The Greenhouse Gas Protocol is considering emissions accounting rule revisions that will make the process of claiming reductions from corporate renewable energy contracts more complicated, especially for companies with smaller electricity loads or highly distributed operations, according to those with knowledge of the discussions.

The GHG Protocol is the nonprofit that manages the guidelines that 97 percent of companies use to calculate and report on greenhouse gas emissions. Many of its rules are being overhauled after a major call for feedback two years ago, including the one covering Scope 2, emissions associated with energy purchases.

Many clean energy buyers agree that an update is overdue: the Scope 2 guidance was originally created in 2015. Those familiar with proposed changes in the current revision, however, worry that making them mandatory will make it tougher for corporate buyers to justify new deals.

Two influential trade groups, the Clean Energy Buyers Association (CEBA) and the American Council on Renewable Energy (ACORE), sent letters to the chair of the GHG Protocol’s standards board urging it not to make the revisions too strict.

“The Clean Energy Buyers Association is deeply concerned with the current direction of the Scope 2 guidance revision process,” the organization’s CEO, Rich Powell, said in a two-page letter, made public May 23. “If the process stays this course, we fear that many corporate clean energy buyers may pull back on investments in clean energy.”

ACORE’s six-page missive, dated April 25 (shared with Trellis but not made public), sounds a similar alarm: “At a time when clean energy companies face significant global and domestic headwinds, an overly restrictive approach for GHG reporting requirements that shrinks the number of voluntary purchasers could be a breaking point for many companies in the clean energy market.” 

Why the guidance matters

The current Scope 2 rule lets companies claim emissions reductions by buying enough renewable energy certificates from solar, wind and other zero-carbon sources to match their annual electricity load in the same broad market. For example, a company could claim credits from a wind farm in Nebraska or solar installation in Texas to reduce its U.S. emissions, regardless of where their operations are located. 

This framework has inspired hundreds of corporations to sign contracts that put more than 100 gigawatts of clean electricity on the U.S. grid since 2014 — 21.7 gigawatts in 2024 alone. 

Both supporters and critics of the methodology say an update is long overdue, and welcome changes that would give corporate claims about renewable electricity purchases more integrity.

“There is a lack of rigor in the current rules,” said Lee Taylor, CEO of REsurety, a firm that facilitates transactions. “The gaps between the dirtiest grids and the clean ones is getting bigger. The carbon intensity of grids is changing. That reality has been true for some time and it’s only growing.”

What’s on the table

The proposed changes as of April 30 are definitely more rigorous. 

One revision being considered would require big energy consumers to match actual electricity loads to renewable sources on an hourly basis; those using less than 5 gigawatt-hours per year could still report on a monthly or annual basis.

Another potential modification would narrow market boundaries, requiring companies to make their renewable energy purchases on the same regional grids that serve their physical locations.

Alongside the bigger changes, a subgroup is debating metrics to recognize corporate deals that are “consequential.” That might include, for example, providing a way to account for energy storage installations or to recognize contracts that add more renewables in places where grids are heavily dependent on fossil fuels, even if the buyer doesn’t have a physical presence there. 

Minutes of meetings by the technical working group developing the Scope 2 revisions are publicly available and include more details about changes being considered.

GHG Protocol declined to comment on the record, citing the ongoing nature of the process.

What buyers would like to see

Corporate renewable buyers, speaking on background, suggested that the future rules be tiered and some elements made optional. This would give sophisticated buyers a framework for making more specific emissions reduction claims without discouraging companies with smaller loads or that are new to corporate renewable procurement from participating, they said.

“I do think the next phase of procurement needs to be more meaningful than just an annual match and putting it wherever the economics make sense,” said Joey Lange, senior managing director for global renewable energy advisory services at consulting firm Trio. “But you can’t penalize the companies that played by the rules to begin with.”

If GHG Protocol makes the suggestions for more hourly matching and narrower market boundaries mandatory, a majority of CEBA’s 400-plus members would face “serious implementation challenges,” the organization said in its letter. “These accounting changes would fundamentally change the practical context of voluntary procurement.”

