As more and more leading companies, governments, and other large buyers of electricity pledge to procure 100% carbon-free energy (CFE), markets are in need of better, more granular information on the time, location, and emissionality of every megawatt-hour that is produced and consumed. To this end, EnergyTag – an independent, non-profit, industry-led initiative – is developing the standards and markets for Granular Certificates (GCs) that enable energy consumers to verify the source of their electricity and carbon emissions in real time. In this episode, Chad Reed sits down with Toby Ferenczi and Killian Daly, the Founder and General Manager, respectively, of EnergyTag. They discuss the cruel irony at the center of deploying more and more renewable energy on local grids, the nuances differentiating 24/7 carbon-free electricity claims from emissionality considerations, and how Granular Certificates can both drive the next generation of carbon accounting (or Carbon Accounting 2.0) as well as accelerate the growth of new markets such as green hydrogen and battery storage.
As more and more leading companies, governments, and other large buyers of electricity pledge to procure 100% carbon-free energy (CFE), markets are in need of better, more granular information on the time, location, and emissionality of every megawatt-hour that is produced and consumed. To this end, EnergyTag – an independent, non-profit, industry-led initiative – is developing the standards and markets for Granular Certificates (GCs) that enable energy consumers to verify the source of their electricity and carbon emissions in real time.
In this episode, Chad Reed sits down with Toby Ferenczi and Killian Daly, the Founder and General Manager, respectively, of EnergyTag. They discuss the cruel irony at the center of deploying more and more renewable energy on local grids, the nuances differentiating 24/7 carbon-free electricity claims from emissionality considerations, and how Granular Certificates can both drive the next generation of carbon accounting (or Carbon Accounting 2.0) as well as accelerate the growth of new markets such as green hydrogen and battery storage.
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WattTime: Avoided Emissions / Emissionality
Episode recorded: September 8, 2022
Chad Reed: This is Climate Positive – a show featuring candid conversations with the leaders, innovators, and changemakers driving our climate positive future. I’m Chad Reed
Hilary Langer: I’m Hilary Langer.
Gil Jenkins: I’m Gil Jenkins.
Toby: The way certificate systems still work today is based on a system of annual matching of supply and demand. Simply by buying enough certificates you can claim to be 100% renewable. It's not reflective of the reality of the grid these days and it's not sending an accurate price signal that values renewables when it's most needed.
Chad:As more and more leading companies, governments, and other large buyers of electricity pledge to procure 100% carbon-free energy (CFE), markets are in need of better, more granular information on the time, location, and emissionality of every megawatt-hour that is produced and consumed. To this end, EnergyTag – an independent, non-profit, industry-led initiative – is developing the standards and markets for Granular Certificates (GCs) that enable energy consumers to verify the source of their electricity and carbon emissions in real time.
In this episode, I sit down with Toby Ferenczi and Killian Daly, the Founder and General Manager, respectively, of EnergyTag. They discuss the cruel irony at the center of deploying more and more renewable energy on local grids, the nuances differentiating 24/7 carbon-free electricity claims from emissionality considerations, and how Granular Certificates can both drive the next generation of carbon accounting (or Carbon Accounting 2.0) as well as accelerate the growth of new markets such as green hydrogen and battery storage.
Hilary: Climate Positive is produced by Hannon Armstrong, a leading investor in climate solutions for over 30 years. To learn more about our climate positive journey, please visit HannonArmstrong.com.
Chad: Toby and Killian, thanks for joining us today.
Toby: Pleasure to be here. Thank you so much for having us.
Killian: Thank you. Pleasure to be here.
Chad: Toby, you've spent your entire career co-founding and leading firms and nonprofit organizations, focused exclusively on the clean energy transition, can you walk us through your career path and what led you to co-found EnergyTag?
Toby: I've been in renewable energy and startups quite some time. I remember I studied physics as an undergrad, which is when I first learned about climate change and I thought, "Geez, that sounds like it's going to be a problem." Then I chose to do a PhD in solar energy. That was the Imperial College. Spent three years in the lab making solar cells, which first exposed me to the renewables industry. Then, I realized that I wanted to get out of the lab and go into industry, so I took a job with General Electric. That was actually in Germany of 2008, 2010, which was ground zero for the renewables industry at the time. 80% of the world solar panels were installed in Germany. It was a fascinating place.
