Month: June 2022

Highlights from a week in London: Net zero, scope 3, and more

Earlier this month, I had the pleasure of attending Reuters’ Responsible Business Europe 2022 in London and representing 3Degrees on a net zero panel discussion and workshop. As it was only my fourth week in my new role overseeing our climate consulting practice in Europe, I was thrilled to have the opportunity to engage with our team members from across North America and Europe, as well as dive into important climate target discussions with so many conference attendees and 3Degrees clients. There is certainly no shortage of questions on this topic!

It was an engaging, whirlwind of a week and, as I walked away from my first in-person event in well over two years, I kept thinking about the many recurring themes that presented themselves both in my conversations with sustainability leaders in organisations across a wide array of sectors, and in the conference sessions that I attended and helped facilitate. Here are a few highlights.

The time is now

“Don’t let perfection get in the way of progress.”

This was a refrain I heard over and over again at the event – and is consistent with the counsel we provide our clients on a daily basis. Companies simply cannot afford to sit back and wait any longer to take robust, meaningful climate action, even in the face of imperfect (and sometimes confusing) policies, slowly developing technologies, and gaps in knowledge. Organisations across sectors have woken up and feel the urgency: climate action is no longer a choice, it’s a necessity. Companies are experiencing pressure coming from a variety of directions – from customers, investors, employees and other internal stakeholders, and beyond. They also know they can’t get there alone. I participated in many conversations that were focused on finding the right partners to help these organisations reach their climate goals, whether that’s a net zero target or other interim targets on the path to zero. Truly, we are all in this together and I was inspired by the spirit of collaboration amidst the sense of urgency. 

Scope 3/supply chain emissions: the challenge is real

For organisations that have 2025 or 2030 net zero targets, the clock is obviously ticking – loudly. Many of these companies have made significant progress addressing their scope 1 and 2 emissions, but are now grappling with the reality of a sizable scope 3 footprint and difficult-to-address supply chain emissions. This was a topic of significant conversation at the event and it was clear that even companies that are further along in their climate journey still have many questions about the most effective approach for their business. Two specific themes were:

Supplier engagement: Leaders across a variety of sectors identified this as an ongoing pain point. Challenges include having the appropriate capacity and funding to implement required change, vendor cooperation and collaboration, lack of tools for accurate measurement and reporting, access to renewable energy in certain markets across the globe, and more. Companies are actively seeking tools and support to help them make the necessary progress here. 

Role of carbon credits in a net zero plan: 3Degrees hosted a customer roundtable on this topic the day before the Reuters event kicked off, and I also participated in a workshop and panel discussion on day two of the conference. A few of the key headlines:

  • In the absence of clear guidance with respect to carbon credits and net zero targets, many companies are forging their own path so they can expedite action. The urgency I mentioned earlier is driving organisations to the realization that they simply can’t wait for new reforestation projects or engineered carbon removal solutions and risk inaction at this moment. While removals will play an important long-term role, there’s also a global need for beyond value chain mitigation in the near term. This could include conservation of threatened natural ecosystems and significant methane avoidance and reduction in unregulated sectors. We counsel clients to think about transitioning their carbon credit portfolios over time, increasing the percentage of carbon removals – and the durability or permanence of those solutions – as well as projects in or near their supply chain.
  • There is an increasing interest in the biodiversity and societal impacts of carbon projects and there seems to be a trend towards beginning to look forward to measuring and reporting on biodiversity and other co-benefits from carbon credit projects.
  • Every organisation’s journey will end up looking different depending on their goals, budget, values and preferences. And this is okay – every organisation has a unique role to play in this market.

Carbon accounting technology is increasingly important 

Not surprisingly, with the rise in corporate climate commitments, there is also increased demand for accurate and easy-to-implement technology enabling these companies to more efficiently measure and report on their carbon footprint. As one of the Reuters panelists said, “You can only ask people to make different choices once you have the data.” This holds true for both internal company greenhouse gas (GHG) reduction initiatives, as well as supply chain engagement. Thus, the carbon accounting technology sector is hopping with activity right now and there are a somewhat overwhelming number of options for companies to parse through. 

