GHG Protocol Scope 2 Hourly Matching: Market Analysis and FAQ

A detailed response to questions about scope 2 changes, considering emissions accounting accuracy, climate impact, and market feasibility

Aug 19, 2025

Michael Leggett

The GHG Protocol is preparing to fundamentally change how companies account for their electricity emissions. As practitioners working daily in renewable energy markets, we see how these changes could unintentionally undermine the very climate progress they aim to accelerate.

The problem: The proposed hourly and local matching requirements, while well-intentioned, threaten the corporate long-term contracts, like power purchase agreements (PPAs), that have become the backbone of renewable energy financing. These contracts give developers the revenue certainty to build new projects, and without them, the financing pipeline for wind and solar weakens. The timing couldn’t be worse in the U.S.: just as federal clean energy tax incentives are being scaled back, new accounting rules could deal a second blow by driving down corporate demand for the very contracts that stand up new clean energy capacity.

Others are sounding the alarm: The Clean Energy Buyers Alliance wrote that “imposing stricter time and location accounting requirements at the organizational level is inefficient and infeasible for most buyers and may curtail ambitious global climate action…undermining the relevance and impact of the Protocol, reverse more than a decade of progress, and jeopardize future global climate action.” Their concerns align with feedback from across the market.

Our response: Some members of the GHG Protocol working group who are in favor of requiring hourly+local matching have published an FAQ on EnergyTag’s blog to explain the proposed changes and address misunderstandings. Their piece suggests there is little reason for concern. We respectfully disagree. What follows is our exhaustive response to those same questions through three lenses: emissions accounting accuracy, climate impact, and market feasibility.

Is this forcing buyers to do 100% hourly matching, i.e. 24/7 carbon-free energy (CFE)?

Formally no; functionally yes. The update changes how Market-Based Method (MBM) claims are counted (you may only use Renewable Energy Certificates or RECs that match the hour and location of usage). But pressure will remain to sustain “zero” Scope 2 goals and narratives and GHG Protocol is the foundation of target-setting frameworks like SBTi which has proposed 100% hourly-matched targets (aka, 24/7 CFE).

EnergyTag (ET) said: “No. GHGP is not a target-setting body, and does not require companies to set any particular targets for their procurement.”

• GHG Protocol doesn’t operate in a vacuum: The GHG Protocol is not just a voluntary standard. It is the rule set that underpins government policy globally and all GHG reporting including target-setting frameworks like SBTi which has proposed a move to hourly/location matching and requiring companies to cover 100% of their scope 2 emissions with zero-carbon electricity.
• 100% RE will remain a common claim. Companies under the proposed carve-outs will not have to hourly match RECs and will more easily continue making 100% renewable claims. Other companies may leverage new blended 24/7 offerings from utilities that include existing hydro and nuclear to achieve 100% hourly matching. Both send a signal to the market that 100% remains a reasonable and achievable target.

ET: “this increases the credibility and comparability of inventory emissions claims”

• Credibility ≠ accuracy: By limiting more extreme mismatches, hourly matching may improve the perception of credibility of usage claims. But because grid physics make tracing impossible, the inventory is no more verifiable than under annual matching. Claiming accuracy perpetuates a misunderstanding about how electricity is delivered based on a false concept of flowing electrons rather than the maintenance of charge on a connected wire.
• Granularity ≠ decarbonization: More precise matching does not guarantee emissions impact. Hourly RECs from spot markets, nuclear, or hydro may look better on paper, but they do little to enable new projects or accelerate decarbonization. In contrast, long-term PPAs with new solar and wind are the proven driver of impact yet are weakened under hourly accounting.
• The real credibility gap: The problem long identified by press and research is that cheap, unbundled RECs often do little to enable new projects. Instead, they allocate credit for clean generation that would have happened anyway. Companies have responded: in 2023, over 800 U.S. buyers used long-term contracts like power purchase agreements (PPAs) to address this issue. Hourly matching does not fix this problem. In fact, it can shift demand away from PPAs that finance new builds toward existing nuclear or hydro to meet 24/7 targets. The key question is whether purchases materially accelerate clean energy deployment. If not, the accounting method, whether hourly or annual, will not restore credibility.

