Harmonizing the application of carbon accounting for emissions from purchased electricity in the context of green claims

In greenhouse gas (GHG) inventories of companies and products emissions of purchased energy, especially electricity, make up a significant proportion. Therefore, companies are interested in sourcing and accounting for green electricity with a low emission factor. The market- and location-based approaches are two different accounting methods leading to different results. If companies base green claims on the method that produces the result most beneficial to their GHG inventory, this can lead to double counting of renewable energy attributes. This harbors the risk of overestimating the amount of energy sourced from renewable energy sources, and hence, the associated positive environmental impacts of companies’ renewable energy consumption. Moreover, it limits the comparability of companies’ GHG inventories, reduces transparency and credibility of GHG reporting and associated green claims. In this commentary, we outline the problem of leaving a de facto choice between location- and market-based accounting approaches for emissions from electricity procurement when making green claims. To achieve credible green claims for customers and a level playing field for companies, we suggest a consistent application of the market-based approach. We propose introducing a requirement to base green claims on this method, if a market region allows for the use of contractual instruments meeting standardized quality criteria.