Carbon Science | What is the grid emission factor in the dual-carbon economy?

The grid emission factor is a key parameter for enterprises to calculate carbon emissions. It is issued by the government department in charge. China's grid emission factor needs to be refined urgently.

If you pay attention to "dual carbon", then you must have heard of various "emission factors" frequently.

The emission factor is the greenhouse gas content per unit of goods/services/consumption activities. Different emission factors are needed to calculate the carbon emissions of different objects. The emission factors of different industries are different. Among them, the power grid emission factor is the most used and influential factor.

The value of the grid emission factor is the total carbon emissions of power generation companies within a certain range divided by the total grid-connected electricity, representing the average carbon dioxide emissions generated per kilowatt-hour of electricity in the grid. Under the same conditions, the higher the grid emission factor value, the higher the unit carbon emissions of the products produced by companies in the region.

The grid emission factor is the core parameter for enterprises to calculate carbon emissions. For example, for an enterprise that consumes no energy except electricity, its total carbon emissions are the electricity consumption multiplied by the local grid emission factor.

The numerical determination of the grid emission factor is also an important part of carbon-related policies. For example, does the environmental benefit of renewable energy generation belong to the generator, the buyer, or the entire grid? Under different policies, the numerical value of the grid emission factor is different.

The EU started carbon data management the earliest. The grid emission factors have been published since the 1990s and updated every year. The EU's carbon footprint requirements for imported products will become increasingly stringent, and products exported to the EU will use grid emission factors to calculate carbon emissions. However, if the grid emission factor value of the product's location is not authoritative enough, the EU requires companies to use the value it recognizes for calculation.

China first announced the national power grid emission factor in December 2017. After the launch of the national carbon market, the Ministry of Ecology and Environment will update the power grid emission factor twice in 2022 and 2023. Currently, there are two main types of Chinese companies that need to use the power grid emission factor: one is power generation companies included in the national carbon market control, and the other is companies that export power batteries and photovoltaic products.

Although other companies are not required to use grid emission factors, as the public's awareness of dual carbon has increased, more and more companies have begun to calculate their own carbon emissions data. So, the question is, are China's grid emission factors sufficient, and what improvements need to be made?

Before answering this question, let’s first understand the definition and significance of the grid emission factor.

The grid emission factor is a key parameter for calculating carbon emissions

The grid emission factor originates from the emission factor method, a carbon emission estimation method proposed by the Intergovernmental Panel on Climate Change (IPCC). Its meaning is that the carbon dioxide emissions generated by the purchased electricity of an enterprise can be calculated by multiplying the purchased electricity by the grid emission factor.

The calculation method of the grid emission factor is: the total carbon emissions of all power generation companies within a certain area divided by the total power supply of the local power grid. In actual operation, it is also necessary to consider how to determine the geographical boundaries, how to measure the inflow and outflow of electricity between power grids, and how to divide the environmental benefits of renewable energy generation.

Xu Shenzhi and others from the State Grid Energy Research Institute published an article titled "Comparative Analysis of Average Electricity Emission Factors and Calculation Methods at Home and Abroad," stating that statistical calculation is the mainstream method for determining the value of power grid emission factors at home and abroad. This method is based on annual carbon emissions and power generation in the power industry, and the data is relatively easy to obtain. However, the disadvantage is that it uses the year as the time scale and the province as the minimum spatial scale to fully reflect the temporal and spatial differences in carbon emissions of new power systems.

Another way to determine the value of the power grid emission factor is the real-time calculation method, which is based on the real-time dispatching data of the power grid and can reflect the temporal and spatial characteristics of electricity carbon emissions. The disadvantage is that the calculation method is complex and relies on power grid dispatching data, and the application subject is exclusive. It is still in the exploratory stage.

The significance of the grid emission factor is to allocate the direct carbon emissions from the power generation side to the consumption side of electricity. The logic here is: no carbon emissions are generated when enterprises or individuals use electricity, but the carbon emissions behind these electricity are indirect carbon emissions of users.

Wang Zhixuan, deputy director of the expert committee of the China Electricity Council and member of the National Expert Committee on Climate Change, told Caijing Eleven that the value of the grid emission factor depends on the direct carbon emissions of the power generation process. Therefore, the premise for the accurate calculation of this value is that the direct carbon emissions on the power generation side must be calculated accurately. The carbon emissions on the power generation side can be estimated using parameters such as the average coal consumption of power companies and the average carbon content of coal, which is not difficult. However, if you want to calculate it very accurately, there will be greater technical difficulties because it is impossible to accurately obtain the parameters of each link.

