What the Financial Times gets wrong about corporate renewable energy and carbon emissions

A number of people in the climate and corporate sustainability communities have been asking us recently about the recent Financial Times article, “Big Tech’s bid to rewrite the rules on net zero.” The good news is that the article helped raise awareness of some serious flaws in the little-known world of current corporate carbon accounting methods for renewable energy purchasing, and two of the main proposals for how to fix those flaws.

The bad news is that this is also a complex subject, and unfortunately the article makes a number of significant mistakes. These include some pure factual errors, conflating certain concepts (like bundled RECs and additionality), and several glaring omissions. The bottom line is most reasonable readers likely walked away correctly understanding that there is a problem, but completely confused on what that problem is, how to potentially fix it, and the perspectives of the key players mentioned in the story.

Even so, the FT is right on the basic point that what happens in this obscure accounting debate has huge implications for climate change. So, the mistakes in its reporting are actually not harmless; what’s at stake in getting this right or wrong is over a billion tons of real-world emissions, per year.  

And so — as both academic experts in power grid emissions and a mission-driven nonprofit that stands for true, accurate, and impactful climate information — we thought it important to clarify some key facts around the topic.‍

Centering the focus on climate change impacts‍

To be clear: the FT article mentions a debate between a who’s who of Big Tech companies — Google, Meta, Amazon, Microsoft. Our organization, WattTime, has worked with and received funding from all of them. In fact, Google is by far our largest funder. The article also mentions academics and practitioners such as the National Renewable Energy Laboratory, Princeton University, and REsurety. We’ve collaborated (and co-authored papers) with them, too.

But WattTime is a not-for-profit. We have no allegiance to any one company, organization, or initiative. Our only loyalty is to one thing: beating climate change. And of all the mistakes the FT makes in this article, it’s this core point — completely missing how the choices discussed will actually affect climate change — that has the biggest consequences.

And what are those choices? The FT article’s authors correctly note today’s renewable energy carbon accounting system is broken, and there are now two main different proposals on how to fix it.

• One proposal argues that, essentially, the purpose of carbon accounting is to accurately measure and reduce real-world emissions. So, the best thing we can all do is to accurately measure the true consequences of renewable energy purchases on reducing emissions and build projects that more authentically drive real-world emissions reductions. Repeatedly proposed in over a dozen papers by scientists at Berkeley, Stanford and Carnegie Mellon, Yale and UCSD, UW, Polytechnique Montréal, RIT, and others, the idea is now also being championed by Meta, Amazon, and others in the Emissions First Partnership. This is often called “emissionality”.
  
• The other proposal argues that, essentially, the purpose of carbon accounting is to assign blame. So, the best thing we can all do is purchase the renewable energy that most closely matches our own particular energy consumption patterns — regardless of whether doing so does or does not help reduce emissions. First proposed by Google and still championed primarily by Google, this is often called “24x7 carbon-free energy” or just 24/7 CFE in shorthand.

Why the difference? Because the authors’ basic instinct — that it’s important not to conflate buying renewable energy with climate action progress — is exactly right. The only reason buying renewable energy counters climate change is because, if done right, it reduces emissions. And scientists universally agree that financing renewables reduces more emissions, more authentically, when built in dirty grid regions (where it replaces highly polluting fossil fuel power plants) instead of clean regions (where we already replaced all highly polluting fossil fuel power plants and new wind or solar increasingly just competes with other wind and solar). Every single study linked above, plus plenty others here, has unanimously confirmed this.

To illustrate the point, what are the two U.S. regions with the fewest dirty power plants left? Answer: the Bay Area (where Meta and Google are headquartered) and Seattle (where Amazon is headquartered). Not one scientist has ever disputed the basic fact: those are literally the two U.S. regions where building more renewable energy is least likely to drive meaningful emissions impact. That’s why independent scientists have been shouting from the rooftops for years that we would drive more climate impact by building new renewables anywhere but there. The EFP was founded to finally try to align corporate buying with scientists’ advice.

And now we’re seeing a growing number of examples of companies putting the emissionality science into action. In 2023, Salesforce — another Bay Area-headquartered tech giant — announced investment in new renewable energy projects in Global South countries in part because they would achieve greater emissions reductions than alternatives closer to its corporate operations. Amazon has worked extra hard to build some of its renewable energy in India where it’s highly impactful and less likely to happen without Amazon’s help. Along similar lines, just last week Meta announced two power purchase agreements for a combined 374 MW of solar in Louisiana, where those projects will displace more fossil-fueled emissions from the U.S. South power grid than investments in solar-rich California closer to Meta’s headquarters (or nearer the company’s data centers in places like Texas).

