Today, November 10, the first Scope 1 and Scope 2 emissions reports are due to the California Air Resources Board under SB 253, a deadline confirmed when CARB's Initial Regulation took effect on October 12 and affirmed by the Ninth Circuit on November 9. Five days ago, the Science Based Targets initiative (SBTi) published proposed interpretations and limited-scope revisions to the electricity criteria of its Corporate Net-Zero Standard Version 2.0.
The first is law. The second is voluntary target-setting. For a generation, Corporate Sustainability could treat those as separate worlds: a strategy conversation about ambition and procurement, and a reporting exercise about inventories. Scope 2 is where that separation now ends.
The stakes reach well beyond any one company's target. At COP28, the UAE Consensus called on all Parties to triple global renewable energy capacity by 2030. With approximately 50 months remaining, in a world challenged as never before, IRENA's tracking finds that annual capacity additions must nearly double to get there. Long-term corporate contracts for new projects are among the few levers that put new capacity on the grid on that timeline.
That is why SR Inc has been working with our Member-clients to help SBTi understand what is vitally important to democratizing access to utility-scale clean energy and storage: deliverability regions wide enough to aggregate real demand, durable treatment for contracts that finance new projects, and certainty that outlasts the next rule change. The November proposals move substantially in that direction, and we are persuaded they reflect a simple truth: these consultations matter. The proposals are not yet final, which is why the next 30 days count.
This post explains what SBTi proposed, what it means in the United States and Europe, what it does not yet settle, and why the companies that get Scope 2 right will design their decarbonization strategy and their compliance program together.
A cornerstone, now with clearer rules
Readers of this blog know the instrument. A virtual power purchase agreement is a long-term, project-specific contract whose price certainty helps a new wind, solar or storage-paired project secure financing, while its energy attribute certificates carry the buyer's claim. Whether or not your company has signed one, VPPAs have been a cornerstone of Scope 2 decarbonization for most of the world's leading SBTi-aligned companies, and aggregation has opened them to buyers too small to anchor a project alone.
The question has never been whether VPPAs matter. It is how far their certificates may travel and for how long they count. Those are questions of deliverability and durability, and they are what the November proposals address.
SBTi's Version 2.0 sorts these tools into an implementation hierarchy. Targets are anchored to the physical, location-based inventory, and market instruments remain valid for demonstrating near-term target progress provided they meet three integrity tests SBTi calls near, new and now. The November proposals are about "near" and "new."
What SBTi proposed on November 5
SBTi's Technical Council approved four items for a 30-day public comment period, as SBTi announced on its blog. Each answers a question companies have been asking since the Standard was published on June 11.
| Criterion | What it governed | What SBTi now proposes |
|---|---|---|
| CNZS-C30.1 | Deliverability regions, defined only in general terms | An interim list of regions based on wide-area synchronous grids |
| CNZS-C30.3(b) | Aggregated load under long-term contracts, limited to PPAs within one synchronous grid | Project-specific instruments for new or repowered projects may be allocated across the activity pool or the national boundary, whichever is larger |
| CNZS-C30.5 | Legacy treatment for contracts signed before the Standard takes effect | A contract qualifies if fully executed and binding before February 1, 2027, even if delivery starts later |
| CNZS-C31.3 | The 15-year generator age limit | Exemptions move from guidance into the Standard itself |
The status matters as much as the substance. SBTi is explicit that no changes have happened yet. Comments are open until December 5. SBTi's published timeline calls for analysis in December and publication of a Basis for Conclusions in January 2027, at which point the interpretations take effect. That is weeks before Version 2.0 itself becomes effective on February 1, 2027.
The right description for this moment is "proposed, with the Technical Council's backing." That is a strong signal, and one worth acting on, but it is a signal companies should help confirm rather than assume.
Deliverability: wide grids, drawn by physics
SBTi's choice of wide-area synchronous grids is the headline. Its reasoning is candid: of the features that define deliverability, only the synchronous grid boundary is binary. Generation and consumption are on the same synchronous grid, or they are not. SBTi calls this the least prescriptive approach that still preserves the concept, while it waits for the GHG Protocol and its own planned Call for Evidence on hourly matching.