ET: “studies have found can be just as cost-effective as 100% annual goals”

• It will cost more. Saying it will be just as cost-effective as 100% annual goals does not align with the analysis and research. Princeton ZERO Lab’s system-level impact analysis of hourly matching said, “Hourly matched procurements reduce system-level emissions but at a cost premium.” The exact premium depends on the region and the percentage matching.
• Soft costs make things even worse. The added costs will be even higher for companies still able to use long-term forward contracts like PPAs. A company that can use one PPA to cover many regions today would need to use multiple PPAs in each region, each with their own fixed costs. These soft costs and how they may compound with a shift to hourly matching is typically not considered in studies. When they are, the benefits of hourly matching are less glowing.
• Meeting sustainability goals is the main objective. Saying that companies can still do as they wish but that it may just not count towards their sustainability goals makes no sense. We should be careful to assume companies will accept the cost and risk associated with buying renewable energy if it doesn't accrue to meeting ambitious sustainability targets.
• Hourly matching will make long-term contracts less accessible. As detailed in our paper and expanded in other questions below, requiring hourly and local matching of RECs will make long-term contracts like PPAs impossible to use for some buyers. This is bad. These contracts have long been recommended by GHG Protocol, SBTi, RE100, and the industry at large as providing meaningful support to build more projects. Instead of doing anything to incentivize the use of long-term contracts, the proposed updates are adding new barriers.

Won’t forcing small businesses to do hourly accounting reduce participation?

Likely. There are real burdens from hourly accounting. And while carve-outs help micro-loads, they (1) do not address risks for mid-tier loads, (2) reduce comparability across companies and sites, and (3) do not exist in other frameworks like SBTi eroding their overall value.

EnergyTag (ET) said: “The proposed update would allow companies with consumption below a threshold (e.g., 5-10 GWh in a given region) to continue to do annual accounting.”

• Carve-outs prove there is a burden. Exempting < 5-10 GWh buyers acknowledges the proposed changes come with added burdens for buyers. Buyer associations and surveys of buyers have also said the burden is real with ~80% of customers expressing doubt they can procure time-matched CFE within smaller boundaries.
• Location matching is not part of the carve-out. Carve-outs do not change requirements that companies only source RECs locally. Time matching is only part of the challenge and threat to long-term forward contracts.
• Downgraded participation is also bad. Forcing small businesses to only buy locally means they cannot aggregate demand and costs across regions so they can use long-term contracts. Some will be forced to abandon PPAs and downgrade to spot-market purchases which do little to help with project financing.
• Pressure will remain. If GHG Protocol is saying that the only way to do scope 2 accounting with integrity is with hourly matching, market and peer pressure will persist on even small companies to comply even if they are not required to (just as happened with the use of PPAs over the last 10 years).

ET: “A recent CDP company disclosure report states that “A subset of only 7% of these companies accounts for more than 76% of the electricity purchasing”

• And yet, changes apply to much more. The 7% are mostly large multinationals already using long-term contracts. The other 93% are smaller buyers, for whom rigid hourly rules would raise costs and reduce participation without adding impact. If the Protocol’s goal is global decarbonization, it should focus on expanding access and preserving PPAs, not restricting them.

ET: “It is to be expected that in the transition period towards the standard’s implementation, both software tools for granular accounting and hourly-matched CFE products of electricity suppliers will become increasingly available“

• Software can’t fix everything. While data accessibility remains a challenge, the transaction and assurance costs of multiplying PPAs across regions remains and is not one that software can fix.

Isn’t hourly accounting very difficult?

Yes, when you take into account all the ramifications.

EnergyTag (ET) said: “No. Hourly accounting simply means collecting (or estimating) hourly electricity consumption data, collecting hourly data from purchased clean energy, and comparing them.” … “This accounting can be done today in spreadsheets.”

• Math is easy, procurement is hard. The real difficulty is not lining up numbers in a spreadsheet, it’s getting the hourly RECs that match your hourly consumption in each region in the first place. Region-bounded procurement fragments PPAs, inflates legal/credit costs, and relies on still forming granular spot markets and storage-REC standards.

