As Renewables Surge, They Can Do More, With a 4 Gigaton Opportunity Right Under Their Noses

By Matt Evans and Chiel Borenstein

Pick up any newspaper today, and there are stories that might make you worry. But one bright spot has been the continuing Cinderella story of renewable energy worldwide. When WattTime was founded only a few years ago, renewable energy deployment every year was barely more than a footnote in the global economy. No more. According to January 2018 numbers from Bloomberg New Energy Finance, world clean energy investment totaled $333.5 billion in 2017. That’s a 3% increase vs. 2016 and the second-highest annual investment total ever. Cumulative investment since 2010 has reached an impressive $2.5 trillion.

Investment focused on solar (48% of the global total), then wind, then energy-smart technologies (including smart meters, battery storage, smart grid, and electric vehicles), then all other clean energy technologies (which collectively ranked a very distant fourth).

The United States, for its part, ranked second globally behind only China. That clean energy investment helped to propel the U.S. to its third consecutive year of emissions declines, dropping by 0.5% in 2017.

Domestically and internationally, these are encouraging developments about which to be rightfully optimistic. Yet if we want to beat climate change before we reach the tipping point, we need to move even faster. It’s time for renewables to seize the moment and up their game. At WattTime, we have discovered a way they can do just that.

Tackling the Carbon Emissions Elephant in the Room

Back in November 2017, Carbon Brief—a UK-based climate science journalism site—reported on some alarming findings from the Global Carbon Project: after a three-year plateau, global annual carbon emissions were forecasted to rise by an estimated 2% by the end of the year.

Last month, the Paris-based International Energy Agency (IEA) confirmed those initial estimates in IEA’s inaugural Global Energy & CO₂ Status Report. The verdict? In 2017, global energy-related CO₂ emissions rose 1.4% to a record-high 32.5 gigatons.

Looking ahead to the rest of 2018, according to the U.S. Energy Information Administration’s (EIA) March 2018 release of its Short-Term Energy Outlook, U.S. energy-related CO₂ emissions are expected to rise by 1.0% in 2018, followed by another 0.8% in 2019.

In the wake of the Paris Agreement, it all could be seen as a discouraging setback in the race to decarbonize the energy sector. But rather than despair, there is reason for hope. Renewables in particular have an opportunity to make each new clean MW go further. Here’s how.

The 4 Gigaton Opportunity Sitting Under Renewables’ Noses

People typically think of solar, wind, and other clean-energy projects as just creating zero-emissions energy, making them in some sense all the same. But upon closer inspection, not all renewable energy is actually created equal. After all, the way that renewables help the environment is that they displace dirty energy. So, the same wind turbine can actually have radically different impacts on the environment and the electricity grid’s emissions depending on whether it’s displacing, say, a coal plant, or another windmill.

Thus, as is often noted in matters of real estate, when it comes to renewable energy deployment, location matters. Where developers site new renewable generation can greatly influence which kinds of energy they displace, and therefore how much carbon emissions those clean electrons ‘erase.’ As it turns out, the size of that prize is large. Very large.

Recently, the WattTime team crunched the numbers from the U.S. EIA’s International Energy Outlook 2017, which forecasts world energy generation and consumption through 2040. The results were very surprising to our team.

If the global distribution of new renewable energy generation forecasted to be built through 2030 were redistributed geographically to optimize for avoided emissions, it could save an estimated 4 gigatons (Gt) of carbon emissions over the life of those renewable energy projects. That number is nearly equal to the annual carbon emissions of the United States.

And the impact could easily be far greater. Renewable energy capacity additions have routinely far surpassed the U.S. EIA’s projections in past years, so 4 Gt—big as that number is—could merely be the starting point.

This is an incredible “free” opportunity. Think again about the implications: holding renewable energy investment and new MW of clean generation constant—and optimizing solely on location for the sake of avoided emissions—renewables that are already planned could vastly multiply their impact.

Such an opportunity is squarely within reach. It is now incumbent on utilities, renewable energy developers, renewable energy buyers, and others to add a new lens to their clean energy investment and deployment. Alongside dollars and MW we should now also include location-optimized avoided emissions. A United States’ worth of carbon emissions are on the line and available for the taking.

By Gavin McCormick and Chiel Borenstein, in partnership with Jaclyn Olsen and Caroleen Verly from the Harvard University Office for Sustainability and Chad Laurent from Meister Consultants Group (A Cadmus Company)

In recent years, institutional climate action targets, renewable energy subsidies, and the rapidly falling costs of wind and solar have led more and more large institutions to begin purchasing significant quantities of off-site renewable energy. The practice has grown rapidly, from 70 megawatts purchased in 2012 to over 2,780 megawatts, as of February 2018. Naturally, all these new renewables are reducing pollution. But…exactly how much pollution?

The Boston Green Ribbon Commission Higher Education Working Group, an alliance of leading sustainability-minded institutions, aimed to find out. The Working Group’s chair, Harvard University, partnered with Meister Consultants Group (a Cadmus Company), and RMI subsidiary WattTime to conduct a study exploring methods for quantifying the actual emissions impacts of institutional renewable energy purchases. The results were intriguing.

Notably, the study, entitled Institutional Renewable Energy Procurement: Quantitative Impacts Addendum, found that the answers may be less straightforward than they initially appear. Evidently, not all renewable energy projects are equally effective at reducing emissions. (Currently, the most common emissions accounting framework treats all renewable energy projects as equally reducing emissions.) Better measuring this variation of impact between projects could soon create new opportunities for renewable energy buyers to begin reducing emissions even faster, more cheaply, more reliably, and more credibly due to the new evidence-based approach.

