Getting Every Ton of Emissions Right: an Analysis of Emission Factors for Purchased Electricity in China
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Working Paper Summary GETTING EVERY Ton OF EMISSIONS RIGHT: AN ANALYSIS OF EMISSION FacTORS FOR PURCHASED ELECTRICITY IN CHINA RANPING SONG, JINGJING ZHU, PING HOU, HONGTAO WANG An independent analysis of the use and calculation of emission factors (EFs) for indirect emissions from electric- TABLE OF CONTENTS ity purchased by corporations in China shows widespread errors that could produce inaccurate accounting results FOR THE FULL REPORT and provide distorted signals that will mislead govern- Executive Summary...........................................................1 ment and corporate analyses and decisions on greenhouse Issues................................................................................2 gas (GHG) mitigation. “Scope” in GHG Accounting..............................................2 Calculation Boundaries.....................................................3 The four most common errors were: Formula, Results, and Data Quality....................................6 Conclusion and Recommendations..................................10 1. Inappropriately using operating margin (OM) or Annex 1: China’s Regional Grid Emission Factors combined margin (CM) emission factors derived from Baseline Emission Factors for Regional Power Grids for Purchased Electricity .................................................11 in China, an annual report developed for Clean Devel- Annex 2: Calculation Spreadsheet of China’s Regional opment Mechanism (CDM) projects rather than for Grid Emission Factors for Purchased Electricity...............14 organizational accounting; Endnotes..........................................................................14 2. Attributing transmission and distribution (T&D) loss Disclaimer: WRI working papers contain preliminary to end users; research, analysis, findings, and recommendations. They are circulated to stimulate timely discussion and critical 3. Not taking into account the impact of the exchange of feedback and to influence ongoing debate on emerging electricity between grids; issues. Most working papers are eventually published in another form and their content may be revised. 4. Ignoring emission allocation between electricity and heat for cogeneration plants. Suggested Citation: Ranping Song, Jingjing Zhu, Ping Hou, Hongtao Wang. 2013. “Getting Every Ton of Using inappropriate emission factors can ripple through Emissions Right: An Analysis of Emission Factors for the system. For example, if OM emission factors are Purchased Electricity in China” . Working Paper. World mistakenly used to account for emissions of purchased Resources Institute, Beijing. Available online at electricity in 2010, it could lead to overestimation of GHG http://www.wri.org/publication/analysis-of-emission- emissions of up to 49 percent for companies in some re- factors-for-purchased-electricity-in-china. gions (see Figure 1). WORKING PAPER | July 2013 | 1 Figure 1 | Percentage of difference between emission factors calculated by WRI and simple operating margin emission factors (2008-2010) 59.8% 59.4% 60% 2010 49.3% 49.6% 2009 42.7% 2008 40.3% 40% 22.2% 21.9% 18.2% 20% 5.7% 6.6% 4.9% 4.2% 1.6% 0 -2.2% -3.8% -7.3% -8.1% -10.4% -20% Northeast Grid Northwest Grid Central China Grid North China Grid East China Grid Southern Grid Hainan Grid* Source: World Resources Institute Notes: Percentage of difference = (OM EF – EF calculated by this paper) / EF calculated by this paper; According to Baseline Emission Factors for Regional Power Grids in China, OM EFs used in the comparison are the weighted average of annual OM EFs over three years. Please refer to Annex 2 for detailed data. *Hainan has been included in the Southern Grid since 2009. Authors of this working paper argue that using inappro- a common error excludes electricity generated through priate emission factors for purchased electricity, even if renewable technologies. 2 they are used consistently by all companies in the same Companies will be misled when identifying reduction country, will produce inaccurate accounting results and hot spots and on the GHG impacts of different technolo- provide distorted signals that will mislead analysis and gies, since inappropriate emission factors distort GHG decisions on GHG mitigation with the following pos- emission profiles between direct and indirect emissions. sible consequences: Companies in regions with larger renewable energy and Governments will be misled when analyzing and evalu- nuclear portfolios may be put in an unfavorable and ating the GHG impacts of different industries, since dif- unfair position when their clients evaluate their GHG ferent industries’ demands for electricity are different. emissions, since these emission factors tend to overesti- If inappropriate emission factors are used under end- mate GHG emissions. 