Overall, my week in London attending the Reuters’ conference, engaging with clients, and connecting with my new colleagues provided the perfect welcome to 3Degrees. More than ever before, I am inspired to hit the ground running, collaborating with organisations that are ready to get serious about setting – and achieving – climate targets. If you’re interested in discussing how we can help, please don’t hesitate to reach out

Clean hydrogen for heavy-duty transportation decarbonization

Hydrogen has the potential to make significant contributions to transportation decarbonization, especially in heavy-duty vehicle applications. However, there is some disagreement on the best, most environmentally conscious ways to produce and use hydrogen as a fuel. As we discussed in part one of our blog series, the energy efficiency and climate impact of hydrogen fuel hinges on the feedstock and source of the electricity used in the production process. Hydrogen’s wide range in carbon intensity is attributable to the number of production pathways and processing technologies that exist. Pathways such as coal gasification, fossil methane SMR, and electrolysis–using a grid mix or renewables–each have their own range of GHG emissions because of unique feedstock extraction and hydrogen fuel conversion practices.

Regardless of source, hydrogen is a strong alternative fuel option as it can be used in fuel cell electric vehicles (FCEVs), which are electric vehicles that combine a hydrogen fuel cell and a motor. Electricity is generated by combining hydrogen with oxygen from the air. This power generation is performed inside the fuel cell and does not release any harmful emissions—just clean water and heat.

Fueling time and driving range are two distinguishing factors that set FCEVs apart from other electric vehicles. It takes about 5 minutes to fill a hydrogen tank, and when full, the tank’s range is similar to that of a standard internal combustion engine vehicle [1]. Because fuel cells are 2-3 times as efficient as internal combustion engines [2], one kilogram (kg) of hydrogen, which contains roughly the same amount of energy as a gallon of gasoline, can power a car for about 60 miles, while one gallon of gasoline sustains about 25 miles of travel. Fuel cells also make vehicles quieter and permit longer travel distance with fewer refueling requirements. 

Opportunities and Challenges 

Today, hydrogen is about $13/kg and is becoming more affordable with technological advancements and infrastructure expansion. To fully achieve hydrogen’s capacity to decarbonize, it will be important to scale up technologies in key sectors, encourage innovation in hydrogen pathways, continue research and development for cost reduction, and develop industry-wide hydrogen standards.

Hydrogen fuel cells aren’t confined to road vehicles; the use of hydrogen fuel cell forklifts for material handling applications is increasing in popularity. There are roughly 35,000 hydrogen fuel cell forklifts currently in use in warehouses, stores and manufacturing facilities throughout the United States, compared to an estimated 9,000 FCEVs on the road [3].

Efficiency gains are the main value proposition for forklifts—with hydrogen it takes just a couple of minutes to recharge a whole fleet, while an electric forklift takes up valuable space in facilities and warehouses while charging. By moving from battery or propane forklifts to fuel cell forklifts, a company can shrink their carbon footprint and maximize the profitability of each square foot of the warehouse. The shorter refueling time made available through fuel cells means reduced operational downtime and more optimized supply chains.

Clean hydrogen has the potential to significantly reduce emissions from transport, especially in heavy-duty applications that have proven hard to decarbonize, such as long-range or utility vehicles, forklifts, buses, trucks, trains, maritime and aviation. Clean hydrogen fuel can help to catalyze electric mobility in large fleets where battery-electric options are in short supply. 

With hydrogen, we see the same chicken and egg issue as previously mentioned with national EV infrastructure. Hydrogen production requires a large, centralized operation and therefore production sites are sporadic across the western United States. Similarly, FCEV availability is limited to areas with an adequate number of hydrogen refueling stations.

Financial Incentives and Policy Support

California’s Low Carbon Fuel Standard (LCFS) is a major force for deploying zero emissions vehicle infrastructure, including hydrogen refueling infrastructure (HRI). The LCFS provides significant incentive value to lower the carbon intensity of hydrogen, and its infrastructure provision allows credits to be generated from deploying HRI capacity. HRI credits are issued according to a number of inputs, including capacity of a station, station availability or up time, as well as the carbon intensity of the hydrogen dispensed. These credits incentivize infrastructure roll out by ensuring hydrogen stations generate a minimum number of LCFS credits. As the station dispenses more hydrogen, the number of infrastructure credits it generates are reduced and credits from the fuel increase.