ET: “Any company with a PPA in a deliverable grid will easily be able to account for it hourly, by using the hourly rather than annual aggregate generation data.”

• PPAs are not available everywhere. You cannot legally use PPAs in all regions and if buyers can only use locally generated RECs, they will be unable to use Virtual PPAs in many regions as well.
• Some RECs from a PPA would become unusable. If a company does have a PPA with a local project, they will not necessarily be able to use all of the RECs from that PPA as any production that exceeds their consumption represents unusable RECs. Companies may need to sign larger PPAs to maintain current RE claims and try to sell excess RECs in spot markets.

Won’t these requirements stop voluntary procurement due to their cost?

For some, yes. With elevated costs and complexity, it seems reasonable to expect some companies to reduce, downgrade, or stop voluntary procurement altogether.

EnergyTag (ET) said: “No. The most credible studies of the costs and impacts of hourly matching (e.g., Princeton, TU Berlin, IEA) show that buyers can procure 80-95% hourly matched clean energy at costs that are comparable to annual matching today, while 100% hourly matching comes at a premium.”

• Studies find costs will increase with hourly matching. Studies like ZERO-Lab and TU-Berlin show costs increase (even if modestly on some grids) to reach ~80-90% hourly CFE and can explode to reach 100% CFE. And these studies likely underestimate cost increases as they assume constant demand and do not include added soft costs from doing a PPA for each region.
• Risk of disengagement. Once the added cost and complexity are fully understood, it’s reasonable to expect that some companies (especially small and mid-sized ones) may retreat from active procurement altogether.

ET: “A recent study focused on India found that 70% hourly matching can be achieved more cheaply than 100% annual matching, while having a greater decarbonization impact and significant cost savings”

• What is the cost above 70% hourly-matched? Multiple studies find that you need >90% hourly matching to reduce emissions more than 100% annual matching. Comparing 100% annual matching to only 70% hourly matching creates misleading conclusions about cost and impact.
• Savings for who? The savings are calculated for the power system and grid operators, not necessarily for individual corporate buyers. C&I consumers finance the new capacity capex, while the grid enjoys most of the opex savings. Whether buyers themselves see a net cost reduction depends on how those capex and opex streams are allocated.

ET: “As mentioned above, the proposed revisions do not force companies to set any particular procurement targets or voluntary procurement strategies, but rather to account for their emissions more accurately.“

• You don’t have to force anything to do harm. Proposed revisions limit access and reduce the appeal of certain procurement strategies like long-term contracts which harms project financing and will mean a slower transition to renewable energy.
• It is all connected. GHGP’s standards are the foundation of target-setting bodies like SBTi, which is not only embracing hourly matching but also pushing for 100% hourly CFE targets. Companies that are able to easily achieve 100% hourly matching will add peer pressure for companies to maintain their current goals. Saying hourly matching does not force companies to set high targets misrepresents the larger picture.

How many companies are engaged in hourly matching today?

Not many buyers. EnergyTag’s list of 45 companies contains only 11 buyers. The other 34 are utilities, brokers, and software vendors that are positioned to sell hourly products. Listing early adopters and vendors demonstrates commendable momentum, but not scale. For now, “many companies already do hourly accounting” is more marketing than market reality.

Shifting to hydro and nuclear. Some companies have moved from PPAs to spot market purchases and/or green tariffs backed by existing hydro or nuclear. We struggle to see this as better than signing long-term forward contracts to enable new solar and wind.

• Digital Realty committed to 24/7 clean power for its data centers. In 2023 it became the first customer of PPC Greece’s 24/7 hourly renewable matching program, which now powers Digital Realty’s three Athens data centers with real-time matched clean electricity. It looks like the program is mostly powered by hydro.
• Mercedes-Benz signing a 24/7 PPA backed by solar, wind, and hydro is another example.
• Other examples include Google recently signing a deal with Brookfield for hydroelectric power, Microsoft with Powerex in BC, and Entergy’s 24/7 offering which includes existing hydro and nuclear.
• Is this really better? Is it better for companies to achieve 24/7 through utility programs, backed by an undisclosed percentage of existing hydro or nuclear? That’s what over 800 companies did in 2023 in the U.S. alone.

