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Coalition Conversations is an RNG Coalition podcast that spotlights the people and stories driving renewable natural gas growth across North America. Hosted by RNG Coalition's Dylan Chase, it features industry experts and leaders discussing policies, technologies, and developments shaping the RNG landscape.
Welcome to Coalition Conversations, an RNG Coalition podcast. Here, we explore the people and projects advancing renewable natural gas as a key part of North America's clean energy future. I'm your host and senior manager of communications for RNG Coalition, Dylan Chase. And today, I'm thrilled to be joined by Chris Cooper, director of policy at the Center for Resource Solutions. Chris is here to discuss the Clean Energy Accounting Project and its latest guidance on clean fuels.
Dylan Chase:This project aims to create consistent, transparent standards for accounting and tracking renewable energy, including fuels like RNG and decarbonization efforts. In today's episode, we'll unpack the clean energy accounting project's goals, explore how this guidance intersects with clean fuels like RNG, and discuss its implications for policymakers, project developers, and end users alike. Without further ado, let's hear this recorded interview with Chris Cooper from the Center for Resource Solutions captured during RNG Conference this past December in Dana Point, California.
Dylan Chase:I'm joined today by Chris Cooper from the Center for Resource Solutions. How are you Chris?
Chris Cooper:Great, good to be here.
Dylan Chase:Thanks for joining us. We're here to discuss today a really exciting development, market based accounting for clean fuels guidance released in conjunction with the Clean Energy Accounting Project. That's a mouthful. For those who may not be familiar, can you tell us a little bit about CRS and the Clean Energy Accounting Project?
Chris Cooper:Sure. Well CRS has been around for about twenty five years working on, broadly speaking, promoting sustainable energy. It's sort of a big mission but within that we take on certain projects and initiatives, CAAP as we call it is one of them, the Clean Energy Accounting Project. Over the years, CRS has become sort of the go to guys when it comes to accounting issues. In fact, I like to tell people that there's no ideology involved with CRS.
Chris Cooper:We don't, you know, have a particular, take a position when it comes to the political parties or any ideology. We're wed to the numbers and that's our only real ideology and so we've built a really good reputation for being credible when it comes to accounting and have basically dominated the space when it comes to clean energy accounting on the power side or electricity side of things and recently ventured into the fuel side, which is infinitely more complex but are tackling that. And so CAAP is a project that we initiated, was launched by founding members Apple, Meta and Entergy in order to fill in kind of the gaps in clean energy accounting that were left, you know, there were lot of questions that came up that were never quite answered by the international emissions accounting organizations like GHT Protocol and we are trying to fill in the gaps until they answer those questions. Their process seems to take a lot longer than ours does so in the interim we're trying to provide guidance to the industries that are trying to make sense of all this.
Dylan Chase:So why is it complex to manage accounting for clean fuels?
Chris Cooper:Well, for one thing, with electricity you have emissions at the point of generation but not at the point of consumption. So you only have to get one stop, you have to make those account for those emissions. With fuels, you have emissions at both the point of generation and the point of consumption, so things become a little bit complicated. With electricity, everything gets dumped onto a grid where everything's mixed together and you you can't know one electron from another and that anything that's dumped on the grid becomes instantaneously accessible by anything connected to grid. Not so with fuels.
Chris Cooper:With fuels you've got, you know, in some cases a dedicated natural gas pipeline that goes for a while, but some fuels mix within that system, some you can actually trace, you know, the actual molecules along the pipeline. And in other cases you have dedicated distribution systems that don't mix with anything. So you have to understand, you know, in terms of making credible claims to the use of a particular chemical or particular fuel, it requires an accounting that takes all of that into consideration, so it's probably you know, 20 times more complex than the electricity side of things and our attempt to come up with rules that are like the rules used for market based accounting on the electricity side has been quite a challenge. But I think we've succeeded finally in coming up with a system by which this can be done and still support credible use claims.
Dylan Chase:And can you touch on which clean fuels are covered under this guidance? Obviously RNG and biomethane, sustainable aviation fuel as well?
