CDP, an international nonprofit, collects detailed, self-reported data on greenhouse gas emissions from companies all over the world. For this story, Bloomberg Green used CDP data to examine “scope 2 emissions,” an accounting of energy purchased by companies to power their operations, including data centers, factories, and office buildings. On paper, businesses routinely reduce or erase their scope 2 emissions through a variety of renewable-energy contracts. Our analysis seeks to quantify and
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(Bloomberg) — CDP, an international nonprofit, collects detailed, self-reported data on greenhouse gas emissions from companies all over the world. For this story, Bloomberg Green used CDP data to examine “scope 2 emissions,” an accounting of energy purchased by companies to power their operations, including data centers, factories, and office buildings. On paper, businesses routinely reduce or erase their scope 2 emissions through a variety of renewable-energy contracts. Our analysis seeks to quantify and examine the instruments companies are using to claim significant emission cuts.
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Read the full story: What Really Happens When Emissions Vanish
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The analysis has two parts and covers 7,863 company filings covering the years 2017 to 2020. Nearly 6,000 of those companies submitted reports in 2021. The first part calculates the difference between the actual emissions, or “location-based emissions,” from a company’s consumption of energy and its “market-based emissions,” or those calculated after allowing reductions for the use of any renewable-energy instruments. The second part of the analysis examines the types of instruments that companies used to claim lower emissions in market-based accounting.
The analysis excludes companies, such as PG&E Corp., that are classified as “Energy Utility Networks” in the data, since government mandates may require them to buy or source renewable energy or renewable energy credits. Our analysis focuses on corporations that voluntarily entered contracts and purchased credits.
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Because the CDP data is self-reported, Bloomberg reporters spent a significant amount of time examining the data submitted, looking into outliers and contacting dozens of companies to check values. These spot-checks found 35 instances of erroneous data which were removed from the analysis.
Part 1: Location-based vs. market-based emissionsA total of 2,575 companies globally submitted valid scope 2 emissions data at least once during the four-year study period.
About 28 percent of the companies in our global dataset reported higher market-based emissions than location-based emissions in 2020, meaning they reported higher emissions after calculating the effects of renewable-energy contracts. Some of the most pronounced instances involved industrial companies that hedge their energy costs by entering into contracts for dirtier sources of energy, such as coal. Experts who reviewed Bloomberg Green’s methodology and findings said that other cases may involve companies making data-entry errors in their filings. These records were excluded from the analysis of aggregate differences between location-based and market-based emissions because experts say they would artificially lower such differences.
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Part 2: Analysis of instruments companies used to claim lower market-based emissionsA total of 2,078 companies globally submitted valid data about their renewable energy contracts to CDP at least once in the four-year study period. For the trend analysis, we looked at companies that submitted data every year during the study period, some 534 companies globally.
The instruments that companies reported to reduce their emissions were classified into three categories: Power Purchase Agreements (PPAs), Unbundled Renewable Energy Credits (RECs), and Other. The classifications were reviewed by multiple experts and CDP. The classifier built by Bloomberg was able to classify correctly in 98% of the records.
Read the full story: What Really Happens When Emissions Vanish
