Guidance for Procuring Clean Electricity in Supply Chains

Join Center for Resource Solutions (CRS) for a discussion about designing clean electricity procurement programs for upstream value chains. The webinar will present CRS’s new Clean Energy Accounting Project (CEAP) guidance for supplier clean electricity procurement and profile existing corporate approaches to increasing clean electricity use in the supply chain. Speakers will also discuss the current state of greenhouse gas (GHG) emissions accounting for upstream clean electricity use and needs for the future.

Speakers:
• Julie Casabianca, Policy Manager, Global Corporate Energy Strategies, 3Degrees
• Todd Jones, Director, Policy, CRS
• Peggy Kellen, Director, Policy, CRS
• Sarah Mihalecz, Senior Director, Transaction Acceleration Group, Clean Energy Buyers Association (CEBA)

Referenced Guidance Documents:
• Guidance for Supplier Clean Electricity Procurement: https://resource-solutions.org/document/08112301/
• Scope 3 GHG Accounting for Upstream Clean Electricity Use: https://resource-solutions.org/document/08112302/

Transcript

2. Agenda ▪ Guidance Overview ▪ Supply Chain Initiative Descriptions ▪ Moderated Discussion and Q&A 2 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED.
3. 3 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. NGO creating policy and market solutions to advance sustainable energy since 1997. ▪ Green-e® certification programs ▪ Renewable Energy Markets conferences ▪ Renewable energy and climate policy ▪ Clean Energy Accounting Project (CEAP) About Center for Resource Solutions
4. 4 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. Founding Partners: Members: CEAP Advisory Committee 3Degrees CDP Clean Energy Buyers Institute Clean Energy States Alliance Constellation Insight Sourcing Group nZero Priority Power Target U.S. EPA’s Green Power Partnership University of California Office of the President
5. Guidance for Supplier Clean Electricity Procurement 5 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED.
6. 6 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. ▪ Intended to help standardize supplier clean electricity programs ▪ Provides a set of common practices, objectives and outcomes, and procurement criteria and metrics ▪ For companies at different stages of program development and with different clean energy objectives Guidance for Supplier Clean Electricity Procurement
7. 7 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. ▪ Expert working group: ▪ Corporates ▪ Renewable energy marketers ▪ Government and policy experts ▪ Disclosures body (CDP) ▪ Public survey ▪ Additional research ▪ CEAP Advisory Committee review Development Process
8. 8 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. Background and Use of the Guidance Measurement of Supplier Electricity Use Measurement of GHG Emissions Associated with Suppliers’ Purchased Electricity Supplier Clean Electricity Procurement and Transaction Analysis Supplier Clean Electricity Procurement Goal Setting (For Company) Launch of Initial Supplier Clean Electricity Program Full Supplier Clean Electricity Program Implementation 1 2 3 4 5 6 ▪ Guidance is presented in a series of stages of program development ▪ Includes all the major activities and considerations for building a supplier clean electricity program
9. 9 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. Background and Use of the Guidance 1 2 3 4 5 6 ▪ Presents a standardized list of objectives and corresponding project and procurement criteria, and verification metrics ▪ Includes guidance for tailoring and considerations at each stage ▪ Includes program design and implementation options ▪ Specific guidelines are bolded in the guidance, and included in a checklist
10. 10 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. Background and Use of the Guidance 1 2 3 4 5 6 ▪ For upstream supply chain only ▪ For electricity procurement only ▪ Does not include a global list of procurement options or rules/instructions for clean electricity transactions and accounting ▪ Must be tailored to specific market and supplier circumstances
11. 11 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. Stage 1. Measurement of Supplier Electricity Use ▪ Primary vs. secondary usage data for Tiers 1, 2 + ▪ Data sensitivity and confidentiality concerns ▪ Allocation methods
12. 12 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. Stage 2. GHG Emissions Data Identifying and Evaluating EF Data Sources Credibility criteria Placement on hierarchy Authority of source Verification Precision of methodology Transparency Temporal proximity Frequency of updates Multiple GHGs Purchased Electricity EF Data Hierarchy 1. Electricity Product-specific Data 2. Electric utility- or Supplier- specific Data 3. Market-specific Residual Mix 4. Market-specific Grid Average
13. 13 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. Stage 3. Electricity Procurement and Transaction Analysis Elements of Electricity Market Analysis Wholesale and retail electricity market structure Laws and regulatory framework governing the electricity sector Laws and regulations affecting specified procurement and delivery, and retail use claims Use and availability of generation tracking and market instruments (e.g., EACs) Current and future options for active procurement of electricity on a resource-specific basis Legal enforceability of procurement options Short-term and long-term costs of procurement options Current and planned electricity generation by region, resource type, facility size, and age
14. 14 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. Stage 4. Goal Setting ▪ Scope ▪ Depth of supply chain, and considerations ▪ Target level ▪ Resource types (carbon-free, renewable, etc.)