Program rules dictate how renewable electricity supply in the form of renewable energy certificates (RECs) can be used to reduce the carbon intensity of hydrogen production. To qualify, RECs must have been generated within three quarters of the hydrogen production, be located on the same grid, meet California’s RPS eligibility rules, and not be counted toward any other voluntary or compliance program. RECs are used across the country to track, transact, and consume renewable electricity on the shared grid while preventing double counting.

Oregon and Washington have similar programs to the LCFS that encourage renewable hydrogen deployment. However, Oregon has no hydrogen production facilities, so hydrogen is often sourced from California-based producers and transported to facilities in Oregon to power hydrogen fuel cell forklifts. Under the CFP, 3Degrees developed the very first hydrogen pathway to generate credits and has issued 100% of the hydrogen credits issued under the Oregon CFP to date.

In addition to the current incentives under the LCFS, the California Air Resources Board (CARB) recently proposed the extension of HRI provisions to support hydrogen refueling infrastructure for medium- and heavy-duty vehicles. While this proposal is not finalized and is not guaranteed to be adopted, it could spur significant uptake of these vehicles, as most observers agree the greatest opportunities for FCEVs are in heavy-duty vehicles. Major advancement opportunities for hydrogen fuels exist in the trucking, shipping and handling, and manufacturing industries. Hydrogen will be key to meeting climate goals, but the high cost of ownership and shortage of infrastructure are obstacles that delay full deployment. Through policy support, technological innovation, and financial investment, hydrogen can be utilized at scale.

How We Help

For organizations exploring ways to accelerate the shift to low-carbon transportation, participating in clean fuels programs offers a path to access lucrative incentives for lower carbon initiatives to reduce the total cost of ownership of zero emissions vehicles and help finance a full transition. Earning credits can help cover the cost of hydrogen projects, but configuring transactions to get value for them is not an easy task. Meeting qualifications for these programs can be challenging—the hydrogen itself must meet a certain level of renewable content to be eligible for each program and there is a whole range of record keeping and monitoring requirements.

Working with an advisor alleviates the administrative burden and can help businesses recognize the highest possible value for participating in these programs. 3Degrees can help your organization reduce its transportation emissions by enabling a cost-competitive transition to zero emissions vehicles. To learn more about our transportation offerings, please get in touch

Resources: 

  1. 5 Things To Know When Filling Up Your Fuel Cell Electric Vehicle. U.S. Department of Energy, 2016.
  2. Hydrogen’s Role in Transportation. U.S. Department of Energy, 2022.
  3. Hydrogen and Fuel Cell Technologies Office Overview. U.S. Department of Energy, 2021.

Making Equitable Access to STEM Experiences Possible

AUI Workshop March 2022

An outpouring of shared ideas and questions from many excited voices within the crowd could be heard through microphones in the room at the March 18 workshop in Pittsburgh, Pennsylvania. About 90 Allegheny County K-12 educators and administrators were gathered to discuss shifts in science education and receive background knowledge in science, technology, engineering and mathematics (STEM) topics as a part of the CE – Clean Energy. Bright Futures. program, which aims to accelerate an equitable clean energy future by increasing the awareness of STEM education in underserved school districts. 

Clean Energy Bright Futures Map

Operating in 26 states, CE’s mission is to transform education for the next decade through local engagement led by educators serving as Clean Energy Fellows in their communities. Becoming a Fellow consists of on-site training with local education partners, utility professionals and other industry experts to provide them the resources to successfully transfer their knowledge and training to students in the classroom. 

Fellows are given classroom lesson plans, innovative science learning materials, and engaging STEM enrichment activities for students. Customized through a collaborative planning process with local educators, training ranges from conference sessions and full-day instruction to a year-long curriculum development lab. Fellows work with CE and community mentors, such as industry representatives, to build knowledge about local energy systems and career pathways. They receive stipends for their time and effort. 

