SBTi’s shift on electricity decarbonization attracts praise and criticism

The Science Based Targets initiative’s (SBTi’s) net-zero standard overhaul redefines how companies should approach electricity decarbonization, but it’s more flexible than the strict carbon accounting rules proposed by the Greenhouse Gas (GHG) Protocol. 

The new approach to Scope 2 — which covers purchased electricity — marks a major departure from the current standard, under which companies can set one goal to cover emissions reductions for energy and their own operations, which is defined as Scope 1. 

The two categories must now be handled separately, which is a wake-up call for some companies that have leaned on the practice of buying renewable energy certificates (RECs) to help with their combined target.

The SBTi update encourages companies to reduce electricity use and source low-carbon energy where possible through direct connections and contracts. They can “match” the rest of their load by supporting low-carbon energy projects in the same region. Companies can still do that by using existing market instruments such as power purchase agreements (PPAs) or RECs.

“We are encouraged to see SBTi explicitly call out that PPAs are still acceptable,” said John Powers, vice president of global renewable energy and carbon advisory for Schneider Electric, which has advised corporate buyers on more than 25 gigawatts of these transactions.

PPAs have been widely used by companies ranging from Amazon to Walmart to claim emissions reductions from electricity; they have helped add more than 100 gigawatts of clean energy to the U.S. grid since 2014.

Stricter geographic lens

The location focus is tougher than past requirements — and the definition of what qualifies as the same region is under debate — but SBTi offers room for exceptions, especially for organizations with distributed geographic footprints, such as retailers or franchisers. 

“This is a framework that is very focused on practical implementation and the recognition that entities are part of systems,” said Abby Davidson, managing director for U.S. with sustainability consulting firm Quantis.

No hourly matching, yet

Corporate energy strategists welcomed SBTi’s decision to let companies match energy consumption with low-carbon electricity sources on an annual basis when reporting on their progress, a change from an earlier proposal. 

That’s at odds with the strict hourly matching model favored under a proposed new accounting rule from the GHG Protocol, which many companies use to calculate emissions reductions across their operations, electricity consumption and supply chains. That proposal is opposed by many corporate energy buyers.

“We have heard from many clients that uncertainty about what is going to count is absolutely delaying action,” said Powers. “This should be a big sigh of relief.” 

Stay tuned, though. SBTi wants firms that buy more than 10 gigawatts annually — think big tech companies or utilities — to report on how they’re matching electricity consumption with low-carbon energy resources on an hourly basis. In the new standard, it has created an optional recognition path for companies that report hourly, while it studies how hourly matching should be considered in the future.

“SBTi’s decision to support voluntary, not mandatory, matching of clean energy purchases to the hour and location of a company’s buildings is the right signal to keep markets moving,” said Miranda Ballentine, senior advisor at sustainability consulting firm Green Strategies. 

Consistent rules needed

Not everyone is a fan of SBTi’s flexibility, adopted after the organization considered more than 1,400 comments submitted during its public consultation in late 2025. 

Some nongovernmental organizations, including Natural Resources Defense Council, Sierra Club and the Union of Concerned Scientists have urged SBTi and GHG Protocol to align on policies that embrace hourly matching. They criticized SBTi for bowing to corporate pressure with its changes. 

“These requirements will drive real decarbonization by aligning corporate emissions reduction claims with investments in renewable energy that credibly displace fossil fuels,” the NGOs said in a letter to SBTi CEO David Kennedy and technical council members. “Any reliance on status quo annual matching will result in non-impactful investments counting toward unscientific climate targets.”  

Likewise, corporate strategists expressed some concern over the potential misalignment between SBTi’s and GHG Protocol’s approaches on electricity. “Everyone is looking to push toward a consistent approach,” Davidson said.