Energy Use Accounting

This Module describes how energy-related emissions must be calculated for Carbon Dioxide Removal (CDR) projects as part of project greenhouse gas (GHG) accounting. This Module applies to all CDR pathways, ensuring a consistently rigorous standard in how energy-related emissions are quantified and reported between different projects and approaches.

This Module was developed based on the current state of the art, publicly available science regarding energy emissions accounting. This Module will be updated in future versions as the underlying science evolves and the availability of high-quality data and documentation in the energy market increases, for example regarding emissions factors and power purchase agreements.

This Module will be reviewed at a minimum each year, when substantial changes of data availability in the energy market occur, or when there are substantial advances in understanding of scientific concepts relevant to emissions accounting for energy usage.

Isometric recognizes that best practices for the provision of energy to CDR projects currently represents an area of uncertainty. Isometric will continue to actively engage with the scientific community regarding the scientific rigor and operability of various energy emissions accounting frameworks for CDR projects, and will actively work to drive consensus in the ecosystem between suppliers, buyers, and academics towards the most rigorous approaches possible. Isometric is comitted to progressively introducing the most rigorous available requirements for energy emissions accounting over time, and intends to phase-in more robust approaches at the earliest time at which the evolving science allows, and at which such approaches are proven to be operable under prevailing market conditions.

The emissions associated with energy use must account for all operations that consume energy within the CDR project processes, through the usage of both electricity and fuel. Emissions associated with energy use for a Removal, $R$, are written hereafter as $CO_2e_{Energy,R}$.

Primary non-road/rail/air/maritime mobile sources are included within this boundary, such as fork trucks and loaders used for material handling, and small personal transport modes used to move staff around project sites. However, road, rail, air and maritime mobile emission sources are excluded from the calculation of $CO_2e_{Energy,R}$, as they are accounted for in $CO_2e_{Transportation,R}$. Refer to the Transportation Emissions Accounting Module for the calculation guidelines.

It should be noted that this Module relates to electricity and fuel consumption strictly within the project gate. Energy emissions associated with the production of products/feedstocks used as inputs for project operations are accounted for separately within the scope of the Embodied Emissions Accounting Module.

Emissions associated with energy usage include the use of both electricity and fuel. The following calculation approach must be followed for the calculation of $CO_2e_{Energy,R}$:

$$CO_2e_{Energy,R} = CO_2e_{Electricity,R} + CO_2e_{Fuel,R}$$

(Equation 1)

Where:

• $CO_2e_{Energy,R}$: the total GHG emissions associated with energy consumption for a removal, $R$, in tonnes of CO₂ equivalent (CO₂e).

• $CO_2e_{Electricity,R}$: the total GHG emissions associated with electricity usage for a removal, $R$, in tonnes of CO₂e.

• $CO_2e_{Fuel,R}$: the total GHG emissions associated with fuel usage for a removal, $R$, in tonnes of CO₂e.

$CO_2e_{Electricity,R}$ and $CO_2e_{Fuel,R}$ must account for all operations and support systems that consume electricity or fuel within the CDR process. This may be calculated on an individual or combined basis, provided that all operations within the process are accounted for.

Equation (1) and the calculation approaches described in Sections 5-6 can also be followed for a batch, $n$, or for a Reporting Period, $RP$.

Electricity-related emissions are typically indirect emissions associated with generation and transmission of electricity by another entity (e.g. an electric utility) which is used by the CDR process. All electricity-related emissions for electricity obtained from the grid (i.e. from an electric utility) shall be accounted for using average emissions intensities for the grid region within which The Project is located (see Section 5.2).

The calculation approach in this Module distinguishes between intensive facilities, which use significant amounts of electricity, and non-intensive facilities. Intensive facilities are defined as those which consume more than 200 GWh of electricity per year.

Intensive facilities are subject to more stringent energy accounting rules than non-intensive facilities. Non-intensive facilities should follow the calculation approach in Section 5.2 and Section 5.4.1 (if applicable). Intensive facilities should follow the calculation approach in Section 5.2 and Section 5.4.2 (if applicable).

