Speaker 1: With laurn Sagoland from London and Gerard Reed from Berlin.
Speaker 1: This is redefining energy today.
Speaker 2: On referring energy, this is a subject very close to
Speaker 2: my heart, is the fight for proper carbon accounting and
Speaker 2: twenty four seven green power. Now j'are my usual co
Speaker 2: host is not there, but thanks God I found a
Speaker 2: replacement another Irish guy. Welcome Killian Daily.
Speaker 1: Thanks very much for having me along. I'm happy to
Speaker 1: fly the flag of Ireland. Enjoyed as absent.
Speaker 2: This episode is in partnership with a company I've invested
Speaker 2: into called Renewable, and Renewable is a procurement and sustain
Speaker 2: meety platform for temporal match renewable energy. Now we'll discuss
Speaker 2: a bit later, but first I want to look back.
Speaker 2: What's the Greenhouse Guest protocol, how important it is and
Speaker 2: how we are really Killian at a cross road right
Speaker 2: now because the version three is in debate. Now you
Speaker 2: are executive director of Energy Tech. Can you explain a
Speaker 2: bit what Energy Tag is.
Speaker 1: Yeah, So, Energy Tag is a nonprofit. Basically, we advocate
Speaker 1: for reforms in clean electricity markets and carbon accounting, ultimately
Speaker 1: with the end goal of delivering clean power around the clock.
Speaker 1: Today's markets and accounting structures just basically don't do that.
Speaker 2: Now Companies cooking their books and trying to transform reporting
Speaker 2: into a pr exercise. That's not new. For instance, if
Speaker 2: we look back before the nineteen twenty nine crash, companies
Speaker 2: were reporting their financials the way they wanted. So every
Speaker 2: time there's a crisis, there are standards that come in.
Speaker 2: So now, of course the financial standouts are pretty established
Speaker 2: and accepted by everybody. Now, what happened is that in
Speaker 2: the nineties, as the whole conversation around climate change and
Speaker 2: emission tradings out to appear, what we realized and what
Speaker 2: government realized is that company were reporting their C two
Speaker 2: emission in a very disorganized, self serving way. And I
Speaker 2: think the government toold the industry. Look, guys, whether you
Speaker 2: come with a common standout to report your CEO two
Speaker 2: or we'll do it ourselves. So in nineteen ninety eight,
Speaker 2: two NGO one in the US called the World Resource Institute,
Speaker 2: and you know one in Switzerland called the World Business
Speaker 2: Council for Development put together a task force to write
Speaker 2: that first Greener's Gas Protocol.
Speaker 1: I fully agree, In fact, I have sort of personal
Speaker 1: experience of this. So before energy tag, what I used
Speaker 1: to do was buy electricity, wholesale electricity for a French
Speaker 1: company called aeri Quid, which consumes more electricity than my
Speaker 1: home country of Ireland forty two an hours a year.
Speaker 1: So this is big stuff, right, And one day I'll
Speaker 1: be buying electricity where obviously you have to match your
Speaker 1: demand on an hourly basis and electricity markets with real power,
Speaker 1: and then the next day I would go and do
Speaker 1: the carbon accounting. And this world is it is a
Speaker 1: bit of a parallel universe. You can claim to be
Speaker 1: solar powered at night, you can claim that you're consuming
Speaker 1: icelandic hydro for your operations in Italy. It's really something
Speaker 1: that is detached from reality and unfortunately that's where we're
Speaker 1: at today with carbon accounting. It's rules that were set
Speaker 1: up maybe twenty years ago when we were kicking off
Speaker 1: the renewable energy revolution, but now it's just simply not
Speaker 1: really fit for purpose anymore when we need to think
Speaker 1: about storage, flexibility and ultimately all the solutions we need
Speaker 1: to integrate renewables around the clock.
Speaker 2: The task force was composed of about thirty forty people,
Speaker 2: and I wasn't one of them at the time I
Speaker 2: was working at PwC. We brought the accounting expertise into
Speaker 2: the building of the gunas GAES Portocol, which took probably
Speaker 2: three years to put together. That the interesting thing is
Speaker 2: it started by the shell of reporting SHELL as an
Speaker 2: extraordinary technical seal two reporting standards. And they arrived and
Speaker 2: they just say, oh, you know, we're Shell, We're so good.
