/ MWh 0 tons 100 MWh GENERATORS SUPPLIERS END USERS The HOW: Develop stakeholder process for developing accoun/ng guidelines based on Corporate Standard, presen/ng a consistent framework for accoun/ng and repor/ng emissions related to energy purchases and produc/on, with focus on renewable energy purchasing mechanisms 1. Survey instruments and purposes
Survey of Instruments: funcdonal categories Tracking mechanisms for supplier porgolio quotas and other regulatory repor1ng Tracking mechanisms for voluntary claims Tracking mechanisms for supplier disclosure Allowances in emission cap & trade schemes Offset credits Power purchase contracts Other financial support mechanisms Survey of Instruments: funcdonal categories Tracking mechanisms for supplier porgolio quotas and other regulatory repor1ng Tracking mechanisms for voluntary claims Examples State Compliant RECs (US, Canada) Renewable Obliga1on Cer1ficates (UK) Levy Exemp1on Cer1ficates (UK) Cer1fica1 Verdi (Italy) Voluntary RECs (US, Australia, Canada) Guarantees of Origin (EU) Tracking mechanisms for supplier disclosure RECs (US, Australia, Canada) Gos (EU Allowances in emission cap & trade schemes Offset credits Power purchase contracts Other financial support mechanisms EU ETS, RGGI, California (WCI), Alberta Alterna1ve compliance instruments designated by above programs (ex: CDM); or voluntarily purchased PPAs between suppliers and generators, or between suppliers and end users FiT, u1lity incen1ves
C. Scope 2 Calculation in Net Reporting (assuming no cap on the emission sector) C. Scope 2 Calculation in Net Reporting (assuming no cap on the emission sector) Electricity consumption 100 MWh Grid average GHG emission factor 0.5 tco2e/mwh Scope 2 emissions 50 tco2e Renewable energy purchased 75 MWh Adjusted consumption 25 MWh Grid average GHG emission factor 0.5 tco2e/mwh Adjusted scope 2 = 12.5 tco2e Renewable energy purchased 75 MWh Avoided non baseload grid emission rate 0.80 tco2e/mwh Avoided grid emissions 60 tco2e *Including avoided emissions is current reporting practices associated with US RECs
E. Scope 2 Calculation in Net Reporting (assuming a cap on the emission sector and corresponding allowance retirement) Electricity consumption 100 MWh Grid average GHG emission factor 0.5 tco2e/mwh Scope 2 emissions 50 tco2e Renewable energy purchased 75 MWh Adjusted consumption 25 MWh Grid average GHG emission factor 0.5 tco2e/mwh Adjusted scope 2 = 12.5 tco2e Renewable energy purchased 75 MWh Allowances retired with purchase 60 tco2e *Currently only select US regional cap and trade programs retire allowances with a voluntary renewable energy purchase Avoided grid emissions 60 tco2e The HOW: Develop stakeholder process for developing accoun/ng guidelines based on Corporate Standard, presen/ng a consistent framework for accoun/ng and repor/ng emissions related to energy purchases and produc/on, with focus on renewable energy purchasing mechanisms 1. Survey instruments and purposes 2. Define informa1on key for disclosure and claiming to achieve accurate accoun1ng 3. Iden1fy elements in systems suppor1ng those claims
A_ributes Does the instrument legally state that it contains amributes of GHG emissions from genera1on? ApplicaDon Does the instrument and/or the program cer1fying or administering it indicate that it is intended for corporate indirect electricity emissions claims (scope 2)? Does the relevant cer1fica1on or regulatory body iden1fy that these purchases should not be used as scope 2 mechanisms? Is the purchase applied to a facility s consump1on in keeping with the geographic use boundaries specified by the instrument or program? Market Integrity Are verifica1on measures in place for the instrument and its issuance? Ownership primarily framed here as prevendon of double coundng PrevenDng explicit double coundng: Instrument cer1fica1on/verifica1on, use of registries, clear re1rement PrevenDng implicit double coundng: Much more involved process of how emissions are allocated to end users Requires coordina1on of mul1ple actors and func1ons tracking + calcula1on In U.S., sub regional grid average emission factors not designed to incorporate and reflect volumes of green power transac1ons concern that impact is neglible currently Integra1ng mul1ple mechanisms into system? E.g., factor out both voluntary RECs and contracts, while retain for the average those projects receiving public support mechanisms Easier to effec1vely use one instrument for alloca1on?