Then, I had the opportunity to do a startup. Actually, a friend from Cambridge who had been working at Bain & Company, we both had an idea to do a solar business. The first company we did was financing and installing rooftop solar projects. Like a SolarCity business model but for the UK, but it was in the days when this was still innovative. It was 2010 we got started. The company grew really quickly, and then we sold it in 2013 to a Chinese solar panel manufacturer.
Then I got interested in grid balancing. Having seen the falling cost of solar energy, I realized, okay, the challenge is going to be how do we get the grid to run completely on carbon-free energy? Then I did another startup called VCharge, which is a demand response play of optimizing EVs and batteries that got acquired by a UK utility called OVO Energy, the third largest energy supplier in the UK. They sell a lot of green energy. I spent five years there. I led international expansion. I was thinking about both this question of how do we balance the grid, but also how do you choose one type of electricity over another? That's what took me on a deep dive into the energy certificate systems, and led to the idea of EnergyTag. I'm sure we'll discuss that in a bit more detail.
Chad: Great. Killian, same question.
Killian: Since I was 18, I've been involved in energy in one form or another. It was a passion right from school. I did energy engineering in university in Ireland, and then went to Cambridge and did a master's there in Energy Technology, and just got a broad spectrum of the absolutely fascinating space that energy is.
After university, I went to France and I led the energy strategy at one of the largest electricity buyers in the world called Air Liquide, which is basically an industrial gas company, one of the largest producers of hydrogen in the world. I learned on the ground in a company where buying energy is a make or break thing, the importance of this. The importance for the global economy, how fundamental it is into everything we do, how we move, how we heat our homes, how we produce our goods. I was really exposed to that within Air Liquide.
Also, of course, to the problems it causes, to the problems linked to how we source energy, how we claim that we source energy, how we account for carbon of the energy that we source. I was confronted with these fundamental issues in Air Liquide, and I started to think, how can I be part of something that can change this and make this more meaningful, more impactful, particularly, through the lens of hydrogen?
I was working a lot in Air Liquide on the next generation of electricity sourcing, to make sure that we're delivering clean electricity to hydrogen electrolyzers every hour on the same grid. That's going to be law in Europe. We were working a lot on how do we do that? As Toby mentioned earlier, how do we fill in those gaps on the grid when there's not much sun or wind? For me, that's one of the most fascinating questions of our time, to be honest. As an engineer, I want to be working in that space.
Got put in touch with Toby a couple of years back, got introduced to EnergyTag, found it just an absolutely fascinating community. Great, great people working on this topic, basically about providing the right market incentives to build out more storage, to incorporate more flexibility, more clean firm technologies, to deliver 24/7 clean energy. That's a year ago, and I decided to go add it full time, and I'm absolutely loving it as general manager here at EnergyTag.
Chad: Excellent. Let's dive a little deeper into the problem that EnergyTag is built to solve. Toby, Killian, can you tell us a little bit more about your specific focus and mission?
Toby: Sure. The idea behind EnergyTag is this recognition that energy attribute certificates, which are known as RECs in the US or guarantees of origin in Europe, play a really essential role in the energy system today because the way they work, is by digitally certifying each unit of energy as it comes onto the grid, consumers can make a reliable attributional claim by purchasing these certificates about where their electricity came from.
There are some important protection mechanisms in there to prevent double counting and other types of issues that make it a reliable accounting system. That's why these certificates underpin the Greenhouse Gas Protocol, Scope 2carbon accounting, and they're used to support any green offers that you see on the market. They exist now in pretty much every developed energy market.
These systems have been around for 20 years now, and the challenge that they're running into is that because we now have a lot of renewables on the grid, the real-world availability of renewables fluctuates quite dramatically throughout the day. Sometimes we have way too much clean energy and other times, hardly any at all. The way certificate systems still work today is based on a system of annual matching of supply and demand. Simply by buying enough certificates to meet your total consumption in one year, you can claim to be 100% renewable. It's not reflective of the reality of the grid these days and it's not sending an accurate price signal that values renewables when it's most needed.
