Release: Emissions from Low-Carbon Electricity Purchases Now Accounted for

February 21, 2015
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Today, the India GHG Program and the BSE unveiled new guidance for companies to measure emissions from purchased electricity. This first major update to the GHG Protocol Corporate Accounting and Reporting Standard responds to the rapid growth of renewable energy and other major shifts in the electricity market. The GHG Protocol Scope 2 Guidance provides a consistent, transparent way for companies to show how different types of electricity purchases count towards their emissions targets, and will inform corporate decisions on what kind of energy should power their business.

“Greenhouse gas emission issues are getting strategic importance for making policy decisions by a growing number of countries around the world. This reflects increasing appreciation by governments of the implications of climate change,” said Ashish Chauhan, Managing Director & Chief Executive Officer of the Bombay Stock Exchange. “Investor interest in the implications of climate change and greenhouse gas emission is growing as well. Financial services organisations facilitate this growing recognition of the impact of climate change by providing the infrastructure, investments tools and vehicles. BSE with more than 5,595 listed companies is one of the largest exchange in the World and the first Exchange from Asia to join the United Nations Sustainable Stock Exchange (SSE) initiative. BSE’s objective is for Indian companies to look beyond shareholder value and make sustainability a core driver of their strategy. BSE has launched two popular sustainability indices, S&P BSE Carbonex and S&P BSE Greenex for the investors looking for avenues to invest in the responsible investment domain,” he added.

Four years in the making, the Scope 2 Guidance was developed in consultation with over 200 representatives from companies, electric utilities, government agencies, academics, industry associations and civil society groups in 23 countries. The report offers case studies of 12 companies that have already used the new guidance, including Mars, Facebook, Google, and EDF Energy. Globally, generation of electricity, steam, heating, and cooling accounts for 40 percent of global greenhouse gas (GHG) emissions. When companies purchase this electricity for their facilities, they report the emissions in the scope 2 category. Accurately accounting for Scope 2 emissions is essential for companies to manage and reduce them, but recent changes in global energy markets have made this accounting increasingly complicated.

Companies now face many choices for low-carbon electricity supply, like power purchase agreements, electricity contracts, on-site versus off-site projects, and renewable energy certificates, all of which can vary by country. The new guidance helps companies address whether and how emissions from these different instruments should be accounted for in their emissions reports. 

“Approximately 42 percent of India’s greenhouse gas emissions come from energy generation and about 76 percent of that energy is consumed by industrial and commercial users.” said Pankaj Bhatia, Director, GHG Protocol. “The guidance will let companies know exactly how their energy choices count towards their emissions goals. By providing rigorous reporting methods, the guidance gives a clear incentive for companies to demand low-carbon electricity.”

Several industry representatives came to the launch event, held at the BSE International Convention Hall in Mumbai today, to learn about the potential of the new guidance. “GHG accounting in India is a 
voluntary activity,” said Vivek Adhia, who heads business engagement for the India GHG Program. “Several responsible businesses have already joined forces to do the right thing, and I am hoping that several more here today will do the same.”

In 2014, 86% of Fortune 500 companies responding to the CDP used the GHG Protocol. Going forward, the Carbon Disclosure Project and other reporting programmes will require thousands of companies to provide additional information about their Scope 2 emissions using the new GHG Protocol guidance.  

“Companies in the Tata group were amongst the first in India to undertake carbon foot printing exercise in 2008,” said Arunavo Mukerjee, Vice President, Advisory Services, Tata Cleantech Capital Limited. “The Indian electricity sector has since changed considerably in terms of low carbon choices available to a customer and am glad to see the carbon foot printing methodology keep up with it.”

Meanwhile, Infosys Ltd, which has been on-board with the India GHG programme for nearly a year is happy to see the new guidance, too. “This is a huge step towards bringing in higher transparency and credibility into the reporting of the renewable energy consumption by Industries’’ said Aruna Newton, Associate VP for Corporate Sustainability Planning and Governance. Investment in renewable energy worldwide has expanded to $310 billion in 2014, compared to $60 billion a decade ago. Till recently, companies have lacked certainty on how to report emissions from the renewable energy they purchase and consume. This uncertainty has impeded corporate investment in, and demand for, renewable energy. “With the new Scope 2 Guidance, companies can clearly understand how electricity purchases count towards emissions targets, informing both short and long-term investment decisions,” said Adhia.

Mark Didden of the World Business Council for Sustainable Development, reiterating the significance of the Scope 2 guidance added, “The Scope 2 Guidance explains how companies can increase demand for new renewable energy generation. Scaling up renewable energy is necessary towards global net zero emissions within the century, a goal that WBCSD strongly supports. Reporting emissions in a standardized manner using the GHG Protocol is a key enabler to achieve this goal.”

Dipanker Sanyal, CEO TERI BCSD India said, “India GHG Programme was launched in July 2013 with 27 leading companies, reaffirming their commitment to account for and reduce their GHG Emission while maintaining business growth and profitability.  Eighteen months later, with more companies joining the programme, most of our founding members in the programme having started their GHG accounting and management initiatives, and we believe Indian companies are ready to go beyond the confines of their own operating boundaries.  Launch of the Scope 2 guidance is thus timely and would expand opportunities for our business to fulfill their respective corporate environmental responsibilities.”