Speaker 2: We're just going to remove SHELL reporting and we're gonna
Speaker 2: put global reporting. He said the guy, wait, you know,
Speaker 2: we need to figure out and look, on one hand,
Speaker 2: it was technically extraordinary, and on the other was extremely
Speaker 2: self serving because at the time, and of course now
Speaker 2: everybody knows scope one scope too scop through. But at
Speaker 2: the time it was direct and indirect, So you had
Speaker 2: direct emissions which were like your responsibility, and indirect were
Speaker 2: like other people's problem. And the whole game of Shell
Speaker 2: was just to spend his time taking some of their
Speaker 2: direct emission and doing a lot of explanation where in
Speaker 2: fact they should be indirect. We start publishing a first
Speaker 2: draft and a certain number of companies were volunteer to
Speaker 2: execute the first draft, and everybody would report the same way,
Speaker 2: which was already a big progress. And I was in
Speaker 2: charge of the aluminium sector, so all the aluminium sector
Speaker 2: companies were supposed to use the protocol. And I end
Speaker 2: up twenty five years ago a Tomago, which is the
Speaker 2: biggest aluminium smelter in Australia. It's a great you know,
Speaker 2: the tour and you know, they welcome me and it's
Speaker 2: a beautiful plant. It's newcastles with between Sydney and Brisbane,
Speaker 2: and the tour around, mister Segalen and now we're so clean,
Speaker 2: We're so clean. We saw like, oh, your protocol is
Speaker 2: going to show that we are so clean. So I
Speaker 2: said great. You know, after like an hour and a
Speaker 2: half of propaganda, I go back on the parking lot
Speaker 2: and then above my head I'll see all those wires
Speaker 2: and literally across the fence. So it was not an expression,
Speaker 2: it was for real. There was eight hundred megawat coal
Speaker 2: plants running twenty four seven for a Tomago smelter. And
Speaker 2: I said, what about those emissions? And I said, yeah,
Speaker 2: they're not mine, yeah, but indirectly they're yours. And the
Speaker 2: guy at this wonderful sentence, he say, of course I know.
Speaker 2: If I report my direct emission, that's two ton of
Speaker 2: sew two aluminium. But if I include the cold plant,
Speaker 2: I'm up to twenty ton of sew tube aluminium. I'm
Speaker 2: not an idiot. I'm not going to report it. And
Speaker 2: then the guy put me back into taxi. I say,
Speaker 2: I was so pissed off that when we're the next
Speaker 2: iteration of the conversation around the glass Parker, that's the
Speaker 2: verse of the scoop two. Otherwise they just put everything
Speaker 2: in direct So thank you, mister Tomago plant manager. You
Speaker 2: have created the SCOP two.
Speaker 1: Yeah, I've heard the story. I really love it, and
Speaker 1: it's an honor to talk to the originator of sculpture
Speaker 1: accounting and to see where we're at with it today. Right,
Speaker 1: Obviously it's been a huge stet. Let's also realize that
Speaker 1: it was very very important to have the protocol set
Speaker 1: up to start to track these emissions. Now, I guess
Speaker 1: where we're at today now the protocol is being revised.
Speaker 1: We're in this phase where ninety six or seven percent
Speaker 1: to the S and P five hundred are using this now.
Speaker 1: So it's a huge success. Companies reporting publicly based on
Speaker 1: the protocol consume more power than India annually. Right, So
Speaker 1: this is big stuff. And the incentive structures. We must
Speaker 1: get them right for the next couple a decade of
Speaker 1: the carbonization, and now we're really at this fork in
Speaker 1: the road. There's an update process going on. There's people
Speaker 1: that don't necessarily agree on the direction of travel.
Speaker 2: The interesting thing is that the protocol, the original one,
Speaker 2: did not really address green power because there was simply
Speaker 2: no wind or no solar indus twenty five years ago.