Chris Cooper:Actually the guidance is designed to apply to any fuels, it actually doesn't even have to apply just to clean fuels, that was by design. Now that said, we think that it's probably mostly going to be used by the renewable natural gas community and hydrogen community because those tend to be the ones that utilize a shared distribution network or common carrier pipeline system, which is somewhat of a prerequisite for being able to do the kind of accounting that we, you know, the market based accounting that we suggest.
Dylan Chase:And can you touch a little bit, you talked about the credibility that a project like this can offer. A lot of corporations rely on clean energy claims to meet sustainability targets. How does a project like this help improve the credibility and integrity of these these corporate claims?
Chris Cooper:Well, CRS, I mean, I like to think of this as curators of credibility, that's really what we do, is determine how how it is that you can make claims that are going to withstand strict scrutiny by the environmental community and by regulators and and and have the numbers to back that up. That's why, you know, the every every we've thought through every possible scenario it seems, where someone could could try to make a claim that counters your claim to the use of clean fuels under these guidelines and have constructed them in such a way that we have an answer to everything. I mean, look, we're fundamentally we're an environmental organization, we're environmental advocates, so we're not going to advocate for a system that lets people get away with, you know, something. But that being said, we also believe that the market provides one of the best avenues for addressing environmental issues and market based solutions, you know, they're not dependent upon which administration's in power at any given time. It allows people to exercise their choices through their consumptive behavior.
Chris Cooper:So if those are the best solutions, how can we open those up to the broadest number of of people? And we've developed these tools in a way that allows you to utilize the market and and access gives gives access to the market to the broadest number of participants while maintaining a credible use claim. And and we're we're adamant that that be that it actually be credible. And so long as you stick to the guidance and the rules, the quality criteria that are listed in the guidance, they provide the minimum sort of minimum threshold for credibility and we stake our reputation on it. You know, twenty five years of working in this particular sector and building that reputation is not something we take lightly and it's that because people can trust us that I believe a lot of industry is wants to support our guidance.
Dylan Chase:Now RNG Coalition obviously is a policy focused group But looking at this from 10,000 feet, it seems like a project like this would really help with the development of voluntary markets. In recent years, we've seen corporates like AstraZeneca dive into RNG. Domino's Pizza this year announced some moves. Is that a correct interpretation? Do you see the voluntary market really developing in a more fulsome way?
Chris Cooper:Absolutely. In fact, to some degree, depending upon who happens to be empowered at any given time, the voluntary market can be the greatest impetus for actual change on the ground and this might be something that becomes more important, at least in The United States in these coming years. It might be the avenue that's available for companies that want to make a difference and the only avenue that's available. That said, we, I mean, there's always a challenge with voluntary markets in terms of access, right? You have folks who want to exercise their consumptive choices but don't have access to certain nascent clean fuels markets and we, you know, that was a big challenge for us in putting together this guidance, and we think we have developed the most permissive rules for expanding access to these markets that still would support credible use claims.
Chris Cooper:So it's as far as we can possibly go, and still make a credible claim, and we're, you know, we're quite frankly proud of where we got to on that. It's
Dylan Chase:a lot of Can you talk through timeline on this project? How long putting something like this together would take?
Chris Cooper:Oh gosh. We've been working on this now for probably ten, eleven months.
Dylan Chase:Mhmm.
Chris Cooper:I only started with CRS in January first of this year, '20 '20 '4, and I was, you know, that was at the very very beginning of this particular SIAP initiative and what we're, you know, a year later and and are just now getting the the guidance out. It has been a labor of love, but, you know, it's because we, like I said, it's so much infinitely more complicated when you're dealing with fuels. We tried using, you know, as a as a foundation the rules that are for electricity and using sort of the the power sector as a as an analogy and quickly found that the analogy kind of breaks down at certain points because of the way fuel is distributed and because of the way it is consumed and the emissions all along the line. I mean you get emissions even with leakage along the pipelines. It's not something you really have to to think about all that much with with power lines.
Chris Cooper:So so it's it's taken a while and I I, you know, for every one page that that made it into that final guidance, I think we probably drafted 10, at least 10 pages that didn't. So, but you can be confident then that we've thought through every possible scenario where credibility could be at issue.
Dylan Chase:You touched on GHG protocol. You know, I'm sure there's lots of listeners who have heard of GHG protocol. Maybe not everyone, you know, understands all the nuts and bolts. Can you touch on, you know, what gaps in GHG protocol's approach to clean fuels that this project aims to address?
