Proposed GHG protocol revisions for scope 2 market-based accounting still create false value chain claims

Abstract

The GHG Protocol is currently updating its accounting guidance for emissions from purchased electricity, known as “scope 2” emissions. However, the current proposed revisions for market-based scope 2 accounting are inconsistent with the requirements for accurate value chain GHG inventories. This perspective paper shows that the “mass balance” approach in the current proposals is not sufficient for claiming to have exclusively used one specific emission source within the mix of deliverable generation, and so misrepresents the emissions from sources used in the value chain. The paper proposes two solutions: a. to clearly state that market-based accounting is a form of “performance accounting” rather than value chain inventory accounting; or b. to introduce a “causality” requirement so that there is a real-world basis for claiming to have used a specific source. Failure to address this issue will result in companies reporting false information, which undermines the integrity of corporate GHG disclosures and creates exposure to regulatory, litigation and reputational risk.