Jake Oster, Rob Threlkeld, Chad Reed and Hannah Hunt work for member companies of the Emissions First Partnership. The partnership consists of Akamai, Amazon, GM, HASI, Heineken, Intel, Meta, Rivian, Salesforce and Workday.
The Emission First Partnership was created by companies working to reduce their emissions with impactful clean energy projects today. As climate action has accelerated over the last decade, our organizations are ready to embrace a greenhouse gas accounting framework that moves beyond the current approach of counting megawatt hours and instead focuses on the heart of the matter: emissions impact.
Recently, the global sustainability community gathered in New York for Climate Week, demonstrating unprecedented focus on addressing climate change. Recent data highlights the escalating urgency, with 2023 on track to be the hottest year on record, and a recent report by Wood MacKenzie forecasting a 2.5˚ C increase in global temperatures by 2050, assuming we continue the energy transition at our current rate. Clearly, we need to do more.
Last year we launched The Emissions First Partnership, which currently consists of 10 companies, to encourage more impactful corporate climate action. The private sector has increased its efforts over the past decade, especially in renewable energy procurement, with over 400 companies committing to 100% renewable energy targets. Their collective efforts have driven nearly 150 GW of purchase commitments globally since 2008, surpassing France’s total generating capacity. These purchase commitments have contributed to grid decarbonization and accelerated the deployment of clean technologies like wind and solar power. We need companies to continue buying clean energy, and we also need to ensure that those purchases maximize their climate benefit.
The emissions benefit of clean energy depends on the electricity it displaces. For example, because electricity in West Virginia is largely produced by burning coal, solar energy generated there displaces almost four times more carbon than the same amount of energy would in California. From an emissions perspective, it would be more impactful to sign a contract with a 50 MW solar farm in West Virginia than with a 100 MW solar farm in California, yet current carbon accounting and sustainability metrics encourage the opposite.
The Emissions First Partnership wants to increase the impact of corporate sustainability actions through the use of better data. A full list of our principles can be found on our website, but our primary focus is to improve carbon accounting standards and to enable all companies — large and small — to make more informed decisions. Unless you measure something accurately, you cannot manage it efficiently. Our approach involves using granular data that reflects the emissions impact of consuming or producing electricity at a specific place on the grid at a specific point in time — two key drivers in determining the emissions intensity of electricity. Estimating these emissions directly allows a company to quantify its carbon footprint more accurately — regardless of its approach to procurement — and greater flexibility to strategically invest in projects and manage grid assets when and where emissions reductions will be greatest.
Alternative approaches are being actively discussed in the industry, with some saying that the status quo works well and others advocating that companies match their energy consumption with clean energy on an hourly basis. A recent Utility Dive article summarized the findings of a Princeton ZERO lab report comparing these methodologies. This is an important and complex topic and we encourage the type of rigorous analysis outlined in the Princeton paper. However, we disagree with its core conclusion: that any procurement strategy other than hourly matching will have “zero or near-zero long-run impact on system-level CO2 emissions.”
The paper comes to this counterintuitive finding because, in the world forecast by its capacity-expansion model, the incentives in the Inflation Reduction Act make clean energy so cheap that projects will get financed and built without the need for corporate purchase commitments. Because these projects get built either way, the paper’s logic continues, corporate purchases are unnecessary and therefore have no impact on reducing grid emissions. The conclusion runs counter to our experience.
Collectively, the members of the Emissions First Partnership have signed over 35 GW of clean energy purchase commitments — almost 25% of total corporate volume since 2008. We understand these contract structures and how renewable energy projects get financed and built, which leads us to question this core assumption of the paper. In our view, projects will still need long-term, creditworthy offtake.
Few renewable energy projects are able to secure financing without long-term purchase commitments. Financiers are very reluctant to fund a project that doesn’t know how much it will earn for the electricity it produces. Corporate purchase commitments transfer this price uncertainty from the project to the buyer. For the project to be bankable, these purchase contracts need to be with a credit-worthy buyer and long-term (10-20 years). While the incentives in the IRA are meaningful, financiers will view projects lacking long-term purchase contracts as more risky, making it more difficult for them to secure adequate funding. As Benoit Allehaut at XCarbon (formerly CapDyn & KKR) said on a recent podcast, "The foundation of a wind project or solar project is a good offtake." Companies that can provide long-term price certainty will continue to advance grid decarbonization by helping projects get financed and built.
We believe all corporate actions, including clean energy purchases, should be informed by better emissions data to maximize their climate benefit. The Princeton paper is also critical of the use of emissions forecasts, saying such forecasts are inaccurate and don’t account for the changing structure of the grid. The world of emissions data is admittedly complex but is also improving rapidly. There is uncertainty in emissions forecasts — as there is in all forecasts — and we should debate, refine and improve the methodologies and datasets used to produce them.
If the purpose of buying clean energy is to reduce emissions, we should do our best to directly consider emissions impacts when making these decisions. Granular emissions data can also capture important variances in the carbon intensity of electricity within the same grid in the same hour. These variances are driven by transmission constraints — an important variable excluded from the Princeton paper — and can provide important insight into where on a grid clean energy is most needed. To accelerate grid decarbonization, we need to refine and leverage all of these datasets to ensure we’re accurately measuring and directing our efforts.
The Emissions First Partnership was created to accelerate grid decarbonization by driving more informed, efficient and strategic corporate action. The Princeton paper had a similar goal: to quantify the emissions impacts of different clean energy procurement methods. While we disagree with some of that paper’s conclusions, we are in full agreement that we need to encourage more impactful private-sector efforts to decarbonize the grid. We welcome continued analysis, discussion and partnership to ensure we’re maximizing the benefit of corporate sustainability activities.
