From additionality to 'emissionality': how companies can magnify their impact
It's time to start considering renewables investments from a new angle.
It’s no secret that in recent years corporations have embraced their fast-growing role in clean energy and climate leadership. As Bloomberg New Energy Finance noted in January, last year was record-setting for corporate clean energy purchasing globally.
And not only are more companies actively finding ways to source renewable energy, many continue to push the environmental frontier further. Purchasing unbundled renewable energy credits (RECs) was once the norm. That has made more of them familiar with the concept of "additionality," the idea that new renewable energy capacity gets built and added to the electric grid as a result of a corporation’s investment.
More recently, many corporations have been revisiting and strengthening their renewable energy and climate targets, and some of those corporations are going "all the way" setting 100 percent renewable goals. In fact, about one month ago, the RE100 — a global initiative promoting 100 percent renewable energy corporate targets — announced that it had surpassed 130 members.
Just weeks ago, yet more Fortune 500 companies claimed to have reached 100 percent renewable energy for their global operations. Meanwhile, a report from Bloomberg New Energy Finance found that for the RE100 membership to collectively reach its corporate 100 percent renewable energy target, it’ll drive $94 billion in investment globally, adding an incredible 87 gigawatts of wind and solar to the grid.
These are exciting and inspiring times.
So what’s the next frontier of corporate clean energy and climate leadership? Perhaps the answer should be what we think of as "emissionality," which refers to the degree to which a new renewable energy project displaces fossil-fueled generation and thus creates a greater or lesser amount of avoided marginal emissions.
In 2014, the Greenhouse Gas Protocol — the nearly universally adopted voluntary accounting framework for measuring corporate environmental impact — began in some sense treating all renewables as equally good. By treating every megawatt of wind or solar power the same as every other, the protocol has done a lot to simplify the previously byzantine and complex world of renewable energy impact measurement techniques. Standardization and simplification have been some of the drivers of this remarkable growth in corporate renewable energy.At the end of the day, carbon accounting has to tie back to its ultimate purpose: driving down actual physical emissions of GHG.
But while that accounting abstraction has done a lot to fuel corporate investment in renewable energy, it is still a simplification. It fundamentally leaves low-hanging fruit of emissions reductions on the table unclaimed, for no reason other than to simplify accounting practices. In other words, more avoided emissions are easily capturable through corporate renewables procurement, but we haven’t been able to "see" those emissions-reduction opportunities because of how we’ve been doing the accounting. And those savings are not small: WattTime analysis routinely finds that some megawatt-hours of renewable energy displace three times as much carbon as others. Yet they are all treated the same.
As corporations set bold renewable energy targets, procure record amounts of clean energy and even achieve 100 percent renewables goals, some are starting to think about how to create additional impact with their investments. To wit, a recent Business Renewables Center event looked into the industry’s crystal ball (PDF) to consider what’s next. One answer? Stop treating all renewable energy as the same, and start optimizing for carbon impact directly. Which is exactly where the concept of emissionality comes in.
At the end of the day, carbon accounting has to tie back to its ultimate purpose: driving down actual physical emissions of GHGs into the atmosphere.
Viewed that way, the real climate impact of renewable electrons come, not in their zero-emissions generation profile, but rather in the fossil-fueled carbon emissions they displace from the grid by essentially "turning off" a marginal coal or natural gas power plant. The resulting avoided emissions — the carbon impact some corporations are starting to think more about — thus can vary, often widely, from one location to another. Is a new wind farm in a particular place offsetting either baseload coal or more wind? Is a utility-scale solar farm generating to coincide with grid peak and thus defer use of a natural gas peaker plant or is it contributing oversupply in a grid already saturated with solar?
We’ve found that the single biggest influence on renewables’ emissionality comes down to location. Depending on where we build new renewables, the positive impact those renewables have on air quality and climate can go from good to great.
Clearly, corporations are already doing great things with renewable energy. Now that same investment can be harnessed to achieve even more positive impact. And this transformative impact can happen with just incremental change to today’s procurement approach. All we have to do is add emissionality considerations and analysis into investment decision making.
To be sure, it has to be done right. The value of standardization in accelerating corporate renewable energy procurement is not to be denied. That’s why WattTime is working with corporate renewable energy buyers and developers, NGOs, researchers and other stakeholders to develop a joint proposal for a way to have our cake and eat it too — a standardized framework for working with emissionality that wouldn’t disrupt the valuable service current carbon accounting frameworks serve today.
It’s akin to considering the miles per gallon equivalent (MPGe) on an electric vehicle. There’s an intuitive understanding that EVs are generally better for the environment than gasoline cars, and likewise, that all megawatt-hours of renewable energy are better than energy from fossil fuels. But which ones are the best? When it comes to renewably generated electricity, emissionality can help answer that question.