We often receive the following question from clients, particularly as it relates to CDP reporting:
What environmental claim(s) will we be able to make if we go 100% renewable, and what is the guidance from leading NGOs?
Here is our typical response:
When a company annually purchases renewable electricity to match 100% of their global operational electricity load, and if they have bundled and retired corresponding verified energy attribute certificates (EACs) that match 100% of their purchase, they should be able to make the claim that they are 1) using 100% renewable electricity and, as a result, 2) they have zero Scope 2 emissions.
All of these conditions must be met in order to make these claims. Companies that purchase less than 100%, purchase only for a specific period of time, or don’t purchase enough EACs to match their global load, must be careful to ensure their claims are accurate. For example, a company that is purchasing renewable energy certificates (RECs) for 100% of their North American (NAM) load could make a claim that its NAM emissions are zero carbon—but not for the rest of its global load.
These parameters apply to companies using onsite generation, offsite power purchase agreements (PPAs), EAC purchases, or other contracting mechanisms. It is the EAC piece of renewable electricity that carries the clean generation’s environmental attributes; without ownership and retirement of EACs in a corresponding volume to the clean energy purchased, someone else can make claim to the benefits of that generation.
Companies must also be careful not to make carbon neutrality claims when using renewable electricity. Achieving true carbon neutrality across Scope 1, Scope 2, and Scope 3 emissions is very difficult. Using renewable electricity, even at 100%, typically enables zero carbon claims only for Scope 2 emissions.
While many NGOs have been vocal on the credibility of renewable electricity claims, the foundation for these positions comes from the Scope 2 guidance issued by the World Resource Institute (WRI). This guidance defines purchase of renewable electricity in the form of PPAs and/or EACs to be a market-based method of electricity reporting known as a contractual instrument. Specific guidance for the quality of the contractual instrument used to address Scope 2 emissions, as well as clarification on reporting requirements, can be found in the guidance. CDP follows WRI’s leadership on Scope 2 reporting in its annual disclosure questionnaires.
Notably, commercial, industrial, and institutional (C&I) buyers often have a secondary environmental goal for their purchase: additionality. Additionality is the claim that “but for my involvement, this project would not have taken place.” For many C&I buyers, the right to say that their role in a project made a material difference is significant.
To date, there has been little specific guidance on what makes an additionality claim. New projects are typically considered additional (as they help to displace grid emissions by shifting the overall electricity mix in favor of renewables over time), as are high-value EACs in many global markets due to the financial role they play in building those markets.
Many participants in a renewable deal—ranging from the buyer to the developer—can claim additionality. Additionality is also distinct from emission reduction claims, as it is not tied to the retirement of EACs. For more detail on making accurate claims about your clean energy purchases, download our white paper on clean energy claims— reviewed and edited by WRI—which provides helpful guidance on these nuanced issues.