The following calculation approach must be followed for emissions associated with provision of electricity from the grid:

$$CO_2e_{Electricity,\ R} = f_{grid} \sum_{i=1}^{N}E_i$$

(Equation 2)

Where:

• $f_{grid}$: grid average emissions factor, in tonnes of CO₂e/kWh. Details of requirements for acceptable emissions factors can be found in Section 5.5.
• $E_i$: electricity usage in hour $i$, in kWh.
• $N$: total number of calendar hours for removal, $R$.

If a CDR project relying on a non-intensive facility wishes to reduce their energy emissions through direct procurement of low-carbon power, they may use the calculation approach in Section 5.4.1. If a CDR project relying on an intensive facility wishes to reduce their energy emissions through direct procurement of low-carbon power, they may use the calculation approach in Section 5.4.2. Project Proponents will be responsible for providing sufficient documentation to submit these calculations, as set out in Section 5.3.

A project may wish to reduce its energy emissions through the procurement of low-carbon power. Project Proponents will be responsible for providing sufficient documentation to allow for the discounting of project energy usage through this mechanism.

Electricity consumption is subdivided into consumption of ‘qualified’ and ‘non-qualified’ electricity:

• Qualified: electricity which is procured by contract purchase from low-carbon sources for the exclusive use of The Project. For qualified electricity, Project Proponents are required to account for emissions associated with the specific generator types which have been procured, including any embodied emissions.
• Non-qualified: electricity which is obtained from the electricity grid to which The Project is connected. For non-qualified electricity, Project Proponents are required to use average grid emissions factors for the calculation of emissions - as described in Section 5.2.

It should be noted that Project Proponents may elect to establish power generation "behind-the-meter". Generators are considered to be behind-the-meter when the equipment is owned and operated by the Project Proponent, or when the equipment is (i) owned and operated by a third-party, (ii) directly connected to The Project, and (iii) does not contribute to transmission on the local electric grid. Under these circumstances, the electricity usage metered for the project operations ($E_i$) will correspond to the difference between the total electricity demand of The Project and the amount of electricity generated by behind-the-meter generators in each metering time period. Generators which are behind-the-meter do not need to satisfy the eligibility criteria established below for qualified electricity. Both embodied and operational emissions associated with behind-the-meter generators should be quantified and allocated to the net-CO₂e calculation for each Reporting Period, $RP$, following the same approach as for all other project equipment.

Qualified electricity must meet all of the following eligibility criteria:

Acceptable grid region definitions should be utilized in-line with those defined by a local regulatory authority. For projects operating in the United States, Project Proponents should use the definitions of grid regions established in the Department of Energy National Transmission Needs Study¹ (i.e. the definition adopted in the United States 45V tax credit for production of clean hydrogen). For projects operating in the European Union, Project Proponents should use the European Network of Transition System Operators (ENTSO) definitions of grid regions (referred to as "power regions"). Projects operating within all other global regions will agree with Isometric, at the point of submission of the PDD, appropriate grid region boundaries to use for the purposes of applying the requirements established in this Module. It should be noted that the definition of a grid region within this Module may change over time as regional frameworks and definitions develop further. However, generators which are certified as deliverable to a Project at the point of commencement of Project operations will retain this certification for the duration of the project lifetime, regardless of future updates to this Module.

Projects which procure low-carbon power to reduce their energy emissions should follow the calculation approach for $CO_2e_{Electricity,R}$ described in this Section. Non-intensive facilities should follow the approach described in Section 5.4.1. Intensive facilities should follow the approach described in Section 5.4.2.

The following calculation approach must be used for non-intensive facilities:

$$CO_2e_{Electricity, R} = f_{grid} \left[ \left( \sum_{i=1}^{N}E_i \right) - \left( \sum_p G_p \right) \right] + \sum_p f_p G_p$$

(Equation 3)

Where:

• $G_p$: total amount of energy procured for removal $R$ by generator type $p$, in kWh. Note that in the calculation outlined above, the amount of procured electricity may not exceed the amount of electricity consumption by The Project for the removal, $R$.
• $f_p$: emissions factor for generation by generator type $p$, in tonnes of CO₂e/kWh.

For non-intensive facilities, documentation proving the direct procurement of low-carbon power should be time-stamped within one year prior to the point of consumption by The Project.