15. 15 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. Stage 4. Goal Setting Category Desired Outcome 1. Accountability Credible usage and Scope 2 emissions claims for suppliers 2. New Clean Electricity and Emissions Impact Provide demand to drive the development of clean electricity Avoid grid GHG emissions Reduce global GHG emissions Directly enable/create new clean electricity generating capacity/supply Grid transformation and clean electricity integration 3. Technology or Business Innovations Support new technologies Strengthen clean electricity markets in country 4. Community Benefits Local community health, equity, justice, and/or peace benefits 5. Economic and Energy Security Benefits Economic benefits for suppliers Energy security, independence, reliability for suppliers or supplier countries
16. 16 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. Stage 4. Goal Setting ▪ Other parameters for clean generation and procurement (e.g. regulatory surplus, geographic boundaries, certification, etc.) ▪ Objectives for the program itself (e.g. simplicity, impact, etc.) ▪ Company’s own clean electricity goals, targets, preferences ▪ Barriers facing company and suppliers ▪ Difficult markets ▪ Procurement by or on behalf of suppliers, related level of supplier engagement, and considerations ▪ Increasing ambition
17. 17 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. Stage 4. Goal Setting Considerations for Tailoring Supplier Clean Electricity Programs to Specific Markets Market and regulatory structure Available clean electricity procurement options Policy landscape Other market interactions Stranded asset considerations Resource availability and availability of clean electricity supply Constraints on clean electricity development Administrative overhead to run a program for suppliers in the market Cost competitiveness with standard offer electricity product
18. 18 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. Stage 5. Initial Launch and “Groundwork” ▪ Supplier education and trainings: reducing consumption, availability of procurement instruments and options, accounting ▪ Piloting initiatives ▪ Initial project development and procurement deals ▪ Policy advocacy
19. 19 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. • Standardized criteria (for both projects and transactions) and verification metrics for different desired outcomes o Accountability: 8 criteria (4 project, 4 transaction), 2 metrics o Impact: 12 criteria (7 project, 5 transaction), 12 metrics o Innovation: 6 criteria (3 project, 3 transaction), 2 metrics o Community benefit: 6 criteria (5 project, 1 transaction), 6 metrics o Economic and security benefit: 3 criteria (3 project), 3 metrics • Data considerations and challenges for criteria and metrics • Tailoring to markets Stage 6. Full Implementation
20. 20 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. Stage 6. Full Implementation Project/Supply Criteria Project(s) not yet in operation or repowered at the time of supplier's initial engagement Project location(s) in a grid region with an annual marginal emissions rate that is greater than the national average marginal emissions rate GHG emissions from the electricity sector or region where project(s) is located are not capped, or there is a policy mechanism in place to set aside and retire emissions allowances on behalf of voluntary renewable energy, or emissions allowances are independently procured and retired Project(s) built, repowered, or directly financed by supplier Project(s) directly associated with immediate or near-term fossil plant retirement, either physically, legally, contractually, or in some other verifiable way New transmission has been created to serve the project(s) Project(s) operates during seasonal or daily peaks, or during times of day when fewer renewable resources are operating Purchase/Transaction Criteria Purchase term/contract length >=1 year Active and voluntary purchasing by supplier Transacted clean electricity is accompanied by emissions allowance retirement, where applicable to project location(s) Long-term purchase (>=10 years) Bundled procurement Desired Outcome Metric Provide demand to drive the development of clean electricity Portion of clean electricity used that is surplus to regulation in the electricity sector Portion of clean electricity used from facilities that were not yet in operation or repowered at the time of Supplier's initial engagement Portion of clean electricity procured under long-term contracts (>= 10 years) Portion of clean electricity actively and voluntarily procured Change in market price of generation, storage, and/or transmission Avoid grid emissions Avoided grid emissions associated with procured clean electricity generation (tons) Reduce global emissions Annual tons reduced by the project beyond an emissions baseline Directly enable/create new clean electricity capacity/supply Clean electricity capacity installed that was directly financed by the Supplier (MW) Grid transformation and clean electricity integration Reduced curtailment (MWh) Amount of peak generation (MWh) Miles of new transmission Amount of storage capacity added (MW) Example: New Clean Electricity and Emissions Impact Verification Metrics Criteria
21. 21 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED. ▪ Administrative categories: required, preferred, and bonus criteria ▪ Guidance for suppliers using multiple procurement options or in multiple markets ▪ Data collection/reporting options ▪ Transactions and Accounting ▪ Implementation tools Program Implementation Options Program Design Options Required Criteria + Plan for Continuous Improvement Required Criteria + Recognition Tiers Required Criteria + Recognition Tiers with Scoring Required Criteria + Incentives
22. Supply Chain Initiatives ▪ Clean Energy Buyers Alliance (CEBA) ▪ 3Degrees 22 © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED.