Apr 10, 2023
In this Energy Minute, Dana Dohse and Steven Goldman discuss the importance of examining the marginal impact of different energy sources - using principles like additionality and emissionality - and why businesses may want to consider them in during clean energy procurement processes. Some of the world’s biggest tech companies, including Amazon, Apple, Microsoft, Meta, and others are looking hard at their energy procurement through one of these lenses, with different outcomes in mind for the facilities they power or the grids they operate on.
In this segment, Dana and Steven look at the concepts of additionality and emissionality, and what they each mean for companies evaluating whether to procure clean energy through financial instruments like RECs or virtual power purchase agreements or working to directly source that power through physical PPAs or local green power/tariff programs.
Resources:
- Nature Climate Change journal article, "Renewable energy certificates threaten the integrity of corporate science-based targets"
Key Takeaways:
- Once it is generated for transmission and delivery, all electricity fundamentally is identical - you can't distinguish between electrons. RECs are a financial construct that allows the environmental value of clean energy generated to be bought and sold, either bundled with the energy being sold or separately (“unbundled”).
- Additionality value refers to when purchasing clean energy is contributing to new capacity being added to the grid, rather than purchasing clean energy from a project that has already been in operation. For an offtaker, focusing on additionality means purchasing clean energy in ways that drive deployment of new projects in general
- Emissionality value refers to purchasing clean energy from projects that are have lower marginal emissions compared to the local average emissions factor, in effect reducing emissions on the local grid by becoming part of the local mix. For an offtaker, focusing on emissionality means procuring from projects that have carbon reduction impacts on the grid in which your facilities are operating.