The following calculation approach must be used for intensive facilities:

$$CO_2e_{Electricity, R} = f_{grid} \sum_{i=1}^N \left( E_i - G_{p,i} \right) + \sum_p \left( f_p \sum_{i=1}^N G_{p,i} \right)$$

(Equation 4)

Where:

• $G_{p,i}$: amount of energy procured in hour $i$ by generator type $p$, in kWh. Note that in the calculation outlined above, the amount of procured energy in hour $i$ may not exceed the amount of electricity consumption by The Project in hour $i$.

For intensive facilities, documentation proving the direct procurement of low-carbon power should be time-stamped with an hourly time granularity and accordingly matched to project energy usage on an hourly basis. Project Proponents must obtain documentation time-stamped with an hourly time granularity when available in the region of operation. We note that as an alternative approach, Project Proponents are permitted to operationalize Configuration 3 of the EnergyTag Granular Certificate Scheme Standard². Further details of this approach, and limitations to it's application in the context of this Module, are provided in Appendix 2.

Under some operational circumstances, documentation proving the direct procurement of low-carbon power featuring hourly time stamps may not be available from any power provider in the region of project operations. In this case, intensive facilities may follow the calculation approach described in Section 5.4.1 (Equation 3), provided that all of the following conditions are met:

• Project operations commenced before the year 2028;
• The Project is at the demonstration scale, defined here as an annual gross removal rate of less than 100,000 tnCO₂/yr. Note that subdivison of projects into several smaller projects is explicitly prohibited, and compliance with this requirement will be verified on a case-by-case basis at the point of project verification; and
• Reasonable best efforts have been made to obtain documentation featuring hourly time stamps. This must be evidenced by the provision to Isometric at the point of project verification of both (i) evidence of engagement with a minimum of three independent power providers and/or vertically-integrated utilities in whose territory the Project operates, including evidenced correspondence confirming that these suppliers do not offer documentation featuring hourly time-stamps and evidence that power provision from these suppliers would otherwise satisfy the requirements established under EC3 and EC4 for qualified electricity, and (ii) a signed affidavit by the Project Proponent declaring that, to the best of their knowledge, procurement documentation featuring hourly time stamps is not currently available in the region of project operations.

It should be noted that all energy intensive projects must procure low-carbon power according to an hourly matching scheme (i.e. Equation 4) whenever possible, as this represents the most credible approach towards accurate characterization of the emissions associated with the provision of electricity to CDR projects. Isometric anticipates that by approximately the year 2028, contracting structures featuring hourly time stamps to facilitate hourly matching of low-carbon power procurement to project electricity demand will be widely available as a consequence of incoming regulations in various jurisdictions (e.g. the US DoE 45V tax credit for the production of low-carbon hydrogen, EU CRCF, etc.). At such a time that contracts featuring hourly time stamps are widely available in the energy market, the exception for energy intensive facilities described above will be revoked and compliance with the hourly matching scheme (Equation 4) will be mandatory for all projects relying on an intensive facility. Isometric anticipates that this provision will expire in approximately the year 2028. However, this date will remain under constant review. It should be noted that projects which commence operations using the exception described above will be permitted to utilize the exception for the full duration of the obtained PPA, regardless of any future updates to this Module. Upon expiration of the obtained PPA, if this occurs at such a time that this provision has been revoked from this Module, then compliance with the hourly matching scheme described above will be mandatory.

Information regarding the low-carbon power procurement approach used by the Project Proponent will be transparently reported in the public PDD, which will be available for download from the registry page associated with each credited removal.

$f_{grid}$ - emissions factors used must:

• Be technology-specific to the mix of electricity generation methods in the connected electric grid;
• Be reported on a consumption basis, meaning that all net physical energy imports/exports across the grid boundary should be reflected;
• Account for the full life cycle emissions associated with electricity generation, including direct emissions from power generation, transmission and distribution losses, and upstream life cycle emissions associated with extraction, refining and transportation of primary fuels (i.e. from cradle-to-gate);
• Be for the specific region (nation, state, locality) where the electricity consumption is occurring, with the most granular or site-specific data source preferred;
• Be for the most recent published year. Wherever possible, the utilised emissions factors must correspond to those most recently published by the relevant authority in the region of project operations;
• Wherever available, be reported on a residual-mix basis, meaning that any generators within a grid region which are subject to contract purchase (e.g. through RECs/PPAs) are excluded from the average emissions calculation. Project Proponents must declare whether such data is available in the region of operation, and utilize such data wherever possible; and
• Account for total GHG emissions as CO₂e. Separate emissions factors for each GHG may be utilized, and the calculated emissions should be converted to CO₂e using the 100-yr Global Warming Potential (GWP) for the relevant GHG, based on the most recent volume of the IPCC Assessment Report (presently the Sixth Assessment Report).