Speaker 2: And in fact, the old green power reporting came about
Speaker 2: fifteen years ago in a bit of a disorganized way
Speaker 2: through system of green certificates, and talk a bit about how,
Speaker 2: in fact the reporting of green power had a bit
Speaker 2: of a parallel truck to CO two and now they're
Speaker 2: going to merge.
Speaker 1: The reporting of green power initially evolved in a kind
Speaker 1: of a simplistic way through man're bal anti tracking systems,
Speaker 1: which are essential to make sure that you're the one
Speaker 1: who's actually claiming that unit of energy and that's not
Speaker 1: being claimed by three other people. The way the systems
Speaker 1: were set up initially probably made sense, but they took
Speaker 1: a very light consideration of how power markets work and
Speaker 1: how the electricity flows through the system. So the way
Speaker 1: today it's still the standard that the way we track
Speaker 1: and claim green power is based on what we call
Speaker 1: an annual matching. So you can claim solar power produced
Speaker 1: in the middle of the day at three o'clock in
Speaker 1: the morning, or you can claim to use green power
Speaker 1: produced in Norway in Spain. For example, today Norway exports
Speaker 1: five to ten times more green power certificates than it
Speaker 1: does physical electricity. So the way we've set up the system,
Speaker 1: it's not really properly tracking the real emissions being delivered
Speaker 1: to consumers, and that's something that we urgently need to address.
Speaker 1: We have companies, for example, all of the big tech
Speaker 1: companies today, they're all already one hundred renewable. This just
Speaker 1: doesn't make sense. They've made important investments and renewables, which
Speaker 1: is great, but to say job done, this is really
Speaker 1: not where're at right now.
Speaker 2: Look I like what you say, because again first there's nothing,
Speaker 2: then there's a standarud and then people try to dodge
Speaker 2: the standard. You're right, in the past ten years will
Speaker 2: do that ESG movement by green and so on. We've
Speaker 2: seen extraordinary claim of people say we're one hundred percent renewable,
Speaker 2: but as you say, a guy's gonna buy green certify
Speaker 2: kids in Arizona and is reporting in Delaware. The grids
Speaker 2: are not even connected together, but you know it's all
Speaker 2: well and fine, which leads to the two main problems
Speaker 2: that you have highlighted. The one is the temporality and
Speaker 2: the second is the geography. And I know there's a
Speaker 2: third one we called additionality. But additionality have heard additionality
Speaker 2: for more than twenty five years. People still talk about it.
Speaker 2: It's impossible. So let's explain exactly what is the matching
Speaker 2: from a geographical point of view and time point of view.
Speaker 1: Yeah. Absolutely, these are like fundamentals to electricity. So what
Speaker 1: we need is on a power system is to in
Speaker 1: the temporal aspect to match ultimately demand with clean power
Speaker 1: on an hourly basis. Right, that's how the power markets work,
Speaker 1: that's how the grid works today. We're trying to do
Speaker 1: that on an annual basis. So you can be one
Speaker 1: hundred percent solar powered, that's not right. What we need
Speaker 1: is to do it in an hourly basis. So, for example,
Speaker 1: if you want to be powered renewable energy at night time,
Speaker 1: well then you have to build a battery and put
Speaker 1: that solar into it during the day and then put
Speaker 1: it out at night. So we set up that incentive
Speaker 1: structure for storage, something that is completely lacking today in
Speaker 1: the standard. So that's number one. Number two is this
Speaker 1: geographical boundary today we've just taken this really broad view,
Speaker 1: especially in Europe and the United States, saying in the US,
Speaker 1: we'll just consider it all completely interconnected. As we know,
Speaker 1: hardly exports any power to the rest of the US.
Speaker 1: But you could be one hundred percent power by Texas
Speaker 1: wind in New York, while in reality you're pulling gas
Speaker 1: from the grid in New York. So you have this disconnect.
Speaker 1: You're not addressing grid congestion, you're not actually tackling the
Speaker 1: hardest hours of decarbonization where you're consuming that power. And
Speaker 1: we need to address these two things. This is not
Speaker 1: a radical concept. This is literally how power markets work today, right.
