/ Does your renewable electricity purchase agreement reduce your GHG emissions?

Does your renewable electricity purchase agreement reduce your GHG emissions?

In this article, we propose to answer the following question:

By subscribing to a renewable electricity supply contract, can we consider that our electricity consumption is decarbonized?

To answer this question, we need to introduce the following two concepts:

Location-based: The location-based method calculates emissions linked to electricity consumption according to the electricity mix in the region where consumption takes place.

Market-based: The market-based method calculates emissions linked to electricity consumption on the basis of the electricity supply contract of the consumer.


According to the market-based approach, a company with a green electricity contract could claim that its electricity consumption is 100% carbon-free. However, the physical reality of the electricity system means that all consumers are constantly affected by the electricity mix of the region in which they are located. And when electricity systems are interconnected, as it is the case in Europe, each country/region is subject to the electricity mixes of its neighbors due to cross-border electricity exchanges, which leads to distinguish between the electricity mix of the production and the electricity mix of the consumption. You will easily understand that the latter notion is the most relevant when it comes to calculating CO2 emissions from electricity consumption. For example, with its nuclear power plants, CO2 emissions from French electricity production are very low. On the other hand, if we take into account cross-border exchanges with, for example, Germany, which regularly exports part of its high-carbon intensity electricity to France, the carbon intensity of electricity consumption is higher than the carbon intensity of electricity production.

Furthermore, when it comes to green electricity suppliers, the promise they make is to inject as much green electricity into the electricity grid as the buyer will have consumed, without specifying when the green electricity will be injected into the grid. They therefore make no promise that they will inject the quantities of green electricity at the exact times when the buyer consumes electricity. A promise they could not keep in any case, unless they connected a wind turbine, or solar panels that would produce and supply electricity on demand directly to the buyer’s points of consumption. Clearly, the notion of market-based does not make sense when it comes to measuring the carbon impact of electricity consumption, even for those who have signed up to a green electricity supply contract.


As a reminder, after initially taking the position that only the Location-based approach should be communicated, the GHG Protocol was forced to soften its position and now recommends communicating both figures.

In contrast, Ademe’s position in its methodological guide is much clearer:

Bilan Carbone® is intended to reflect a physical reality, not a trade name. Renewable electricity production is rarely self-consumed and is therefore very often connected to the national grid: this “green” production is therefore part of the national electricity mix. The development of “green” energies means a reduction in the emission factor of the national electricity mix.

To sum up, a market-based approach is preferable if you want to communicate on the nature of your electricity supply contract, and a location-based approach if you want to measure your effective and real contribution to reducing greenhouse gas emissions.


Don’t hesitate to read the following article written by @gregory lebourg and commented by @Hugues Ferreboeuf : The carbon impact of Cloud services: don’t be fooled.


#ademe #ghgprotocole

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