$f_p$ - emissions factors used must:

• Be technology-specific to the method of electricity generation;
• Account for all embodied emissions associated with the establishment of procured generators by amortizing on a per unit electricity generation basis. If embodied emissions are not included within the used emissions factor, then they must be calculated separately and allocated to The Project on a proportional basis relative to the usage of the generating asset over its anticipated lifetime and generation capacity;
• Account for the full life cycle emissions associated with electricity generation and include direct emissions from power generation (i.e. fuel combustion), upstream emissions associated with fuel production, equipment manufacture, and equipment decommissioning and disposal at a minimum;
• Account for any necessary derating factors associated with energy loss during transmission between the generating facility and The Project. Where derating factors are not applied in the utilized emissions factors, the Project Proponent must additionally account for these. For example, derating factors for transmission losses may be estimated using the approach of Sadovskaia et al. (2019)³, or any other suitably justified method; and
• Account for total GHG emissions as CO₂e. Separate emissions factors for each GHG may be utilized, and the calculated emissions should be converted to CO₂e using the 100-yr Global Warming Potential (GWP) for the relevant GHG, based on the most recent volume of the IPCC Assessment Report (presently the Sixth Assessment Report).

Regional or subnational location-based grid average emissions factors must be used where available for the calculation of $f_{grid}$. These must represent net physical energy imports and exports across the grid boundary and all electricity production occuring in a defined grid distribution region that approximates a geographically precise energy distribution and use area.

Applicable life cycle emission factors include those utilized in the Argonne National Laboratory GREET Model⁴, California Air Resources Board modified GREET model (CA-GREET)⁵, Ecoinvent database⁶, US Federal Life Cycle Inventory database or LCA Commons⁷, and similar databases used in common life cycle assessment (LCA) practices or tools (such as OpenLCA, SimaPro, or GaBi).

Emission factors may be used that do not incorporate the full life cycle emissions associated with power generation if these additional life cycle emissions are accounted for separately. Power generation emission factors based on fuel combustion from sources such as EIA or US EPA (i.e., AP-42) may also be utilized if the additional upstream and downstream life cycle considerations are addressed.

The primary measurement considered in calculation of electricity emissions is:

• $E_i$: total amount of electricity used by The Project in hour $i$.

Measurements must be made using a utility grade power meter, or an independant power meter installed by the Project Proponent, with hourly reporting frequency at minimum. Preference is for meters with an accuracy of better than 2% of reading for total electricity consumption, as reported in units of kWh. However, meters with accuracy of worse than 2% of reading for total electricity consumption are acceptable provided that the accuracy of the meter is reported and an appropriate discount is applied to the Project net-CDR calculation. Meters must be calibrated initially and at regular intervals in accordance with manufacturer specifications to ensure accuracy.

Electricity usage must be monitored for all operations within the gate at each location of utilization relevant to project operation. The Project Proponent must maintain records of any electricity use for any operation or support system within the gate of a removal that consumes electricity. This is in addition to documentation listed in Section 5.3, if applicable to The Project.

Allowable electricity records include, but are not limited to:

• On-site electricity meter readings (i.e. utility electric meter), whether owned by the site owner or by the electric utility, either electronic or manually logged; or
• Independent power meter readings for metering equipment installed by the Project Proponent to measure power consumption of the process.

If other equipment or processes not related to the removal process are included in meter readings or utility bills, electricity usage may be allocated to such processes based on sub-metering data, equipment maximum electricity consumption ratings and operating hours for each sub-system, or by other justifiable allocation methods which must be reviewed and accepted during third party verification.

All records of electricity usage, including meter specification and calibration records, must be maintained by the Project Proponent for a period of at least five years.

Process emissions may result from combustion of fuels to provide thermal energy to support equipment startup and operations, to supply steam or other thermal energy sources for operations, or to power primary non-road/rail/air/maritime mobile sources. Fuels for the provision of heat to The Project can be supplied from outside sources, or may be produced as a result of activities within the project gate.

