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Guidance for Procuring Clean Electricity in Supply Chains

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/

Center for Resource Solutions
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August 23, 2023
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Transcript

  1. View Slide

  2. Agenda
    ▪ Guidance Overview
    ▪ Supply Chain Initiative Descriptions
    ▪ Moderated Discussion and Q&A
    2
    © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED.

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  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

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  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

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  5. Guidance for Supplier
    Clean Electricity
    Procurement
    5
    © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED.

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  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

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  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

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  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

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  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

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  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

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  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

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  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

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  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

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  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.)

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  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

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  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

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  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

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  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

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  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

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  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

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  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

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  22. Supply Chain Initiatives
    ▪ Clean Energy Buyers Alliance (CEBA)
    ▪ 3Degrees
    22
    © 2023 CENTER FOR RESOURCE SOLUTIONS. ALL RIGHTS RESERVED.

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