Much of the attention around the Energy Transition Accelerator, which C2ES has helped to develop over the past year and a half, has rightly focused on its potential to generate tens of billions of dollars in finance to accelerate the just clean energy transition in developing countries. But the ETA is also innovating on the demand side: that is, on how companies might use ETA credits – generated from verified reductions in emissions from the electric power sector in participating countries – as part of their voluntary corporate climate strategies. The ETA Core Framework, published in November 2023, envisions four use cases. The use case that has received overwhelming interest from companies is Use Case 2, in which ETA credits could be used to address the upstream Scope 3 emissions related to electricity use by a company’s suppliers. This use case has the potential to be a major new tool for companies aiming to address emissions in their supply chains: think of the electricity used not only to manufacture consumer products but also to make the inputs needed to produce a range of goods and services. A new brief from Winrock International’s Net Zero Climate Services Unit explores how this use case could work. It explains the challenges companies face in cutting Scope 3 emissions and shows how ETA credits could help companies concretely tackle these emissions. The brief is particularly timely given the recent Scope 3 report from the Science-Based Targets Initiative (SBTi). As the new brief explains, the use of ETA credits to address a company’s electricity-related supply chain emissions would likely be categorized as Scenario 3 in the framework introduced by SBTi. The world desperately needs more climate finance. Companies need better tools to cut emissions and accelerate business transformation in their supply chains. Using high-quality carbon credits to address within-value-chain emissions can fill both gaps – and bring us further and faster on the path to low-carbon prosperity. I’ve shared my full thoughts on this use case at https://lnkd.in/ecUW_gXU and I encourage stakeholders to email feedback about the ideas within this brief to [email protected].
Today, I’m pleased that Winrock International Net Zero Climate Services Unit is releasing a brief we prepared for the Energy Transition Accelerator (ETA) titled “Exploring how Energy Transition Accelerator credits could help decarbonize value chains: A brief on an illustrative use case and key issues for continued analysis”. https://lnkd.in/gGNCAfnK The ETA is an innovative carbon finance platform aimed at catalyzing private capital to support just energy transition strategies in developing and emerging economies. The central feature of the ETA will be the introduction of a sector-scale crediting approach for the electricity sector intended to ensure environmental integrity and to incentivize broad sectoral transformation. This brief explores the case of a hypothetical technology company that is seeking to mitigate its Scope 3 electricity emissions related to copper and how it could purchase and cancel ETA credits as a mitigation approach. The brief shows how a technology company sourcing goods and services with copper components: 1. calculates copper emissions and identifies which of those are from electricity generation, 2. seeks to address emissions from copper at the source, 3. encounters significant barriers, 4. purchases ETA credits on account of those barriers, and 5. matches tons CO2e of copper production emissions from electricity with an equivalent amount of ETA credits. As noted in the brief, there are some open questions related to this in-value chain use case for ETA credits, which we hope to explore further this year in future briefs. We welcome your feedback and engagement on the paper here and/or by email to [email protected]
Director - Nature for Climate at WBCSD
3moDominic Waughray