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Real time net zero accounting: coming to an organisation like yours

Real time net zero accounting is going to revolutionise how we think about net zero. We will be rewarded for using electricity when it is low carbon, and the renewable energy we procure will need to be time linked to show its production matched when we used it. It will make renewable energy credits more expensive, but more meaningful, whilst opening the market to energy storage and other innovations will reduce costs.

Director, Sustainability and ESG, Barny Evans argues that if we get real time net zero right it will accelerate the transition, reduce overall costs and unleash huge economic growth.

Net zero is an attractive and easy label. Applied to buildings, cities, products and even festivals, it gives a sense that the subject has eliminated overall Greenhouse Gas (GHG) emissions. Unfortunately, it is flawed. It relies on the idea that I if I use X amount of electricity then I can balance that by buying X amount of zero carbon electricity. The problem is that it doesn’t work like that. If I use electricity today, much of it will come from fossil fuels, even if I procure the same amount of renewable electricity from a provider it doesn’t capture the CO2 emitted from my electricity use.

If we can’t realistically capture CO2 at scale, then the only option is not to emit it. To do that, we need to use zero carbon electricity all the time, matching demand with supply. That is the real challenge we face now.

I have made this argument for years to no avail, until now. We are finally seeing the realisation that an energy system is like a living breathing thing. It is not like a bank account where you can put energy in and take it out later; it needs to be in balance always.

The UK Green Building Council (UKGBC) has just launched their updated guide on renewable energy procurement for net zero to which my colleague James Blake, Head of Sustainability & ESG contributed. Previously, guidance just focused on the quality of the renewable energy, looking at issues of additionality and ensuring it wasn’t double counted. In the latest iteration though, they specifically add the principle of time-matching. That is the renewable energy certificates will in future relate to a specific hour or less. The guidance does not make it mandatory that you time match your renewable energy procurement but requests that you have hourly consumption data to allow matching and acquire real-time certificates when they become available.

This should also feed into corporate GHG reporting, which the UKGBC mentions. Recently, we have seen that organisations wanting to be “carbon neutral” or “net zero” will now have to demonstrate an emissions reduction plan. In the future, I expect we will see real time emission factors and account used, meaning we will need to procure zero carbon electricity at the same time as we use it; or store it for later.

The brilliance of this is that it means the provider of your renewable energy will need to have a variety of sources and be able to balance varying supply and demand in just the same way as the National Grid does. They won’t just be able to own a solar farm and sell you an amount; they will need to have contracts for solar, wind, hydro, interconnectors and even energy storage so they can offer clean energy at any time point. Instead of just driving intermittent solar and wind deployment, the provider will need to think about the system as a whole.

These certificates are not available on the market easily now, but organisations like Google and Ibedrola (Spanish energy company) have both called for hourly accounting of renewable generation. The EU is also funding Energy Tag which are creating renewable energy certificates with “temporal granularity”. Microsoft, Engie, Statkraft and Ovo are all involved. This is coming.

It is difficult to overstate the difference this will make. It will make being zero carbon / net zero more difficult and expensive, but also more meaningful. It will reward you as an organisation/building/city if you can reduce demand for electricity when renewable sources are scarce and increase demand when they are plentiful. It will mean we need people who can analyse and understand energy systems. To achieve, this will require you to employ the most top-flight consultants who understand all this stuff (we have some availability).

It has been a long time coming, but the result will be a much more rapid transition to net zero, cheap energy and huge economic growth. We must embrace this change.

For more information please contact Barny Evans.

31 October 2023