A separate survey of clean electricity practitioners conducted between November and February underscores CEBA’s position: 80 percent “lacked confidence” they would be able to comply with scenarios being considered.

“There are companies that feel stuck,” said Roger Ballentine, president of consulting firm Green Strategies, which conducted the survey. Uncertainty over both the rule change and broader macroeconomic conditions is paralyzing the market, he said: “If they want to execute a big deal, are they sure that deal will be okay? It really makes it very tough on procurement people to decide what they should do right now.”

Both CEBA and ACORE urged the GHG Protocol standards board to seek more input from corporate practitioners and renewables developers as the technical working group finalizes its draft. Some of their ideas:

• Solicit more feedback from corporate practitioners.
• Address concerns of renewable energy buyers before a draft is finalized for public consultation.
• Accelerate development of metrics for “consequential” deals, so they are aligned with the broader Scope 2 changes.
• Offer more clarity immediately about how existing contracts will be recognized, so companies don’t postpone new contract negotiations.
• Make some of the stricter proposed revisions optional.  

GHG Protocol is expected to publish a draft outlining high-level changes to Scope 2 in the fourth quarter of 2025. Revisions based on that feedback will be circulated in 2026, according to the GHG Protocol website. A final draft isn’t anticipated until 2027, and it’s likely that there will be a grace period before the changes take effect.

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Microsoft, which usually leaves buying construction materials to its contractors, has signed a long-term contract to buy low-carbon cement by startup Sublime Systems. It will use a new form of environmental credits related to that purchase to claim emissions reductions related to data center construction.

Under the deal, announced May 22, Microsoft will claim 622,500 metric tons of emissions reductions over a six-to-nine-year period against its Scope 3 footprint — which accounted for 96.5 percent of the technology company’s total footprint in its 2023 fiscal year. 

For perspective, Microsoft used 605,000 carbon credits that year to make its carbon neutral claim. It has also purchased credits for close to 20 million tons of carbon removal.

Microsoft plans to use Sublime’s cement in data centers, infrastructure and offices wherever geographically possible. Most cement is used within a few hundred miles of where it is produced. 

Microsoft’s footprint rose 31 percent between 2020 and 2024, largely because of data center expansion. Concrete and steel are carbon-intensive materials that together contribute 13 percent of global carbon dioxide emissions. With much ado being made about the huge energy appetite of data centers that fuel artificial intelligence, Amazon, Google and Microsoft are all seeking ways to address their construction-related emissions.  

Sublime uses an electrochemical process instead of a combustion-driven kiln to manufacture a replacement for ordinary portland cement. The company, spun out of research at the Massachusetts Institute of Technology, has raised $200 million. That includes funding from venture capital firms including The Engine, Lowercarbon Capital and Energy Impact Partners, along with an $87 million award by the Department of Energy in 2024 — funding that so far has not been affected by the Trump administration’s shifting priorities.

“We see a big opportunity to both domesticate and modernize U.S. cement making,” said Sublime CEO and Co-founder Leah Ellis. The U.S. imports more than 20 percent of its cement, and Sublime’s technology could change that locus. Two factories in the Northeast have closed in the past 18 months because of outdated technologies. 

Microsoft is the anchor customer for Sublime’s first commercial facility being built in Holyoke, Massachusetts, slated to begin deliveries in 2028. One of the biggest construction companies in the Northeast, Suffolk, announced a $3 million investment on May 21 to buy cement from the factory.

“Sublime’s mission is no less than fundamentally reshaping a cornerstone of the global built environment landscape, and we are proud to support them through our capital, our network and our commitment to building a more sustainable world,” said Jit Kee Chin, executive vice president and chief technology officer for Suffolk’s investment arm, Suffolk Technologies.

Source: Mikhail Glabets Photography

Credits for low-carbon cement and steel

Terms of the Microsoft-Sublime deal weren’t disclosed, but the company is positioning the contract as a way to provide early demand signals for the startup’s first factory, which will produce about 30,000 tons of cement annually. “Microsoft is a market maker,” Ellis said.  

Sublime’s first commercial deliveries are slated for 2028; the startup hopes to support a full-scale facility with a capacity of 1 million tons potentially by 2030, she said.