The following calculation approach must be followed for calculation of $CO_2e_{Fuel, R}$:

$$CO_2e_{Fuel, R} = \sum_{k=1}^K m_{fuel,k}f_{fuel,k}$$

(Equation 5)

Where:

• $CO_2e_{Fuel, R}$: total GHG emissions resulting from fuel combustion for a removal, $R$, in tonnes of CO₂e.
• $m_{fuel,k}$: total mass, volume, or heating value of fuel $k$ used for a removal, $R$ in appropriate units e.g. kg, gal, ft³, therms etc.
• $f_{fuel,k}$: emissions factor for fuel $k$ in tonnes of CO₂e/unit.
• $K$: total number of distinct fuels, $k$, used for a removal, $R$.

Project Proponents may consider the use of waste heat to reduce the fuel usage of a project. Waste heat sources do not require accounting of GHG emissions associated with production of the utilized thermal energy. Waste heat utilization must meet the criteria described in Section 6.1 to be eligible for discounting against project heat usage.

Any activities specifically developed inside the project gate to handle and utilize waste heat must be accounted for in the life cycle analysis. These potentially include, but are not limited to:

• Waste heat distribution systems, including pumps, piping, or other equipment;
• Waste heat upgrading processes, such as heat pumps, booster pumps, other other equipment; and
• Waste heat conversion processes, such as heat-to-power technologies (e.g. organic Rankine cycle generators).

Equipment and energy usage associated with waste heat utilization must be accounted for in accordance with the requirements of this Module and the Embodied Emissions Accounting Module.

Waste heat must meet all of the following criteria to be considered exempt from GHG emissions accounting:

$f_{fuel,k}$ - emissions factors used must:

• Be selected based on the specific fuel type being used and the type of combustion process;
• Be for the specific region (nation, state, locality) where the fuel consumption is occurring, with the most granular or site-specific data source preferred;
• Account for the full life cycle emissions (well-to-wheel) associated with fuel combustion and include direct emissions from fuel combustion, as well as upstream emissions associated with fuel production and equipment manufacture, and downstream emissions associated with equipment decommissioning and disposal, at a minimum; and
• Account for total GHG emissions as CO₂e. Separate emissions factors for each GHG may be utilized and calculated emissions converted to CO₂e using the 100-yr Global Warming Potential (GWP) for the relevant GHG, based on the most recent volume of the IPCC Assessment Report (presently the Sixth Assessment Report).

Acceptable emission factors include those utilized in the Argonne National Laboratory GREET Model⁴, California Air Resources Board modified GREET model (CA-GREET)⁵, Ecoinvent database⁶, US Federal Life Cycle Inventory database or LCA Commons⁷, and similar databases used in common LCA practices or tools (such as OpenLCA, SimaPro, or GaBi (LCA for Experts) ).

Other emission factors may also be used that do not incorporate the full life cycle emissions associated with fuel combustion if the additional life cycle emissions are accounted for separately. For example, data sources such as the US EPA - Direct Emissions from Stationary Combustion⁸, US EPA AP-42⁹, or US EPA MOVES Model¹⁰ (mobile sources) may be utilized as long as additional factors for full life cycle emissions are included in analyses.

Note that heat supply to projects from sources other than fuel combustion is allowable under this Module (e.g. geothermal steam). In these cases, bespoke emissions factors are likely necessary on a case-by-case basis, as emissions from such sources can vary significantly by site. Therefore, the exact emissions allocation procedure will be reviewed and agreed by Isometric at the point of project verification.

The primary measurement considered in calculation of fuel emissions is:

• $m_{fuel,k}$: total mass, volume, or heating value of fuel $k$ used for a removal, $R$ in appropriate units e.g. kg, gal, ft³, therms etc.

Fuel usage must be monitored for all operations within the gate at each location of their utilization relevant to project operation. The Project Proponent must maintain records of any fuel use for any operation or support system within the gate of a removal process that consumes fuel.

Allowable fuel records include, but are not limited to:

• On-site fuel meter readings (e.g. natural gas utility meter, fuel flow meters), either electronic or manually logged; or
• Weight of fuel container readings, either electronic or manually logged; or
• Monthly utility bills, if they indicate total fuel consumption for the month by the process, and/or a justifiable allocation procedure is used to determine fuel consumption by the process; or
• Fuel usage for handling equipment may also be determined by any of the above methods, or, if necessary, by documentation of total time of use of each equipment item for a removal, R, and calculation of the fuel consumption based on manufacturer fuel consumption ratings. Data obtained from equipment manufacturer on-board-diagnostics or on board data systems is also acceptable.

