Tag: Emissions First

Blog post: Is 24/7 or Emissions First right for you? It depends on what you are trying to achieve.

Lee Taylor
Lee Taylor, REsurety's CEO, discussions Emissions First for clean energy leaders
Lee Taylor, Co-Founder and CEO

Authored by Lee Taylor, Co-Founder and CEO, REsurety

Clean energy leaders today agree clearly on one thing: annual MWh-based accounting was a phenomenally successful driver of our industry’s past success, but it is insufficient to meet the needs of our industry’s future – and our planet’s future.1 However, those same clean energy leaders have different proposals for what should replace annual MWh-based accounting. From these proposals two approaches have emerged: Hourly Energy Matching (the methodology advocated for by 24/7 proponents) and Carbon Matching (the methodology advocated for by the Emissions First Partnership).

Hourly Energy Matching asserts that buyers of clean energy should match their consumption with clean energy generation in both time and location. Carbon Matching advocates that buyers of clean energy calculate the induced carbon emissions of their consumption and then subtract the avoided carbon emissions of their clean energy procurement, with the goal of pursuing strategies for both consumption and generation, independently, to get to an end result of zero as fast as possible. In the corporate community, Google has led the charge on Hourly Energy Matching whereas the Emissions First Partnership (including Akamai, Amazon, General Motors, HASI, Heineken, Intel, Meta, Rivian, Salesforce, and Workday) has advocated for Carbon Matching.2

There is a perception by some that these two camps are in direct conflict. In reality, Carbon Matching and Hourly Energy Matching share a common long-term goal: a carbon-free grid. However, Carbon Matching and Hourly Energy Matching are two different strategies to achieve that goal and should be considered alternative – not mutually exclusive – options, each of which is an improvement over the status quo.

Hourly Energy Matching is an attempt to approximate the physical sourcing of clean energy. Said another way, Hourly Energy Matching is effectively a proxy for behind-the-meter co-location and temporal matching of clean energy generation and energy consumption. It is an effort to get most of the benefits of co-location without giving up the benefits of grid interconnection. Done correctly (more on this below), this strategy provides a tool to attempt to physically consume carbon-free energy.3

By contrast, Carbon Matching is an attempt to minimize carbon emissions as fast as possible. The basic premise is: our climate doesn’t care when and where carbon is emitted, it all goes into the same atmosphere and drives climate change. So Carbon Matching focuses on driving dollars to the projects and strategies that decrease overall carbon emissions as fast as possible, whether or not that results in consumption and clean energy generation occurring in the same time and location. For example: siting new load in a clean grid while siting new renewable generation in a dirty grid achieves faster decarbonization than co-locating load and generation in either one location.

Regarding the “done correctly” point above, I do have one significant bone to pick with the messaging to date by the Hourly Energy Matching camp. In many real world applications, Hourly Energy Matching has a significant “deliverability problem” that has thus far been downplayed or outright ignored. Here’s the problem: using grid connected projects as a “proxy” for co-location is only defensible if there are no material transmission constraints between the location of your generation and the location of your consumption. Just as transmission constraints drive dramatic price differences within a region, they also drive large differences in the carbon intensity of electricity within the same grid at the same time.

Hourly Energy Matching advocates acknowledge this and so define “deliverability” as existing between any two locations on the grid between which there is no material congestion. But, as a result of the complex and rapidly changing congestion patterns of modern grids, that means that whether or not generation in one location is “deliverable” to load in another changes every 5 minutes in many markets and can cause locations that are just a few miles apart to become non-deliverable. That reality presents challenges to the ease of Hourly Energy Matching’s implementation, so advocates have thus far taken a “let’s not let the perfect be the enemy of the good” approach and suggest using unjustifiably large geographic boundaries such as balancing authorities or the DOE’s geographic regions as approximations of deliverability.

But calling something deliverable doesn’t make it so. For example, in renewables-rich Texas, out of the hundreds of operating wind farms only two would be considered deliverable to Houston if you used energy price differentials as an indicator of congestion – as many have proposed.4 And congestion is not just a Texas problem. In MISO in 2022, renewables were being curtailed 71% of the time as a result of local congestion.5 In summary: matching generation and consumption hourly while ignoring local transmission constraints is the definition of precision without accuracy – and Hourly Energy Matching advocates need to acknowledge this and ensure that the implementation of “deliverability” consistently avoids that outcome.6

In the end, as a buyer of power, you have a choice. Is your goal to attempt to physically consume local carbon free energy? And are you comfortable knowing that your dollars spent could very likely have abated carbon further and faster if deployed elsewhere? If so, then you should pursue an Hourly Energy Matching strategy.

Alternatively, is your goal to reduce overall carbon emissions as fast as possible? And are you comfortable with the fact that your choice may lead you to invest in projects that aren’t located in your backyard? If so, then you should pursue a Carbon Matching strategy.

Both strategies have their respective merits and it is important to note that they are not mutually exclusive. I can speak to this personally. I live in Massachusetts, which means I live in a house that gets (relatively) little sunshine and draws power from a (relatively) clean grid. Even so, I installed solar panels on my roof in order to source carbon-free energy for my own consumption. However, like many 24/7 strategies, my rooftop solar system is both expensive and exclusive. The implied cost of carbon underlying the RECs generated by my rooftop system translates to nearly $650 per metric ton of avoided carbon. And, residential solar isn’t a financial option for all homeowners and is no option at all for renters. While I still feel good about my decision to install solar, I recognize that this kind of behavior alone simply is not cost-effective nor scalable enough to stave off the worst effects of climate change. Given that, the majority of my time and effort go into our work at REsurety, where we provide the tools required to enable Carbon Matching throughout the clean energy ecosystem (from corporate procurement, to energy storage, to hydrogen development) – with the primary objectives of maximizing the speed with which we decarbonize the grid as a whole.