Microsoft is using a new category of environmental attribute certificate (EAC) for concrete and steel to justify its investment. The certificates are legal mechanisms companies use to calculate emissions reductions. One common type is renewable energy certificates, which many businesses use to offset emissions from purchased electricity. 

Environmental attribute certificates are used to spur investments in technologies that decarbonize hard-to-abate sectors including aviation, freight rail and maritime shipping. The new ones that will be issued under the Microsoft-Sublime deal are based on a methodology Microsoft developed with carbon management consulting firm Carbon Direct.

“While we prioritize deploying physical material whenever possible, this EAC approach helps both buyers and sellers overcome geographic, supply chain, cost and other barriers that make it challenging to introduce new technologies,” said Katie Ross, director of carbon reduction strategy and market development at Microsoft.

Goal: Scale availability of low-carbon cement

Microsoft’s purchases will be independently verified, although the details of how that will happen haven’t yet been determined, said A.J. Simon, director of industrial decarbonization at Carbon Direct. The certificates will be managed by a book and claim system, similar to what’s in place for sustainable aviation fuel.

The methodology published as a guide for other companies recommends that certificates be vetted using seven criteria, such as whether purchases will complement direct procurement of steel, cement and concrete. 

“The intention is to set high-integrity standards for commodity EACs that will improve confidence in this mechanism,” Simon said. “The thresholds for quality in the report reflect Microsoft’s decarbonization; other companies may decide to weight the criteria differently.”

The prepurchase commitments made possible by the EACs act as accelerants for startups, Ellis said. Despite uncertain macroeconomic conditions, Sublime isn’t making big adjustments, and it’s working closely with three of the world’s largest cement producers — Holcim, Amrize and CRH — to focus on the long term. “This isn’t an industry that pivots quickly,” Ellis said.

[Connect with more than 3,500 professionals decarbonizing and future-proofing their organizations and supply chains through climate technologies at VERGE, Oct. 28-30, San Jose.]

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Monetizing reforestation and other nature-based carbon removal projects is hampered by the difficulty of verifying outcomes such as soil carbon absorption across vast swaths of land and over multiple years. “Accountability is vital for the success of nature-based solutions,” states the Nature-based Solutions Initiative.

Now, AI’s firepower as a problem solver for a host of business challenges because of its ability to analyze — and act on — large amounts of data is being harnessed to provide an answer.

Canadian startup veritree is applying AI to nature-based solutions and carbon credits. Founded in 2022 as a spinoff from apparel company tentree, veritree provides an AI- and blockchain-enabled platform that connects businesses to about 50 nature-based projects in North America and Africa that use geo-sensors, computer vision cameras, satellites and on-the-ground monitoring to track changes. 

The sensors and monitors feed data into the veritree AI platform, which then reports progress on such metrics as carbon sequestration and species replenishment.

Businesses using veritree’s solution for AI-verified restoration projects include Samsung, ASML, Hopper, Sunrun and GreenFi in a list that has grown to 300 companies in three years. As of mid-May, those businesses have connected with reforestation projects to plant 100 million trees, according to the company.

Veritree closed a $6.5 million Series A funding round last week led by Pender Ventures and plans to use the capital to roll out projects in Latin America and integrate more auditing technologies into its platform.

“They come to us because their investors want to see progress audited and verified,” said Derrick Emsley, CEO and co-founder of veritree. “Confidence is one of the critical aspects that’s missing in this space right now, particularly in nature-based projects. Our platform is a utility for making sure that the projects that need to be funded have high-quality outcomes.”

The veritree platform “brings accountability to a space that’s long needed it,” said Pender Ventures Partner Isaac Souweine, in a statement as veritree announced its Series A round.

Mangroves in Madagascar

Ever since COP 27 in Egypt in 2022, nature-based solutions have been held up as essential to the climate struggle: reaching Paris goals requires not only reducing emissions but removing carbon already in the atmosphere. Moreover, widespread drought and biodiversity loss have led to a society-wide wake-up call about the need to protect nature.  

