The CarbonNeutral Protocol Index

2.4.1 Treatment of renewable electricity in Scope 2 emissions

This guidance details how the carbon attributes of renewable energy in the form of energy attribute certificates (EACs) are accounted for in Scope 2 of the GHG inventories that underpin CarbonNeutral? certifications.

A number of countries have adopted policies requiring or encouraging electricity suppliers to offer renewable electricity to consumers. This may be done through a range of different electricity products such as tariff- based programmes and power purchase agreements. All credible renewable electricity products involve the cancellation of EACs such as Renewable Energy Certificates (RECs), International Renewable Energy Certificates (I-RECs) or Guarantees of Origin (GOs) in order to support the renewable electricity claim.

Prior to 2015, detailed guidance on how to report the carbon attributes of renewable electricity was absent from the GHG inventory standards accepted under The CarbonNeutral Protocol. However, in 2015, the WRI, author of the widely used GHG Protocol Corporate Standard, published its “Scope 2 Guidance” as an amendment to the GHG Protocol to clarify the accounting treatment of low-carbon grid-delivered energy in Scope 2 GHG inventories. The amendment, published after four years of development and industry consultation, provides guidance for how corporations should measure emissions from electricity and energy purchases, including renewable energy, and covers:

  • Requirements: Accounting and reporting requirements which entities must meet to be in conformance with the GHG Protocol Corporate Standard
  • Quality Criteria: A list of Scope 2 quality criteria that all electricity purchasing instruments, termed “contractual instruments,” need to meet in order to be used in market-based method accounting
  • Recommendations: Additional features entities are recommended to disclose include their electricity purchases, as well as other metrics such as total electricity, steam, heating, and cooling consumed and what percentage of a corporates’ operations have market-based method data available

From the date of publication of the GHG Protocol Scope 2 amendment, entities using the GHG Corporate Protocol to meet the GHG inventory requirements of The CarbonNeutral Protocol are required to meet its Scope 2 Guidance, as officially amended from time to time by the WRI. It is important to note that EACs address the Scope 2 component of electricity emissions. Transmissions and distribution (T&D) losses from the electricity grid, the Scope 3 component of Scope 2 emissions, are not addressed by EACs and need to be mitigated using carbon credits.

Entities using any other GHG inventory standard recognised under The CarbonNeutral Protocol are subject to The CarbonNeutral Protocol’s original requirements that:

  1. Zero emissions may only be claimed when double-counting is avoided. Evidence should be available to establish either that the renewable electricity is not supplied to the national grid in the country concerned; or, that the benefit of the renewable energy is not included within national average grid factors or any other reporting factors
  2. Emissions from energy supplied as “green”, “clean,” or “low carbon” can be treated as zero where the energy consumed has been fully offset by the supplier or a third party using carbon credits that meet the requirements of The CarbonNeutral Protocol

For more information see: RECS International, 2020, Maximising the reliability and impact of buying renewables: guidance for market participants, link

2.4.2 Market-based Scope 2 reporting declaration to support CarbonNeutral? certification

This guidance details the disclosure requirements for businesses seeking to make a market-based Scope 2 reporting declaration in support of CarbonNeutral? certification. The disclosure only needs to be made when the party supplying the contractual instrument is not the primary CarbonNeutral certifier. For example, when an entity sources renewable electricity directly from an electric utility to support a Scope 2 reporting claim, it should provide details of the contractual instrument within the disclosure table (Table 9 below). The disclosure table will be provided by the certifier upon request.

A column should be added to the table to account for each contractual instrument claim made within a corporate GHG inventory. Often this will involve engaging the contractual instrument supplier to determine the appropriate form of evidence that can be supplied to substantiate a market-based claim. The disclosure table should be completed at the time of preparing the GHG inventory and should be signed by a company representative to warrant that the information provided is up to date, accurate and that the CarbonNeutral certifier can rely on the information.

When an entity’s location is neither consuming renewable energy nor applying EACs to reduce their Scope 2 emissions, and a published residual mix emissions factor is available, then the residual emissions factor(s) must be applied resulting in a market-based total for Scope 2 emissions.

Table 9: Illustrative - Market-Based Scope 2 Reporting Declaration in Support of CarbonNeutral? Certification

2.4.3 Energy Attribute Certificate (EAC) Application Protocol for third-party assessment partners

To ensure assessment partners are fully informed regarding EAC purchases, and so they can be accurately integrated into assessment reports, entities should follow the agreed upon EAC Application Protocol.

2.4.4 How to report GHG emissions from green gas certificates

Green gas certificates are relatively new products that are being adopted at scale by businesses to manage their Scope 1 GHG emissions.

The widespread adoption of green gas certificates has been facilitated by CDP’s 2017 guidance, which encourages companies to extend the market-based reporting approach from renewable electricity to renewable gas.