Have a question on this topic? We’re always happy to discuss so send us a note at [email protected].

1 For further reading or listening on this, see: Carbon Accounting Changes Could Lift Corporate Greenhouse-Gas Emissions, WSJ, May 2023. GHG accounting reform could change energy investment, The Interchange Podcast, July 2023. Going beyond megawatt hour matching, Climate Positive Podcast, July 2023.

2 The Emissions First Partnership states that it supports companies with hourly match goals, and its carbon matching approach can serve as a foundation for those goals (see EFP website).

3 I say “attempt” instead of “ensure” on purpose, because it’s not possible to trace electrons from generation to consumption across a grid. 24/7’s advocates agree with this: “We know from Kirchoff’s circuit laws that electricity generated in one spot cannot be directed to a specific user over the electricity grid. Once you put electricity on the grid there is no actual way to know ‘the energy from wind farm X is going to my data center Y.’” – Google’s Green PPAs

4 Many Hourly Energy Matching proponents have suggested that two locations could be considered “deliverable” if the Locational Marginal Price (“LMP”) at the generator location is within 10% of the (hourly-matched) LMP at the consumption location. Using trailing 2-year observed prices, only 2 wind farms in Texas have experienced LMP differentials of less than 10% to Houston Hub.

5 See Table 1 from MISO’s 2022 State of the Market report. Wind and solar were on the margin and as such set pricing in 68% and 3% of intervals, respectively.

6 For more detail on how local transmission can undermine or even reverse the carbon benefits of hourly matching, see REsurety’s white paper on this topic related to defining green hydrogen: Emissions Implications for Clean Hydrogen Accounting Methods.

The Interchange Recharged Podcast: GHG Accounting Reform Could Transform Energy Investment

The Interchange Recharged Podcast: GHG Accounting Reform Could Transform Energy Investment

In this episode of The Interchange Recharged, David Banmiller is joined by AWS’ Jake Oster and Meta’s Peter Freed to discuss the goals of the Emissions First Partnership and why updating carbon accounting standards is so important.

Listen to the podcast here or on Spotify, or download a full PDF transcript below.

Episode Summary

Changes to the way emissions are reported will have a big impact on renewable investment.

It might be the most important piece of sustainability material in corporate and climate work that no one’s ever heard of, and it drives a huge amount of corporate behavior.

In 1998, the GHG Protocol Corporate Accounting and Reporting Standard launched, and set out a standard for businesses to measure and report their greenhouse gas emissions. Like financial accounting standards, the GHG Protocol influences corporate behavior such as investment decisions. So, a planned revision of the rules for reporting Scope 2 emissions is a significant event. The new standard, expected to take effect in 2025, could have a big impact on corporate investment in low-carbon energy around the world.

Now, a consortium of some of the world’s biggest funders of the Greenhouse Gas Protocol, such as Amazon and Meta, are looking to refine the current rules with the goal of increasing the accuracy of reporting. Together with 8 other companies, including Intel and Heineken, they’ve co-founded the Emissions First Partnership, which is advocating for changes to the Greenhouse Gas Protocol.

Host David Banmiller is joined by Jake Oster, Director of Energy and Environmental Policy at Amazon Web Services, and Peter Freed, Head of Energy Strategy at Meta, to explain the goals of the EFP and why updating accounting standards is so important.

The EFP says that changes to the GHG Protocol Scope 2 emissions reporting is a crucial step to addressing the climate crisis and decarbonizing the power system. Investment in new renewable technologies from corporates, as a result of the accounting standards being updated in the past decade, is increasing.

Pre 2015, before the current market-based methodology was in place, there was about a gigawatt of installed capacity coming from PPAs. Today, there’s more than 100. The pace of progress in the energy transition is accelerating as reporting standards are refined and the EFP aims to continue this progress.

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Climate Positive Podcast: Integrating Emissionality into the Greenhouse Gas Protocol

Climate Positive Podcast
Climate Positive Podcast: Integrating Emissionality into the Greenhouse Gas Protocol

In this episode of Climate Positive, HASI’s Chad Reed and Brendan Herron sit down with Faraz Ahmad, Head of Net Zero Grid at Amazon, to discuss the Emissions First Partnership and how underserved regions could benefit from an emissions first energy transition approach.

Listen to the podcast here, or read the transcript below.

Episode Summary

More than 90% of Fortune 500 companies report their emissions using the Greenhouse Gas Protocol (GHGP), which supplies the world’s most widely used greenhouse gas accounting standards. But despite significant advances in data analytics around emissions measurement, it’s been nearly a decade since the GHGP was last updated. Thankfully, the NGOs that manage the GHGP recently kicked off the update process, soliciting feedback from stakeholders across the spectrum.

In this episode, Chad Reed and HASI Strategic Advisor Brendan Herron speak with Faraz Ahmad, Head of Net Zero Grid for Amazon. Faraz dives deep into the efforts of the Emissions First Partnership, a consortium of companies working together to reduce their emissions with the most impactful clean energy projects and to move away from megawatt hour matching and toward integration of an emissions-based framework into the GHGP. Faraz also discusses how underserved regions – both across the globe and within the U.S. itself – could economically benefit from an emissions first approach to the energy transition.

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