Some of veritree’s customers, such as GreenFi and Hopper, have built brands around restoring nature. Others have climate goals embedded in strategy, such as ASML, the photolithography chip company, or Samsung, its first customer, which turned to veritree for a carbon sequestration project that replanted 2 million mangroves in Madagascar. Veritree has been named by Deloitte, Forbes and Fast Company as a tech company to watch.

Other companies are also turning to AI technologies for similar purposes: Cultivo gathers data from geo-sensors, satellites and ground-monitoring devices to track progress on nature-based carbon credits, which it lists on the Verra registry of voluntary carbon credits. Blue Sky Analytics offers data-collecting satellites with remote sensing technology to monitor nature-based projects. 

Still, the market for nature-based carbon credits is much smaller than the need. According to the U.N. Global Compact and the Intergovernmental Panel on Climate Change, nature-based solutions could provide about a third of the reductions in greenhouse gas emissions needed to reach 2030 Paris goals. Yet, they receive less than 3 percent of global climate funding, said the Boston Consulting Group. A great deal of skepticism persists about voluntary carbon markets because of a lack of confidence in the outcomes. Thus the need for verifiable impact. 

AI capital flows elsewhere

To date, AI’s entry into the sustainability world has mostly been in energy optimization. 

Certain sustainability problems are such costly bottlenecks that investors know there’s a bankable business case for them. The years-long process of integrating renewable energy projects onto electric grids and optimizing grid efficiency are two such problems. This spring, National Grid Partners announced a $100 million investment in AI startups focused on electric grid efficiency, including AiDASH, Exodigo, Luminance, Sensat and Urbint. Last fall, KKR and Energy Capital Partners announced plans to invest $50 billion in renewable power generation to accelerate AI growth.

Another driver of applying AI to energy optimization is that AI’s huge energy demand is influencing infrastructure decisions, a case of “the tail wagging the dog,” Gupta said in an interview. AI proponents who care about climate want to streamline energy use while investing in AI.

About 2,600 gigawatts of renewable energy is waiting to be connected to U.S. electricity grids, an amount that’s double the existing grid capacity, Ajay Gupta, founder of venture capital firm CLAI vc and a fellow at Stanford University’s Distinguished Careers Institute, noted during San Francisco Climate Week. He listed Rhizome Data and Tapestry at Google X as AI startups trying to address bottlenecks and grid resiliency.

Veritree’s work fits the bill, said Souweine. “Veritree is solving one of climate-tech’s biggest blind spots — trust in nature-based solutions.”  

[Join a vibrant community of leaders and innovators driving cutting-edge tools, business strategies, and partnerships to protect and regenerate nature at Bloom, Oct. 28-30, San Jose.]

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The race to commercialize apparel recycling is heating up. On May 20, Reju, a startup within a French engineering and fossil fuel company, announced plans to build a polyester recycling plant in the Netherlands. Its projected annual output: 300 million articles of clothing.

Since its launch 18 months ago, Reju has opened a “Regeneration Hub Zero” demonstration plant in Frankfurt, Germany, which is expected to officially come online this year. The company has also inked partnerships with textile collectors and sorters and spoken with more than 100 brands and retailers to drum up interest for its Reju Polyester product, according to CEO Patrik Frisk.

“We are talking to everybody in the American market, and everybody in the European market,” said Frisk, a former Under Armour chief executive with decades at brands including The North Face, Timberland and Gore-Tex.

The global popularity of polyester, brewed from the fossil fuels that have hastened the climate crisis, has skyrocketed in recent decades, featuring in two-thirds of new clothing. The world churns out 33 million metric tons of plastic-based fibers each year. Only 3 percent gets recycled, according to the Ellen MacArthur Foundation. 

The waste is a mounting problem for the fashion brands and retailers that are gradually being forced to deal with their materials after end of use, thanks to extended producer responsibility (EPR) regulations in the European Union and California.

Competition

Numerous ventures are throwing fortunes and bold claims behind creating a circular economy for polyester that treats tossed-out textiles as a commodity rather than a liability.