Green gas, known also as biogas, refers to calorific gas produced by the breakdown of organic matter, through anaerobic digestion or fermentation. Feed stocks include biodegradable materials such as manure, sewage, municipal water, green waste and plant material. Biogas is primarily methane and carbon dioxide and may have small amounts of hydrogen sulphide, siloxanes and moisture, which make it corrosive.

Before biogas can be introduced to a gas grid it needs to be upgraded to pipeline quality natural gas standards. The upgrading process consists of drying the gas and removing hydrogen sulphide and carbon dioxide. This upgraded gas becomes biomethane.

The costs for upgrading biogas to biomethane and the requirement for agreements to inject biomethane into gas grids, makes on site biogas plants more common than biomethane plants that inject gas into gas grids. Biomethane can be used for any purpose currently satisfied by conventional natural gas including heat generation, cogeneration heat/power and natural gas vehicles.

Injecting biomethane into the natural gas grid allows the use of renewable gas in areas located away from where the biomethane is generated. Each unit of green gas injected into the gas grid displaces the need for a unit of conventional natural gas, therefore certificates and contracts are the only practical means of tracking the green gas from production to end use.

Projects such as the Green Gas Certification Scheme1 aim to provide a certified means of tracking gas injected into the gas grid through to end user consumption claims. This scheme is similar to many renewable electricity tracking schemes such as I-REC (International REC standard) and EECS-GO (European Energy Certificate System – Guarantee of Origin).

While the focus of the GHG Protocol Scope 2 Guidance is on electricity, the guidance does anticipate the application of the market-based reporting approach for green gas products. Appendix A to the GHG Protocol Scope 2 Guidance states:

If a company has a contractual instrument specifying its gas supply as “biogas” or “biogenic,” the company should report using the market-based method and refer to the Scope 2 Quality Criteria to evaluate whether its gas use should be reported as Scope 1 natural gas using a standard emission factor, or as biogenic CO2 emissions reported separately from the Scopes. This evaluation requires some interpretation since the Scope 2 Quality Criteria are specific to electricity and their guidance must be translated for use with gas. For instance, criterion 1 in relation to GHG emission rate claims should be also interpreted to include the emission rate specific to the biogenic fuel origin.

Section 6.12 of the GHG Protocol Scope 2 Guidance provides the following guidance on the treatment of biofuel emissions:

Based on the Corporate Standard, any CH4 (methane) or N2O (nitrous oxide) emissions from biogenic energy sources use shall be reported in Scope 1, while the CO2 portion of the biofuel combustion shall be reported outside the scopes. In practice, this means that any market-based method data that includes biofuels should report the CO2 portion of the biofuel combustion separately from the scopes.

The application of this guidance to the use of biomethane delivered through the gas grid has the following impacts on a company’s GHG report:

  • Scope 1 CO2 emissions can be reported as zero for biomethane consumption, i.e. for each MWh matched to a green gas certificate. This biogenic CO2 represents the carbon sequestered during the growth of the biomass
  • Biogenic CO2 emissions must be reported outside of Scopes 1, 2 or 3, as an addendum to the company’s GHG inventory
  • To fully account for a site’s GHG impact, fugitive CH4 and N2O emissions from biomethane combustion must be reported under Scope 1. Unlike CO2, these fugitive emissions are not captured during the growth of the biomass and therefore need to be reported as a Scope 1 emission

The CDP’s 2017 reporting guidance builds on this direction from the GHG Protocol and recommends that a company report their gas/certified biogas as follows:

  • Fossil gas and non-certified biogas need to be accounted for and reported as Scope 1. The formula is the usual Activity data multiplied by Emissions factor, where the factor is emissions at the point of generation;
  • Certified biogas will be reported under question CC8.9a; and
  • In question CC11.3 companies shall report total MWh of energy, including certified biogas
  • Therefore, the use of certified biogas will be considered to be equivalent to “zero” Scope 1 emissions for the purpose of reporting to CDP

In allowing “zero” Scope 1 emissions, CDP is ignoring the GHG Protocol’s recommendation to account for fugitive emissions from biomethane combustion as Scope 1. This is a pragmatic approach that reflects the minimal amount of fugitive emissions as they represent less than half of one percent of the biogenic emissions. The CDP guidance goes on to recommend:

  • Green gas certificates need to be a legitimate and legally enforceable means of transacting property rights and claims to biogenic or renewable fuel attributes of gas production in a specific market
  • The use of gas certificates is limited to users on the same pipeline network who can physically receive gas from biomethane gas plants on that network

For the purposes of CarbonNeutral certification, the minimal fugitive CH4 and N2O emissions from biomethane combustion must be reported under Scope 1. Table 10b illustrates how this would play out for a site in London, using the UK relevant 2017 factors published by BEIS2. For biomethane, these factors combine the CH4 and N2O emissions into a single factor, which is marginally higher than the fugitive CH4 and N2O emissions associated with natural gas combustion.

Table 10a: Reporting 10,000 MWh of Natural Gas Consumption

Table 10b: Reporting 10,000 MWh of Biomethane Consumption Evidenced by Green Gas Certificates