Speaker 1: We need to just bring that logical power markets and
Speaker 1: bring it into the carbon and green world.
Speaker 2: As usual, the fussy few lobbies say, I hear you,
Speaker 2: but it's not possible, it's too costly. I've heard that
Speaker 2: for twenty five years. So everything is impossible. That's the
Speaker 2: role of energy Tag. Energy tag is really about putting
Speaker 2: forward thinking companies together to demonstrate that technically those temporal
Speaker 2: machine and geographical machine are possible. Now, of course you're
Speaker 2: not going to get two hundred percent immediately unless you're
Speaker 2: in Norway or Quebec or Brazil, but at least you know,
Speaker 2: oh and at least you can track and you can
Speaker 2: track pog guys, because otherwise, as you say, everybody wins,
Speaker 2: you know, every ah, I'm clean, I'm clean, I'm clean,
Speaker 2: which means nothing. So probably go a bit inside the
Speaker 2: role of energy tag.
Speaker 1: I suppose we have a couple of different functions. Obviously
Speaker 1: one of them mentions is like being part of the
Speaker 1: update processes for greenized gas protocol or in regulatory processes
Speaker 1: saying we need to do accounting in this more granular
Speaker 1: hourly way. But also we bring folks together and figure
Speaker 1: out how do we do this tracking. We have open
Speaker 1: source standards for example, how to do this hourly tracking.
Speaker 1: And this is something that's now proven all over the
Speaker 1: world on consumers of all different sizes. This can be
Speaker 1: enabled directly by electricity suppliers like your Octopus Energy in
Speaker 1: the UK, for example, have an hourly matching tariff for
Speaker 1: their business customers. We've shown this working also in the
Speaker 1: US in Asia Pacific region, because again, right, we're fundamentally
Speaker 1: taking data as they're already and just matching that together
Speaker 1: on an hourly basis. So the tracking and the accounting
Speaker 1: is absolutely possible. Some companies like Google are already reporting
Speaker 1: this voluntarily publicly across their global operations. So of course
Speaker 1: once we change these rules, there'll be a kind of
Speaker 1: a phase in period, etc. But we've shown that it's
Speaker 1: technically feasible to do this accounting. Now, as you said,
Speaker 1: is it going to be easy for everyone to be
Speaker 1: one hundred percent renewable and one hundred percent clean everywhere?
Speaker 1: Absolutely not, because it's not easy to be that in reality.
Speaker 1: And that's what we need to kind of take a
Speaker 1: step back here and say, right, where are we actually
Speaker 1: at and what investments do we need to make to
Speaker 1: really get to being powered by clean power around the clock.
Speaker 1: And that is kind of the paradigm shift we need
Speaker 1: to have. We need to move away from feeling that
Speaker 1: being one hundred percent renewable by fudging the rules is
Speaker 1: the way forward, right, we need to take a step
Speaker 1: back and think, well, obviously a plenty of solar and
Speaker 1: wind demand response flexibility, clean firm technologies they all have
Speaker 1: to come into the mix if we're going to actually
Speaker 1: decarbonize the grid and deliver cheap power around the clock
Speaker 1: and get rid of fossil fuels in all hours.
Speaker 2: That's all when I'm fine, But that's to twenty one
Speaker 2: and since then you've got the crazy rise of data centers,
Speaker 2: and of course big tech has been a big proponent
Speaker 2: of clean energy. Some play the game, as you name them, Microsoft, Google,
Speaker 2: but others decide to break the thermometer and design their
Speaker 2: own accounting system. And I'm going to name them it's
Speaker 2: Meta and Amazon, Meta and Amazon. I've decided, like man
Speaker 2: the twenty four seven. You know, it's just going to
Speaker 2: show that I'm pouring all all my new data center
Speaker 2: with gas turbines. So I invent a new self reporting protocol.
Speaker 2: But like weworker used to do, and of course they're
Speaker 2: going to show everything isthing's great. You know, data center
Speaker 2: in West Virginia is going to be compensated by a
Speaker 2: wind farm in India. They don't want to play the game.
