Dive Brief:
- The Science Based Targets initiative is looking to clarify the scope 2 emissions reporting guidance in its updated Corporate Net Zero Standard as companies look to understand how its purchased electricity practices fit into the updated standard before it takes effect.
- The clarifications, which are being offered for public consultation, includes the grandfathering of contracts signed before the updated net-zero standard goes into effect on Feb. 1, 2027, SBTi announced last week.
- The clarification and public consultation comes as the Greenhouse Gas Protocol is updating its scope 2 emissions accounting guidance. After an initial public consultation period on scope 2 changes, the GHG Protocol announced last month that it would develop further revisions that are expected to be released for public consultation in Q2 of 2027.
Dive Insight:
SBTi, which finalized its updated Corporate Net Zero Standard in June, said in a press release last week that scope 2 emissions was the topic stakeholders had the second-most questions about for the group. SBTi said the clarifications address about 40% of the scope 2 topics questioned by stakeholders.
SBTi said the clarifications and interpretations should “address limited unintended consequences” and clarify what it intended in its scope 2 reporting criteria, and that communicating those intended revisions publicly should help “maximize stakeholder awareness of them.”
The revisions and interpretations apply globally and are relevant to “any company that purchases electricity and uses market instruments for low-carbon electricity,” the standard setting organization said in the Nov. 5 release.
SBTi clarified a few concepts introduced in the updated standard, such as “deliverability regions” and aggregating load under long term contracts, in addition to the grandfathering of contracts signed before the new standard takes effect. A public consultation opened on Nov. 5 and will remain open for 30 days.
SBTi introduced a concept of "deliverability regions” in version 2 of the Corporate Net Zero Standard, which was defined as a “geographical area throughout which all sources of electricity generation connected to a synchronous grid can reasonably be expected to serve sources of electricity consumption connected to that grid.” However, SBTi said it failed to provide detailed definitions of those regions, which would leave companies to make their own interpretations.
The clarification document, also released last week, provides a preliminary list of deliverability regions, which the group is also seeking public comment on.
SBTi noted that, as it is currently written, its policy on load aggregation on long-term contracts limits load aggregation to “wide area synchronous grids” and power purchaser agreements are the only market instrument recognized. SBTi has since found that it raises issues, as current aggregation practices extend beyond such boundaries, “particularly in the U.S.” and other instruments like tax credit transfer agreements “play a similar role in project financing” but can’t be described as a PPA, according to the clarification document.
As GHG Protocol updates its scope 2 criteria, the SBTi updates are designed to provide interim guidance while that process is ongoing, “where appropriate,” SBTi said in the clarification.
“The GHG Protocol’s scope 2 revision is ongoing, and both organizations are committed to interoperability,” SBTi said in the press release. “Our interim interpretation supports the GHG Protocol’s direction of travel on deliverability regions without pre-empting its work. It supports current practice while enabling a managed transition to tighter geographic matching, and it lets companies use Standard in the meantime.”
Earlier this year, SBTi said it is looking to pivot from a global climate ambition-setter to a corporate “transformation partner.” Part of that strategy includes looking to increase its interoperability with standards like GHG Protocol and strengthen its partnerships “to reduce fragmentation, duplication and burden.”
