Accounting for Scope 2 Emissions

Companies say they run on “100% renewable electricity.” But if a business consumes power at 2 am, can it claim solar power generated (possibly abroad) at noon?

In a new research comment, Gunther Glenk and Stefan Reichelstein propose an approach that accounts for the actual emissions embodied in electricity consumption and sets incentives for renewable energy procurement.

The core idea is that the task of assessing and reporting the carbon intensity of energy purchased by different customers on the grid during a given time interval should fall within the domain of the attendant energy supplier, not the customers. Importantly, the energy supplier ought to determine the actual emissions embodied in delivered energy using primary data by allocating all emissions from different power generators to customers in a differentiated manner based on a so-called structured market-based method.  

This method ensures that all emissions generated in a period are allocated and prevents suppliers from biasing the allocation. It also incentivizes decarbonization by allowing energy customers to take full credit for any renewable energy they procure. When combined with additional constraints, the method further aligns abatement incentives for customers with the societal goal to decarbonize the overall energy supply.

In addition, the method builds on the GHG Protocol Scope 2 Guidance, currently under revision. It is also in line with the stated objective of the GHG Protocol and ISO (at COP30 last year) to integrate and harmonize corporate and project-level accounting standards.

Read the research comment here.