Speaker 2: And you know, I'm saying it here, this is ridiculous,
Speaker 2: doesn't make any sense, but they've put Pyre mooney. So
Speaker 2: every time you hear somebody promoting Meta or Amazon Accounting
Speaker 2: know that they're paid. They are paid all the consultants,
Speaker 2: and every time I call them directly and guy say,
Speaker 2: it's that's stupid, the guys say, yeah, I know, but
Speaker 2: you know what, I got my check. Let's go back
Speaker 2: to when we did the Scope two. We had very
Speaker 2: very few data. Basically we say we're going to take
Speaker 2: some averages and so on. But now, as you said,
Speaker 2: with the digital we know what's going on every five minutes,
Speaker 2: hour and so on. And the philosophy of the Greeners
Speaker 2: gas potocol at the beginning is when a better measurement
Speaker 2: is introduced, we're going to use the best. So now
Speaker 2: probably explain what's going on on the Scope two, which
Speaker 2: is basically power consumption.
Speaker 1: Basically, we're at an inflection point and we've demonstrated that
Speaker 1: people can can go further than the current rules alive. Right,
Speaker 1: So if you're building out a data center, for example,
Speaker 1: you can actually measure where you're at on an hourly
Speaker 1: basis and really which how are really supplying your data center,
Speaker 1: not from some disconnected, faraway land room, like really in
Speaker 1: the same grid region. The solutions are out there today
Speaker 1: to do that. Then you obviously need to think about
Speaker 1: how you're procuring electricity. There's the really interesting analysis done
Speaker 1: by the IA a few months ago on how to
Speaker 1: power data centers. There's a very interesting finding. Like a
Speaker 1: lot of the interesting stuff, it's very deep in the report,
Speaker 1: page seventy or eighty how do we power data centers?
Speaker 1: Then what they find in Europe and China is that
Speaker 1: we can on an eighty percent hourly matching basis power
Speaker 1: data centers with hybridized renewables. So with solar wind batteries
Speaker 1: brought together, this can be cheaper than the standard industry
Speaker 1: retail price of electricity in Europe and China. So this
Speaker 1: is the future. Battery prices are collapsing, renewables are getting
Speaker 1: cheaper and cheaper. This is the way forward to really
Speaker 1: really power a data center or any other type of
Speaker 1: large industrial load or facility. Right. So this is what
Speaker 1: we need to do, and we need the accounting structure
Speaker 1: and framework to incentivize that type of behavior. Luckily that
Speaker 1: is happening right and so the Greenhouse Gas Protocol we've
Speaker 1: been in the technical working Group, I'm a member of
Speaker 1: that for the last year or so. The direction of
Speaker 1: travel is very clear. It's towards this granularity. As you mentioned,
Speaker 1: the tools are there now, we're going towards hourly and
Speaker 1: local matching. That's in the proposal. Public comment coming in October.
Speaker 1: So it's a really exciting time.
Speaker 2: What should people who think like us? How can we
Speaker 2: support the inclusion of twenty four to seven granular accounting
Speaker 2: inside the scoop too? Sorry it looks like a bit complex,
Speaker 2: but that's where we're right right now. The people who
Speaker 2: are against are all oil lobbyists. They just paid for that.
Speaker 2: I've seen that crowd for twenty five years. The people
Speaker 2: who are against our oil lobbyist period killian. Where do
Speaker 2: we go and comment in favor of the inclusion?
Speaker 1: So there's going to be a public common period in October,
Speaker 1: and it's as you say, it's essential that everyone that
Speaker 1: they be a company, an academic and NGO listening to
Speaker 1: this spread the word. It's super important that you reply
Speaker 1: to that public comment. And thankfully, the Technical Working Group,
Speaker 1: the governance of the Greenhouse Cast Protocol are fully behind
Speaker 1: this proposed direction of travel towards hourly local accounting for
Speaker 1: our large consumers. This is not for SMEs that we're
Speaker 1: talking about right here, there's going to be a transition
Speaker 1: into this stuff. As you say, it's definitely not impossible.