Avoiding explicit double coundng Is the instrument iden1fied with a unique serial numbers and tracked through an external system? Is the instrument re1red or canceled once a claim in a GHG inventory has been made? Does the program/cer1fica1on body ensure that no other instrument conveying similar amributes has been issued from the same genera1on? Energy purchasing mechanisms produced in on site facili1es where energy has been consumed by the host company may be either retained for the on site consumer or sold off. If sold off, has the GHG emissions associated with the consumed energy been es1mated at grid average (or another specified factor) rather than assumed to be zero? Avoiding implicit double coundng Does the program or cer1fica1on system acknowledgement the implicit double coun1ng with other electricity genera1on informa1on used for corporate scope 2 accoun1ng? Does the local grid system or purchasing program provide a plan or threshold by which factors will be adjusted?
The HOW: Develop stakeholder process for developing accoun/ng guidelines based on Corporate Standard, presen/ng a consistent framework for accoun/ng and repor/ng emissions related to energy purchases and produc/on, with focus on renewable energy purchasing mechanisms 1. Survey instruments and purposes 2. Define informa1on key for disclosure and claiming to achieve accurate accoun1ng 3. Iden1fy elements in systems suppor1ng those claims 4. Iden1fy policy considera1ons for programs AddiDonality: incen1vizing behavior beyond what would have occurred in the absence of the incen1ve s interven1on Ra+onale for inclusion Consumers expect degrees of addi1onality with expecta1on of making a difference, driving new projects, and going beyond regula1on GHG accoun1ng is a valuable benefit of purchase, and should be ascribed to those projects which are brought about due to the incen1ve of the REC Challenges Concerns about mo1va1on of project dis1nct from the objec1ve amribute of its emissions Degree of direct causal impact inherently obscure mul1ple sources of project financing Execu1on of tests can be intensive, subjec1ve Every market different, responds to different incen1ves Market/regulatory condi1ons change over 1me and what s addi1onal changes
Broader concept of eligibility addi/onality is subset shrinking the pool of exis/ng projects, shaping the profile of new Regulatory Quota some1mes ownership ques1on Financial Support iden1fy threshold of what other types of support are enough (Subsidies, tax credits, FiT?) Vintage drive new projects Technology specifying types to achieve enviro outcomes or spur innova1on Environmental Performance Other impacts beyond GHG s Geographic Boundaries Local economic/enviro benefits Who is the GHG Protocol? Why, and how, is the GHGP addressing renewable energy accoun/ng ques/ons? How has the GHGP framed the accoun/ng ques/ons? What is the intended outcome of the publica/on? Next steps
Stakeholder Understanding Informa1on Systems Clarify accoun1ng procedures for energy purchases in GHG inventories Mechanisms and Instruments Jurisdic1onal or programma1c policies Stakeholders unsa/sfied with policies, informa/on Stakeholder Understanding Cannot monitor, rate or enforce Informa1on Systems Clarify accoun1ng procedures for energy purchases in GHG inventories Mechanisms and Instruments Informa/on requires coordina/on Jurisdic1onal or programma1c policies Eligibility s/ll preroga/ve of instruments and policies
Who is the GHG Protocol? Why, and how, is the GHGP addressing renewable energy accoun/ng ques/ons? How has the GHGP framed the accoun/ng ques/ons? What is the intended outcome of the publica/on? Next steps Technical Working Group Draes and Discussion Ongoing discussions and webinars, star1ng Friday (Feb 24) Openness to a global approach, language and terms Specific inputs in publica1on process (emission factor calcula1on, survey of instruments) * Other engagement opportuni/es * Individual consulta1ons, leading to case studies where appropriate Shorter technical pieces Co hosted workshops with decision makers, program administrators and other experts Partnerships in financial support
Materials to date and summaries of scoping workshops available on project website: hmp://www.ghgprotocol.org/feature/ghg protocol poweraccoun1ng guidelines Contact: Mary Sotos mary.sotos@wri.org 202 729 7627