Global emissions accounting is evolving – it’s time for businesses to get ready

The world’s most widely used standard for measuring and reporting greenhouse gas emissions, is gearing itself towards locally sourced hourly carbon-free electricity. To get the most benefits, corporate leaders must start preparing now.

The Greenhouse Gas Protocol is the foundation companies stand on for measuring their emissions. Its guidance on Scope 2 emissions – from electricity procurement – was first published in 2014, when the first pioneering companies started committing to 100% renewable electricity. A decade later, there is a heated debate on the best way for the standards to evolve, matching ambition to accelerate renewables with the reality for those who are procuring electricity.  

So, what are the proposed Scope 2 updates from the Greenhouse Gas Protocol?  

Companies would need to prove that the electricity they use not only comes from carbon-free sources but also reflect how much carbon-free electricity is being generated and delivered through the grid. Climate-conscious businesses currently measure their electricity and match it with renewables annually. The proposed changes would mean electricity is matched hourly instead and it would need to be supplied from the same grid or market which it’s generated. This more granular measurement means companies can understand how much of their electricity consumption is really carbon-free. This does more than just tighten up reporting; it will be critical in removing the need for back-up fossil fuels. 

At the heart of this evolution is the concept of 24/7 carbon-free electricity. It promotes real-time accountability and drives innovation in energy storage, grid flexibility, and carbon-free technologies. It’s the next frontier for procurement. 

Let’s cover how this new “where and when”-guidance could affect businesses. 

It will likely reshape how global businesses buy energy in the future, demanding a more sophisticated approach to energy procurement and emissions accounting. Existing energy contracts may no longer meet the new rules, and companies will need to invest in smarter systems capable of tracking their energy use in real time.  

In the short-term, it could impact reporting scores. It’s a valid concern. Performance systems like SBT, RE100, and CDP are all based on the Greenhouse Gas Protocol, which is closely watched by investors, boards and NGOs. But we’re missing the point if we’re chasing a number. It’s about ultimately getting to the right destination – removing fossil fuels from global grids, fast. The corporates that take up the challenge to move towards 24/7 carbon-free electricity will be recognised as world-leading innovators – navigating the far-reaching implications affecting procurement, reporting, and strategic planning. 

Those who get a head start, proactively aligning with this more representative approach, will gain a huge advantage. It will push business leaders to have an accurate and clear understanding of where they are in their journey towards fully carbon-free operations. This knowledge will support businesses to reduce their emissions further. 

So, why is this the right direction and how can business leaders’ benefit?  

Let’s start with greater energy security. 24/7 carbon-free electricity guides businesses to build a reliable, resilient power supply from diverse carbon-free sources (like solar, wind, nuclear and geothermal) alongside energy storage. It means that exposure to fossil fuel price volatility and energy security risks will be minimised.  

Furthermore, using 24/7 carbon-free electricity builds consumer trust by showing an ambitious commitment to the environment; it ensures every hour of energy use is matched with carbon-free power. This transparency appeals to eco-conscious consumers, helping businesses boost credibility, and stand out in a competitive market. 

Those who take the first steps now will ultimately benefit the most.  

To accelerate this shift, Climate Group has established the 24/7 Carbon-Free Coalition with a group of pioneering companies, including Google, AstraZeneca and AirTrunk. The goal is to bring together companies to transform the energy system and build a more sustainable future based on 24/7 carbon-free electricity.  

Later this year, the Greenhouse Gas Protocol will be seeking feedback during their planned public consultation period. Central to the discussion will be striking a balance between credible, ambitious action and the feasibility of businesses to deliver it. To have the most impact on grids locally and globally, the direction towards 24/7 carbon-free electricity is essential. 

The world has moved on – and the Greenhouse Gas Protocol seems ready to reflect that. Those who are learning about and trialling locally sourced hourly carbon-free electricity now will be in the best position once the new guidance is published in 2027. The question for businesses is: will you choose to stand at the sidelines, or at the front of the pack? 

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Originally published on BusinessGreen