Green tariffs and GHG emissions, an ongoing discussion
How organisations and individuals can account for grid based electricity carbon emissions from green tariffs is an ongoing discussion and contentious issue both in the UK and internationally.
One view states that the carbon emissions for electricity consumed from the grid should be at the national grid average figure regardless of the fuel mix of any particular tariff, another states that it should be possible to buy electricity from renewable energy generators using the grid as a transportation network and then be able to claim lower or zero emissions. This could better incentivise grid scale renewable energy which is often more cost effective than onsite renewable energy generation (large vs small wind) and more practical in that not everyone has a good roof for solar, or land for wind or hydro.
Emission factors are important because they can make a big difference to the carbon emission saving benefits of key demand side changes such as installing heat pump heating systems and switching to electric vehicles.
The complexity of the grid both in physical terms and on the market side make this a difficult topic. The following articles give a good overview of this evolving topic:
- 2009: Carbon Neutral briefing paper on green electricity
- April 2012: Nick Blyth, GHG accounting of green power
- March 2013: [Nick Blyth, Policy update: Accounting for green power](http://www.environmentalistonline.com/article/policy-update-accounting- green-power)
- December 2013: Open Letter on Scope 2 GHG Reporting
- January 2014: Nick Blyth, Policy update: Guidance on green power
- March 2014: Nick Blyth, Policy update: Change to guide on ‘green’ tariffs
- March 2014: [Is your "green power" really just "green washing?"](http://ghginstitute.org/2014/03/12/is-your-green-power-really-just-green- washing)
- January 2015: [Scope 2 Reporting Guidance – the dawn of a new era for green electricity?](https://www.carbontrust.com/news/2015/01/scope-2-reporting- guidance-the-dawn-of-a-new-era-for-green-electricity)
- February 2015 Open Letter Rejecting the Use of Contractual Emission Factors in Reporting GHG Protocol Scope 2 Emissions
- October 2015: [UK's first renewable electricity supply scheme launched](http://blueandgreentomorrow.com/features/uks-first-carbon-trust-certified-renewable- electricity-supply-initiative-launched),
- September 2016: 500 companies obtain UK's first energy label specifying renewable energy credentials
- November 2016: Should businesses be concerned about the credibility of their renewable electricity?
Physical product: There is a question of what is the actual physical product being bought versus what is being bought through market mechanisms, there is a risk that a product does not account for transport and distribution losses, life-cycle emissions and supply & demand matching or grid balancing.
Additionality: ROC have been the primary driver for increased renewable energy investment in the UK. The ROC subsidy is paid for by all electricity customers. Are green tariff customers driving growth in renewable energy above and beyond what the renewable obligation obliges? should this be required?
Fairness: Is it fair for customers of green tariffs to appropriate the full carbon reduction benefit of renewable energy partly paid for by a premium on all electricity customers. To what degree are green tariff customers providing additional funding for renewable energy.
Double counting: If renewable energy is included in the grid average emission factor then claiming zero or low carbon emission factors from a green tariff will result in double counting of emission reductions.
Energy efficiency: Zero emission green tariffs may make it too easy for customers to reduce their carbon emissions and that this may disincentivise energy efficiency measures.
Zero or low carbon emission factors would ultimately contribute demand-side funding for renewable electricity.
Some suggest state funding or requirements shouldn’t bear on the situation at all and that emission factors should simply be attributed to identified generation sources.
Risk companies will abandon green tariffs without benefits
In an attempt to address some of the concerns outlined in the articles above the following calculations attempt to estimate alternative emission factors that take into account some of these points taking a more nuanced position between a zero carbon emission factor and grid average.
1: Towards a fairer emission factor based on who pays for the electricity
Renewable electricity generators typically make an income from the electricity they generate by first selling the generated electricity at the wholesale cost which is around £50/MWh and then because this is not yet enough to cover installation, maintenance and a return on investment by itself an additional amount is needed which makes these projects financially viable. This subsidy can take many forms and until the recent introduction of Contracts for Difference, Renewable Obligation Certificates (ROC) have been the primary subsidy mechanism in the UK for larger scale renewable energy.
A ROC is valued at around £43/ROC and each renewable energy generating technology can earn a varying number of ROC's per MWh. In 2014-2015, 71.3 million ROC’s were issued, representing 55.7TWh of renewable generation. This works out to being 1.28 ROC’s per MWh or an additional payment of £55/MWh on top of the wholesale sale amount of around £50/MWh.