Wang Zhixuan said that it is meaningless to calculate the grid emission factor very accurately, just like you don't need to know exactly how many bacteria are on your hands before deciding how to wash your hands. The accuracy of the grid emission factor depends on policy orientation. For example, the grid loses electricity during transmission. Who should calculate the carbon emissions of this electricity? It can be allocated to users, calculated to grid companies, or ignored. It depends on how policymakers want to set the rules.

At present, the United States, Australia, Canada, the United Kingdom, New Zealand and other countries regularly publish average grid emission factors. The United Kingdom and New Zealand publish national average grid emission factors. Australia takes into account the exchange of electricity between power grids, and the United Kingdom takes into account imported electricity, but most countries do not consider electricity exchange. Since 1990, the European Environment Agency (EEA) has been compiling and updating the average carbon emission intensity of electricity in European countries and Europe every year.

The EEA's calculation method is basically the same as China's power grid emission factor. The value has dropped from 0.524 tons of carbon dioxide per megawatt-hour at the beginning of its release to about 0.289 tons of carbon dioxide per megawatt-hour in 2021, a decrease of 45% from 1990.

China’s national grid emission factors have been published three times so far:

The first was released by the National Development and Reform Commission in December 2017, with a value of 0.6101 tons of carbon dioxide per megawatt-hour;

The second was released by the Ministry of Ecology and Environment in March 2022, with the value adjusted to 0.5810 tons of carbon dioxide per megawatt-hour;

The third time was in February 2023, when the Ministry of Ecology and Environment adjusted the value to 0.5703 tons of carbon dioxide per megawatt-hour. The Ministry of Ecology and Environment also announced that the annual national grid average emission factor, if updated, will be released at the end of each year.

Tang Jin, president of the China Carbon Investment Research Institute, a carbon neutrality service provider, told Caijing Eleven that the calculation and release systems of power grid emission factors vary from country to country, because it involves issues such as whether the green benefits of green electricity are double-counted and how to calculate the exchange of electricity between power grids. The power grid emission factor information currently released by various countries has yet to be mutually recognized.

The grid emission factor is a key parameter when calculating a company's carbon emissions.

The calculation of greenhouse gas emissions of an enterprise includes direct emissions and indirect emissions. Direct emissions are called Scope 1 emissions and refer to emissions generated by emission sources directly controlled or owned by the enterprise. Indirect emissions refer to emissions caused by the activities of the enterprise but occurring in emission sources owned or controlled by other enterprises.

Indirect emissions are further divided into Scope 2 emissions and Scope 3 emissions. Scope 2 emissions refer to emissions generated by electricity, steam, heat or cooling purchased by the company, while Scope 3 emissions include all other indirect emissions.

For most non-high-energy-consuming enterprises, indirect emissions are the main source of their carbon emissions. In scope 2 emissions, purchased electricity is generally the main source of indirect emissions. In other words, the grid emission factor is the key parameter for calculating the carbon emissions of most enterprises.

For high-energy-consuming enterprises included in the national carbon market, direct emissions are their main carbon emissions. At the same time, their scope 2 indirect emissions are also included in the carbon market control, and the carbon emissions need to be calculated using the grid emission factor. The EU carbon market does not require emission-controlled enterprises to comply with scope 2 emissions, but the upcoming EU Carbon Border Adjustment Mechanism (CBAM, commonly known as carbon tariffs) will require relevant products to calculate scope 2 carbon emissions.

Zheng Ying, a researcher at the Tsinghua Sichuan Energy Internet Research Institute, told Caijing Eleven that some of the EU's green trade rules and overseas supply chain carbon footprint requirements include the calculation of indirect emissions from purchased electricity, which means that the grid emission factor is needed for calculation. Therefore, the competitiveness of many Chinese manufacturing export companies is affected by the grid emission factor. Industries with large exports such as power batteries and photovoltaics, as well as industries that may be subject to key constraints of international green trade rules such as steel and aluminum, are particularly affected.

Taking photovoltaics as an example, the European market accounts for nearly half of China's total photovoltaic module exports. China's national power grid emission factor is about twice that of Europe, which means that the carbon content of Chinese photovoltaic products is about twice that of European domestic products (under the same conditions), and the competitiveness of Chinese products in Europe will be reduced.

How to improve the grid emission factor

Is China's power grid emission factor sufficient? What improvements need to be made?

Relevant business people believe that it is not enough to only update the national power grid emission factor. The government departments in charge should also update the regional power grid emission factors and provincial power grid emission factors, and form a fixed update cycle and release platform.

