Scope 2 quality criteria
The integrity of the market-based method depends on ensuring that contractual instruments reliably and uniquely convey GHG emission rate claims to consumers. Without this, a resulting market-based scope 2 total lacks the accuracy and consistency necessary to drive corporate energy procurement decisions.
The scope 2 guidance outlines basic rules to make sure contracts used for reporting emissions are trustworthy. These rules help ensure the emissions data is accurate and that the same emissions aren’t counted more than once.
1. Stating claims about greenhouse gas emissions
The scope 2 guidance requires that only one instrument, or discrete set of instruments applied all at once, conveys attribute claims about the energy type and its GHG emission rate. Certificates that do not specify attributes can still convey a claim by proving that no consumer is claiming the same energy generation attributes. If the attribute emission rate itself is not specified and the technology is not zero emissions, the reporting organisation should seek from the generating entity a specific emission rate from that generation facility.
2. Claims should be unique
If other instruments exist that can be used for attribute claims by other electricity consumers, companies should ensure that the one being used by the reporting entity for a GHG emission rate claim is the only one that does so.
Companies should check with their electricity supplier or relevant policy-making bodies to ensure that the certificates are claimed, paired, or retired in compliance with applicable jurisdictional or program requirements.
Null power (electricity that is consumed, but generated certificates are sold to third parties) should be assigned residual mix emissions for the purpose of delivery and/or use claims in the market-based method.
3. Instrument retirement
Instruments should be retired, redeemed, or claimed to support a consumer claim. This can be done through a tracking system, an audit of contracts, third-party certification, or may be handled automatically through other disclosures, systems, or mechanisms. These practices help guarantee that only consumers make a claim, even as an instrument changes hands through trading.
4. Vintage
Vintage reflects the date of energy generation from which the contractual instrument is derived. This is different from the age of the facility.
In order to ensure temporal accuracy of scope 2 calculations, this criteria seeks to ensure that the generation on which the emission factors are based occurs close in time to the reporting period for which the certificates or emissions are claimed. This timing should be consistent with existing standards for the market where the contractual instruments exist. Contractual instruments should clearly display when the underlying electricity was generated.
5. Market boundaries
This criteria addresses the geographic boundary from which certificates can be purchased and claimed for a given operation’s scope 2 accounting and reporting.
The market for purchasing and selling electricity is typically a regional transmission organization, power pool, or balancing area, with exports and imports often broadening these markets. Certificates are separated from underlying electricity flows, and markets for unbundled certificates have often been less constrained than those of the electricity itself. This larger market boundary for certificate use promotes broader areas of consumer choice and the building of renewable energy resources in the most economically viable locations.
Companies should check whether the regulatory authorities and/or certification/issuing bodies responsible for certificates have established the boundaries in which certificates may be traded and redeemed, retired or canceled, and should follow these market boundaries.
6. Supplier-specific emission factors
The utility or supplier should disclose whether and how certificates are used in the emission factor calculation, unless there is third-party certification of the utility product. The utility or supplier-specific emission factor may be for a standard product offer or a differentiated product e.g. a low-carbon power product or tariff. The supplier-specific emission should preferably be disclosed publicly according to the best available information.
7. Direct contracts or purchasing
In the absence of energy attribute certificates, the contract and claim associated with it should be verified by a third party to convey a unique or sole ownership right to claim a GHG emission rate.
8. Residual mix
To ensure unique claims by all electric users, an adjusted residual mix characterizing the GHG intensity of unclaimed or publicly shared electricity is necessary. This residual mix should be based on combining national or sub-national energy and emissions production data with contractual instruments claims.
If a residual mix is not currently available, companies should disclose that an adjusted emissions factor is not available or has not been estimated to account for voluntary purchases and this may provide other information about the magnitude of this error.