A new analysis co-authored by Watershed, Flexidao, and Granular Energy examines how the Greenhouse Gas Protocol's (GHGP) proposed scope 2 revisions would affect corporate clean energy reporting, budgets, and impact. The GHGP issued the draft updates in October 2025. A public comment period closes on January 31, 2026, and final rules are expected at the end of 2027.
The report finds:
- The impact of annual matching can diverge materially from that of hourly matching (~50% in selected studies). Companies reporting 100% renewable electricity annually may achieve only 40-65% hourly carbon-free energy.
- Deliverability requirements could disqualify 30-50% of current unbundled REC portfolios.
- Constraining certificate eligibility by market boundaries can result in multi-fold price increases in affected markets, based on historical examples. In one region, REC prices rose roughly 3-7X following a shift to in-region eligibility.
- Operating costs could rise by low single-digit percentages relative to electricity spend due to increased data and assurance requirements.
Download the report here.
The GHGP's proposed changes
Under the GHGP’s current guidance, companies purchase renewable energy certificates (RECs) to claim carbon-free electricity in their greenhouse gas accounting. Each REC represents one megawatt-hour of renewable generation. Companies are allowed to match RECs to electricity consumption on an annual basis from anywhere in the world (“annual matching”). If a company uses 100 MWh over a year, buying 100 RECs—regardless of when or where that renewable energy was generated—allows them to report zero scope 2 market-based emissions.
The proposed revisions introduce two fundamental changes:
- Hourly matching: Requires RECs to correspond to electricity consumption in the same hour, not just the same year.
- Deliverability requirements: Restrict RECs to generation that can physically deliver electricity to the consuming load within defined market boundaries.
These changes shift from “did you buy enough renewable energy over the year?” to “was renewable energy actually serving your electricity load hour-by-hour?”
Key findings of this analysis
Annual matching significantly overstates emissions reductions
Research has found that annual matching approaches can overstate emissions reductions by approximately 50% compared to hourly matching. This gap exists because renewable generation patterns, like solar peaking midday or wind fluctuating, rarely align perfectly with actual electricity consumption.
Real-world corporate disclosures confirm this pattern. Google reported that while achieving 100% annual renewable matching in 2023, only 64% of its electricity came from carbon-free sources on an hourly basis.
For most companies, the analysis suggests that 100% annual coverage translates to roughly 40-65% hourly carbon-free energy. To achieve 100% hourly matching, companies would need to undergo significant procurement changes.
Deliverability constraints would disqualify many existing portfolios
Many companies currently rely on unbundled RECs from regions with surplus renewable generation to cover load elsewhere. For example, Nordic hydro certificates serve European and global consumption, and Texas wind RECs cover load far outside the Texas grid. Under the proposed deliverability requirements, these cross-border transactions would no longer qualify for market-based reporting.
The analysis finds that for companies with globally dispersed operations, new deliverability limitations could disqualify 30-50% of current unbundled REC portfolios. Companies would need to replace these certificates with locally- or regionally-sourced alternatives, which may be more limited in availability. The impact varies by geography: companies with load concentrated in renewable-rich regions face less disruption than those in markets with constrained local supply.
Regional supply constraints drive substantial price increases
Historical market data provides evidence of how deliverability restrictions affect costs. In PJM, the mid-Atlantic wholesale electricity market, eligibility rules tightened in the late 2010s to require in-region supply. REC prices increased from $5-10/MWh to $35-37/MWh by 2023—a 3-7x increase reflecting regional supply constraints once cross-boundary certificates no longer qualified.
The analysis suggests similar dynamics could emerge under the proposed GHGP updates. Where market boundaries constrain available supply, certificate prices would reflect local scarcity. Companies currently relying on low-cost unbundled RECs from surplus regions would face higher procurement costs to replace them with qualifying local alternatives.
New data and assurance requirements increase operating costs
Beyond procurement costs, the proposed rules would introduce additional administrative burdens:
- Hourly matching requires interval meter data for all consumption, which many companies don't currently collect or can't access from utilities.
- Documentation requirements expand to demonstrate deliverability and temporal alignment.
- Assurance processes become more complex, requiring verification of hourly data integrity and certificate eligibility across multiple market boundaries.
The analysis estimates these incremental operating costs typically fall in the low single-digit percentage range relative to total electricity spend. However, these costs depend substantially on external infrastructure, including utility data systems, certificate registries, and assurance provider capabilities, that remain outside corporate control.
Methodology
The analysis was conducted by Watershed, Flexidao, and Granular Energy. The report synthesizes multiple data sources to assess the proposed rule impacts. The researchers reviewed peer-reviewed academic literature on temporal matching methodologies, including peer-reviewed academic literature on temporal matching methodologies, and analyzed publicly-disclosed corporate data on annual versus hourly renewable energy coverage from companies. Historical REC pricing data from regional markets provided evidence of how eligibility restrictions affect costs. By examining how different portfolio characteristics—geographic distribution, contract types, resource mix—would perform under hourly matching and deliverability requirements, the analysis quantifies differential impacts across corporate renewable energy strategies.
Public comment period
The public comment period, during which companies can submit feedback to the GHGP, closes January 31, 2026. Learn more and participate here.