Speaker 1: It's the only way to do the accounting accurately, right,
Speaker 1: So it's super important follow energy tag on LinkedIn, follow
Speaker 1: me on LinkedIn, sign up to our newsletter on our website.
Speaker 1: We'll be communicating about this really widely and making sure
Speaker 1: that you guys know when to comment and what to
Speaker 1: say in supporting these rules.
Speaker 2: Well, this is fantastic. Killian. Also in London with gone Wable,
Speaker 2: we're having this big day the tenth in October, so
Speaker 2: that in two weeks time where we go also deep
Speaker 2: into power purchase agreement linked into twenty four to seven.
Speaker 2: And people say it's complex, No it's not, No, it's not.
Speaker 2: And as you said, having some green certificate coming out
Speaker 2: of Iceland, whereas Iceland is not connected to any greedy
Speaker 2: in your job, that is ridiculous.
Speaker 1: One hundred percent. And you know, we hear this, Oh
Speaker 1: it's not possible, but you know why then, right. The
Speaker 1: people who understand the grid the most and the power
Speaker 1: markets the most are the system operators in Europe. They're
Speaker 1: put out a paper a couple of years ago calling
Speaker 1: for the exact changes that are being proposed right now.
Speaker 1: They wouldn't be calling for things that were infeasible that
Speaker 1: were bad for the system. They're independent, they don't have
Speaker 1: a skin in the game and in corporate carbon accounting,
Speaker 1: and they're very clear and so eat very clear this
Speaker 1: is the direction of travel. We need to have to
Speaker 1: integrate renewables more cost effectively into our system. So there
Speaker 1: you have it. Obviously, there's companies doing this. There's IA Research,
Speaker 1: Princeton Research, MIT Research showing that this approach will deliver
Speaker 1: more grid decarbonization, will incentivize the technologies we need to
Speaker 1: deliver clean power and the clock. It's a pretty broad
Speaker 1: coalition of people who are in favor of these changes,
Speaker 1: and that's key. It's not just one group, it's a
Speaker 1: broad perspective. This has also already been adopted in regulations
Speaker 1: in Europe and the US as well for things like
Speaker 1: green hydrogen accounting and subsidies. So this is not coming
Speaker 1: out of the blue. It's just common sense, and we
Speaker 1: need to stay rational and kind of respond to some
Speaker 1: of the criticism in the way that it needs to
Speaker 1: be responded to.
Speaker 2: Yeah. Sorry, sometimes I get a bit to fight up.
Speaker 1: You know, I think a little bit of a missed
Speaker 1: opportunity not to focus more on this approach, because at
Speaker 1: the end of the day, the price of renewables combined
Speaker 1: with storage is dropping super fast, and the price of
Speaker 1: gas well, god only knows it's going up in the US,
Speaker 1: it's extremely volatile and unpredictable. In Europe's that's your basically
Speaker 1: your alternative in terms of electricity sourcing in a lot
Speaker 1: of parts of the world. So that's the bet to
Speaker 1: take in the long run. The hedging benefit we did is,
Speaker 1: you know, as part of a study done by your
Speaker 1: electric tex Parker th Fe years ago showing the massive
Speaker 1: hedging benefit to hepas that are more around the clock,
Speaker 1: maybe matching eighty ninety percent of your demand. It's shielding
Speaker 1: you against those high electricity price years and times. This
Speaker 1: is not only about being transparent and green, it's also
Speaker 1: just about smart business sense going forward and realizing that
Speaker 1: round the clock renewables are going to be the more
Speaker 1: competitive option in the decades to come.
Speaker 2: Well, Killiana, you're such a good Irish guy. I'm not
Speaker 2: sure I'm going to bring a job back on the show.
Speaker 1: That's you saying that, not mea It was.
Speaker 2: Great to have you. This is the pod. Guys, we're
Speaker 2: going forward and thank you for your work, and we're
Speaker 2: going to get that scoop two nailed.
Speaker 1: Thanks so much, Laura, thank you for listening to Redefining Energy.
Speaker 1: Don't forget to rate the show and subscribe on Apple, Podcast, Spotify,
Speaker 1: or the platform of your choice.