The lower the value of the power grid emission factor, the more favorable the product export. Compared with the national power grid emission factor, the emission factor values ​​of some regional and provincial power grids in China are lower. Zheng Ying's team tracked and calculated the changes in Qinghai's provincial power grid emission factor. Due to the high proportion of renewable energy electricity in Qinghai and its rapid development, the emission factor value of Qinghai's power grid has always been significantly lower than the national power grid emission factor, and the rate of decline is relatively fast. From 2017 to 2021, Qinghai's provincial power grid factor has dropped by more than 30%. It is estimated that by 2025, Qinghai's power grid emission factor will drop by about 30% compared with 2019.

China's regional and provincial grid emission factors have not been updated for more than eight years. In October 2013, the National Development and Reform Commission first released the average emission factors of regional and provincial grids in 2010; in September 2014, the National Development and Reform Commission released the regional grid emission factors in 2011 and 2012. In 2018, after the responsibility for climate change was transferred from the National Development and Reform Commission to the Ministry of Ecology and Environment, the responsibility for determining and publishing the numerical values ​​of grid emission factors was transferred to the Ministry of Ecology and Environment.

At the fifth session of the 13th National People's Congress, National People's Congress deputy Bai Xuefeng proposed "Suggestions on regularly updating and publicly publishing China's regional power grid average carbon dioxide emission factors." The Ministry of Ecology and Environment responded in September 2022: "We will actively adopt the opinions and suggestions of the deputies in our work, strengthen research on updating factors, and work with relevant departments to accelerate the establishment of a unified and standardized carbon emission accounting system to provide solid data support for achieving the goals of carbon peak and carbon neutrality."

Will regional and provincial power grid emission factors be updated regularly in the future? There is no answer at present. However, each region is exploring and developing according to its own situation. Take Shanghai as an example. According to the data compiled by Shanghai's 2010 energy balance sheet and greenhouse gas inventory, when the emission-controlled enterprises included in the Shanghai pilot carbon market calculated indirect emissions, the power grid emission factor value has always been 0.788 tons of carbon dioxide/MWh. It was not until February 2022 that the Shanghai Municipal Ecology and Environment Bureau adjusted the power grid emission factor to 0.42 tons of carbon dioxide/MWh.

How will the refinement of grid emission factors reduce the carbon burden of exporting companies? Wu Bixuan, senior partner of Hiways Law Firm, told Caijing Eleven that according to the EU "carbon tariff" bill, the emission factors of the national grid will be used by default when calculating the indirect emissions of export products. However, judging from the text of the bill, it does not completely rule out the possibility of replacing the default national grid emission factors with grid emission factors that are smaller in scope and more timely. The premise is that the more refined grid emission factors are recognized by the EU and solve the "double calculation" problem of the environmental attributes of green electricity. This means that in some low-emission "power special zones", the emission reduction effect of green electricity used by enterprises in the zone may be recognized by the EU, thereby bearing less indirect emission burden under the "carbon tariff".

How to solve the "double calculation" problem of green electricity's environmental attributes is a key task in optimizing China's power grid emission factors.

Wang Jun, a senior carbon management researcher and author of the book "Carbon Neutrality Era", told Caijing Eleven that as the proportion of renewable energy generation increases, the average carbon emissions of the entire power grid will decrease, and the emission factor of the national power grid will also be adjusted down. This allows all electricity consumers to achieve emission reductions without doing anything; but if these renewable energy generation has been sold to specific users and the user's carbon emissions have been offset accordingly, then if this part of the electricity is counted in the power grid, the environmental benefits of green electricity will be double-counted.

The Ministry of Ecology and Environment has not announced the calculation details of the national power grid emission factor. Based on public information, many industry insiders have estimated that the current calculation of the national power grid emission factor does not take into account the situation of green electricity trading.

Wang Jun said that the current proportion of green electricity in the national power grid is still relatively small, and the proportion of environmental attributes used in power trading is even smaller, so there is no need to consider the problem of double counting for the time being. However, new calculation methods should be studied now.

Zheng Ying suggested that we can refer to foreign experience and solve the problem of repeated calculation of green electricity environmental attributes by refining the classification of power grid emission factors. For example, Japan has released two types of electricity emission factors based on whether it contains the environmental value of renewable energy: basic emission factors (emission factors containing environmental value, calculated in the same way as China's electricity emission factors), and adjusted emission factors (excluding environmental value).

The Chinese government has made strategic arrangements for the carbon emissions data accounting system. In April 2022, the National Development and Reform Commission, the National Bureau of Statistics and the Ministry of Ecology and Environment issued the "Implementation Plan for Accelerating the Establishment of a Unified and Standardized Carbon Emissions Statistical Accounting System". The plan points out that it is necessary to establish a national greenhouse gas emission factor database, coordinate the measurement of emission factors, improve accuracy, expand coverage, establish a normalized and standardized database update mechanism, and gradually establish an emission factor compilation and update system with wide coverage, strong applicability and high credibility.