The missing ingredient is to take the existing certificate system and add a timestamp. The current certificates tell you where the electricity came from, but not when it was produced. If you add a timestamp to the certificate, then you can use them to say where your energy came from in a specific hour of the day, and this drives a lot of benefits. Hopefully, we can come back to it.
What's first needed, because we're trying to create market-wide change and adoption, so how do you go from a well-established certificate system, which is regulated in many parts of the world, to this new timestamped certificate system or granular certificate? What you need, first of all, is market consensus, and so the mission of EnergyTag is to define and build a market for granular energy certificates. That means creating a standard. The main thing that EnergyTag does, it's a nonprofit industry-led initiative that has become the internationally-recognized standards body, providing a mechanism for registries to issue timestamp certificates in a way that is compliant with existing certificate systems around the world.
Chad: Right. Yes, that's very helpful. I think it's important and even more helpful to give a specific example so that folks can really tangibly understand this. If I'm a company and I really would like to get all of my energy from renewable resources, I can make that commitment, whether that's a 24/7 commitment or another commitment publicly.
Then I have to go out and find either power purchase agreements in the places where I have facilities or offices and/or procure these RECs, which are energy attribute certificates. In the US, we call them RECs, but the problem is, I'm going to say, "Hey, I consume, for the purpose of this example, 100-megawatt hours in a given year, so I have to go out and buy 100-megawatt hours on an annual basis, either through PPAs or RECs."
By doing it on an average annual basis like that, I'm not actually offsetting the same amount of emissions through my purchases as I am through my consumption, in most cases. If I am this business that's made this commitment and I'm in Indiana, for example, and I'm consuming electricity because my business runs from 9:00 AM to 5:00 PM, but I'm buying these RECs because maybe in Indiana they don't have RECs available to purchase or they're just very expensive, so I'm going to buy these RECs in another market, maybe Texas. I can buy cheap and plentiful RECs in Texas. Those RECs are really being produced from a wind farm that usually produces electricity at night.
While I'm saying that I'm zero carbon on paper because I purchased 100-megawatt hours of RECs to offset my 100-megawatt hours of consumption, the reality is very different because the grid emissionality, and we'll talk about that term in a minute, but in Indiana it's very different than in Texas, especially during those times and days. This actually results in this inaccurate up to 35% difference in the emissions factors of consumption versus offsets or RECs in a lot of cases, as one and other studies have found.
I just thought it was important that we dive into a specific example, so folks could understand that a little bit more in detail. One thing you all have said is it's a cruel irony that the more successful we are at deploying renewable energy, the harder it gets to integrate that energy into the grid. Can you explain why that is the case?
Toby: It's basically the problem of grid integration of renewables. In the world before renewables, electricity was generally produced from fossil fuel generators, the coal and gas power stations. The way they typically operate is as the demand for electricity fluctuates, power stations would ramp up and down in terms of the power output in order to meet that fluctuating demand. It's a bit like putting your foot on the gas pedal of the car. The same way with a gas turbine, you can ramp up and down to meet the fluctuations.
As you start to add renewables, then typically, these fossil fuel generators, these thermal generators have stepped in when renewables, wind or solar have not been available with that same mechanism. That's actually something that's very easy to do when you have a small amount of renewables, but if you want to actually get to ultra-high penetrations of renewables, say, 70%, 80%, 90%, and then eventually to 100%, you'll have fewer and fewer of these gas turbines, these fossil fuel generators on the system. The fluctuations that you might see in terms of production on the grid will vary. It's the first 30% of renewables on the grid is going to be much easier than that last 30%.
Killian: Just to bring it back, real examples, some of the more active countries, we see an EnergyTag, it's places like Denmark, it's places like Germany, it's places like the Netherlands where they already have high penetrations of renewables and they're hitting these issues in certain hours. There's too much renewables, they have to curtail. In certain times, when there's no wind or sun, they have massive issues because they basically have to call on gas turbines, they have to call on fossil generators to fill in those gaps. In Europe, that is aggravating a massive energy crisis at the moment because of a reduction of natural gas supply due to the war in Ukraine.
It's a really, it's a political topic. It's extremely important we deal with it. It's fundamental that clean energy markets work to fix that problem, to fill those gaps, and to integrate renewables during those hours when the sun is not shining, when the wind's not blowing, we need batteries, we need clean firm technologies. Energy markets can't deliver them today, and we're trying to change that. We're trying to make sure that when consumers go out there and want to have the most impact, that actually, it's leading to batteries being built on the ground, and that's what this is all about.