If other equipment or processes not related to the removal process are included in meter readings or utility bills, fuel usage may be allocated to such processes based on sub-metering data, equipment maximum fuel consumption ratings and operating hours for each sub-system, or by other justifiable allocation methods which must be reviewed and accepted during third party verification.

Meters must be calibrated initially and at regular intervals in accordance with manufacturer specifications to ensure accuracy. All records of fuel usage, including meter specification and calibration records, must be maintained by the Project Proponent for a period of at least five years.

Isometric would like to thank following contributors to this Module:

• Tim Hansen (350 Solutions).
• Wilson Ricks (Princeton University)

This appendix is a companion to the Isometric Energy Use Accounting Module V1.2, providing supporting information regarding the rationale and factors considered when determining the requirements of the Module. This appendix should be read in conjunction with the Module and is provided as guidance. Should there be any discrepancy or inconsistency between this appendix and the Module itself, the requirements of the Module will prevail.

The emissions accounting approach adopted in this Module for electricity consumption from the grid requires the use of generation-weighted grid-average emissions factors. An alternative approach supported by some published studies relies on the use of marginal grid emissions factors when accounting for emissions from electricity consumption from the grid.

A marginal generator is the specific generating unit in a grid region which will modify its output in response to changes in demand from users of the grid. In many grid regions, even those with a high proportion of generation provided by renewables, the marginal generators will often be fossil-fuel based. The marginal emissions factor, specifically the Short-Run Marginal Emissions (SRME) rate, aims to quantify the emissions which result from an incremental increase in demand causing a real-time increase in output from a specific marginal generator. The motivation behind marginal emissions accounting in this context is to embed within the calculations that incremental demand, like that from a CDR project, is likely to be met by flexible fossil-fuel based power generation in many real-world settings - which can result in significant emissions and a reduction of the net carbon removal achieved by a project. In many cases, the SRME will be substantially larger than the corresponding grid average emissions factor.

However, Isometric’s present view is that marginal emissions factors are not appropriate for emissions accounting of electricity usage in this context. Firstly, the marginal generator is fundamentally unobservable in practice. In real-world grids, there are a large number of fluctuating sources of demand at any given time, and complex grid dispatch models respond to these fluctuations in demand by ramping up/down several independent generators simultaneously. Under these conditions, the definition of the SRME provided above is invalid and loses practical meaning from the perspective of establishing a causal relationship between a CDR project and a specific marginal generator.

Secondly, marginal emissions rates are determined by modeling approaches, which can be categorized as either (i) statistical models applied to historical data to analyze the relationship between demand and emissions, or (ii) economic dispatch models to estimate a merit order based on marginal generation cost (dispatching lowest cost first). There is no clear consensus in the published literature as to which modeling approach is favorable, and the models used are fundamentally unable to be validated because the marginal generator cannot be observed in practice. Therefore, there is no clear mechanism by which any model for the marginal emissions factor can be validated as achieving the intended goal in real-world scenarios. This combination of factors does not satisfy Isometrics standards for the use of modeling approaches in emissions accounting. As per Section 2.5.5.3 of the Isometric Standard; “Models must be [...] shown to be reliable via [...] testing or correlation with empirical data”. In contrast, grid-average emissions factors can be readily validated as achieving their intended objective by using empirical data and real-world measurements. This means that grid-average emissions factors are inherently more reliable, based on currently available data and science.

Therefore, while marginal emissions rates appear to be the most conceptually aligned approach with a consequential emissions accounting framework for CDR projects, currently available data and methodologies for their calculation are not sufficient to permit confident real-world usage. Isometric will continue to monitor developments in the scientific literature, as well as data availability in the energy market, and will make future amendments to this Module as needed.

For energy intensive projects, defined as having an annual electricity consumption of more than 200 GWh, the Module requires that any procured power is matched to project demand on an hourly basis (i.e. “hourly matching”). Following consultation with experts in the carbon removal ecosystem, Isometric believes that such an approach is the only effective means by which to embed the impact of generator intermittency within the emissions accounting scheme for widely-used low-carbon generator types (e.g. solar, wind).

