Blog
Devon Lukas, Senior Consultant, Clean Energy and Emissions Impact Solutions
This blog is the first of a two-part series. To read part two, go to Is your clean energy strategy actually cutting carbon? How consequential accounting incentivizes what actually matters.
Corporate climate action is undergoing a quiet but massive revolution. For the last decade, the primary goal for sustainability teams via Greenhouse Gas Protocol (GHGP) guidance has been straightforward: measure your footprint, then buy enough clean power or certificates to match it. While this accounting framework was designed to bootstrap the early renewables market – and had major success doing so – a lot has changed in 10 years.
Last month, the GHGP finished up its consultation on Scope 2 and, notably, launched the parallel “consequential method” via the Actions and Market Instruments (AMI) workstream to revise the framework for modern day emissions accounting. Ultimately, this inventory has much more impact than just voluntarily measuring emissions; it incentivises the decisions that companies make to reduce them. The GHGP has the opportunity to set a powerful guideline through these revisions that could incentivize and empower widespread global decarbonization.
Under the current Scope 2 Market-Based Method (MBM), corporations can claim carbon neutrality by matching electricity usage with Renewable Energy Certificates (RECs) on a simple total annual megawatt-hour (MWh) basis. While this system incentivized lots of clean power development over the past decade, it lacks accuracy and impact for the modern grid. It measures who uses which MWhs, not who reduces carbon emissions. To sum it up, this simplified measurement faces what the Greenhouse Gas Management Institute describes as a “fundamental disconnect between corporate actions and reported outcomes,” often insensitive to modern emissions mitigation efforts.[1]
In response to the growing need for change, the
GHGP recently held two public consultations for
feedback on new revisions. The first revision
includes mandatory “hourly matching” (the concept
of matching load with an equal amount of clean
generation within the same hour and location) in the
Scope 2 MBM proposal in an attempt to improve
accuracy. While it does not require new power to be
built (the “additionality” pillar), this concept aligns
energy usage with clean power production that could
be applicable for greener grids.
However, the grid is not fully clean yet, and the MBM lacks an impact-based measurement. This issue leads us to the second public consultation, in which the GHGP proposed a parallel "consequential method" in an attempt to quantify and report the impacts of actions. Requiring and incentivizing new clean power in dirtier regions (and out of renewables-saturated regions) is a key aspect to global decarbonization, and a gap that the consequential impact-based method could help address if done right.
Historically, the standard has measured impact in units of energy, not emissions. In reality, no two MWhs have equal impact, regardless of how close in time or space they are. We can all agree that a MWh of clean energy generated in a grid with abundant solar power does not have the same emissions impact as one generated in a coal-heavy region, but even within the same region the grid is not uniform and impacts vary from transmission congestion.[2, 3, 4] So – how do we ensure that emissions accounting measures the right metric to incentivize the most clean power production and emissions reductions?
Figure 1 shows average generation-weighted wind Locational Marginal Emissions (LMEs) in ERCOT from 1/1/2025 - 12/31/2025
The above highlights one example of how emissions impacts can vary for two nearby projects within a congested grid region leveraging our CleanSight Impact software. They are close enough that generation from both projects would likely be matched to load in equal ways under new GHGP guidance, yet they have different emissions impact stories. While they are experiencing roughly the same wind patterns, they are impacted by other surrounding generators on the grid, demand, and transmission infrastructure, causing them to have different emissions abating potentials especially during times of congestion.
Figure 2 focuses on one hour where the projects have very different LME profiles. They are in the same grid region, experiencing roughly the same weather/wind patterns, but the grid generator makeup and transmission infrastructure cause them to perform differently. LMEs go up at Wind Project A, while LMEs go down at Project B.
Measuring by impact is long overdue as experts, academics, and the GHGP’s own Technical Working Group have studied its effectiveness, feasibility, and ability to encourage clean power development in locations that need it most.[5, 6 ,7] As a result, the AMI was tasked with developing the consequential method, the first phase of which was released late last year and open for public comment through this past January. While the first phase is a step in the right direction, more work needs to be done in order to make this metric quantifiable and functional in emissions accounting frameworks. But – it has the crucial potential to be used as a baseline framework to guide clean power production to where it is most impactful.
Be sure to check out part 2 of this series, where we break down the proposed consequential method, its components, and other impact accounting methodologies to examine how this concept can help fill the current gap.
Resurety's consulting is following this topic closely. Stay tuned for part 2 of this series and explore other clean energy intelligence posts here. To learn more or speak to one of our experts, fill out the form below.
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