Chad: You're creating standards for these granular certificates, explain to us specifically what they are, what these certificates are telling buyers of power, of energy, and how they help solve this problem that you've eloquently detailed.
Killian: Basically, a granular certificate, it's a piece of information on a database that records the amount of energy that has been produced in a certain time, and gives obviously the time of that production and the location of that production and the source of that production. It could be, 1-megawatt hour of wind energy was produced in Maryland between one and two o'clock in the afternoon. That is the information basically that a granular certificate will give. It could also be, released from storage at this time. With that information, then there's the level of transparency needed by consumers to go basically contract for that energy.
As Toby mentioned earlier, perhaps in California in the middle of the day, that solar granular certificate between 12:00 and 1:00, it's not going to be that valuable. There's going to be lots of them. Whereas, perhaps in the middle of the night, that clean energy granular certificate released from a battery is going to be super valuable, and it's going to create a business case for more batteries to be built. That's ultimately this time-based value signal that we're looking to create and send to markets.
Chad: Excellent. Are there buyers actually interested in this today?
Killian: Yes, companies like Google and Microsoft have set targets by 2030 to be 100% clean energy on an hourly basis. They're some of the world's largest companies, sustainability leaders, and they're obviously going to put a lot of resources and expertise into making sure that happens. They're already actively out there, thinking about, how do we contract this. What technologies do we need? How do we get the certification systems in place? They're 2030 goals, of course, we're in 2022, so it's a process. You don't change energy markets overnight.
Similarly, from governments, we've seen great signals. The US federal government is committed to buying half its energy on an hourly basis. Clean energy, of course, by 2030. That's another massive signal. They're the biggest energy buyer in the US. United Nations energy is putting together a 24/7 compact with over, I think now, over 70 signatories. Some of the world's largest producers and consumers already in that committing to moving towards sourcing clean energy on an hourly basis.
An example I mentioned earlier, which is absolutely massive is the renewable hydrogen in Europe. The European Union wants to produce 20 million tons of hydrogen, green hydrogen by 2030. That would be almost 1000 terawatt hours of electricity. That's like 25% of all the EU's current electricity, would have to be 24/7 matched to hydrogen production. Again, to do all of this properly, you need granular certificates, so demand is being built in already, and I'm sure it will only grow over time.
Chad: How do we actually make this happen? You are developing the standards, how do you ensure those standards are adopted by the various national and subnational market makers that need to adopt them? What is your theory of change in how you roll this pretty big reform to RECs into the marketplace?
Toby: I think one of the ideas behind setting up this voluntary standard is that whilst waiting for regulatory change, and we do think that over the next few years, maybe five years, maybe a bit less, bit more, all the existing established certificate systems will move from an annual base system to a higher temporal granularity, at a one hour or less base matching system. Whilst that happens, there's nothing to prevent a voluntary market emerging from industry for participants that want to move faster, but you need to have industrywide consensus.
That's actually interesting because it's how the direct markets first got started. It came from industry before any legislation. It's actually similar to how most environmental products developed. They start out as voluntary, and then they turn into compliance markets, but it's actually very hard for regulators to start regulating something before it exists and they can show that they're demand. Actually, rather than just spend time, which we are doing, we do engage with policymakers, by actually doing it and showing, "Hey look, this is how the system works. It's robust, there's demand for it. It's actually a way to accelerate the change of the old system to the new system."
Killian: Absolutely echo that. It's about making it happen and keeping in touch, making sure that regulatory bodies, whether that be in the European Union or the United States or elsewhere in the world, are aware of what we're doing basically, and are aware of the benefits of change. That also goes for standards bodies. For example, the World Resources Institute that sets the global standard for global carbon accounting of Scope 2 emissions related to electricity. Obviously, we're in touch with all of these stakeholders to let them know, today's systems have been very, very useful in driving renewable energy capacity, but they won't get us the whole way. They won't get us to the future we need, which is clean energy grids every hour, everywhere. We're working on trying to update the attribute systems, so ultimately, governments can maybe regulate new green products like the European Union is doing, or so that standard bodies can go to the next generation of carbon accounting that's hourly and, of course, is more difficult, but ultimately, will get us to a better place.
