New GHG Protocol Scope 2 Guidance

Turbine

Greengage were in attendance at the London presentation of the recently released GHG Protocol Scope 2 Guidance. The Guidance represents a four-year global collaboration to harmonise methods for how companies report greenhouse gas (GHG) emissions from purchased electricity, steam, heat and cooling (known as scope 2 emissions).

For most companies, emissions from purchased energy represent a significant emission source and operational cost. There has therefore been a pressing need for an accurate method to account for scope 2 emissions in order to manage and reduce them. The Guidance has been developed to meet this need, by providing a unified, internationally-consistent and transparent basis for companies to account for electricity purchases in their GHG inventory.

The Guidance is introduced as an amendment to the GHG Protocol Corporate Standard, revising and updating the previously brief treatment of Scope 2 accounting boundaries and methods. The key areas addressed by the Guidance are:

  • Scope 2 Requirements: The introduction of a Scope 2 accounting method based on two numbers; a location-based calculation using grid average emissions factor, and a market-based calculation using emissions factors derived from electricity purchasing instruments (“contractual instruments”) e.g. power purchase agreements (PPA), Guarantees of Origin.
  • Quality Criteria: A list of Scope 2 Quality Criteria that all “contractual instruments” must meet in order to be used in market-based method accounting.
  • Recommendations: Guidance on additional features companies should disclose about their electricity purchases.

The consensus on the day was that the new accounting methodology represents a step forward and raising of the bar in GHG reporting, and is a must read, must follow guidance for any organisations preparing GHG inventories, whether voluntary or mandatory.