Certified Energy will be trialling the calculation and presentation of a monthly Residual Supply Mix – summarising the nature of electricity generated and supplied to consumers via the national grid in each month.
Using regular, monthly emissions values for reporting
When reporting on a business's emissions, available values have traditionally been based on annual averages, not made available until some months after the period has ended. We are interested in understanding the value to energy users of more recent, detailed information, and so have launched a trial to calculate and present monthly emissions factors.
Our monthly RSM calculation will present (in the first half of each month) the actual reportable emissions factor for grid-supplied electricity for the previous month. This is based on the actual electricity supply mix, and actual redeemed certificates representing explicit transaction of green energy attributes.
Provision of the monthly RSM increases the ability of an energy user to understand grid emissions and adjust behaviour accordingly. Even if behaviour change is not possible, monthly RSM will mean that reporting energy users are more accurately taking ownership of the effects of their usage.
It is worth noting that, according to the GHG Protocol Scope 2 Guidance reporting standard, all reporting entities are required to use both the market-based and location-based reporting methods within voluntary reporting. The guidance also states that ‘companies shall use the most accurate and appropriate emission factors listed in the emission factor hierarchy for each method.’ Both NZ-ECs and the NZECS RSM are compliant market-based reporting methods.
While contractual instruments such as NZ-ECs reflect individual corporate choice for renewable energy, the RSM is a reflection of the overall market choice. The existence of an up-to-date RSM will improve the accuracy of the emissions allocation within the New Zealand market.
Certified Energy expects that best-practise in emissions reporting will require more and more accurate and actionable information to be available.
Traditional approach to emissions reporting
As described above, there are some drawbacks with the traditional approach of using annual emissions values.
Use of annual average emissions for all consumption within a year loses sight of all intra-year variation, and treats each unit of energy consumed as having the same emissions value regardless of when it was used.
Annual calculation of these values also presents significant delays between the end of the base-year, and the provision of emissions information. For example, if annual values are presented in June of each year, for the preceding calendar year, then in May of the following year a reporting entity will be reporting using emissions values based on grid information that could be over two years removed.
Not only does this separation have the potential to result in 'unaccounted-for-emissions', but it weakens the ability for the business to reduce emissions through behavioural change, as the signals received from the data do not align with their actual behaviour.
Example:
In March, April and May of the 2021 calendar year, the New Zealand residual grid emissions factor was 187, 202, and 189 kg CO2e / MWh respectively – a result of low hydro availability resulting in much higher use of thermal fuels than usual.
Use of an annual average, even from the 2020 calendar year, would result in users reporting an average emissions factor of around 110kg CO2e / MWh, taking no account of the particular events impacting the New Zealand energy market. Under the annual emissions factor mode, effects of these events are not recognised until 2022 at the earliest, with no ability for energy users to adjust.
Provision and use of monthly emissions factors in this scenario would result in energy users having improved awareness of the current, local events, with some ability to take action.
Continuous improvement in this area
Presentation of monthly RSM information is a step in the direction of more specific, actionable grid emissions information. We seek to understand from our audience the value of monthly RSM, and any improvements that are required to enable its use. We also seek to understand the level of interest of users in having access to even more granular information.
All comments and questions are gratefully received.
You can find the monthly RSM publication here.
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