In order to determine which communities to serve, CE conducts preliminary analyses and contacts a variety of entities in the local STEM community. The key contacts are usually people responsible for curriculum development, such as associated non-profit organizations, school districts, and STEM networks. CE relies heavily on local expertise in education and energy, and consulting with local leaders to best understand the needs of each specific community. 

Once Clean Energy Fellows are active in their school districts, there is ongoing curriculum consulting done by CE to ensure effective assimilation into the existing education framework to achieve long-term autonomy over STEM education for all students. 

Clean Energy Bright Futures Implemenation

Pennsylvania Cohort

With newly introduced state science standards, Pennsylvania teachers have shown a strong interest in gaining additional exploratory science education resources for their classrooms. Pennsylvania’s updates to the K-12 science standards are similar to that of the nationwide effort, Next Generation Science Standards (NGSS). This, along with prior community outreach, made the Pittsburgh community a key candidate for implementing the STEM skills training. 

CE led interactive breakout sessions at the Allegheny Intermediate Unit’s (AIU) Kickoff Event entitled, A New Vision for Science Education: Shifting from “Learning About” to “Figuring Out.”  on March 18, 2022. Attendees received a keynote presentation from a science education researcher and professor at Penn State on the shifts required to transition to NGSS. In the breakout sessions, elementary-level teachers examined how to build a small wind turbine that would power an LED light, while middle- and high-school educators analyzed a video of a fallen branch on a powerline. This led to interesting conversation and hands-on learning to develop a deeper understanding of the science behind the events. The lessons emphasized the importance of using science education to solve problems. 

“You provided a wonderful introduction to what is embodied in our soon-to-be-released PA Integrated Science Standards. Not only did teachers and administrators learn about energy and energy transfer in a way that is grade-level appropriate, they also learned a bit about the idea of exploring before explaining.”

-Allegheny Intermediate Unit Math & Science Collaborative Crew

Energy Empowerment for All 

CE seeks collaborative partnerships with organizations whose mission is to expand equity and access for students from groups traditionally excluded from STEM opportunities. CE and its partners center their efforts around fostering equity and justice in STEM with emphasis on addressing racial injustice, gender inequity and other barriers to success for minority identities in STEM fields. Some of the program benefits include: 

  • Long-term, sustained impact in traditionally excluded communities
  • Amplified local STEM teacher and student leadership
  • Engaging all students in clean energy opportunities (regardless of race, gender, ethnicity, geography or socioeconomic status) in the science field 
  • Chance at equitable access to family wage, wealth-building careers in energy
  • Showing students how to become educated energy consumers, creative problem solvers

Quickly evolving and highly volatile, the energy sector is one of the fastest growing industries, and its workforce needs talented individuals from diverse backgrounds. To succeed in an equitable clean energy transition, all students need to be set up for success, and CE is doing just that by closing the opportunity gap one school district at a time. 

How We Helped

Clean Energy Bright Futures works with corporate sponsors, like 3Degrees, to support the program. 3Degrees provided a $60,000 grant to the Bonneville Environmental Foundation, who runs CE, for the Clean Energy Fellows’ Pennsylvania Cohort. 

Sponsors fund the program and collaborate with local STEM leaders to build curriculum, educator capacity, resources, and connections to real-world projects. Partners help transform education through supporting CE’s networks of educators in developing wealth-building STEM skills for the next generation who will lead an equitable clean energy transition to a low carbon future. Continued support is provided to help guarantee the program is self-sustaining for years to come. 

The CE program relies on the support of funding partners to extend the reach of these hands-on STEM education resources to classrooms nationwide. If you would like to get involved in supporting this project, please contact us today.

Maximizing carbon displacement with power purchase agreements: Part 2: Using battery storage for carbon arbitrage

What is Carbon Arbitrage?

Arbitrage on its own is an investment strategy that leverages price differences to generate a profit by buying and selling the same assets at different prices (buy low, sell high). Carbon arbitrage involves leveraging emission factor differences to maximize carbon displacement by shifting renewable generation to more carbon-intense hours.  

The benefits of carbon arbitrage tend to be less focused on the financial value, but rather on short- and long-term carbon emissions reduction, risk mitigation, and social benefits.

Maximizing the carbon displacement value of your renewable energy procurement is all about enhancing the climate benefit of your project. To respond to the increasing number of clients inquiring about this, we put together a three-part blog series with approaches organizations can use when planning their strategies.