Chad: Yes, and you've actually built a pretty large coalition of dozens of corporate buyers, system operators, academics, investors, market makers, et cetera. It's been impressive to see how quickly you've built this coalition and developed these standards. What is the timeline for implementation here? What is a realistic timeline for getting granular certificates printed in, let's say, the US and the EU?
Killian: First of all, just on the coalition point, we think it's just fundamental. We're trying to change a system, so you need an ecosystem to change it. You can't just focus on consumers or producers. We have, of course, the support of the likes of Google and Microsoft. Some major producers like AES, and Vattenfall in Europe, ENGIE, Iberdrola. It's really important to have these folks on board. Then, of course, to make sure that you're interacting with the right policymakers and standards bodies that I've mentioned already. We're interacting with most of the major ones there.
In terms of timelines, obviously we've already started in a sense, so there's already proof that these concepts work. Technically, there's a number of pilots done around the world by some of the worlds biggest registries. The likes of M-RETS in the US have canceled early certificates. IREC hasdone so, which is the biggest registry outside of the EU and the United States, and there's a lot going on in Europe. As I mentioned, in Denmark, in Norway, in Sweden, already they have successful pilots and are now building out scaled granular certificate systems.
In the European Union, just to be concrete, currently, we're updating the renewable energy directive here, which is the federal law for renewable energy markets and renewable energy itself. Already the European Parliament is supporting granular certificates in their position. That's a huge signal. They see it as essential, basically for better consumer transparency and more impactful energy markets.
Let's see what happens. Obviously, that needs to go through a further process before it gets adopted, but it's a great start. The system operators here in Europe have come out unanimously in support of granular certificates as essential to making clean energy markets and consumer choice, better serve their clean energy integration needs. That's another massive signal as well.
I think we're off to a great start. Obviously, it will take time before these things are adopted and fully scaled in law over the coming years, but certainly, as Toby mentioned, in four or five years, we expect this to be, or hope at least, this to be the new normal.
Chad: You've talked a lot about how these GCs, these granular certificates, would include temporal and geographic granularity, much of which is missing in the current energy attribute systems that are across the world today, what about emissionality? One, can you define what we mean by emissionality to many of our listeners? Two, what role does emissionality have in the granular certificate process?
Killian: Basically, there's two ways of looking at it. Some consumers, there's 24/7 carbon-free electricity, which basically means, I go out and find every hour, I find attributes to make sure that I'm always injecting the same amount of energy into the grid as I'm taking from it, if you'd like to think about it that way, as the grid is constantly needing to be balanced, and then there's another approach where folks look to source attributes at grid locations and times where the marginal emissions, so the marginal unit on that grid is highest, basically. They're looking to displace the marginal plant.
It's like two different approaches. One is more a, let's say, a standard, what we would call, without getting too jargony, attributional accounting approach, so typically, what people use in Scope 2 carbon accounting. Another one is more an offsetting approach where you would go out and cancel out the emissions you are having with your own actual inventory or actual consumption by buying an offset. That's, I hope, sufficiently explained difference between our quite technical concepts.
Obviously, in EnergyTag we've been clear that we're there in terms of setting up robust energy tracking systems that can facilitate multiple use cases. Yes, we don't really want to pick sides, let’s say, because certain buyers want to do emissionality, others prefer 24/7 CFE. We’re there just to make sure the tracking is there and robust. I think what the great thing is about both these movements, is it’s folks who are thinking about the next generation and the next steps, who’ve maybe done 100% annual are now like, “How do I optimize my impact?” I think that answer does vary. It depends what type of company you are. It depends where your plants are.
Chad: You’ve mentioned a couple of the newish markets that could benefit from the adoption of granular certificates, energy storage, hydrogen, could you talk a little bit about those, and how specifically they would benefit if every megawatt hour was tagged with the time, location, and potentially, the emissionality associated with it?
Toby: For me, this is one of the key benefits of moving to granular certificates, the idea behind having the timestamp on the certificate is that gradually, you'll see formation of a market price, a reference price for these certificates throughout the day. Perhaps a bit similar to how you see a price in wholesale power markest. An intraday price go. This price go should value renewable energy or clean energy based on its real-world availability. Essentially, what you want is for renewables to be cheap when they're in oversupply and more expensive when they're in undersupply.
