What the proposal changes
The Greenhouse Gas Protocol (GHG Protocol) has released a draft revision to its Scope 2 emissions accounting methodology. Under the current rules, firms can claim renewable-energy credits (RECs) as long as the electricity is sourced within the same calendar year and from a broad geographic area. The draft would tighten that requirement, allowing credit only when clean energy is generated in the same hour and on the same grid as the fossil-fuel electricity it offsets.
Why the shift matters
Scope 2 accounting underpins the net-zero targets of almost all companies in the Global EuroHerald 500. The protocol is used by roughly 97 percent of S&P 500 firms pursuing carbon-neutral goals. If the hourly, grid-matched rule is adopted without a grandfather clause, more than 90 percent of today's multibillion-dollar REC certification market could be rendered ineffective. Companies such as Google and Microsoft that already align with the new methodology would be spared, but the majority of corporations could see their sustainability scores fall sharply.
Lower scores risk barring firms from markets that require high sustainability ratings and could reduce opportunities to partner with suppliers that prioritize green credentials. The potential financial impact has prompted a wave of criticism.
Industry reaction
More than 1,000 comments were submitted on the draft, with only 22 percent supporting hourly matching. Among the respondents, just 12 percent of the 429 companies that answered the question were in favour.
"Mandatory time and location matching could chase away corporate investors and undermine the relevance and impact of the Protocol," said the Clean Energy Buyers Association (CEBA), which represents buyers such as Amazon, Salesforce, Dollar Tree and Lululemon.
The GHG Protocol working group is set to meet next month to address the pushback. Many stakeholders are urging an optional approach for the new hourly accounting, alongside a separate metric that would capture the broader impact of clean-energy investments not tied to a specific grid.
Background on the protocol
Established in 2015, the GHG Protocol created a voluntary framework that allowed companies to offset Scope 2 emissions with RECs, helping finance more than 260 gigawatts of renewable capacity worldwide. Its widespread adoption meant that regulators and certification bodies built rules on top of the protocol's methodology, even though the framework lacks the rigorous accounting standards required for formal regulation.
Electricity on a grid is indistinguishable once mixed, making it impossible to prove that a particular kilowatt-hour of renewable power directly displaced a fossil-fuel kilowatt-hour for a specific factory. Proponents argue that the tighter rule would curb "greenwashing" by preventing firms from buying cheap, off-grid RECs. Critics contend that the change would disrupt investment incentives that have driven over 100 gigawatts of new renewable capacity in the United States without delivering meaningful improvements in reporting accuracy.
What comes next
The upcoming working-group meeting will decide whether the hourly, location-specific requirement becomes mandatory, optional, or is abandoned. Parallel efforts, such as the Actions and Market Instruments (AMI) framework, aim to develop a complementary metric for global impact, but AMI is not slated to be part of the core Scope 2 accounting at this stage.
Regulators in the European Union and California have recently delayed reporting updates, signalling a broader trend toward flexibility rather than stricter precision. The Science-Based Targets initiative (SBTi) has incorporated hourly matching only as an optional voluntary recognition, indicating that the industry may favour a hybrid solution that protects legacy contracts while offering new, optional pathways for higher-resolution accounting.
Investors will be watching closely. If the GHG Protocol proceeds with a mandatory hourly rule, the immediate effect could be a sharp re-valuation of companies' sustainability scores and a potential reshaping of the REC market. A compromise that retains optionality and provides a transition period would likely minimise disruption while still encouraging more accurate reporting.