Chris Cooper:Yeah, absolutely. There's, there was, it's kind of an interesting history, the history of sort of how the rules under GHG protocol are, you know, came about for bio methane certificates and right now it's questionable whether or not there are any rules. They have introduced at various times, there was initially for their scope two which is your sort of indirect emissions that are from the energy that you consume to make a product or something, that guidance that came out had an annex to it, the original draft of it, that presented rules for how, you know, biomethane certificates, which otherwise would be known as market based accounting for biomethane, should be handled. And that, there was, you know, quite a lot of pushback against that annex because it was developed without a whole lot of industry or stakeholder input. So GHGP sort of pulled back on that and said, okay, we're not gonna publish this annex, we'll get, start a stakeholder process.
Chris Cooper:And so the next time we heard about it was they issued sort of interim, interim guidance on biomethane certificates, what do we do now that you've gotten rid of the annex? And that interim guidance basically said, well, until we develop something, you know, on paper that sort of has more stakeholder feedback, everyone should sort of consult their, their, you know, accountants and look at their regional jurisdictions to determine, you know, where you report, how you report, you know, purchase methane and certificates. So that more or less was just announcing that they have a huge gray spot, right? Next iteration we saw was they are right now developing a land use or land, what is it, land sector and removals guidance, which is in sort of final stages. The last I'd heard that guidance had had included a section in it that would implicate how you report on biomethane certificates primarily due to the biological, biogenic nature of those that would require some sort of looking at life cycle emissions.
Chris Cooper:That, they pulled back on and said they're not gonna include that section in the final draft. So where we are right now is we we assume because GHGP had done had done a survey of, you know, global survey of market based accounting period, generally, and how, whether or not it should be applied to any of the scopes, that they intend to clarify all of this in their update of the corporate standard which should, is due out sometime around 2026, '20 '20 '7. Now, given our knowledge of how GHGP operates, I mean, they're very thorough, but they're gonna take their time regardless of how long it takes. We, we, you know, feel that this is likely not to be resolved by them until 2027. Mhmm.
Chris Cooper:What are folks supposed to do in the interim? We have an entire RNG industry that's developing and is sort of moving past, you know, what GHGP has done. It's it's the reality on the ground is is lapsing what is in the rules. So that was the big impetus for CAAP taking on the idea of of guidance for market based accounting of clean fuels, which serves then as interim guidance until GHG protocol puts out final rules. Now, we're, the rules we have adopted are adopt the framework, the attributional accounting framework that is adopted under the protocol and is, are meant to work hand in hand with the existing protocol.
Chris Cooper:We're aware though of the fact that it's likely, because we're the only game in town right now, the only people who put out any interim guidance, that it's likely to impact the development of those final rules by GHGP. We're fine with that. We think we've done a thorough job and and and we can, you know, defend the positions that we've taken here. It'll be interesting to see though how that that process develops and it's really probably going to depend upon the stakeholders that get actively involved in the process of updating corporate standard. We are fortunate to get invited to sit on the Scope two working group for updating the Scope two guidance and from that, I mean Scope two right now is the only scope in which you're allowed to use market based accounting, but we think that's a good position from which to advocate for the use of market based accounting throughout the scope, which I know is something that the clean fuels industry would also like to see.
Dylan Chase:Fantastic. So Chris, can you tell me about any innovative methodologies or novel approaches that are involved in this CF guidance on clean fuels?
Chris Cooper:Sure. Probably one of them, the stickiest issues for us that took the longest to sort of figure out was market boundaries, which is basically the idea of how, within what markets can you use certificates or contractual instruments and they still support a credible use claim. And on the power side, on electricity side of things, this is fairly easy because anybody who's connected to an electricity grid can, because you can't track the electrons, you can claim that you're using electrons that were, you know, generated by somewhere, someplace thousands of miles away and nobody can really say any different. It's a little trickier when it comes to fuels. So how can we make these credible claims that and and have the most expansive market boundaries?
