Apple, Amazon, Schneider Electric Warn GHG Protocol that Tougher Scope 2 Reporting Rules will Slow Corporate Energy Transition

Proposed changes by the Greenhouse Gas Protocol (GHG Protocol) to tighten carbon accounting criteria underlying standards for reporting of emissions from companies’ electricity purchases will ultimately slow the corporate uptake of clean energy and reduce the pace of decarbonization, according to a letter by a group of companies, financiers environmental groups and sustainability experts.

The letter was signed* by 48 companies representing more than $4.7 trillion in annual revenue, including Amazon, Apple, FedEx, GM, Mars, Salesforce, and Schneider Electric, as well as by climate-focused groups including Ceres and ACORE.

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GHG Protocol was established in 1997 by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) to develop comprehensive global standardized frameworks to measure and manage GHG emissions from private and public sector operations, value chains and mitigation actions. GHG Protocol’s standards have been integrated and referenced in major global sustainability reporting frameworks including the IFRS Foundation's ISSB standards and the European Sustainability Reporting Standards (ESRS) underlying the CSRD regulation.

The letter follows the launch last year by the GHG Protocol of a consultation on proposed changes to its initial 2015 Scope 2 Guidance, which standardize how companies measure emissions from purchased or acquired electricity, steam, heat and cooling.

One of the most significant changes proposed by GHG Protocol is the introduction of new hourly matching and local market deliverability requirements for market-based reporting on emissions from energy contracts and instruments, which the organization said would help align emissions claims more closely with the time and place electricity is consumed.

In the letter, however, the signatories said that they were “extremely concerned” that the new proposals, which would require companies reporting Scope 2 emissions to match carbon-free electricity purchases to individual company load on an hourly and physically deliverable basis, could significantly harm energy transition efforts, warning of impacts including potentially dramatically discouraging voluntary clean energy procurement, increasing electricity prices for individuals and companies, and slowing system-wide decarbonization, while offering only limited benefits to carbon accounting accuracy.

John Powers, Vice President Global Renewables and Cleantech, Schneider Electric, said:

“The Scope 2 changes now on the table do not recognize the value of aggregating load across a wider area to support a new renewable energy project, and would steer capital away from the most impactful and achievable action available to voluntary buyers today. A rule that requires hourly matching and discourages high impact long term offtake at scale is not a more ambitious climate standard. It’s a less effective one.”

The signatories urged the GHG Protocol to make the new hourly and deliverability requirements optional, rather than mandatory.

Scope 2 emissions typically constitute a significant portion of the GHG emissions under a company’s control. According to GHG Protocol, nearly 40% of global greenhouse gas emissions can be traced to energy generation, and half of that energy is used by industrial or commercial entities. Efforts to address Scope 2 emissions usually include initiatives such as energy conservation, efficiency upgrades, and shifting to low-carbon electricity.

The letter stated:

“We strongly urge the GHGP to improve upon the existing guidance, but not stymie critical electricity decarbonization investments by mandating a change that fundamentally threatens participation in this voluntary market, which acts as the linchpin in decarbonization across nearly all sectors of the economy. The revised guidance must encourage more clean energy procurement and enable more impactful corporate action, not unintentionally discourage it.”

Click here to access the letter.