EU carbon accounting methodologies must recognise market instruments used in corporate energy procurement as a route to decreasing carbon footprints. A uniform approach to carbon accounting methodologies, across all product categories starting with EV batteries and PV-modules, which recognises clean and renewable power purchase agreements and guarantees of origin is needed. This will cut carbon, unlock private investment in clean and renewable energy, and contribute to the Clean Industrial Deal’s goal of stabilising energy prices.
This is urgent because several strategic legislative files are delayed because of the ongoing political debate on carbon methodologies, primarily the EV Batteries Delegated Act and PV Ecodesign rules. At the same time, new measures are being introduced which rely on carbon metrics: from the Carbon Border Adjustment Mechanism to the Industrial Decarbonisation Acceleration Act. An unclear regulatory framework disincentivises private investment into industry decarbonisation. All this stalls progress towards Europe’s 2030 and 2050 climate as well as energy security goals.
Why is it the strategic choice for the EU to recognise market instruments like PPAs and guarantees of origin (GOs)?
Investment
PPAs mobilise private capital for clean and renewable energy projects and renewables help reduce electricity prices. Furthermore, as the Clean Industrial Deal promotes, PPAs are used to hedge against price volatility and provide an avenue for industry operating on carbon-intensive grids to decarbonise.
Consistency
Consistent rules across the EU’s regulatory framework are essential to send clear signals to stakeholders for investment decisions, e.g. promoting PPAs under RED III should also mean PPAs are accepted as a carbon reduction method. Therefore, a universal carbon methodology must be applied whether it is within the rules of the Batteries Regulation, Ecodesign, CBAM, IDAA or any other regulatory framework that applies product carbon accounting methods.
Efficiency
Harmonised carbon accounting rules lead to reduced administrative burden for manufacturers, as well as to improved transparency in reporting, monitoring and verification. Essential for the EU’s cutting red tape agenda.
Enforceable criteria that promote high quality, credibly verified PPAs and GOs are possible and desirable. They should promote real decarbonisation efforts and drive the energy transition. By using robust criteria and reliable verification methods, we can confidently allow energy procurement tools like PPAs within carbon methodologies, which, given the EU’s leading PPA market, would benefit European industry.
On the other hand, if the EU doesn’t recognise the critical role of PPAs and GOs in carbon accounting, the EU would create a severe disadvantage for companies operating in European countries with carbon-intensive grids, which are utilising PPAs to decarbonise their operations, thereby potentially hurting Europe’s current industrial base. Furthermore, reducing the attractiveness of PPAs risks stalling private investments which support the decarbonisation of national grids and associated reduced energy costs.
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