How to Make Hourly Scope 2 Allocational Accounting Work? Roger and Patrick explore this question in a recent article published by SSRN. Read on to learn more.
Abstract
The Greenhouse Gas Protocol (the Protocol) was established as a global standard guiding consistent accounting and reporting of corporate greenhouse gas emissions. A central purpose of the Protocol’s Scope 2 standard is to accurately allocate electricity-sector emissions from electricity generation to consumers of electricity. In an accurate and complete allocation of emissions, all emissions from electricity generation and transmission (scope 1) would be fully allocated to electricity consumers (scope 2). Those who are in the process of updating the Protocol’s Scope 2 Market-Based Method (MBM) are considering a range of differing ideas and proposals to improve the current system and increase the accuracy of the allocation of electricity-sector emissions to individual companies.
One of the leading proposals for how to update the Protocol recommends matching clean energy attributes to electricity consumption on an hourly basis within a given market boundary — often referred to as 24/7 or hourly matching. Advocates say it’s a more precise and transparent way of linking clean power to corporate demand. However, current proposals for how to implement 24/7 would add substantial double counting and deliverability issues to the MBM, which could actually make carbon accounting significantly less accurate.
These issues must be resolved. First, the 24/7 framework must find a way to prevent the potential double counting of emissions, and second, it must demonstrate actual electricity deliverability to the point of consumption and account for transmission congestion.
The adoption of 24/7 proposals by the Protocol revision process runs the risk of making Scope 2 emissions accounting less accurate. The following paper takes a closer look at what it would really take to implement 24/7 accounting without sacrificing accuracy and feasibility.
SSRN 4.16.25
