What’s Scope 2 good for?

Abstract

The Greenhouse Gas Protocol’s Scope 2 has long been pivotal in addressing electricity's role in emissions, yet its effectiveness in emissions accounting is limited. This paper critiques Scope 2 for its inadequate allocation of electricity-derived emissions and for supporting misleading emissions reduction claims through market-based transactions. The paper investigates alternatives like 24/7 Carbon Free Electricity and Emissions First, noting their improvements over Scope 2, but also their failure to fully address grid embodied emissions. The concept of carbon solvency is introduced as a superior model, compelling firms to align long-term emissions liabilities with carbon removal assets, thus enabling more accurate emissions accounting and investment decisions for grid decarbonization. This approach fosters clearer decision-making, particularly in electricity generation methods with variable upstream emissions, such as hydrogen and biofuels. By redefining net zero within a rigorous, auditable framework, we propose a shift from current practices towards a more accountable and environmentally impactful model.