Ensuring Low-Emission Electricity Purchasing Requires a Broader Systems Perspective

Abstract

Introducing electricity purchase conditions in renewable fuel regulations and carbon accounting is a controversial issue in the US and Europe. We argue that their impact must be assessed considering demand flexibility, local grid conditions, and overlapping policy instruments such as emissions trading schemes and renewable portfolio standards. The introduction of more stringent requirements has a significant impact on companies' reported progress in reducing indirect emissions. In addition, we currently lack reliable carbon intensity data with sufficient temporal and spatial granularity outside the US and Europe. Assessing hydrogen imports should consider strategic behavior. In summary, a broader systems perspective is needed to analyze the impact of electricity purchase conditions on markets, prices, and emissions, integrating voluntary actions to decarbonize hard-to-abate sectors under increasing renewable energy shares. This will have implications not only for the (re)design and integration of certificate markets for renewable electricity but also for renewable fuels and carbon.