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GHG Protocol Workshop on Accounting for Green Power Purchases January 24, 2010 London, U.K.

GHG Protocol Workshop on Accounting for Green Power Purchases January 24, 2010 London, U.K. Background on the GHG Protocol Initiative. The Climate Registry CDP Executive Order 13514 ISO 14064-1 UK voluntary reporting program

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GHG Protocol Workshop on Accounting for Green Power Purchases January 24, 2010 London, U.K.

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  1. GHG Protocol Workshop on Accounting for Green Power Purchases January 24, 2010 London, U.K.

  2. Background on the GHG Protocol Initiative The Climate Registry CDP Executive Order 13514 ISO 14064-1 UK voluntary reporting program Major economies reporting initiatives (e.g. China, India, Brazil, Mexico) World Resources Institute

  3. GHG Protocol publication modules Corporate Module • Entity-level accounting • Corporate Standard • US Public Sector Protocol • Supplements • Facility-level accounting • Sector-specific guidance and tools (cement, power) • Reduction project-level Accounting • Project Protocol • Supplements Project Module World Resources Institute

  4. VisionTo provide internationally accepted GHG accounting and reporting guidance on green power purchases and energy-related instruments. World Resources Institute

  5. Objectives of this workshop Purpose: Gain a deeper understanding and facilitate discussion and consensus on the issues and options for moving forward Tangible outcomes: A summary of possible best practices and outstanding issues Intangible outcomes: An improved common understanding of each others perspectives World Resources Institute

  6. GHG Protocol decision-making approach for critical issues • Broad agreement on a single best practice approach - recommend a single approach • Support is split between 2 or more best practice approaches - offer a choice of approaches with guidance on how to select • No agreement on any generic best practice approaches - provide best practice case studies as examples, or - offer no guidance or case studies - address qualitatively • Agree the issue should not be addressed in the guidelines - provide rational for omission in guidelines World Resources Institute

  7. Ground rules Participate to the fullest of your ability Keep jargon to a minimum Share your knowledge Criticize ideas, not people Keep an open mind Every issue identified today will have follow-up Signal when we are going off-track World Resources Institute

  8. Workshop schedule - AM World Resources Institute

  9. Workshop schedule –PM World Resources Institute

  10. Questions? World Resources Institute

  11. Overview of Issues from Concept Note Mary Sotos World Resources Institute Stephen Russell, WRI World Resources Institute

  12. Outline The GHG action reference map Emission rates from RE projects Avoided emissions from RE projects Green tariffs World Resources Institute

  13. Energy Supply Chain (generic) GENERATORS GENERATORS SUPPLIERS SUPPLIERS END USERS END USERS World Resources Institute

  14. Energy Supply Chain (generic) SCOPE 1 SCOPE 2 ( for T & D) SCOPE 2 GENERATORS SUPPLIERS END USERS World Resources Institute

  15. Example energy policies within the energy supply chain EMISSIONS CAP on POWER SECTOR SCOPE 1 SCOPE 2 ( for T & D) SCOPE 2 RENEWABLE ENERGY STANDARD GENERATORS SUPPLIERS END USERS World Resources Institute

  16. GHG Action Reference Map Dividing ownership of existing sources Spurring New RE Development DIRECTLY CONSUME RE GOAL EXAMPLE ACTION EXAMPLE INSTRUMENT ACCOUNTING OPTIONS ACCOUNTING IMPACT OTHER CONSIDERATIONS HELP DEVELOP NEW RE HELP DEVELOP ADDITIONAL RE SOURCE RE World Resources Institute

  17. Outline The GHG action reference map Emission rates from RE projects Avoided emissions from RE projects Green tariffs World Resources Institute

  18. Grid emissions diagram G R I D 0 tons 100 MWh 200 tons 100 MWh 200 tons 100 MWh World Resources Institute

  19. What average grid emission factors represent G R I D 0 tons 100 MWh 200 tons 100 MWh 200 tons Grid avg EF: 400 tons = 0.8 tons/MWh 500 MWh 100 MWh

  20. RE certificates conveying emission rates G R I D 0 tons 100 MWh 200 tons 100 MWh RE certificate conveying 0 tons emissions/ MWh 200 tons 100 MWh World Resources Institute

  21. Possible corporate accounting procedure for alternative emission rates Activity Data 100 MWh 100 MWh Emission Factor 0.5 tons CO2e/MWh 0 tons CO2e/MWh Total Emissions 50 tons CO2e 0 tons CO2e Total emissions calculated with standard grid average mix “Adjusted” emissions with 100 MWh of zero-emissions green power World Resources Institute

  22. Three conditions necessary to support accounting • Clear ownership • 2. Adjustment of grid Efs • 3. Role for additionality G R I D 0 tons 100 MWh 200 tons 100 MWh RE certificate conveying 0 tons emissions/ MWh 200 tons 100 MWh World Resources Institute

  23. Adjusting Grid Average Emission Factors 0 tons 100 MWh G R I D 0 tons 100 MWh 200 tons 100 MWh 0 tons 100 MWh 200 tons 100 MWh World Resources Institute

  24. Example grid average EF adjustment 0 tons 100 MWh 0 tons 100 MWh G R I D 200 tons 100 MWh 0 tons 100 MWh Grid avg EF: 400 tons = 0.8 tons/MWh 500 MWh Adjusted grid avg EF: 400 – 0 tons = 2 tons/MWh 500 – 300 MWh 200 tons 100 MWh World Resources Institute

  25. Additionality – two approaches 0 tons 100 MWh G R I D 0 tons 100 MWh 200 tons 100 MWh 0 tons 100 MWh 200 tons 100 MWh World Resources Institute