In the United States, the proposed list names three regions: the Eastern Interconnection and the Western Interconnection (each shared with Canada) and ERCOT. That is a far wider boundary than the grid-operator territories many had feared. Standing alone, though, it would make ERCOT an island, since Texas is not synchronously connected to either Interconnection. The long-term contract provision discussed below is what keeps ERCOT procurement useful for national load.
In Europe, the list separates the Continental Europe Synchronous Area, the Synchronous Grid of Northern Europe, the island of Great Britain, the island of Ireland and Iceland. Two consequences follow:
Two safeguards in the proposal deserve attention. First, a narrower boundary applies wherever an applicable regulatory framework requires one. Second, actions taken under the interim interpretation remain valid for the target cycle in which they were taken, and long-term contracts signed while it is in effect may keep its boundaries for their full duration, even if a later formal interpretation draws tighter regions. That second protection is precisely what a project lender needs to hear.
Long-term contracts: the provision that matters most
For companies that cause new capacity, the revised C30.3(b) is the most consequential proposal. As published in June, it allowed aggregation only across interconnected areas within one wide-area synchronous grid, and only for PPAs. SBTi now acknowledges that existing aggregation practice goes beyond synchronous grid boundaries, particularly in the U.S., and that some financing instruments are not PPAs at all, such as tax credit transfer agreements paired with an up-front commitment to buy a new project's certificates.
The proposed text is short. Where a project-specific market instrument exists and delivery begins within 36 months of the project's commissioning or repowering, its attributes may be allocated across the activity pool or the national boundary, whichever is larger. SBTi's footnote says this is meant to capture physical and financial PPAs with new or repowered projects and equivalent long-term financing contracts, not spot or short-term purchases.
In practice this means a new-build VPPA in ERCOT, signed after February 1, 2027, could still be applied to a company's load anywhere in the United States for SBTi target purposes. That preserves the most common pattern in American corporate procurement. Three conditions keep it honest:
The legacy clause is now clarified as well. A contract qualifies if it was fully executed and legally binding before February 1, 2027, measured by the final required signature. Delivery may start later. Where delivery has not started, the certificates may serve only the facilities or areas the contract was demonstrably intended to cover, shown by the contract or contemporaneous documents. Term sheets still under negotiation on that date do not qualify.
The 15-year generator age limit stays, but its exemptions move into the Standard. The most important for VPPA buyers mirrors C30.3(b): project-specific instruments where delivery begins within 36 months of commissioning are exempt, so a 15-year contract for a new project does not age out mid-term.
Why "new" must come before "near"
One admonition belongs in every conversation about deliverability: there is no valid "use claim" in off-site clean energy procurement. A VPPA delivers no electrons to the buyer. The project sells its megawatt-hours into its local wholesale market, where they serve whatever load is there, and the buyer receives the energy attribute certificates those megawatt-hours represent. What a company actually procures is the certificate and, when its contract finances a new project, the causation of new clean supply. The GHG Protocol's market-based method has always been an accounting of contractual instruments, not of physical flows.
Seen this way, insisting on deliverability does not make a claim physical. It narrows the geography of a contractual claim, and so, unfortunately, perpetuates an accounting fiction: that a certificate from a nearby project is "used" in a way a distant one is not. SBTi's own words are carefully chosen. Its interim test asks only that generation could reasonably be expected to serve consumption on the same synchronous grid, a standard of plausibility rather than delivery.
The concern behind the rule is real, and fairness requires saying so. SBTi points to a history of claims built on certificates from oversupplied regions with no credible physical relationship to the buyer's consumption, and many respected voices share that view. We agree the problem is real. We believe its answer is causation, not proximity.
Nonetheless, "near" now organizes Version 2.0, and with the right exceptions it need not devastate voluntary clean energy demand at the very moment that demand must inflect from gigawatts to terawatts. IRENA's tracking finds that annual renewable additions must reach roughly 1.2 TW a year through 2030. Voluntary demand is not compelled. It is vaporized the moment it is no longer seen as practical.
The decisive design choice is therefore one of priority. Where a single long-term contract causes new clean energy, "new" should take precedence over "near," and companies should be able to aggregate load across deliverability regions where that is what makes the contract practical. The revised C30.3(b) does exactly this within national boundaries, which is why it matters so much for the United States. In this comment period, we will encourage SBTi to keep that priority explicit and to consider where it should reach further.