The expected number of ROC’s issued for 2015/2016 is 86.8 million ROC’s based on DECC’s analysis of expected generation. The total electricity supply is expected to be 303.8 Twh and so the number of ROC’s per MWh of total electric delivered is 0.29 for 2015/2016. A ROC is valued at around £43/ROC and so we can calculate the expected cost of the ROC subsidy on a typical domestic electricity bill of 3300 kWh (3.3MWh)
3.3MWh x 0.29 = 0.957 ROC x £43/ROC = £41.15 on the average 3300 kWh electric bill.
We can calculate that a 100% renewable energy supplier supplying 3.3MWh per household will require around 1.28 ROC’s per MWh, or 4.224 ROC’s. At £43/ROC this would add up to £181.632 per household. The 100% renewable energy suppliers customers only pay for 0.29 ROC’s per MWh delivered or £41.15 as calculated above and so the total amount paid for by customers of other suppliers is £181.632 - £41.15 = £140.482 per household.
The wholesale cost of the electricity at £50/MWh adds up to £165 per household. Together with the suppliers ROC payments the renewable supplier’s customer pays £206.15 for the renewable electricity.
The full cost of the renewable electricity is 3.3 MWh x (£50/MWh wholesale + (£43/ROC x 1.28 ROCs/MWh)) = £346.63.
This amount paid for by the renewable energy supplier’s customer is therefore £206.15 out of £346.63 which is 60% of the cost of the renewable electricity supplied.
If we took the view that the fairest way to allocate the carbon benefit of the renewable electricity is to allocate it on the basis of who pays for it. We could therefore calculate the emission factor for present 100% renewable energy tariffs as 60% at zero carbon and 40% at the grid emission factor minus renewable supply.
If there are 0.29 ROC’s per MWh of total electric and 1.28 ROC’s per MWh of renewable electric (0.78MWh per ROC). Then there should be 0.23MWh of renewable electricity per MWh of total electricity. If the combined emission factor is 420gCO2/kWh and 23% of this was at zero carbon. Then 77% is at a higher carbon emission factor of 545gCO2/kWh.
We can then calculate a green tariff emission factor estimate as 40% x 545gCO2/kWh or 218 gCO2/kWh.
This provides perhaps a useful middle road emission factor which provides a significant carbon benefit from switching to a green energy supplier while accounting fairly for the additional financial support for renewable energy generation provided by green tariff customers without unfairly claiming the full benefit partly attributable to all customers.
A heat pump consuming electricity at 218 gCO2/kWh and running at a COP of 3 would provide heating at 73 gCO2/kWh of heat delivered, this would provide a carbon savings of 68% compared to mains gas at 230 gCO2/kWh. An electric car charged at 218 gCO2/kWh could achieve 34 gCO2/km a 62% carbon reduction vs 70MPG, 67% vs 60MPG and 73% vs 50MPG.
2: An emission factor taking into account a backup requirement for when supply does not meet demand
At present, green tariffs make use of the wider grid in order to match their customers demand with renewable supply, buying more renewable electricity as a proportion of the available pool when renewable supply is low and less as a proportion when renewable supply is plentiful. It could be argued that as demand is met with renewable supply the resultant CO2 emission rate is 0gCO2/kWh however you could say this is a bit convenient as its using the wider grid to take the slack.
Using the ZeroCarbonBritain dataset and electricity supply model available here 7. Household electric only model with the full electrification demand model, with an equal amount of wind and solar supply matching demand over the 10 year model basis including grid losses (offshore wind: 0.64kW, onshore wind: 0.64kW, solar: 1.28kW), the matching between supply and demand reaches 85%. If the demand does not include demand shifting such as the smart charging of electric cars and heatstores the matching level drops to 73%.
If we assumed that the backup supply was at present provided by natural gas rather than power-to-gas synthetic methane or biomass - as the use of these potential backup sources have not yet been fully realised, using the CCGT gas turbine emission factor of 360gCO2/kWh, we can calculate the resulting emission factor for every unit of electricity being supplied as 0.25 x 360gCO2/kWh = 90gCO2/kWh in the case of a 25% backup requirement or 0.15 x 360gCO2/kWh = 54 gCO2/kWh in the case of a 15% backup requirement.
The analysis above shows the resultant CO2 emissions for 3 electricity supply options:
1. UK Grid average 2010 at 444gCO2/kWh http://www.earth.org.uk/note-on-UK-grid-CO2-intensity-variations.html#fullyear2010 1. UK Grid average 2015 at 367gCO2/kWh http://www.earth.org.uk/note-on-UK-grid-CO2-intensity-variations.html#fullyear2015 2. 25% natural gas backup requirement, largely renewable supply 90g CO2/kWh 2. 15% natural gas backup requirement, largely renewable supply 54g CO2/kWh 4. Fully renewable with renewable backup 0g CO2/kWh
To explore supply demand matching in more detail see 10 year hourly zero carbon energy model: