Sustainable Electricity

Definition

Sustainable Electricity is the generation of electricity for diverse uses in the economy in long-term sustainable manner.

Individuals, companies and organizations more broadly can reduce their use of electricity by investing in energy efficient technologies and energy conservation. Emerging green power markets provide opportunities to switch to less GHG intensive sources of electricity.

Reporting of Scope 2 GHG Emissions under the GHG Protocol allows transparent accounting of GHG emissions and reductions resulting from the use of sustainable electricity.

EU Taxonomy Context

The following further defines sustainable electricity in the context of the EU Sustainable Finance Taxonomy: Electricity generation is responsible for over a quarter of EU greenhouse gas emissions hence ambitious emissions reductions in this sector are vital to decarbonisation. The EU Taxonomy work on electricity has attempted to recognise this finding with suitably ambitious requirements within a model of supporting a transition to the EU’s emission reduction goals.

Criteria and Thresholds

An overarching, technology-agnostic emissions threshold of 100g CO 2e / KWh is proposed for electricity generation. This threshold will be reduced every five years in line with a trajectory to net-zero CO2e in 2050.

For electricity generation we have generally required using an ISO 14044-compliant Life Cycle Emissions (LEC) analysis to prove eligibility - that is that the life cycle impacts for producing one KWh of electricity are below the declining threshold of 100gCO2e.

Some technologies, such as solar, wind and existing hydropower (in the EU), are exempt from the requirement for LCEs on the basis of the existing research base on the issue. Exemptions are subject to regular review in accordance with the declining threshold.

However, with electricity generation from natural gas, where the risk of fugitive emissions across the gas supply chain is seen as high, there is a requirement to provide a full life cycle assessment of fugitive emissions on ongoing basis. This assessment should include actual physical measurements, i.e. methane leakage measurements across gas extraction, transport and storage systems. Electricity generation from other gaseous fuels (such as hydrogen or renewable gases) would be eligible under the Taxonomy, subject to meeting the declining emissions threshold.

For activities which go beyond 2050, it must be technically feasible to reach zero emissions. Implications include:

• Coal-fired power: unabated coal-fired power generation will not meet the required threshold. Coal- fired power with carbon capture and sequestration may qualify in the short-term, but new coal plants generally have lifetime of 40 years or longer. Under the requirement to reach zero emissions in 2050, coal with CCS would need to demonstrate that it will be able to do this.
• Natural gas-fired power: unabated natural gas-fired power generation is not expected to meet the required threshold. Gas-fired power with carbon capture and sequestration may qualify. However, this will be subject to the requirement that fugitive emissions across the gas supply chain need to be measured rather than estimated.

A further series of sector-specific thresholds have been articulated, which define the circumstances under which an energy sector activity provides a substantial contribution to climate change mitigation.

The TEG has also developed criteria for other economic activities across the energy sector including:

• Transmission and distribution of electricity
• Storage of energy
• Retrofit of gas transmission and distribution networks
• The manufacture of biofuels and biogas
• The operation of district heating and cooling networks
• Installation and operation of heat pumps
• The Cogeneration of heating/cooling and power
• The production of heating/cooling

Outlook

Energy criteria in the EU Taxonomy will require further refinement and development to ensure topicality and market coherence. This will encompass:

• Adjustments to thresholds: energy thresholds should be revisited regularly in order to reflect state of the art research and progress on decarbonisation efforts. Particularly, the emission threshold for electricity generation should be reduced every five years.
• Inclusion of new technologies: technological progress could allow for market entry in the near future. Technologies with a sufficiently high technology readiness level (TRL) could be added to the Taxonomy (e.g. nuclear fusion).
• Development of further metrics: as energy markets decarbonise and deployment patterns of certain technologies change, some activities (e.g. storage of electricity) might require the development of further metrics.
• TEG also recognises that the use of Biomass for energy requires trade-off decisions relative to other potential uses and across mitigation activities, but also for do no significant harm dimensions. For these reasons, the TEG recognises that possible production and use of bioenergy will require further consideration as the Taxonomy is developed and based on technical feedback in the outreach period.