One Reju competitor, Circ, based in Danville, Virginia, shared plans on May 19 to build a $500 million polyester recycling plant in France, backed by the French government and the European Union. Its recycled fibers have appeared in clothes by Zara, Patagonia, H&M and Levi’s.

Ambercycle and Worn Again Technologies also break down mixed textiles, such as the polyester-cotton blends ubiquitous to T-shirts, into raw material for new clothes.

A family affair

One thing that sets Reju apart: family connections. Its parent company, Technip Energies, has been in the polyester business for nearly 70 years. Its technology appears in 40 percent of the world’s 370 steam crackers, the industrial plants cranking out ethylene, a building block of polyester. TEN Zimmer, which Technip bought in 2015, processes polyester and nylon, another recycling frontier for fashion. One thousand polyester plants around the world use its technology.

Technip Energies, which today has a 17,000-person workforce, was formed in 2021 as a spinoff of TechnipFMC, which was created in 2017 when Technip and FMC Technologies merged. Technip Energies’ origins reflect the evolution of the oil and gas industry. In 1958, Technip took shape under the French Petroleum Institute, or IFP, in Paris. FMC Technologies originated in 1883 as an insecticide maker. 

Reju, founded in 2023 and employing 75 workers so far, is part of Technip Energies’ attempts to transition to a lower-carbon future. Those attempts also include investments in blue hydrogen, carbon capture and storage and recycled and biobased chemicals.

Technip Energies’ 2021 sustainability report set net zero deadlines of 2030 for Scopes 1 and 2, and of 2050 for Scope 3. It is not working on those emissions goals with the Science Based Targets initiative (SBTi), however, which in 2022 put on hold its consideration of oil and gas companies.

In 2024, Technip Energies grew revenues by 14 percent, to 6.9 billion euros.

Regional hubs

Not surprisingly, Reju is targeting population centers rife with unwanted, post-consumer clothes.

In the United States, it is finalizing the details of a new plant while collaborating with Goodwill and Waste Management on a garment recycling pilot. In April, Waste Management launched a textile curbside collection service in Troutdale, Oregon, which will be replicated in other cities. Goodwill sorts the apparel and will provide what it can’t sell to Reju.

“Reju has built a credible network of feedstock suppliers, which is often a bigger problem to solve than the chemistry,” said Marcian Lee, an analyst with Lux Research, “so I think it has a good shot at success.”

The polyester trap

Love it or hate it, polyester is functional, durable and cheap. “You have a really good product, a highly efficient system, that’s one of the largest commodities in the world,” Frisk said. It will take a generation to scale a potential replacement. Until then, Frisk added, “we can either continue to put it into the ground or we can burn it.”

Unless of course, we recycle it. Reju breaks down polyester molecules into a monomer, before building it back up again. It uses IBM’s VolCat technology, co-developed with Under Armour while Frisk was its CEO. In 2019, IBM shared with Trellis that, just as VolCat — short for volatile catalyst — could handle polyester bottles coated with milk or other gunk, it can manage the dyes and pigments on polyester clothing.

By returning “to the origin of polyester,” Frisk said, Reju can design lower-shedding synthetic fibers, yarns and fabrics that harm nature less and will be easier to manage at end of use.

No matter the efficiency and scalability of their recycling approaches, Reju and its rivals enter an industry being built from scratch.

“We actually spend less time than you might think on the technology itself, and much more on building out the system, from both a feedstock perspective and the downstream perspective of getting it to actually work as a circular system,” Frisk said.

Reju’s intended new site, at the 1,900-acre Chemelot Industrial Park, is tucked into the southern tip of the Netherlands, between Belgium and Germany. Technip Energies’ board will make the final investment decision, which is expected to fall between $200 million and $300 million.

Laying down the pipes

“The textile industry is essentially catching a free ride on infrastructure that’s been built for other stuff,” Frisk said. “The oil pipes and the refineries and the cracking plants, all of that has been built for different things and we’re only a small part of it at the end,” he said.

“Our post-consumer textile waste stream has to be as robust as the oil pipeline that comes out of the oil ship and goes into a refinery, then ultimately into the polyester plant,” Frisk said. “So that has been the first priority, because if you don’t build that, you will not have anything to sell to the brands or the retailers.”