The Higher Education Working Group—consisting of Boston College, Boston University, Harvard University, MIT, Northeastern University, Tufts University, and the University of Massachusetts, Boston—had already been active in illuminating and streamlining institutional renewable energy purchasing. In 2016, the group authored a report in partnership with Meister Consultants Group offering detailed background information on renewable energy procurement options, as well as guidance on impact claims for institutions already making or looking to make renewable energy purchases.

While attending an RMI Business Renewables Center (BRC) member event, Jaclyn Olsen, Associate Director of Harvard’s Office for Sustainability (OFS), met Gavin McCormick, co-founder and Executive Director of Watt Time, and became intrigued by the work WattTime was doing on quantifying carbon impacts of renewable purchases. Jaclyn proposed a partnership to build on the research that the Working Group had already done on the topic, and the result was a collaboration between OFS, WattTime and Meister Consultants Group to create a report for the Working Group members that brought this new way of assessing emissions reduction impacts from renewable purchases to potential purchasers.

Three Ways to Count Emissions

Most institutions today report their greenhouse gas emissions using the carbon footprinting approach, as laid out in the Greenhouse Gas Protocol (GHGP). While the process involves multiple methods, hierarchies of emissions factors, and other complexities, at a high level it’s a simple approach: Organizations count how much regular electricity they purchase from the grid, subtract off the amount of renewable energy they purchase, and multiply the remainder by the average emissions intensity of the local grid. This framework allows for straightforward comparison of renewable energy commitments across institutions; however it does not differentiate between varying carbon impacts of different renewable energy projects.

Before we describe the study’s findings, it is important to note that carbon footprinting is not the only way to measure emissions. The Quantitative Impacts Addendum study identifies three different ways institutions can measure the emissions impacts of renewable energy purchases: (1) the status quo, carbon footprinting; (2) avoided emissions; and (3) quantification through the generation of carbon offsets. Each has its own benefits and drawbacks.

The study’s primary goal was to uncover the implications of these differences, so that institutions making renewable energy purchasing decisions will have a broader and deeper understanding of the emissions impacts of the projects they are considering.

1) The Status Quo: Counting Megawatt-hours, Not Emissions

The simplicity of carbon footprinting comes at a cost. The GHGP is very explicit that this approach measures the change in emissions that an institution “owns” in an abstract accounting sense, not necessarily the actual real-world emissions reductions caused by renewable energy purchases.

The reason this distinction matters is that the real-world emissions reductions can vary widely. After all, adding renewable energy to the grid only reduces emissions if it displaces existing power plants. But which power plants are displaced? A renewable energy project that displaces mostly coal will reduce considerably more emissions than one that displaces natural gas, or even other emissions-free resources like hydropower.

2) A Measurement Change: Avoided Emissions

The avoided emissions method is also defined under the GHGP, and is classified as an optional calculation. This method establishes a framework for measuring not megawatt-hours, but emissions. By measuring which existing or future power plants a renewable energy project displaces, it measures the actual emissions impacts of a project.

Employing this methodology, the differences in emissions impacts between renewable energy projects can be substantial. The report finds that renewable energy purchases by Boston area schools could reduce anywhere from 791 to 2,187 pounds of carbon dioxide per megawatt-hour—nearly a 300% variation among projects of identical size—depending on the power plant being displaced.

It’s important to note that while the GHGP allows organizations to measure avoided emissions, the GHGP does not allow organizations to use these calculations in their main emissions inventory. So organizations that declare carbon targets and choose to voluntarily define them in terms of the emissions inventory cannot use the avoided emissions method. This could lead to a situation where the claimed emissions reduction is higher or lower than a more accurately calculated value.

3) Carbon Offsets: Counting Emissions Towards Declared Targets

Unlike the avoided emissions methods, projects measured using carbon offsets can be “counted” towards an institution’s official emission inventory. To ensure the integrity of that system, projects are only eligible for carbon offsets if they pass a series of tests that they are valid and additional (truly reducing emissions beyond what would have occurred in the project’s absence). While ensuring the highest levels of accuracy, the carbon offset process is also much more time-consuming and administratively burdensome than the avoided emissions approach. It is also very difficult to prove additionality for renewable energy projects, so many renewable energy projects will not be eligible.

Pros and Cons of Each Method

There are clearly pros and cons to each approach. In determining which method to use, key factors institutions could consider include the following:

• Administrative complexity: The main reason carbon footprinting is so widespread is its simplicity. However, new technologies such as blockchain could soon greatly lower the difficulty of the other two methods.
• Local benefits: Under the current rules, avoided emissions and carbon offsets do not “count” GHG emissions reduced in a region with a cap-and-trade program, which includes all of New England. Is this a helpful nudge towards selecting greener projects, or an unwelcome disincentive to buying local?
• Additionality: Suppose an institution buys a REC, i.e. the legal rights to claim the electricity from a renewable energy facility. If the facility was going to exist whether or not it made that purchase, should the school be able to say the purchase lowered its carbon footprint? Using carbon footprinting, the additionality is immaterial and the school can claim the reduction regardless; however, using a carbon offset approach, the school would not be able to take credit for this purchase. Would that be beneficial or not?

Where Next?

The main reasons to measure emissions are 1) to ascertain as accurately as possible whether we are collectively moving towards the emissions reductions we all know are needed, and 2) to allow actors to make accurate comparisons of the impacts of different choices.

When some institutions are using one method and others are using a different method, it is difficult to accurately compare the impact of different individual actions, and to calculate the collective impact. There is a need for a clear and consistent way for institutions to accurately measure the impacts of renewable purchases. It would certainly be possible for the GRC Higher Education Working Group member institutions to collectively define a new standard that draws the best elements out of the three methods and discards the drawbacks. Regardless of the method schools select (or create), acting together maximizes transparency and reduces administrative costs. The report recommends that whatever the Working Group decides, the members collectively decide it together.