The issue of accurately attributing greenhouse gases (GHG) to the load that caused the emission remains a difficult issue for GHG accounting. We previously posted about causation as the basis for attributing GHG emissions from electricity. In this post, we will discuss the issues around accurately attributing GHG emissions using a locally-relevant emission factor and California’s recently passed GHG emission intensity reporting requirement under AB 1110 (Statutes 2016, Chapter 656).
Generally, average emission factors for electricity are used to estimate GHG emissions from electricity consumption. Emission factors estimate the emissions per unit of electricity supplied by an investor-owned utility (IOU), publicly-owned utility (POU), Direct Access (DA) provider, or Community Choice Aggregator (CCA) in kilograms or pounds of carbon dioxide equivalent per megawatt-hour (lbs CO2e/MWh).
Weighting the overall emission factor by the fraction of energy supplied by each source is one method to create a locally-relevant emissions factor. To do this, it is necessary to use fuel source data to create an emission factor for each fuel supply category. These are in turn weighted by the fraction each contributes to the overall electricity supply to a particular customer, city, or region. One challenge using this method is that a portion of all electric purchases are not traceable to the original fuel source and category because of physics and electric market operations. This is untraceable electricity is commonly referred to as unspecified power. Public Utilities Code Section 398.2(e), as amended by AB 1110, defines electricity from unspecified sources as:
Electricity that is not traceable to specific generation sources by any auditable contract trail or equivalent, including a tradable commodity system, that provides commercial verification that the electricity source claimed has been sold once, and only once, to a retail consumer.
Comparatively, California Public Utilities Code Section 398.2(d), as amended by AB 1110, defines purchases of electricity from specified sources or purchases from specified sources as:
Electricity transactions that are traceable to specific generation sources by any auditable contract trail or equivalent, such as a tradable commodity system, that provides commercial verification that the electricity source claimed has been sold once and only once to a retail consumer. Retail suppliers may rely on annual data to determine whether a transaction meets this definition, rather than hour-by-hour matching of loads and resources.
These definitions reflect the day-in and day-out process of buying and selling electricity to balance supply and demand. Unspecified sources are undifferentiated purchases of electric power from markets (including the California Independent System Operator (CAISO)) or trading desks across the western interconnect to serve load. There is no system wide mechanism to track and attribute the GHG emissions from these unspecified sources of power. Currently, the best practice for estimating the GHG emissions from unspecified electricity is to use the California Air Resources Board’s (CARB) default emissions factor of 0.428 MT of CO2e/MWh (943 lbs/MWh) as a proxy. The use of a proxy may over report or under report actual emissions from power delivered to load, but is designed to estimate marginal power in the western interconnect.
The percentage of unspecified power varies significantly depending whether the emissions estimate desired is for the state, a region, city, or specific company or customer. The level of unspecified power is an important variable to accurately estimate GHG emission levels. Roughly 15% of all electric power consumed in California is unspecified. However, this number increases as you evaluate specific suppliers. For example, 40% of Southern California Edison’s electricity was unspecified in 2014. This number would increase if all DA providers in its service territory were included to evaluate the GHG emissions for a city in its service territory. Finally, if only the DA provider was evaluated to determine the amount of GHG emissions for a university or industrial customer, it is likely that the reported level of unspecified power could be at or above 75%. This can introduce a high level of uncertainty when trying to accurately account for GHG emissions for a smaller load.
With the passage of AB 1110, California will now require every retail supplier (IOU, POU, DA, or CCA) to disclose the associated GHG emissions intensity for the previous calendar year in addition to the previously required disclosure of its electricity source per California Public Utilities Code Section 398.4(a). The disclosure will provide retail customers with both the GHG emissions intensity of the electric portfolio offered and the California Energy Commission’s (CEC) calculation of GHG emission intensity associate with all statewide retail electricity sales (California Public Utilities Code Section 398.4(k)(1)). Further, California Public Utilities Code Section 398.4(k)(2) as amended requires the CEC to:
- Create a methodology, in consultation with the California Air Resources Board (CARB), to calculate GHG emission intensity for each purchase of electricity by a retail supplier to serve its retail customer;
- Calculate the GHG emissions intensity associate with statewide retail electricity sales based on the GHG emissions for total California system electricity;
- Rely on the most recent verified GHG emissions data while ensuring that GHG emissions intensity factor electricity from specified and unspecified sources are available to retail suppliers with sufficient advance notice to permit timely reporting;
- Establish guidelines for adjustments to a GHG emission intensity factor for a reporting year for any local publicly owned electric utility demonstrating generation of quantities of electricity in previous years in excess of its total retail sales and wholesale sales from specified sources that do not emit any GHGs. Adjustments authorized by the guidelines established by the CEC shall not permit excess generation procured in a single year to be counted more than once or to be resold to another retail supplier as a specified source;
- Ensure that there is no double-counting of the GHG emission or emission attributes associated with any unit or electricity production reported by a retail supplier for any specific generation facility or unspecified source located within the Western Electricity Coordination Council when calculating GHG emission intensity.
The CEC must adopt the required emission guidelines for the reporting and disclosure of GHG emission intensity on or before January 1, 2018. Retail suppliers must report data on GHG emission intensity associated with retail sales occurring after December 31, 2018 with a carve out for CCAs established after January 1, 2016 that requires reporting at least 24 months, but no more than 36 months, after serving its first retail customer. Finally, AB 1110 will standardize the method and reporting of GHG emission intensity at the utility level by requiring that any marketing or retail product claims relating to the GHG emissions intensity of the electric supply portfolio of a retail supplier be consistent with the methodology adopted by the CEC under California Public Utilities Code Section 398.4(k)(2)(F)(iii), as amended.
The CEC’s new mandate to create GHG emission intensity for each purchase of electricity by a retail supplier will highlight the difficult issue of quantifying GHG emissions from purchased unspecified electricity. While quantifying GHG emissions is not new territory for the CEC or other state agencies, it remains an open question as to whether the CEC can create a more accurate method for tracking and quantifying emissions from unspecified purchases of electricity and whether this method will account for hourly, daily, weekly, monthly, or yearly purchases. There is an opportunity to change how emissions are reported and quantified to provide more accurate information. However, creating an entirely new method could be a heavy lift and move us away from existing methods. How useful this new method will be for GHG emission accounting for local governments or individual retail customers remains an open question that will be answered over the next year.