Curiouser and curiouser, further down the GHG reporting hole we go….

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Defra’s latest consultation on changing the corporate GHG reporting guidelines closes on Monday March 24th, and much as I think the proposed changes are a step in the right direction, the need for improvements is far from over.

This is a proposed update to the recently published (June 2013) guidelines for mandatory corporate GHG reporting to bring them in-line with the international work of the GHG Protocol on Scope 2 emissions.

You don’t get much more complex than the energy market – so many forces at work, different customers to serve, and so important to our everyday lives and work. So that’s why when you ask a simple question, it doesn’t always lead to a simple answer. In fact, it can be pretty tricky to reach a conclusion at all. And that’s where I find myself when it comes to the current consultation on Defra’s GHG Reporting Guidelines.

For years I have been working with partners (developers, local authorities, retailers, industry) to help them prioritise energy efficiency and then source their remaining electricity demand from renewable sources. Why, because that’s the only practical way we can achieve ‘Zero Carbon’ for our buildings and operations.

What we have found is that we can’t currently fit enough renewables on most buildings to match their total demand, even if it were cost effective to do so. That leads us to also look to off-site renewables. And since we can’t all be energy generators ourselves (or can we…?), we need to buy it from someone else….

So therefore, we need to be able to recognise the proper purchase of renewable electricity within the carbon reporting world…since it’s one of the main ways to achieve ‘Zero Carbon’ for a business or organisation.

BUT, the energy market is so complicated and all the levers and pulleys in place make it very difficult to know who’s driving what!? And that’s before we get to understand the incoming Energy Market Reform (EMR) in 2017!

Does market pull (customers asking for REGO certified electricity) actually have any impact on the amount of renewable generation ….? Recent research in the US appears to say no – although there are important differences in our respective markets. If not, then should allow people to take ‘credit’ for what was already happening irrespective of their choices…?

In times of confusion I retreat to the original question – what are we trying to achieve with corporate GHG reporting? …to my mind this has to include the following two pillars:

a) public transparency; and

b) actual reductions in atmospheric emissions.

Well in aid of the first – here are some helpful facts – the DECC Fuel Mix Declarations. UK energy suppliers are required to ‘declare’ the mixture of fuels that went into making the electricity that they sold; and in doing so calculate the carbon emissions of a kilowatt hour of their electricity. These are helpfully collated here.

For example for April 12 to March 13 against a grid average of 11.3% renewables and 470g/kWh:

  • EDF sourced 8.3% from renewables and emitted 161g/kWh (lots of nuclear).
  • British Gas sourced 10% from renewables and emitted 379g/kWh.
  • SSE managed 14% from renewables but emitted 613g/kWh (lots of coal).
  • Good Energy sourced 100% from renewables so emitted 0 g/kWh.

So – as a first step I’d recommend that companies have a quick look-see and find out where their provider really stands on renewables and low carbon electricity….before making any claims around ‘green tariff’ or contractual arrangement they may offer. If you have chosen well, there shouldn’t be that much of a difference!

As for the second objective – actual reductions in emissions – the complex GHG reporting issues around ‘additionally’ and ‘double counting’ remain. This is mainly because the UK government already has legally binding carbon reduction targets, as well as an EU level commitment for 15% renewable power (electricity, heat and transport) by 2020; alongside being an active member of the EU ETS which sets caps on carbon emissions for major polluters. These then connect to the Renewables Obligation and other renewables support mechanisms. All of this forms a complex web such that an emissions reduction in one area (such as renewable electricity production) might actually reduce the need for reductions elsewhere and negate any ‘additional’ benefit – i.e. that saving had to be made one way or another irrespective of our business choices. Pretty fatalistic really!

However, how certain are these macro-outcomes, especially since the UK government recently helped negotiate out of EU national renewables targets for 2030 and now this proposal is being delayed by some EU members.

Given all this uncertainty, there certainly seems to be space for encouraging a ‘market pull’ for more renewables to reinforce the existing regulatory push – and this can only be achieved through greater simplicity and clarity for the consumer.

Such reform would certainly need to include reconciling the array of different requirements to how renewable electricity is treated, depending on whether you are reporting to DefraDECC or DCLG.

What we don’t know is whether commercial demand for renewables can ever overcome the ‘additionally’ threshold – i.e. outstrip government policy driven supply – and then tolerate any price rises that this could cause.

I for one would at least like to give it a chance to happen, but not at the expense of defensible and meaningful GHG reporting.  I suspect that as the current Defra consultation draws to a close, the debate has only just begun…

This blog first appeared online for 2Degrees Community on the 21st March 2014.

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