In practice, implementation of hourly matching requires two conditions to be satisfied by the prevailing energy market:

• Renewable Energy Certificates (RECs) or Energy Attribute Certificates (EACs) proving procurement of power featuring hourly generation timestamps must be available; and
• Digital infrastructure in the energy market must exist to facilitate liquid trading of hourly RECs/EACs to match the varied operational requirements of carbon removal suppliers.

At present, it is generally the case that neither of these conditions are satisfied by real-world regional energy markets. Isometric anticipates substantial developments in energy markets towards these goals over the next several years. However, in the interim while these market developments take place, an alternative emissions accounting approach is required. To ensure that early stage projects can secure financing, emissions accounting requirements which are operable in the real-world are necessary. This is an essential component of ensuring that the CDR industry can scale effectively over the coming years to drive down cost and energy consumption of key carbon removal technologies.

Therefore, Isometric is introducing an operational on-ramp for carbon removal suppliers operating energy intensive projects. The on-ramp will allow an exemption for energy intensive projects to use a conventional volumetric matching approach (i.e. “annual matching”), rather than being required to conduct hourly matching. This on-ramp will be accessible to suppliers initiating projects in the period until 2028. Isometric will be reviewing the conditions of the energy market on, at least, an annual basis to determine if the continued use of the exemption is necessary - if the wider energy market develops the required infrastructure faster than we anticipate, then Isometric’s timeline for a full transition to hourly matching will be accelerated. The exemption will only be available to removal projects which meet the following two criteria (i) the gross removal capacity of the project is less than 100,000 tnCO2/yr, and (ii) a burden of proof is satisfied to demonstrate that implementation of hourly matching is not possible in the region of project operations. Full details of the burden of proof and other details relating to the exemption can be found in the Module main text.

As outlined above, the exemption for energy intensive projects to use volumetric matching in place of hourly matching is expected to increase uncertainty on the number of credits which should be generated for a removal activity. Prior to the release of this Module, Isometric has conducted extensive modeling activities to quantify how the volumetric matching exemption could impact the number of generated removal credits. As inputs, the modeling exercise used:

• Regional electricity generation and carbon intensity data from the NREL Cambium model for a range of typical grid regions; and
• Representative performance data and electricity demand profiles for carbon removal technologies.

This data was used to estimate the impact on calculated energy emissions in a range of scenarios for both hourly matching and volumetric matching based frameworks. We have concluded based on the outcomes of this exercise that the impact on the accuracy of the net carbon removal calculation when allowing volumetric matching is small enough in magnitude that use of the exemption is permissible in the near-term for projects operating at small scales. It is important to note that the limited use of the exemption with respect to project deployment date and size are key pillars towards ensuring the responsible application of carbon accounting rules in the context of energy intensive carbon removal.

While permissible for near-term use, Isometric intends to phase out the use of this exemption at the earliest possible date. Isometric will actively support market advancements in collaboration with carbon removal suppliers, buyers, and academics to ensure that the necessary market structures are both rigorous, and implemented as soon as possible, to enable a full transition to the application of an hourly matching approach for all energy intensive removal projects.

The EnergyTag Granular Certificate Scheme Standard (Version 2)², published March 2024, establishes guidence ("Configuration 3"), which can be operationalized in the absence of the availability of documentation proving the procurement of low-carbon power for provision to the project time stamped with an hourly granularity, which can emulate the same outcomes as hourly time matching under limited circumstances.

The basis of this approach is that where the RECs/EACs produced by a generator are not explicitly time stamped with hourly granularity, generation side metering of electricity production with hourly measurement frequency can be used to map a time stamp onto the RECs/EACs purchased from that generator. Under this approach, RECs/EACs produced by the generator are allocated time stamps corresponding to particular hours in proportion to the observed generating output from the generator in each hour of interest.

We note that the currently published guidence by EnergyTag in Version 2 of the Granular Certificate Scheme Standard does not provide protections against duplicate claims to generation at a partricular time under contractual purchasing structures where two (or more) buyers receive RECs/EACs generated by a single generator. Therefore, at this time, operationalization of Configuration 3 for emulation of hourly time matching will only be permitted under the Module in circumstances where the Project Proponent is the sole buyer of RECs/EACs produced by a generator.

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