Tag: Greenhouse Gas Protocol

RER, Nareit Urge Practical GHGP “Scope 2” Standards for Real Estate’s Energy Purchases

Posted on by abigail_grenadier

This week, The Real Estate Roundtable (RER) and Nareit submitted joint feedback to the Greenhouse Gas Protocol (GHGP) on proposed updates to its Scope 2 Guidance. The submission urges GHGP to preserve optional hourly and narrow geographic matching for bulk clean energy purchases, rather than make these strict “24/7” procurement conditions mandatory. (Summary memo | detailed comments, Jan. 23)

Background

  • Scope 2 emissions result from the generation of electricity, steam and other power purchased or acquired by a customer from a utility provider or grid operator. These emissions are not directly controlled by building owners or tenants, but depend on the types of fuels that power off-site grid infrastructure. (US-EPA) 
  • Last year, GHGP unveiled a set of proposed revisions to its Scope 2 Guidance. GHGP’s recommended modification to its global guidelines would require companies to match clean energy procurements (such as renewable energy certificates or power purchase agreements) to their actual electricity consumption on an hour-by-hour basis, rather than on an annual basis—a practice often referred to as “24/7 matching.” (GHGP Press Release, Oct. 20) 
  • The changes also proposed tight narrowing of geographic deliverability standards, requiring the purchased clean energy to be co-located on-site and/or within the same local grid segment. 

RER and Nareit Collaboration

  • The comments RER and Nareit submitted this week emphasize that 24/7 matching is not practicable for the vast majority of U.S. businesses that use GHGP guidance to voluntarily account for Scope 2 emissions. 
  • As RER and Nareit explained, 24/7 matching is not workable as a “one size fits all” standard practice for commercial building owners because they do notcontrol how much energy tenants use. Owners of multi-tenant buildings do not have dependable access to leased space energy data on a monthly—much less hourly—basis. (Summary memo)  
  • The joint RER-Nareit comments also explain that there is not enough solar or wind generation in many U.S. markets to support GHGP’s restrictive geographic deliverability mandate, and market and policy headwinds are expected to make corporate investments in renewables more challenging in the short term.
  • Further, RER and Nareit raised concerns about scientific validity, noting that electricity does not physically flow in accordance with contractual arrangements and that strict hourly “matching” is a misleading accounting construct.
  • RER and Nareit back an alternative approach put forth by GHGP working group participants that would maintain the current Scope 2 Guidance approach, allowing for—but not requiring—optional 24/7 matching.

Why It Matters

  • GHGP’s existing Scope 2 “quality control” criteria are a proven, successful framework that have helped spur significant growth in U.S. clean power purchases since 2015. The 24/7 matching mandate would reverse this trend.
  • Mandating strict time and place restrictions for corporate procurements like RECs will make compliance burdens with the Scope 2 Guidelines more onerous, increase costs, disincentivize private sector investments in clean energy—and not result in better information for investors.

January 31 Deadline

  • Real estate companies and their assurance providers submitting direct feedback to GHGP may wish to incorporate points from the joint RER/Nareit summary memo and detailed comments.

RER, Nareit and allied real estate stakeholders will remain engaged to advocate for a practical, science-based Scope 2 framework as GHGP moves to adopt new guidance.