GHG accounting of green power

30th April 2012


Greenpower

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IEMA

IEMA's Nick Blyth explores guidance and opposing views on accounting for greenhouse-gas (GHG) emissions from renewable electricity

How organisations account for grid-delivered “green” electricity in their GHG footprints can prove both contentious and confusing. Data from an IEMA 2010 survey indicated that roughly two-thirds of GHG practitioners are following UK guidance. Of the 272 respondents who purchased green electricity, 183 were reporting in line with UK guidance with the remaining 89 instead reporting their net or gross emissions as zero carbon.

In the UK, guidance states that all purchased electricity supplied via the national grid, should be accounted in an organisation’s GHG footprint by using a grid average emission factor. Any electricity sold as generated from UK-based renewable sources should also be treated at grid average and not attributed either a lower or zero-carbon emission factor, contrary to what is allowed in some other countries. This position has been explained with reference to a number of fairness, transparency, ownership, additionality and double counting principles:

  • For transparency reasons, all electricity supplied via the UK National Grid should be treated as “consumed grid average” because this is the closest possible approximation to the carbon intensity of the product actually being supplied to organisations. In essence, you can physically only receive and consume what the grid provides.
  • In the UK, energy companies have to supply a proportion of renewably generated electricity into the grid, due to the Renewables Obligation (electricity market reform including the carbon price floor will also be important in future). Such mechanisms and public funds are driving UK investment in renewable energy generation, not consumer paid price premiums. Under such circumstances, reporting any grid distributed electricity at zero emissions is likely to be misleading.
  • Reporting zero emissions for any UK grid supplied electricity is not possible without a level of double counting as the associated low or zero emissions will also be factored within the wider UK grid mix emission factor – as used by other reporting organisations.
  • Net accounting in UK guidance does allow for some discounting of emissions through purchases such as high quality carbon offsets (for example, via the Kyoto Clean Development Mechanism). Such purchased “emission reductions” are allowed, not least because of the well evidenced additionality of these projects. Purchased green tariffs have, to date, not been seen as demonstrating an equivalent level of additionality.
  • Reporting power tariffs at zero emissions would fail to factor in emissions associated with transport and distribution losses via the grid.

Not all accept these positions and some favour the use of lower or zero-carbon emission factors, stating this would ultimately contribute demand-side funding for UK-based renewably-generated electricity.

Some suggest that state funding or requirements shouldn’t bear on the situation at all and that emission factors should simply be attributed to identified generation sources. Such an approach is indeed followed in some countries compliant with the GHG Protocol corporate standard. In the US a system of renewable energy certificates is used in purchasing, tracking and reporting electricity at zero emissions.

Moving forward

The question arises of whether UK guidance should respond to these arguments? Alternatively, if the GHG Protocol issues new specific guidance what might it learn from UK practice?

1. The footprint’s final use is a consideration

By including eligibility criteria and not limiting to GHG generation attributes, UK guidance helps organisations to develop fair and robust footprints with high credibility on consumption emissions and reductions.

This can be particularly important if the footprint is to be used in green claims and alternative approaches may risk too easily, (or falsely?) attributing zero emissions to large sections of an organisation’s GHG footprint.

Guidance should continue to aim for high credibility with consideration to any future public or commercial claim based on the footprint
2. Some gaps need addressing

Grid-related transport and distribution losses and also life-cycle emissions for grid and energy generation can be gaps in reporting. The GHG Protocol corporate standard indicates that emission factors at generation should be sought and used, if available. In this situation transport and distribution loss can fall outside of practice, although it is optional in scope 3 assessments. Defra and DECC guidance from 2009, does cater for transport and distribution loss, referencing conversion factors which address the loss separately and in the provided consumption factor.

3. Future guidance could consider new approaches

Current UK guidance effectively prevents the use of low or zero-carbon emission factors for renewably-generated, grid-distributed electricity. Future revisions could re-evaluate this while maintaining robust positions on fairness and transparency. It may, for example, be possible to build on concepts of gross and net GHG accounting in Defra and DECC guidance to allow different emission factors where certain criteria are met. In the UK, such a change may only be possible if power supply can be demonstrated as separate to any Government requirement or public funds.

To counter this, public subsidy could itself be accounted for or resolved. Power companies could potentially publish their own emission factor for each tariff, along with a discount factor that balances out the public investment per unit. In regions where there is no significant public investment a near zero-carbon emission factor will result. Such a measure could potentially support the objective of accurately allowing consumer pressure to bear through a true and fair reporting context.

4. Full and transparent disclosure is crucial

Given there are disagreements over approach, reporting in this field needs to be particularly clear and comprehensive. Assumptions and approaches should be explained and narrative report sections used to ensure clarity in final reports (for example, by fully explaining any net accounting).

In this context, I propose that at the outset, or perhaps prominently in an accounting summary, total emissions for grid-related electricity reporting should be set out at grid average (ie the total MWh multiplied by average emissions factor for the grid).

Such a transparent starting point on consumed electricity would not preclude any subsequent net accounting, such as potential net discounting based on lower emission factors for electricity from renewable sources.

GHG reports need to give confidence that accounted footprints are transparent, accurate, credible and fair. And these need to be central principles in any future revised guidance on green electricity accounting.


Nick Blyth is IEMA’s policy and practice lead on climate change. For more information on IEMA and climate change visit www.iema.net

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