3 use carbon taxes policy or emissions-trading schemes Based on requirements and guidance from the most com- 1 that include emissions from electricity, it will create monly used corporate GHG accounting and reporting significant questions about the fairness of the policy. standards, namely GHG Protocol A Corporate Accounting Local governments may have fewer incentives to sup- and Reporting Standard (revised edition) (GHG Protocol port the development of renewable electricity because Corporate Standard) and ISO 14064-1:2006 Specification 2 | Getting Every Ton of Emissions Right: An Analysis of Emission Factors for Purchased Electricity in China with guidance at the organizational level for quantification plants allocated to heat and electricity when calculat- and reporting of greenhouse gas emissions and remov- ing the emission factors. als (ISO 14064-1), the authors articulate what should and should not be included in the calculation of emission fac- Develop a GHG reporting scheme for the power sec- tors for purchased electricity in China. tor referencing international experiences such as the eGRID database. Using such a reference will increase The authors also provide calculated default emission fac- data quality of the emission factors while providing a tors for six regional grids in China (Annex 1) and show the sophisticated data foundation to support GHG reduc- calculation process in detail (Annex 2). tion in the power sector. This working paper argues that companies and government For companies that account for and report GHG agencies in China should include the following items when emissions, consultancies, and assurance providers, as well calculating emission factors for purchased electricity: as other organizations that provide support to corporate GHG accounting and reporting, this working paper has the Use the actual supply of electricity (as opposed to elec- following recommendations: tricity consumed) to calculate emission factors. For now, the operating margin emission factors, Allocate emissions from combined heat and power build margin emission factors, and combined margin (CHP) plants to heat and electricity. emission factors 4 are not appropriate for GHG accounting at the organizational level. Instead, Include electricity generated from all technologies, companies can use emission factors provided in Annex including low-cost/must-run resources such as hydro, 1 of this working paper to account for their indirect geothermal, wind, low-cost biomass, nuclear, and GHG emissions from purchased electricity. To be solar. consistent, companies should use corporate emission factors published by national or local governments Use cross-province regional grids or smaller geo- when they become available. graphic units as the basis to define grid boundaries. Account for GHG impact of imported electricity from Companies can develop and use emission factors outside the grid. that are specific to them if data are available. When doing so, they should take into account the RECOMMENDATIONS issues discussed above. For government agencies and research organizations that Following the transparency principle of the GHG support policy making in China, this working paper has Protocol Corporate Standard and ISO 14064-1, the following recommendations: companies should disclose the emission factors they use to account for indirect emissions from electricity. The government should develop, publish, and regu- larly update emission factors for purchased electricity The full report is available in Chinese at http://www.wri. that are suitable for organizational GHG accounting org/publication/analysis-of-emission-factors-for- purposes. purchased-electricity-in-china. Annex 1 is included be- low, as well as a link to Annex 2. It should develop emission factors for six regional grids or according to grid units defined by other crite- ria, such as smaller administrative regions (province or city) or aligned with the operation of grid companies. However the criteria are defined, they should be ap- plied consistently. Base emission factors on the actual supply of electric- ity, including all electricity generated from all technol- ogies, and emissions from combined heat and power WORKING PAPER | July 2013 | 3 ANNEX 1: CHINA’s REGIONAL GRID EMISSION FacTORS FOR PURCHASED ELECTRICITY, 2006–2011 2006 CO2 EMISSION CH4 EMISSION N2O EMISSION CO2 EQUIVALENT POWER GRID COVERAGE AREA FACTOR FACTOR FACTOR EMISSION FACTOR t CO2/10MWh g CH4/10MWh g N2O /10MWh t CO2e/10MWh Northeast Grid Liaoning, Jilin, and Heilongjiang Provinces 11.9424 130.4796 184.6768 12.0007 Shaanxi, Gansu, Qinghai, Northwest Grid 8.4090 89.8306 131.4507 8.4504 Ningxia, and Xinjiang Provinces Chongqing, Henan, Hubei, Central China Grid 7.8340