Chris Cooper:And this was a real challenge. Usually this requires there to be physical connectivity. There there you have to be both the generator of the fuel and the folks who are using the certificates that are supposed to be, you know, the attributes associated with that fuel have to be attached to the same distribution network and what we have done is come up with a novel sort of definition of market boundaries. Haven't seen it anywhere before but we've run this through all sorts of tests and scenarios and we think we can defend it. That doesn't necessarily require that there be interjection of fuel from both the generator and the consumer of the certificates.
Chris Cooper:Instead what we do is is is claim that so long as both the the consumer of the certificate and the generator of the fuel, the clean fuel, both are connected to shared distribution networks, and those networks are are operate in such a way that that fuel, different kinds of fuels or fuel from different sources is mixed, such that you cannot trace, you know, practicably trace the origins of the fuel from where they're generated to, you know, to where they're consumed and there is some physical connection between the two. So for instance, if you're, if it's like, we're talking about sustainable aviation fuel for example, you don't necessarily have to go and interject sustainable aviation fuel into both systems but both systems have to have sustainable aviation fuel in the mix and there has to be like an airplane from one of the airlines that that lands in that place, so there's just some sort of physical connection. Then you can make a credible claim to the use of any fuel that is interjected in either of the distribution networks. And the reason we can get away with this is because the there is no under under this system there's no competing chain of custody that would lay a claim that's different to what the claim would be by the person who's using or the entity that's using the certificates.
Chris Cooper:So it's kinda like saying, well, you can't prove us wrong, you know, like like, do we have absolute evidence that what we are using is the same thing that was interjected in the system down there? No. But there's no better claim claim of custody or chain of custody that would compete against it. And this is useful because it it permits investment in these nascent markets until they reach scale, and when they do reach scale and they're available everywhere, then it no longer becomes a problem, right? No one's gonna make a claim, you know, is gonna say that your claim is incorrect because you couldn't have possibly gotten that fuel into that system.
Chris Cooper:Until then, this is as far as we can go, and we thought long and hard about this, as broad as we could possibly make access to the market and yet still support a credible use claim. And to my knowledge, no one else has come up with a definition of market boundaries or defined market boundaries in this way. It's permissive enough to permit investment in these nascent markets, but it's restrictive enough that there's no counterclaim that can be made, so no one can be accused of greenwashing, which we're quite cognizant of, that being a real risk.
Dylan Chase:So it strikes me as well, we're here at the beginning of 2025, obviously a lot of regulatory and political change on the horizon, so uncertainty there. So guidance like this coming out helps to add a little bit of market certainty. Would you agree?
Chris Cooper:Yeah, market certainty and it also is going to be important for, in many cases, making claim to tax credits under the IRA. In several places there is a requirement for there being third party independent verification of the nature of the fuel or the nature of the energy that is being used to produce whatever the product is. And this helps with that, you know, it's sort of a one stop shop for verification from a credible source. Standards.
Dylan Chase:We've been joined by Chris Cooper from CRS. Chris, any closing thoughts, maybe ways folks can get involved or where, even where they can find this market based accounting for clean fuels guidance?
Chris Cooper:Just on our website, which is resourcesolutions.org, and we are also always looking for stakeholders who want to be involved in our CAAP initiative. Each year CAAP takes on, you know, two or three sticky issues like, like this with regard to clean energy accounting. I know accounting doesn't sound like it's all that sexy of an issue to talk about, but it's really where the rubber meets the road and the decisions that are made by this diverse group of stakeholders has real implications for the industry. Hundreds of millions of dollars at stake and this is where major decisions are made about how, what's gonna count and what's not. So I would encourage anybody who belongs to an industry or a company that has any interest in the final rules for these kinds of things, get involved.
Chris Cooper:We're happy to have you and we'll work out ways of having you involved. It's not a huge time commitment, but it can be very rewarding, very, learn a whole bunch of stuff, but you also impact the sector where it matters most.
Dylan Chase:Fantastic. Chris Cooper from Center for Resource Solutions. Thank you for joining us.
Dylan Chase:Conversations was made possible through the support of Greenlane Renewables, a pioneer and leading specialist in the purification of biodigester and landfill gas. Greenlane has been solving the industry's toughest challenges, delivering high performance at low cost, and actively contributing to the decarbonization of our planet for over thirty five years. Thank you for listening, and we will be with you again soon.