That's not how renewable energy is priced today with the current REC systems based on the annual matching. They're priced the same regardless of time of day, so regardless of supply and demand. There's not an efficient price signal to the market. When you have this intraday price for these certificates, if you read the EnergyTag standard, really recommend having a quick look through. If you can download it at energytag.org, you'll see that there's a whole section dedicated to storage, and there's a mechanism in there by which batteries or other types of flexibility can actually purchase these certificates? Example, is the battery you can charge, the battery with renewable energy by purchasing these time-based certificates.
Then, by discharging the battery, you essentially reissue a new certificate with a new timestamp. There's a record that shows that originally, the battery did charge with renewable energy, so you are still issuing a clean energy certificate, but it's come from a battery. When we speak to buyers, what they really care about is that they're using zero-carbon electricity. It doesn't really matter that the energy's been stored in a battery, as long as you can show that it originally came from a zero-carbon source.
The way the battery benefits is it can capture the spread between the low price dollars and the high price dollars to an arbitrage opportunity, and it's an additional revenue stream. When you're operating a battery, what you're doing is you're trying to co-optimize against the different available revenue streams. You might be making trades in the wholesale power markets, you might be delivering some ancillary services to a grid operator, and you're trying to stack different revenue streams. This is just simply another revenue stream to add to the stack.
The more we can increase the return on investment for battery and storage projects, the faster we can build them out. We're on a race against time to build out all of the infrastructure, not just more renewables. All of the infrastructure that we're going to need to get to a carbon-free grid. One point about it that often comes up is additionality.
We have clients wanting additionality. By that, they have typically meant more renewables. Actually, the new way of thinking about additionality is not just more renewables.
If you really care about carbon, the best solution might not be just to keep adding more solar in a region that has lots of solar. You might be better off to add a battery system in a certain location that can store unused solar to a time and deliver the time when it's most needed. It's a way to eventually harness that consumer demand for clean energy, to send the right price signals for the right technologies that are needed. Killian, do you want to talk a bit about hydrogen?
Killian: Yes, sure. It's one of my favorite topics. Before I start even, I think the comments I'm going to make apply to anything that's electro-intensive. Any new product that we're going to have or a service that we're going to have, that's going to consume a lot of electricity, we need to apply granular certificate thinking to it. Green hydrogen, it's only clean if the electricity is clean. That's something I'm sick of it almost saying it. Green hydrogen, it could actually be much, much worse than grey hydrogen and much worse than today, if the electricity is not clean. It's actually twice as bad if we use natural gas to produce electricity and then put it into electrolyzer, it's twice as bad as today. It's twice as bad as doing nothing. Hydrogen is already a highly-emitting industry.
The one and almost only question about producing green hydrogen and clean hydrogen and building out the hydrogen sector in general, is making sure it's clean, otherwise, it's going to bring us backwards and it's not going to bring us forwards. Hydrogen can be an amazing solution for chemicals for long-term energy storage, for lots of different applications as long as it's clean. The way to make sure it is clean is using granular certificates to make sure that on the hour of production in that electrolyzer, you are finding clean energy on the same grid that's being fed into that electrolyzer, and granular certificates are the way that you actually prove that.
It's so fundamental because if we forget about this and turn on the electrolyzer all day long, we're going to have to build more gas turbines, maybe more coal power plants to meet all this new demand, and we're going to go backwards. It's really, really important that we always remember, clean hydrogen it's only clean if it's clean electricity.
Chad: Those are great examples and two markets that are definitely growing and needed for the clean energy transition that we're all working toward. What about the next generation of carbon accounting? Right now in the US, we are debating, the SCC is debating whether to specifically require Scope 1, 2, and in many cases, Scope 3 emissions reporting from public companies as part of a larger climate risk disclosure requirement. In other countries, this is already happening. How would GCs potentially change or enable the next generation of carbon accounting to make it even more useful to both the companies that are reporting and the investors who are interested in determining the climate risk associated with companies’ operations and, at times, investments?
