Chapter 1: Introduction

The guidelines provide methodologies for quantifying greenhouse gas (GHG) reductions from projects that affect electricity generation or consumption on the grid. They are designed to be programme-neutral, emphasising transparency, accuracy, and completeness in emissions accounting. Notably, issues such as sustainable development, stakeholder consultation, and legal claims to GHG reductions are outside the scope and are flagged as potential ESG risks requiring external resolution.

Chapter 2: Key concepts

The guidelines define “build margin” (BM) and “operating margin” (OM) emission factors. BM relates to emissions from new or avoided capacity, while OM concerns emissions from existing operations. These concepts are critical for estimating project impact on grid emissions. ESG relevance includes aligning GHG accounting principles with principles such as conservativeness, transparency, and relevance.

Chapter 3: Electricity reduction project activities

Electricity-saving activities can also reduce GHGs. For such projects, savings must be calculated accurately, and baseline emissions are determined similarly to generation projects. A key ESG issue is ensuring credible baseline estimation despite projects being small in scale or implemented without grid-related intent. Recommendations include using time-sensitive methods to reflect varying marginal emissions and applying zero-emission status for efficiency projects when appropriate.

Chapter 4: Defining the GHG assessment boundary

Defining the assessment boundary is essential to capture both direct and secondary emissions effects. Primary effects cover emissions from avoided grid electricity; secondary effects may include lifecycle emissions changes. ESG considerations relate to capturing a full emissions profile and avoiding underestimation of environmental impacts.

Chapter 5: Determining the extent of build margin and operating margin effects

Projects must be assessed for their impact on capacity demand. Many small-scale projects have negligible impact on BM. Larger or aggregated projects must quantify capacity effects, including rated capacity and timing. A recommendation is to assess each project type’s relevance to grid capacity needs individually.

Chapter 6: Selecting a method to estimate build margin emissions

Users may choose between project-specific and performance standard approaches. The project-specific method identifies a single baseline plant; the performance standard method calculates a weighted average of candidate emissions. The method selection impacts stringency and thus ESG integrity in reporting.

Chapter 7: Identifying the baseline candidates

Projects must identify candidate technologies they would displace. For electricity reduction projects, it is crucial to assess whether displaced capacity is “baseload” or “load-following.” This characterisation influences BM estimation and affects the perceived impact of the project on grid emissions.

Chapter 8: Justifying the baseline scenario and characterising the build margin

To justify a project’s baseline scenario, barriers and alternatives must be compared. ESG concerns include transparency and equity in comparison of technologies and ensuring that displacement claims are robust. Recommendations include applying credible barrier assessments and documenting assumptions clearly.

Chapter 9: Estimating the build margin emission factor

BM emissions can be estimated using a single proxy plant or as a weighted average of multiple candidates. This chapter supports quantitative calculation methods, advising practitioners to select approaches that align with project context and ESG accountability standards.

Chapter 10: Estimating the operating margin emission factor

OM emissions can be estimated using four different methods depending on project data and grid characteristics. Projects with time-sensitive impacts should apply time-differentiated OM estimates to improve accuracy. ESG recommendations include choosing methods that reflect operational realities and ensure temporal integrity of emissions data.

Chapter 11: Estimating baseline emissions

Baseline emissions are derived by combining BM and OM emission factors. The guidelines encourage conservative assumptions where accuracy is uncertain. This approach aligns with ESG principles of avoiding overstatement of GHG reductions.

Chapter 12: Monitoring and quantifying GHG reductions

Monitoring plans must include parameters that affect baseline and project emissions. For electricity reduction activities, project emissions are typically zero, simplifying quantification. ESG considerations include rigorous monitoring to maintain credibility and data integrity. Recommendation: include provisions for updates in line losses and grid behaviour.

Chapter 13: Reporting GHG reductions

Projects must report key assumptions, methods, and emissions data. Transparent reporting supports ESG objectives by enabling verification and avoiding double counting. Projects using standard baselines must also include project-specific monitoring and reporting protocols.