Iain Kaplan is a partner and Gustaf Michaelson is a senior analyst at the NorthBridge Group consulting firm.
Many climate experts believe that new technologies are needed to achieve deep electric sector decarbonization, whether carbon capture and storage, new nuclear, advanced geothermal, long-duration energy storage or other emerging sources.
In particular, CCS-equipped power plants may be an appealing decarbonization option, given their dispatchable nature, support from federal incentives like the 45Q tax credit and ability to scale. The recently announced Broadwing project in Decatur, Illinois, as well as those in Baytown, Texas, and southeastern Wyoming are among those that could usher in a wave of new CCS generation. Given projections for AI-related demand growth, this would be a welcome development.
Because carbon capture and disposal entail significant costs, CCS projects will not advance without regulatory mandates that create greater value for their low emissions output. While federal 45Q tax credits provide significant contributions toward CCS project economics, to date this has not proven sufficient to spur widespread adoption of CCS. Clean energy buyers who are willing to pay a premium for low-carbon, firm electricity may be a key force in enabling the viability of CCS projects, but these buyers will need a way to claim the low-carbon attributes of this electric supply.
Clean energy buyers use renewable energy credits and zero-emissions credits to claim that their energy use is associated with an emissions-free resource. A similar energy attribute certificate could be issued for CCS-backed generation, although not necessarily conveying a zero-emissions attribute. EACs are commonly used in Scope 2 emissions accounting under the Greenhouse Gas Protocol Corporate Standard.
When CCS applications at power plants intersect with greenhouse gas accounting, two fundamental questions arise: What greenhouse gas emissions reductions should be attributed to these projects, and how should these be claimed by consumers of their electricity?
Behind these questions are many more:
- What components of the capture and storage process should be measured and tracked?
- How should different fuels and different CO2 end uses be treated?
- How should projects that achieve different levels of capture be differentiated?
- What verification methods are needed to ensure a credible emissions claim?
Establishing a consistent answer to all these questions, and more, will help ensure there is a uniform attribute for CCS generation and promote market confidence on the integrity of emissions claims. NorthBridge Group conducted broad outreach to climate-focused nongovernmental organizations, attribute registries, clean energy buyers, CCS project developers and other emissions accounting experts. We used that input in developing a standards document that proposes how registries can issue, track and retire energy attribute certificates for electricity generated with CCS. In it, we define a methodology for calculating emissions from CCS-backed electricity generators, set requirements for data reporting and verification, and propose required and recommended features. Energy tracking registries that currently issue and track RECs or other EACs can use this document for guidance.
Several key issues we address include:
- Attribute structure. An EAC is issued for each megawatt-hour of generation. The EAC is minted with an associated emission rate measured in pounds of carbon dioxide equivalent per MWh. When retired, the attribute holder may claim the pounds of CO2e listed on the attribute in its market-based Scope 2 inventory. The emission rate will reflect the performance of the project during the period the EAC covers.
- Eligibility. The calculation methodology applies to multiple fuel types, generation technologies and post-capture CO2 pathways. Registries may elect to issue EACs only to certain fuel types or post-capture pathways. To aid buyers, the EAC may designate the fuel source and CO2 pathway.
- Processes considered. The emission rate calculation methodology includes emissions from electricity generation, CO2 capture, transportation and storage so that the EAC represents emissions from all activities required to ensure permanent CO2 storage. Emissions from on-site activities as well as purchased energy are included. Though the standard acknowledges the potential for the EAC to reflect the carbon intensity of the upstream fuel supply, it does not propose how to do so or recommend doing so at this time.
- Monitoring and verification. All project data is subject to independent third-party verification. There is a requirement to submit monitoring and reporting plans, which can be met through other regulatory documentation.
- Leakage. To protect an attribute holder's emissions claims against the potential impact of post-injection leakage, all projects will be required to hold some form of self-insurance. The standard recommends a menu of options that registries may offer and from which projects can choose, such as private insurance, credit reserves or holdbacks, and issuing EACs with built-in leakage estimates.
We acknowledge that the work is not done. An EAC that bears an emission rate may represent a new frontier for many energy-tracking registries that will undoubtedly take work and time to implement. More revisions may be necessary, especially if technical working groups in the GHG Protocol standards update process offer new guidance. And some questions, such as how or if upstream fuel considerations should be folded into the attribute, are acknowledged but not answered.
Nonetheless, a standardized attribute for CCS-equipped electricity generation will allow clean energy buyers to engage with new forms of low-carbon, dispatchable electricity, and developers can monetize these attributes in support of project economics. We are hopeful that this work can meaningfully advance the viability of projects that contribute to the deep decarbonization of an electric grid.
