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Corporate greenwashing risk

Hourly matching may not accomplish the emissions reductions companies would be claiming

The major Market-Based Method (MBM) revision that GHGP has put forward for public comment is most commonly known as “hourly matching.” The details have been covered extensively in trade media, organization blog posts, and professional social media, so we’ll just summarize the high-level gist here. If enshrined as the new GHGP Scope 2 MBM, organizations would be allowed to count toward their Scope 2 emissions reductions only if their procured clean energy or certificates are a) produced in the same hour as the organization’s electricity demand and b) located within the same grid region as the load.

But when you look closely at the details, what the proposal does (and doesn’t) include significantly undermines the green claims it purports to improve, and experts have had big questions around the effectiveness of hourly matching. The net effect of the proposal in its current state is the very real risk of greenwashing. In particular:

Hourly matching discourages investment in impactful clean power development: First, restrictive locational and time matching requirements limit the locations where organizations will direct investment for clean energy development. As a result, organizations would likely opt to build in a cleaner region that is compliant with Scope 2 requirements instead of a more impactful region that would take the place of dirtier fuels but is outside of the “deliverable region.”
The myth of deliverability: Second, the proposed revision mandates that purchased clean energy must be “deliverable” to the organization’s electricity load, and it uses grid regions as the de facto proxy for meeting deliverability requirements. However, the Center for Resource Solutions (CRS), GHG Management Institute, Green Strategies and others point out that intra-regional transmission constraints and other factors mean that clean energy often is not deliverable to an organization’s load. It’s a myth that sounds good in theory but vanishes in practice.
No additionality requirement: Third, the current proposal also lacks any rigorous criteria for additionality in the purchased clean energy. That means that an organization could simply purchase unbundled RECs from existing renewable energy projects and apply them toward its organization’s carbon footprint. The lack of an additionality requirement removes the incentive to build and procure clean power in impactful locations.
Standard Supply Service (SSS) contribution: Fourth, the SSS criteria allow organizations to claim credits from existing clean energy sources on the public grid in a way that will reduce the amount of clean energy they need to procure on their own. With zero change to clean energy or emissions in the real world, this on-paper-only change to the math would magically boost an organization’s clean procurement and reduce its reported emissions. According to a recent WattTime analysis, the SSS provision alone could cut the emissions-reduction benefit of voluntary clean energy procurement in half.

Greenwashing is facing a moment of reckoning

The proposed hourly matching revision to GHGP Scope 2 standards would result in green claims that aren’t substantiated by data or real-world outcomes. That spells major potential greenwashing trouble—not hypothetical trouble, and not just for corporate brand reputations, but also for real legal liability.

Just last month, the United States’ largest meat companies agreed to walk back “net-zero” and “climate-smart” claims as part of settlements in response to greenwashing lawsuits. Also last month, the European Commission announced that 20 airlines would agree to change misleading climate-related claims about sustainable aviation fuel (SAF) and their overall carbon footprint. And it’s not just lawmakers and environmental NGOs bringing suit against corporate green claims. Earlier this year, a company sued its competitor over alleged false environmental claims.

A moment of reckoning is here, and voluntary clean energy buyers cannot afford for the GHGP’s proposed Scope 2 revisions to saddle them with reporting guidelines that embed accounting that dangerously flirts with greenwashing.

Add your voice to the public comments

The Scope 2 revisions are not yet signed, sealed and delivered. There’s still time to make your voice heard and advocate for a better way. For example, a REsurety analysis of a hypothetical corporate clean energy buyer could implement an impact accounting strategy and achieve four times greater avoided emissions at half the cost of an hourly matching approach.

To help organizations better understand how the proposed hourly matching revision and the alternative impact accounting proposal would affect their reported net carbon emissions, REsurety and WattTime have released a free Scope 2 accounting calculator. Organizations are invited to enter their electricity consumption and clean energy purchasing details to see how their reported carbon emissions would be calculated under the two dominant proposals. And if you have strong feelings about the results, don’t forget to submit comments to the GHGP.

Because this holiday season, none of us want coal in our stockings—or our clean energy carbon accounting.

Nat Steinsultz is a senior data scientist at WattTime. Devon Lukas is a senior consultant and project manager at REsurety.