What the proposals do not settle
Good news invites overreach, so three limits deserve plain statement.
First, SBTi sets targets; it does not set accounting. Every proposal above governs how market instruments count toward an SBTi target. None changes how emissions are measured in a mandatory report. Those reports rest on the GHG Protocol, whose 2015 Scope 2 Guidance remains the rule in force.
Second, the GHG Protocol is still deciding. Its October 16 update describes a proposed framework with two market-based methods. Method 1 would add hourly matching and deliverability. Method 2 would keep the 2015 rules until a cut-off date still to be set, after which companies reporting market-based emissions would use Method 1 where qualifying data exists. Even whether market-based reporting is required ("shall, should or may") remains open. A consolidated public consultation is expected in 2027, with a final joint standard later. SBTi says its interim regions support the GHG Protocol's direction of travel without pre-empting it. That is a hopeful sign, not a guarantee, and ERCOT's status as its own synchronous grid remains the scenario to plan for.
Third, mandatory reports and voluntary targets now sit side by side. California's first SB 253 reports, due today, require Scope 1 and 2 emissions measured under the GHG Protocol; CARB waived limited assurance for this first cycle but expects it thereafter. In Europe, CSRD's climate standard, ESRS E1, requires both location-based and market-based Scope 2. Version 2.0 itself anchors Scope 2 targets to the location-based inventory and reports market-based actions separately.
The practical result is that one VPPA may now be described three ways: as progress toward an SBTi target, as a market-based figure in a CSRD or SB 253 report, and as a contribution to grid decarbonization that sits outside the physical inventory. Each must be consistent with the others, documented, and eventually assured. Getting one right while ignoring the others is how a good procurement becomes a bad disclosure.
Strategy and compliance, designed together
Scope 2 is the clearest example we know of a truth that mandatory reporting is making unavoidable: strategy and compliance are no longer separable disciplines.
At SR Inc, our two advisory services are built on that truth. Each Member of SR's Strategic Roundtable works from a Member Advisory Plan (MAP): the agreed program through which our team helps set vision, targets, scenarios and the procurement path to deliver them. Each Member of SR's Comprehensive Compliance Collaborative works from a Compliance Action Plan (CAP): the agreed program through which our team helps the company master its mandatory reporting obligations. The CAP extends the MAP. It does not duplicate it.
The November proposals show why each needs the other.
The MAP informs the CAP. A company that chooses, through its MAP, to meet its Scope 2 target with a new-build VPPA in ERCOT has made a disclosure decision as much as a procurement decision. Its CAP must then carry that choice faithfully: how the certificates appear in the market-based figure under SB 253 and ESRS E1, how the location-based anchor is explained, how legacy status is documented before February 1, and what evidence an assurance provider will ask to see. Without the MAP, the CAP is bookkeeping without a purpose.
The CAP advances the MAP. Compliance work is also an early-warning system for strategy. A company tracking the GHG Protocol's Method 1 and Method 2 debate through its CAP will see first whether a cross-grid procurement that SBTi accepts could later look weaker in a mandatory market-based report. That insight belongs back in the MAP, where it can shape contract structure, project location and timing while there is still room to choose. Without the CAP, the MAP risks building on rules that are still moving.
For organizations managing these decisions, SR Inc's ESG Controller Support service builds on the MAP and CAP by helping translate evolving requirements into assigned responsibilities, documented evidence, reliable controls and assurance-ready disclosures. The reader who has never signed a VPPA should take heart from this, not fright. The decisions are sequential and learnable, and the window to make them well is open. What matters is that the people making the procurement decision and the people signing the disclosure are working from the same plan. Our Member Executives put the goal simply: call the audit meeting, rather than be called into it.
What to do between now and February 1
Five steps, in order of urgency:
The tripling goal will not be met by policy alone, nor by the largest buyers alone. It will be met, if at all, when companies of every size can contract for new capacity confident that their claims will hold, in their targets and in their mandatory reports alike. That is the work of the next 50 months.
If you would like help with any of these, we would welcome a conversation at your convenience about how best we can help, whether through SR's Strategic Roundtable, our Comprehensive Compliance Collaborative, or both. SR's Strategic Roundtable Member Executives can reach their Account Leader directly; others can contact us through sustainround.com.
Sources and authorities