Vast Majority of Companies Oppose Tougher GHG Protocol Scope 2 Reporting Proposals

Greenhouse Gas (GHG) reporting framework provider GHG Protocol announced the release of the results of its public consultation on the Scope 2 standard, detailing the feedback received on its proposed update to the methods underlying reporting of emissions from companies’ purchased electricity and electricity sector actions.

The report indicated very low support by companies for some of GHG Protocol’s most significant proposals to tighten Scope 2 reporting, including stricter requirements for renewable electricity purchases used for market-based reporting to better align with when and where electricity is consumed.

The report follows the launch last year by GHG Protocol of a consultation on proposed changes to its initial 2015 Scope 2 Guidance, which standardize how companies measure emissions from purchased or acquired electricity, steam, heat and cooling.

Among the most significant changes proposed by GHG Protocol were the introduction of new hourly matching and local market deliverability requirements for market-based reporting on emissions from energy contracts and instruments, which the organization said would help align emissions claims more closely with the time and place electricity is consumed. The Hourly Matching proposal would require organizations using contractual instruments to match them to electricity consumption hourly, while the Deliverability proposal would require those instruments to come from renewable electricity that can be delivered to the same electricity market where the electricity is consumed.

Responses to the consultation indicated low support by companies for both of these proposals. Only 12% of companies said that they support hourly matching, and 82% indicated low or no support, while 19% supported the deliverability proposal, with 71% indicating low or no support.

Support was slightly higher when including all organization types (companies account for slightly less than half of respondents), but still low overall, with only 22% of all organizations supporting Hourly Matching, and 30% supporting deliverability.

Key areas of concern regarding hourly matching reported by respondents included concern that the requirement could discourage global participation in voluntary clean energy procurement markets, cited by 87%, and concern over the burden and cost to reporting organizations (86%), with 84% saying that hourly matching should follow an optional ‘may’ rather than a required ‘shall’ approach. Among those supporting the proposal, the report said that “almost all framed the proposed requirement as a necessary correction to prevent claims of using power at times when it is not physically possible to do so, and most cited it as necessary to reduce perceived greenwashing risk.”

For the deliverability proposal, the most frequently cited concern, at 87% of respondents, was that the requirement’s “narrower market boundaries restrict companies’ abilities to invest in areas where renewable energy development could yield the greatest decarbonization impact,” while 72% said that it could prompt a shift away from long-term agreements and towards spot purchases. For those supporting the proposal, the report said that most “noted that when contractual instruments originate from regions with no physical connection to the reporting entity’s grid, the link between claimed attributes and the electricity system serving consumption may be weakened, thereby reducing inventory accuracy.”

GHG Protocol said that in response to the consultation feedback it will revise the consultation draft with the Independent Standards Board (TWG) and TWG (Technical Working Group), with the groups planning to “explore whether offering multiple reporting approaches that reflect different theories of change could best respond to the diverse views represented in the public consultation feedback.”

Click here to access the report.