New Brattle Report Analyzes Benefits of Advancing GHG Accounting for the Greenhouse Gas Protocol

In a new report prepared for the Greenhouse Gas Protocol, experts from The Brattle Group review and compare studies on greenhouse gas (GHG) emissions accounting and clean energy procurement strategies.

In support of the Protocol’s ongoing efforts to update its Scope 2 guidance, the authors evaluate the advantages, limitations, and implications of different strategies, which include:

• Annual matching: Procured clean electricity amount must match the electricity consumption on an annual basis
• 24×7 Matching: Clean procurement and consumption must match on an hourly basis
• Three Pillars: In addition to 24×7 matching, the procured electricity must be deliverable and incremental
• Marginal Emissions Matching: Avoided marginal GHG emissions from procured clean electricity must match the GHG emissions caused by energy consumption
• Flow-based Accounting: Emissions are traced and assigned based on when, where, and how much electricity is consumed

Corporations and governments worldwide use standards set by the Protocol – a partnership between the World Resources Institute and the World Business Council for Sustainable Development – to measure and report their GHG emissions to investors and customers. Guidance from the Protocol is increasingly vital for companies and investors seeking to ensure their efforts to reduce their carbon footprint are evidence-based, resilient to policy changes, and adaptable to changes in economic fundamentals of the power grid.

Scope 2 emissions are indirect GHG emissions associated with the purchase of energy, such as electricity. There is a growing recognition of the need to evolve Scope 2 accounting to better align with the realities of the power grid transition, renewable resource intermittency, and the pursuit of cost-effective corporate sustainability goals – all while reporting GHG emissions with greater accuracy and scientific validity.

The report, Assessment of Studies on US Hydrogen Tax Credits and Potential Takeaways for Scope 2 Guidance, provides summaries and analyses of the clean energy procurement approaches presented in recent studies. All of the reviewed studies vary significantly in their objective, design, and findings, with several designed to inform the US Treasury’s rulemaking of Section 45V, the Clean Hydrogen Production Tax Credit.

“At the moment, there is no consensus on the best clean energy procurement strategy,” said Brattle Managing Energy Associate Long Lam, one of the authors of the report. “Our review highlights how various approaches can provide businesses, governments, and organizations the tools they need to make informed decisions on reducing their carbon footprints and maximize their impacts.”

Findings from the report include:

• Different clean energy procurement options offer different advantages. Which strategy will be the most superior and cost-effective depends on a region’s energy policy, data availability, the advance of instruments in that region, and the region’s economic fundamentals.
• Going forward, there will be an increasing need for more advanced GHG accounting that includes consideration of time variability and locational variation. The authors highlight the importance of distinguishing between the development of advanced clean energy procurement strategies and the adoption of more advanced GHG accounting; the latter can be accomplished regardless of the preferred procurement strategy.
• The Protocol should consider the diverse circumstances of governments and companies worldwide, providing adaptable guidance for regions in the early stages of introducing power markets, green markets, and advanced data infrastructure while championing companies and organizations that push forward on innovative initiatives.

“We appreciate The Brattle Group’s thoughtful analysis of research on electric power sector emission accounting approaches and broader questions around emissions matching strategies,” said Michael Macrae, Director of Scope 2 and Senior Advisor on Impact Accounting at the GHG Protocol. “This work highlights critical insights and ongoing debates that are highly relevant to the Greenhouse Gas Protocol’s efforts to refine its Scope 2 standards, ensuring robust and actionable methodologies for global GHG emissions accounting.”

Assessment of Studies on US Hydrogen Tax Credits and Potential Takeaways for Scope 2 Guidance is authored by Principal Dr. Kathleen Spees, Managing Energy Associate Dr. Long Lam, and Energy Associate Dr. Kala Viswanathan.