The climate crisis is here. The stakes have never been higher for corporate and institutional sustainability to be firmly rooted in science and drive as much real-world impact as possible. Fortunately, a wave of companies and other institutions are stepping up to consider how to take their sustainability programs to the next level.

We sat together with WattTime in order to figure out how we both believe measuring greenhouse gas emissions from electricity could be done right, done better, and done in a way that drives more impact.

You can read all about it in this document, and we’ve summarised the key elements here.

There are two frameworks

To fully understand and report their greenhouse gas emissions from electricity, organisations broadly have two different questions they must answer:

• what is the carbon footprint of their electricity usage?
• what is the carbon impact of the sustainability efforts that they’re undertaking?

Surprisingly, answering each question requires using a dedicated framework.

• Attributional framework (the footprint): Organisations have an inventory of assets (offices, factories..) which consume electricity. The attributional framework accounts for the emissions attributed to the electricity consumption of all of its assets.
• Consequential framework (the impact of interventions): Organisations might make interventions (investments, load-shifting) that have a carbon impact outside of their inventory of assets. The consequential framework accounts for the avoided emissions due to interventions of the organisation.

Let’s take the example of an organisation that installs a new large electric vehicle charging station for its employees. If we restrict ourselves to the scope of electricity, then this change will:

1. increase its electricity footprint as it will consume more electricity which will lead to more emissions. This is captured by the attributional framework.
2. cause an impact in the form of an increased electricity demand from the grid. This could cause a peaking power plants to ramp up, or new grid infrastructure to be installed, which would increase (or lower) emissions outside of the inventory of the organisation. These changes represent the impact that the organisation is having on the world as a consequence of its intervention (hence the consequential framework is used).

Note that we’ve already written about this distinction when we wrote about what marginal emissions are, and when to use them.

Guidelines and recommendations

When using these two frameworks, we generally recommend using methodologies that model the underlying physical reality as closely as possible. This ensures that any action taken based on these frameworks drives real and tangible emission reductions that can be witnessed in the atmosphere.

For example, we recommend

• minimizing the amount of assumptions, and relying on measured, real-world data as much as possible
• using a high temporal resolution, as the electricity system fluctuates with the installation of wind and solar generation
• using a high spatial resolution, as different areas behave differently
• taking into account imported and exported electricity, as smaller areas might heavily depend on its neighbours
• distinguishing short-term and long-term impacts when assessing the consequences of an intervention

How purchased electricity fits in

Purchasing electricity and/or contractual claims using Power Purchasing Agreements (PPAs), Guarantees of Origin (GO) or Renewable Energy Certificate (REC) schemes is a standard practice. These contractual rights enable contract holders to claim a zero footprint of their electricity consumption, and were introduced in order to serve as a financing mechanism to install more renewable generation assets.

Various shortcomings appear when these contractual claims are allowed to be used in the attributional framework:

• The hourly granularity is not always taken into account, and doesn’t fit the physical reality that it is more difficult to reach zero emissions during hours without wind or sun (note that noteworthy efforts such as EnergyTag are currently happening to alleviate this point).
• The regional granularity is not always taken into account, as one can buy certificates from e.g. Iceland to claim as low-carbon the electricity consumption of a factory in continental Europe.
• It carries the risk of being unintuitive for tax-payers who might not understand why, as users of a low-carbon grid (built with their tax money), their local electricity can’t be claimed as low-carbon anymore because their low-carbon generation has already been sold as certificates to foreign countries (see picture below).

From a physical standpoint, Norway has a fully decarbonised electricity system (left). However, after having accounted for the sale of certificates (to avoid double counting), a Norwegian company that hasn't bought a certificate will not be able to claim a low electricity footprint, even though the electricity physically is low-carbon (right). Note the case of Iceland where its inhabitants might wonder how their greenness could have been sold even though no transport cable to the continent exists. Data from 2017.

As the use of contractual instruments in attributional accounting currently does not follow the underlying physical constraints of electricity delivery (by e.g. disallowing trades between disconnected regions), we see this method as currently suboptimal in the attribution of emissions.

However, these contracts may contribute materially to the project being built. In this case, measuring the emissions avoided using the consequential framework would quantify the impact of a project financed by these contracts.

In conclusion

In the long-run, we recommend excluding contractual instruments from attributional accounting, and instead suggest that the impact of these contracts be assessed using the consequential framework.

We recognize that following these recommendations may not be possible for every organisation right now, and we do recognise and applaud initiatives that are trying to bring electricity accounting closer to the physical reality. We hope that these recommendations can help chart a path towards a future where electricity carbon accounting practices become more accurate and physical, in order to drive the transition towards a truly decarbonised electricity system.

Read the full whitepaper here

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