Repackaging existing contracts and projects? Other buyer examples may give the false perception of progress and feasibility.

• Einstein Bros. Bagels - the original 2018 PPA with the 200 MW project was part of the project’s obtaining financing. In 2020, Einstein Bros signed a 3 year contract for ~ 4,180 MWh/yr and presumably extended that PPA for the 24/7 story in 2025.
• Chiang Mai University announced their 12 MW rooftop solar project

Positive examples aside, issues remain. All of these examples are companies that clearly care. Every example is a company going above and beyond current standards. But it is less clear that these are examples that prove the impact and scale of hourly matching or how to avoid the downsides of requiring hourly matching and risks to practices already used by hundreds if not thousands of companies today globally.

Will this make it harder for companies to report zero market-based emissions?

EnergyTag (ET) said: “Yes, but getting to fully zero emissions is hard.”

• We shouldn’t make climate action harder for hardness’ sake; we should make it meaningful.

• Focus on emissions accounting. The GHG Protocol is an emissions-accounting standard, not a marketing guide. The FTC Green Guides (and programs like RE100, SBTi, and Green-e) pick up the baton on what you can claim publicly and what targets you set and add guidelines and verification protocols to ensure claims are correct. GHG Protocol should care about accurate emissions accounting and real emissions reductions, not usage or matching claims.

• PPAs represent real decarbonization. Companies give new solar and wind projects long-term revenue certainty so they can be financed and built. Those projects represent real avoided emissions even if the solar farm isn’t plugged into the company’s office building.

• Hourly+local matching can correlate with real reductions too IF companies are willing to spend more in the hours where REC supply is scarce and IF projects can be built in that region to address that scarcity and IF a voluntary spot-market for RECs and power supplied during those hours provides enough financial certainty for projects to be financed and built. But, that’s a lot of if’s. PPAs can be used with hourly+local matching but it is harder, more costly, and works in fewer places for fewer companies.

ET: “A more accurate accounting system must stop assuming that solar generation is consumed at night, that electricity generated on faraway, disconnected grids is consumed where a company operates”

• We have an accurate accounting of emissions. Location-Based Method (LBM) gives you a holistic inventory of a company’s indirect emissions from electricity and is made more accurate with the proposed changes to adopt hourly local emissions factors. Changes to the Market-Based Method are needed as well, but requiring hourly+local matching is throwing the baby out with the bathwater.

ET: “Updated Scope 2 market-based accounting is intended to provide a more accurate measure of progress towards the decarbonization of electricity use.”

• Accurate matching or emissions? Accurate emissions accounting doesn’t require more-accurate matching claims. And better accuracy of matching claims doesn’t guarantee emissions reductions.
• Accurate matching at what cost?

ET: “Tighter market boundaries will direct clean energy investments where it’s most needed to supply consumption”

• Tighter boundaries don’t magically align dollars with need; they align dollars with ZIP codes. That’s not system optimization; it’s procurement parochialism. We should be focusing on accelerating grid-wide decarbonization. Hourly matching appears to shift more demand to non-additional PPAs and low-impact RECs.

The path forward

Hourly+local matching alone will not get us to real decarbonization. What’s needed is an accounting framework that also measures GHG emissions in tCO₂. The TWG proposed such a path, and even the ISB acknowledged broad support for continued development. Rejecting it over unsettled details like marginal emissions factors or additionality risks locking the standards into a framework that prioritizes usage claims over impact.

We are not advocating to leave the standards as they are. Use of long-term contracts continues to grow and is central to financing new capacity. Standards should amplify their use, not make it harder. And they must work across grids at all stages of the transition to renewable energy and be relevant today and over the next decade.

Matching MWh alone is not GHG accounting. Standards must evolve to reflect consequential impact in tCO₂ and whether actions actually reflect and incentivize real-world decarbonization impact.

Later this fall, GHG Protocol will open a public comment period. It is essential that we all participate so they fully understand both the ramifications and the potential of the proposed rules.