The next challenge will be convincing brands to pay more for the recycled alternative. “Until we have cost parity the use of recycled fibers is going to remain negligible, even with ties to a heavy polyester use brand,” said Liz Alessi, an apparel sustainability consultant in New York City.

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If you’re a sustainability professional, chances are you’ve used or are thinking about using artificial intelligence (AI) for materiality assessments, data analytics or reporting. A recent survey of 500 sustainability professionals found that nearly half of them have begun using or experimenting with AI in their sustainability programs.

Recognizing this growth opportunity, a number of companies are leveraging AI tools that tout the ability to streamline and enhance sustainability-related efforts. As sustainability experts, it’s essential that we get up to speed on these rapidly emerging tools and how to effectively integrate them into our work. It’s also critical for companies to balance investments in platforms with investments in the people to ensure they’re familiar with the latest practices.

Areas primed for AI disruption 

In our scan of the AI-powered landscape, we see the following practices already happening or being ripe for the deployment of AI: 

Benchmarking and goal setting: AI tools are useful in setting robust yet achievable sustainability goals. AI has proven to be particularly helpful in benchmarking against peers and competitors and looking at technological and operational options and their projected impacts. 

Materiality and sustainability risk assessments: AI is well-suited to help companies compile, assess and prioritize potentially relevant risks and develop an initial list of material topics aligned with single or double materiality principles. Using products such as those offered by Datamaran or ClimateAI can help companies identify a portfolio of risks and prioritize and understand the impacts the risks may represent.

Data collection and report development: Sustainability-related data often resides in disparate and disconnected systems within a company’s IT infrastructure. AI is particularly proficient at sorting through large volumes of data to extract and synthesize it. Moreover, AI solutions can also fill in gaps in data sets by using data from comparable companies or interpolating between data points. Companies such as Hershey, Trox and Nortal, for example, already use AI-powered platforms to streamline information collection processes, develop outlines to guide report development processes and even produce first drafts.

Product design and materials selection: As companies work to produce more sustainable products, computer-aided design (CAD) tools have integrated AI-enabled features into their platforms that can shorten product development cycles, model the impacts of desired performance attributes, suggest alternative materials and help gain critical feedback earlier in design processes. French sporting goods manufacturer Decathlon used such a platform to optimize the design of diving fins, resulting in substantial reductions in material usage and the associated carbon footprint. 

Supply chain optimization: Finally, AI tools can model complex supply chains, support compliance and identify areas where organizations can improve their resilience. Supply chain platform provider E2Open, for example, integrates AI into many of its products including a system that models product demand to help users effectively project how much product is needed, resulting in more efficient manufacturing and logistics processes while reducing climate impacts.   

Striking a balance between people, platforms and impact 

Clearly, the introduction of AI-based tools is having a broad and deep impact on corporate sustainability efforts. 

But with these benefits come concerns about the massive computing power required for AI data systems, which increases energy demand and thus climate impact. According to an International Environmental Agency report, the U.S. economy is set to consume more electricity in 2030 for processing data — mostly driven by AI applications — than for manufacturing all energy-intensive goods combined including aluminum, steel, cement and chemicals.

Data scientist Hannah Ritchie put this issue in context by emphasizing the uncertainty around projections for AI data center energy demand. Similarly, Massachusetts Institute of Technology senior scientist Vijay Gadepally has outlined a series of steps that can be taken to reduce energy demand. How we power our increasingly data-hungry economy is an important conversation that needs to continue to be part of the advancement of AI. 

As AI tools become more sophisticated and their analytical capabilities more robust, we’ll see increasingly complex models to support strategic and operational decision-making. Such “digital twins” already in use include modeling supply chains and optimizing products and facilities. Imagine using such approaches to better understand how a company’s sustainability efforts may affect the climate, the local economy, resource availability or other impacts. That is the power AI is already delivering and will continue to bring to corporate sustainability efforts.

[Join more than 5,000 professionals at Trellis Impact 25 — the center of gravity for doers and leaders focused on action and results, Oct. 28-30, San Jose.]

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