By contrast, the FT authors portray 24/7 CFE as some sort of clean energy and climate footprint panacea. But this is not so. Google’s 24/7 strategy is inherently insular. It actively encourages companies to optimize not for what best helps mitigate climate change, but instead only to match their own individual corporate load and only ever doing so locally — ignoring the fact that this requires building renewable energy in the areas scientists say are least impactful, for example adding to California’s growing problem of renewables oversupply.‍

Google has been furiously trying to fund experts to argue that this 24/7 CFE strategy of not prioritizing emissions reductions is somehow counterintuitively the most emissions-reducing strategy. A couple like Jesse Jenkins of Princeton’s Zero Lab have indeed found solid evidence that 24x7 can do some modest but very real good in certain specific circumstances, like when subsidizing clean hydrogen production. Jenkins’s intriguing findings have found widespread interest, and they should.

More often, though, even many studies Google itself has funded — like this report from the International Energy Agency (IEA) or this report from environmental nonprofit RMI — instead quietly contradict Google’s own claims, showing that in the majority of contexts 24/7 CFE leads to less climate impact than more conventional strategies, not more. It’s a shame the FT missed this equally crucial research on all the problems with 24/7 CFE.‍_‍‍

The FT’s supposed debate isn’t actually a debate

_‍Let’s not lose the plot here: first and foremost, all the companies discussed here — Meta, Amazon, Google, their peers in the EFP, and others — have made historic investments in clean energy, driving tremendous real-world climate benefits unmatched in most other industries. Last year alone, the world’s major corporations publicly announced a record 46 gigawatts of new solar and wind contracts, according to BloombergNEF. That’s nearly triple the amount of renewables that Germany, the world’s fourth-largest economy, added to its power grid in 2023.

Further, all these companies agree that carbon accounting standards are broken and need fixing. And as many analysts have noted, these companies roughly agree on some of the key factors that need fixing: more attention to time and place, less use of clearly non-additional and low-quality renewable energy certificates, and a greater focus on authenticity and accuracy.

The EFP, in fact, has formally called for the GHG Protocol’s guidance on Scope 2 electricity-related emissions accounting to evolve by adopting support for both emissionality and 24/7 CFE. After all, Google’s 24/7 CFE strategy can, under the right circumstances, authentically help reduce emissions. And it’s completely fine if Google or any other company chooses to pursue it themselves.

But 24/7 CFE also introduces serious potential pitfalls and causes for concern. Like how it actively encourages building renewable energy in the least-impactful locations. Or how some companies are already using 24/7 CFE as an excuse to buy more unbundled RECs or obviously non-additional renewable energy. Or how in practice, the only major company yet to adopt it — Google — has by its own account seen its carbon footprint go up, not down, due to the challenges 24/7 CFE has created in their ability to build renewable energy.

Those increased emissions are a shame for climate change, but this is much bigger than any one company. What really matters is that what most companies end up doing. And it’s extremely important that Google’s interesting innovation, with all its promise but also all its stumbles, does not stand in the way of other companies following the much more direct advice of scientists to fight climate change by accurately measuring and concretely reducing real-world emissions.

Where we go next matters. This is a complex subject and it’s entirely understandable the FT missed some of the nuance. But with almost 40% of renewable energy in the United States — let alone other countries — now being financed by corporations following the Greenhouse Gas Protocol, it’s hugely important that everyone following this debate have access to accurate, reliable information about what’s really going on here. We have so little time left to reduce global emissions by half, and we can’t afford to spend it mistakenly attacking hugely impactful, authentic projects that are only trying to follow the best practices laid out by the scientific community.

Gavin McCormick is the founder and executive director of WattTime; Henry Richardson is a senior analyst at WattTime; and Pete Bronski is founder and CEO of Inflection Point Agency. The opinions represented in this contributed article are solely those of the authors, and do not reflect the views of Latitude Media or any of its staff.

Editor's note: This piece was updated on September 3 to remove an inaccurate reference to a National Renewable Energy Laboratory study; the author was in fact affiliated with Carnegie Mellon University at the time of its publication. NREL as an institution does not take a position on the purpose of corporate carbon accounting.