Killian: Taking a step back again, having done a lot of carbon accounts in my life, clearly, I think it's another example of something that was extremely important and useful over the last 15, 20 years in getting companies to actually start to think about, "What are my impacts? What are my emissions?" but now, it's basically out of date and needs to be evolved into a next generation because again, annually, being 100% renewable or having zero carbon emissions associated with your electricity, being zero, it's not really, truly being zero in the sense that we need it.
I think being truly zero should be when you've really actually contracted loads of storage or clean firm or really thought about how you might decarbonizing the grid every hour of the day, and that should be the reward for getting to zero. It should be hard to do because this is like literally one of the biggest problems we have in the world about decarbonizing the grids every hour.
We need to evolve carbon accounting standards, make them more temporally and potentially geographically granular, let's say, hourly carbon accounting. I think a lot of the same structures and ideas can remain the same, but they need to be happening really on an hourly level. Folks would be thinking, what's my impact this hour for every hour of the year? Probably that's, at least, an initial statement of how things can move forward. I know there's going to be a lot of debate about this over the coming years. It's already started.
Toby: Maybe just to add to that more concretely, our understanding is that the Greenhouse Gas Protocol, which is what sets out the main or the most used methodologies for doing Scope 1, 2, and 3 carbon accounting, looks likely to be reopened, at least, Scope 2 will be reopened. This is one of the topics that will be up for discussion, Killian and I appeared on a panel, hosted by the World Resources Institute a couple of weeks ago. I think it was great. Something you can check out the videos online.
They did a great job, but it just shows that there is recognition that we need to look at this and just to say that if Scope 2 was amended and granular certificate were to be included, then that would have a significant impact on all of the carbon accounting that organizations do in regard to the carbon emissions associated with their electricity consumption. It'd be a pretty big change and so, yes, I think it should be on the radar of all organizations that currently measure their Scope 2 emissions.
Chad: Reforming the Scope 2 emission accounting as prescribed by the Greenhouse Gas Protocol is something I know our company and many others have thoughts on and hope to contribute to in the coming months and years. We're almost done, but I want to hit on a couple of hot seat questions for you both, so give me your quick immediate thoughts to the following statements. One thing I changed my mind on is--
Killian: Hydrogen, we need it, but not as much as I had first thought.
Toby: I've flip-flopped on my thoughts about nuclear, I guess, but it's a hot potato, but I really think we need an all-of-the-above strategy when it comes to carbon-free energy.
Chad: Yes, agreed there. The person I've learned the most from is ____.
Killian: My dad in a word. Yes, he's been a mentor, he's an entrepreneur, he's taught me a lot, so yes, definitely my dad on that one.
Toby: I think I have to say, Phil Moody. Phil is the Chairman of EnergyTag. He's also the godfather of energy certificates around the world. He's one of the people that created the energy certificate schemes as we know them. He's also secretary general of the AIB, for 20 years the AIB. Oversees the certificate schemes in Europe. He's a great guy. He's a legend in the certificate world.
Killian: [chuckles] Yes, that's a great choice.
Chad: Excellent. The most insightful book or article I've read recently is ___.
Killian: A book called Factfulness, which really is life-changing. It will change how you see the world and realize actually, despite all the problems, we're still actually making progress when you look at things over the long trend.
Toby: So many. If you haven't read it, Capital [in the Twenty First Century]. It's quite an eye-opening and it makes me realize, how we're on the journey towards increasing inequality and how it's something that we're going to need to tackle.
Chad: Finally, to me, climate positive means ___.
Killian: For me, it's spending your daylight hours working on climate action. Actually, doing something about making the situation less negative and more positive.
Toby: Yes, there's vastly more renewable energy available for humanity than we could ever want, and it is by far, the cheapest form of energy generation. It's just a solvable problem, it's just about how quickly we go.
Chad: Excellent. Thank you both for joining me today. This has been a really great conversation. We're excited to work with you all on developing these GCs and the marketplace going forward, so thanks again.
Killian: Thank you so much for having us, Chad.
Toby: Yes, thanks this has been great.
Chad: If you enjoyed this week’s podcast, please leave us a leave a rating and review on Apple and Spotify. This really helps us reach more listeners.
You can also let us know what you thought via Twitter @ClimatePosiPod or email us at climatepositive@hannonarmstrong.com.
I'm Chad Reed.
And this is Climate Positive.