Introduction: Moving Scope 2 Accounting to an Hourly Perspective
Managing electricity-related CO₂ emissions (Scope 2) is a core pillar of corporate decarbonization. Traditionally, companies have relied on annual average emission factors—a relatively coarse approach that smooths out the reality of how power systems actually operate.
That is now changing.
Instead of using a single annual average, emissions are increasingly being assessed at a finer, time-based granularity—matching electricity consumption with emission factors that vary by hour. This shift reflects the growing penetration of renewable energy, where the generation mix fluctuates significantly throughout the day.
In short, this is not just about improving accounting accuracy. It fundamentally changes what is being measured—from “how much electricity you use” to “when you use it.” That opens the door to evaluating—and incentivizing—behavioral change on the demand side.
Contents
- Introduction: Moving Scope 2 Accounting to an Hourly Perspective
- The Basics of Scope 2: Market-Based and Location-Based Approaches
- What Is the Grid Emission Factor?
- Current Practice: Annual Average Grid Factors
- The Direction of Change: Hourly Emission Factors
- The Impact of Daytime Load Shifting
- Consumer Carbon Intensity: A KPI for Behavioral Impact
- Relationship with Hourly Matching
- Conclusion: From Energy Volume to Time-Aware Design
The Basics of Scope 2: Market-Based and Location-Based Approaches
Scope 2 emissions must be calculated using two complementary methods:
- Market-based method
- Location-based method
The market-based method reflects procurement choices—such as renewable electricity contracts or energy attribute certificates. It answers the question: what kind of electricity did you buy?
The location-based method, on the other hand, reflects the physical reality of the grid you are connected to. It answers: what electricity was actually flowing in the system where you consumed power?
These two approaches are not substitutes—they are complementary. One captures strategy, the other captures reality. Together, they provide a complete picture of electricity-related emissions.
What Is the Grid Emission Factor?
To understand the location-based method, we first need to understand the grid emission factor.
The grid emission factor represents the average carbon intensity of electricity supplied by a specific transmission and distribution network. It is calculated as a generation-weighted average of all power sources connected to that grid.
For example, if the grid includes thermal power, nuclear, hydro, solar, and wind, each source contributes to the overall emission factor based on its share of total generation and its own emissions intensity.
In simple terms, the grid emission factor tells us:
How much CO₂ is emitted, on average, per kWh of electricity consumed in that grid.
Under the location-based method, this factor is used to calculate emissions—regardless of which electricity supplier a consumer contracts with.
Current Practice: Annual Average Grid Factors
Today, most location-based accounting does not use time-specific emission factors.
Instead, companies rely on a single annual average grid emission factor:
Annual CO₂ emissions = Annual electricity consumption × Annual average grid emission factor
While this approach is simple and widely used, it has a major limitation: it ignores time variation in the power mix.
In reality, grid emissions fluctuate significantly throughout the day. Solar generation peaks during daylight hours, lowering emissions intensity, while thermal generation dominates at night, increasing it.
However, annual averaging masks these differences. As a result, emissions appear identical regardless of when electricity is consumed—eliminating any incentive for demand-side optimization.
The Direction of Change: Hourly Emission Factors
The emerging approach is to calculate emissions using time-based (e.g., hourly) emission factors.
Under this method:
Emissions at each time = Electricity consumption × Emission factor at that time
Total emissions are then calculated by summing across all time intervals.
This enables a much more accurate representation of actual system conditions—and critically, it makes the timing of electricity use visible in emissions reporting.
In other words, when you consume electricity now directly affects your reported emissions.
The Impact of Daytime Load Shifting
This is where load shifting to daytime—or “daytime shifting”—becomes powerful.
During the day, especially when solar generation is abundant, the grid’s emission factor tends to be lower. At night, when fossil fuel generation increases, emissions intensity rises.
By shifting electricity consumption from night to daytime, companies can reduce emissions without reducing total energy use.
Importantly, this is not necessarily about capital investment. It can often be achieved through operational changes—rescheduling processes, optimizing charging, or adjusting demand patterns.
This makes emissions reduction something that organizations can actively control through behavior.
【Example】
Here is a simple numerical illustration:
Assume:
- Nighttime emission factor = 0.6 kg-CO₂/kWh
- Daytime emission factor = 0.3 kg-CO₂/kWh
If a consumer consumes 1,000 kWh at night:
→ Emissions = 600 kg
Now suppose 500 kWh is shifted to daytime:
- Night: 500 kWh × 0.6 = 300 kg
- Day: 500 kWh × 0.3 = 150 kg
Total = 450 kg
This results in a reduction of 150 kg, or 25% lower emissions, with the same total electricity consumption.
This example illustrates a key point: under time-based accounting, operational decisions directly translate into emissions reductions.
Consumer Carbon Intensity: A KPI for Behavioral Impact
To evaluate these changes, we need a new metric: consumer carbon intensity.
This is defined as:
Consumer carbon intensity = Total CO₂ emissions ÷ Total electricity consumption
In other words, it represents the average carbon intensity of electricity use for a given consumer.
The strength of this metric lies in its ability to enable relative comparison.
Total emissions or electricity consumption alone cannot be fairly compared across organizations, as they depend heavily on business scale and output. However, carbon intensity normalizes this by expressing emissions per unit of electricity consumed.
This is analogous to fuel efficiency in vehicles.
You cannot compare drivers based on total fuel use or total distance traveled. But fuel efficiency—distance per unit of fuel—provides a common benchmark.
Similarly, consumer carbon intensity allows comparison:
- Across different organizations
- Across different time periods within the same organization
It becomes a powerful KPI for tracking actual decarbonization performance.
Moreover, because:
CO₂ emissions = Electricity consumption × Consumer carbon intensity
organizations can decompose changes in emissions into:
- Volume effects (how much electricity is used)
- Timing/quality effects (how clean that electricity is)
This enables more precise management and strategy.
Relationship with Hourly Matching
Hourly matching refers to aligning electricity consumption with renewable generation on an hourly basis—typically within the market-based framework.
While hourly matching and consumer carbon intensity are related, they are not the same.
Hourly matching can, in some cases, be achieved through contracts or certificates. In contrast, consumer carbon intensity reflects actual consumption behavior.
This distinction is important.
A company may improve its hourly matching score through procurement, but unless consumption patterns change, its real-world carbon intensity may not improve accordingly.
Therefore, combining both metrics provides a more complete and credible picture:
- Hourly matching → procurement alignment
- Consumer carbon intensity → behavioral impact
Conclusion: From Energy Volume to Time-Aware Design
The move toward time-based emission factors marks a fundamental shift in how we think about decarbonization.
It is no longer just about how much renewable energy you buy—but how intelligently you use electricity over time.
Consumer carbon intensity emerges as a central KPI in this new paradigm, enabling companies to quantify and compare their efforts.
Daytime load shifting is one of the most practical and immediate actions available. It represents the starting point of a broader transition toward time-aware energy management.
Decarbonization is no longer just about procurement—it is about designing when and how energy is used.
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