As previously discussed in Swan Energy blogs, Streamlined Energy and Carbon Reporting (SECR) obligations provide a huge opportunity for an organisation to highlight their green ambitions. So, how should a business go about including green energy contracts and carbon offsetting/sequestration in a newly required Energy and Carbon Report?
For starters, SECR regulation requires quoted companies to disclose a total gross Scope 1 and 2 CO2e emission figure, while large LLPs and unquoted companies are required to disclose a gross CO2e figure based on Gas, Electricity and Transport use. The regulations then require further calculations, to give a final relevant Intensity Ratio (e.g., gross tCO2e/tonne of product).
However, these mandatory gross figures will not (and should not) include any progress an organisation has made by choosing green energy providers and/or partaking in offsetting schemes. This is where optional net emission figures come in, and it is upon these figures that many well-known companies are now basing their Net Zero ambitions.
The first complication is that gross CO2e figures use location-based electricity emission factors. In the UK, this means that any electricity imported from the National Grid must have a standard carbon emission factor applied (0.23314kg CO2e/kWh in 2020). This figure represents a typical electricity contract and takes into account the ever-evolving energy mix in the UK Grid.
However, many providers now offer ‘certified green’ style contracts, where the energy supplied is guaranteed to be ‘cleaner’ than the UK location-based figure and so has a lower emission factor. This is called the market-based emission factor and can be requested from your provider. Green energy providers often guarantee fully Renewable Energy Guarantees of Origin (REGO) backed energy and so promise an emission factor of 0. By using a market-based emission factor, a net emission figure and subsequent net Intensity Ratio can then be calculated and included in an Energy and Carbon Report.
Of course, an organisation can go further than simply changing their electricity plan and look to offset their emissions. Common methods in the UK include the purchase of Woodland Carbon Units (WCU) or Peatland Code carbon units, both being well regarded and fully verified.
However, there are many energy and offset providers who promise green benefits but are less than transparent with how these work. Therefore, due to the nature of some offerings, an organisation should prepare for their green contracts and offset schemes to be questioned in the future. Thus, it is recommended all such contracts and schemes are reputable, as well as fully explained and evidenced.
When it comes to onsite renewable electricity generation, this should not create a difference between gross and net CO2e figures. Onsite generation should decrease demand for electricity imported from the grid and therefore lower gross CO2e figures and improve relevant Intensity Ratios. A similar effect will be felt with the use of biofuels over their fossil equivalents.
In summary, a gross CO2e figure must always be included in an Energy and Carbon Report to meet SECR regulation. If an organisation decides to report their net CO2e figure (and associated net Intensity Ratio), this should take into account any green electricity and/or carbon offsets. The net figure would then be included alongside the gross CO2e figure and gross intensity ratio an organisation would be wise to highlight the difference between these two figures and provide explanations of the hypothetical carbon savings to showcase their green ambitions.
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