In part one of this series on maximizing carbon displacement value, Amy Chiang highlighted choosing the right market for your power purchase agreement (PPA). The market you choose can have a sizable impact on the carbon displacement value of your project based on the carbon intensity of that region, along with how renewable energy technologies intersect with that market.

In this blog, we’ll uncover how to ensure maximum carbon displacement value through using an alternative technology for carbon arbitrage. 

Leveraging Alternative Technologies for Carbon Arbitrage

To get the maximum carbon displacement out of a project, you’ll need to first choose a market and technology combination as we discussed in part one. While doing this, it’s important to keep in mind the time of day and why it matters. Knowing that wind farms typically generate the most output at night, while solar plants generate during the day, is a crucial starting point. The challenge then becomes lining up the hours that power is being sent to the grid with the hours of highest carbon intensity. This is where alternative technologies come in to help. While several technologies can be used for carbon arbitrage, we are going to focus on the most common technology, battery storage.

Currently, battery storage is often used to shift electricity generation to hours that have higher prices in order to maximize the project value (“energy arbitrage”). Along with the monetary benefits of battery storage, you can also use it to transfer renewable energy electricity to hours that have higher carbon emissions (“carbon arbitrage”). Conveniently, higher carbon emissions hours often equate to higher priced hours and carbon arbitrage can result in both increased avoided carbon and increased value. However, that is not always the case, and carbon arbitrage can in some cases lower the value of the project. 

Due to the potential for decreased project value, implementing carbon arbitrage may require buyers to shift their mindsets. Your strategy will have to change from energy arbitrage (using the difference in hourly prices to maximize revenue by charging your battery at low-priced hours and discharging at high-priced hours) to carbon arbitrage (using the difference in hourly emission factors to maximize the displacement of carbon emissions by charging your battery at low emission hours and discharging at high emission hours).

Carbon Arbitrage Emissions Factors & Reporting

We touched on the methods for calculating emissions factors in a grid in part one, but as a reminder, the two most common emissions factor types are average emission factors and marginal emission factors

There is currently no agreed upon standard calculation – different organizations take different approaches, and discussions about what should be the primary approach are ongoing. Some organizations will only accept the use of marginal emission factors when calculating carbon displacement as they see this as the best way to calculate avoided emissions due to their categorization of the last, marginal plant as well as sensitivity to time of day. However, others argue that average emission factors are influenced by time of day as well and can still demonstrate why time of day matters for carbon intensity when calculating carbon displacement. 

What we can agree upon is that there is currently no incentive for carbon arbitrage, in either the market structure or reporting. The Greenhouse Gas (GHG) Protocol does not account for this and it can be more laborious to incorporate into your project. Currently, carbon arbitrage will only be implemented if there is a prioritization of the impact your project will have. 

3Degrees sees a future in which there are incentives for carbon arbitrage. The reporting standards could switch from accepting attributional accounting (annual matching of energy attribute certificates (EACs) to megawatt-hours (MWh)) to requiring consequential accounting (measuring the carbon emissions you caused compared with the carbon emissions you avoided). In this world, carbon arbitrage could be used to maximize avoided carbon per MWh, which would result in fewer MWh needed to meet reporting goals. Or, there could be future regulatory changes, like a carbon tax. By putting a value on carbon, an incentive would then be created for carbon arbitrage. Regardless of what the future scenario may be, companies that focus on carbon arbitrage now are getting ahead of the curve and leading the way on groundbreaking work.

Leadership Needed for a Net Zero World

To close out, most of the world’s public and private organizations currently use annual EAC matching for their electricity emissions reductions. However, there are some organizations that are exploring alternative locations or technologies to displace even more carbon and drive deeper impact. We strongly believe that this leadership will give companies a head start on future carbon-based reduction goals.

Up Next: How PPAs Fit into a 24/7 Carbon Free Energy Strategy

In the final blog in this series, we’ll explore another innovative carbon displacement strategy to see how PPAs fit into 24/7 energy matching. 

If you have questions about your organization’s renewable energy procurement strategy in the meantime, please contact us.