  26. Treatment of emission rates from on-site RE generation G R I D 0 tons 100 MWh 200 tons 100 MWh RE certificate conveying 0 tons emissions/ MWh 200 tons ? 100 MWh

  27. Outline The GHG action reference map Emission rates from RE projects Avoided emissions from RE projects Green tariffs World Resources Institute

  28. Diagram of what avoided emissions represent 0 tons 100 MWh Emissions avoided/ reduced compared to hypothetical situation 200 tons 100 MWh G R I D 0 tons 100 MWh 200 tons 100 MWh 0 tons 100 MWh World Resources Institute

  29. Offset quantification illustration Hypothetical reference case OFFSET CREDIT EMISSIONS in TONS CO2e Historical emissions from fossil generators on the grid with the RE project TIME World Resources Institute

  30. Possible corporate accounting procedure for offset credits Scope 1 Scope 2 Scope 3 205 tons CO2e Total emissions = 30 tons CO2e + 50 tons CO2e + 125 tons CO2e = Offsets for all scopes’ total 205 tons of offsets Offsets for specific scopes’ total 30 tons of offsets 50 tons of offsets World Resources Institute

  31. “Double counting” concerns 0 tons • Emissions rate • Ownership of the offset • Fossil generators’ scope 1 100 MWh 200 tons 100 MWh G R I D 0 tons 100 MWh 200 tons 100 MWh 0 tons 100 MWh

  32. Power sector with an emissions cap Cap set at emissions quantity x EMISSION ALLOWANCES EMISSION ALLOWANCES EMISSION ALLOWANCES 200 tons 100 MWh G R I D 200 tons 0 tons 100 MWh 100 MWh World Resources Institute

  33. New RE within an emissions cap Cap set at emissions quantity x EMISSION ALLOWANCES EMISSION ALLOWANCES EMISSION ALLOWANCES 0 tons 200 tons 100 MWh 100 MWh G R I D 200 tons 0 tons 100 MWh 100 MWh World Resources Institute

  34. Accounting components Cap set at emissions quantity x EMISSION ALLOWANCES EMISSION ALLOWANCES EMISSION ALLOWANCES • 1. Retired allowance • 2. Emissions rate 0 tons 200 tons 100 MWh 100 MWh G R I D 200 tons 0 tons 100 MWh 100 MWh World Resources Institute

  35. Outline The GHG action reference map Emission rates for RE projects Avoided emissions Green tariffs World Resources Institute

  36. Green tariff categories (i) The energy supplier puts investment towards new renewable capacity (ii) The energy supplier changes the physical mix of their supply (iii) The energy supplier purchases renewable energy contracts or tracking instruments (iv)The energy supplier obtains offsets SCOPE 1 SCOPE 2 ( for T & D) SCOPE 2 GENERATORS SUPPLIERS END USERS

  37. Clarifying Questions? World Resources Institute

  38. Session I: Accounting for Emission Rates from RE Projects

  39. Outline Three conditions: • Clear System for Tracking and Conveying Ownership • Role for additionality? • Adjustment of grid-average EFs. • Application to on-site RE generation • The current UK position • Questions for group discussion World Resources Institute

  40. 2. Role for Additionality? World Resources Institute

  41. Explicit additionality criteria Regulatory surplus: Is the project mandated by any existing law, policy or statute? Financial barriers: Does it face capital constraints that revenues from instrument sales can address? Common practice: Is the project activity commonly employed? World Resources Institute

  42. Role for Additionality?: Challenges Are the simple additionality criteria sufficient? What time horizon to apply, and what happens after this time horizon? The RE instruments would not embody any avoided emissions World Resources Institute

  43. 3. Adjusting Grid Average Emission Factors GRID 200 tons 0 tons 0 tons 100 MWh 100 MWh 100 MWh Grid avg EF: 400 tons = 1.0 tons/MWh 400 MWh Adjusted grid: 400 – 0 tons = 2tons/MWh average EF 400 – 200 MWh 200 tons 100 MWh World Resources Institute

  44. 3. Adjusting Grid Average Emission Factors Why? 1. Addressing consumer concerns: • Do RE purchases convey exclusive rights to the emissions profile? • Are RE purchases consequential? 2. Designing a system prepared for the market’s growth World Resources Institute

  45. 3. Adjusting Grid Average Emission Factors How? Who would make the adjustments? EF publishers, utilities, regional energy tracking systems? Is it possible to adjust EFs on an adequate timescale? World Resources Institute

  46. Outline Three conditions: • Clear Ownership • Role for additionality? • Adjustment of grid-average EFs. • Application to on-site RE generation • The current UK position • Questions for group discussion World Resources Institute

  47. Application to on-site RE generation World Resources Institute

  48. The Current UK Position The UK Government’s guidance on measuring and reporting GHG emissions sets out the criteria for claiming an emissions reduction from renewable electricity: Organisations should account for all electricity purchased for own consumption from the National Grid or a third party at the ‘Grid Rolling Average’ factor (irrespective of the source of the electricity) in scope 2  Organisations should account for electricity generated from owned or controlled renewable sources backed by REGOs at zero emissions in Scope 1  Organisations may also report an emissions reduction in their reported net figure for any renewable electricity they have generated and exported to the National Grid at the Grid Rolling Average factor.  The amount reported in this way should not exceed their actual electricity use.  Organisations should account for any subsidy received from generating electricity (e.g. ROCs) in a supporting narrative. 

  49. Discussion Questions What are organizations’ experiences with using RE instruments as contractual EFs? What are the implications of additionality requirements? What are the technical challenges in implementing grid-adjustment? What are organizations’ experiences with accounting for on-site projects? What are other advantages and disadvantages, and the prospects for this approach? World Resources Institute

  50. Session II: Accounting for Avoided Emissions from RE Projects

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