The Greenhouse Gas (GHG) Protocol is the most widely adopted standard for GHG emissions accounting globally. While the standards have remained largely unchanged since 2015, many of the rules are being reviewed to identify areas of improvement after a major call for feedback 2 years ago, including one covering Scope 2 emissions associated with energy purchases. In 2025, it is anticipated to have a particular impact on Scope 2 emissions accounting. This is creating considerable concern within the corporate renewable energy sector, especially those companies with smaller electricity loads or highly distributed operations.
The GHG Protocol’s current market-based approach for Scope 2 emissions allows companies to claim emissions reductions by purchasing enough Renewable Energy Certificates (RECs) or similar Energy Attribute Certificates (EACs) to match their annual electricity load. A company is able to claim credits from a wind farm in one region to offset emissions from operations in another, regardless of where their actual operations are located, as long as it is within the same broad market. This provides flexibility and has helped to encourage corporate renewable energy procurement.
Proposed Changes
- Hourly matching: Among the changes being considered is the requirement for larger energy consumers (e.g., those using over 5 gigawatt-hours per year) to match their actual electricity loads to renewable sources on an hourly basis, instead of the current annual or monthly matching. This aims to incentivize renewable energy projects that reduce grid emissions when electricity demand is highest, moving beyond paper offsets that do not necessarily reflect real-time grid decarbonization. Implementing this would present a major logistical and data challenge for many companies, requiring more advanced tracking and procurement strategies.
- Narrower market boundaries: The revisions may also narrow the geographic boundaries within which companies can claim RECs. This would require companies to purchase their renewable energy on the same regional grids where their operations are physically located. The goal is to make sure renewable energy purchases contribute to the decarbonization of the specific grids from which a company draws power. Such a change could limit the pool of available renewable energy projects for some companies and make procurement more complex, especially for those with operations across diverse regional grids.
- Increased focus on real emissions impact: There is an emphasis to move toward a more rigorous and impactful accounting of Scope 2 emissions in order to make certain that reported reductions genuinely contribute to reducing atmospheric GHGs.
- Addressing additionality and quality of RECs: While RECs have been instrumental in funding renewable energy development, some stakeholders are concerned about their effectiveness in driving additional emissions reductions, particularly when unbundled and traded without direct connection to actual consumption. The revisions aim to address these concerns by promoting higher-quality, more impactful procurement.
- Alignment with other standards: The revisions also aim to enhance alignment and harmonization with other evolving regulatory and voluntary disclosure and target-setting regimes such as the Science Based Targets initiative (SBTi), International Sustainability Standards Board (ISSB), and the Corporate Sustainability Reporting Directive (CSRD).
Stakeholder Concerns
Two influential trade groups, the Clean Energy Buyers Association (CEBA) and the American Council on Renewable Energy (ACORE), sent letters to the chair of the GHG Protocol’s standards board expressing concerns about the potential for these proposed rules to be overly strict. They fear it might impede corporate clean energy procurement if mandatory hourly and location accounting is implemented without sufficient flexibility. They urge the board to allow companies to choose the best path for their specific circumstances while still encouraging decarbonization. CEBA and ACORE urged the GHG Protocol standards board to seek more input from corporate practitioners and renewables developers as the technical working group finalizes its draft. They also suggest:
- Addressing concerns of renewable energy buyers before a draft is finalized.
- Offer clarity immediately about how existing contracts will be recognized.
- Make some of the stricter proposed revisions optional.
Conclusion
The GHG Protocol’s forthcoming Scope 2 revisions represent both a significant opportunity and a challenge for renewable energy buyers. They aim to improve the integrity and impact of corporate decarbonization efforts. However, the potential for increased complexity, particularly with hourly matching and narrower market boundaries, will require careful planning and adaptation. Companies must stay informed and be prepared to innovate their renewable energy strategies.
The GHG Protocol is expected to publish a draft of the new rules for Scope 2 for public consultation by the fourth quarter of 2025. This is a critical period for stakeholders to review and provide feedback. Revisions based on the feedback from the 4Q 2025 consultation will be circulated with a final draft of the new guidance not anticipated until at least 2027. If your organization needs assistance in navigating the ever-changing regulatory landscape for sustainability compliance and reporting, please contact Canopy Edge for an initial consultation.
