--- title: The Carbon Rulebook Most Big U.S. Companies Follow Is Being Rewritten description: The Greenhouse Gas (GHG) Protocol, the carbon accounting standard most big U.S. companies follow, is being rewritten. See what could change and what investors should know. image: https://blog.reyndersmcveigh.com/hubfs/Multnomah%20Falls%20and%20bridge%2c%20in%20the%20Columbia%20River%20Gorge%2c%20Oregon..jpeg --- [![horizontal](https://blog.reyndersmcveigh.com/hubfs/horizontal.svg "horizontal")](https://reyndersmcveigh.com/) - [About](https://reyndersmcveigh.com/about) - [Who we are](https://reyndersmcveigh.com/who) - [Our Team](https://reyndersmcveigh.com/team) - [Contact](https://reyndersmcveigh.com/contact) - [Careers](https://reyndersmcveigh.com/careers) - [Services](https://reyndersmcveigh.com/services) - [Investment Management](https://reyndersmcveigh.com/investment-management) - [Financial Planning](https://reyndersmcveigh.com/financial-planning) - [Sustainable Investing](https://reyndersmcveigh.com/sustainable-investing) - [Insights](https://blog.reyndersmcveigh.com/insights) - [Forms](https://reyndersmcveigh.com/compliance) - [Form CRS](https://reyndersmcveigh.com/crs) - [Form ADV](https://reyndersmcveigh.com/s/2024-06-18-ADV-Part-2A.pdf) - [Mutual Fund](http://www.reyndersmcveighfunds.com/) [Log In](https://reyndersmcveigh.sharefile.com/Authentication/Login) [Log In](https://reyndersmcveigh.sharefile.com/Authentication/Login) Oct 28 # The Carbon Rulebook Most Big U.S. Companies Follow Is Being Rewritten When a company says its data centers run on clean energy, what is that claim based on? The answer depends on how the company accounts for its emissions, and 97% of the S&P 500 companies that disclosed their emissions to the CDP in 2023 reported them using the Greenhouse Gas Protocol (GHG Protocol).1 That standard is now under revision, and the proposed change has divided some of the country's largest companies. For investors, the outcome could change the standard of proof behind a clean energy claim. ### What Is the GHG Protocol, and What’s Changing? Companies report emissions in three categories. Scope 1 covers what a company emits directly from sources it owns or controls, such as fuel burned in its furnaces and company vehicles. Scope 2 covers the emissions from generating the electricity, steam, heating, or cooling it buys. Those emissions occur at the power plant, but they are attributed to the company that uses the energy. While not widely reported, Scope 3 covers everything else up and down its value chain, such as the emissions from making the products it purchases and from customers using the products it sells. A company that operates data centers reports the electricity they use under Scope 2. Because those facilities use so much power, technology companies are at the center of this debate. Take a company that used 100 units of electricity last year and bought clean power for 80 of them. Under today’s rules, it can report those 80 units as clean. Those rules, set out in the GHG Protocol’s 2015 Scope 2 Guidance, match a company’s electricity use to its clean energy purchases over a full year. The purchases are often renewable energy certificates, records showing that a unit of electricity was generated from a renewable source.2 For the first time since 2015, the GHG Protocol is now revising Scope 2 Guidance. Under the draft proposal, companies would match their electricity use hour by hour rather than over a full year, and with clean power generated near where the electricity is used rather than anywhere in the same market. ### Annual vs. Hourly Carbon Accounting Central to the debate are energy sources, such as solar and wind, which generate power intermittently rather than consistently throughout the day. Under annual accounting, a company can match round-the-clock electricity use with clean power purchased at any point during the year. For example, the sun could be shining in New Mexico while a data center in Virginia runs on fossil-fueled power after sundown, and the company’s reported emissions could still reflect the daytime solar purchase. Supporters of hourly matching point to cases like this, where reported emissions look low even though the grid leaned on fossil fuels to keep the lights on.3 Under hourly matching, instead of buying whichever renewable megawatt-hour is cheapest, companies would have an incentive to invest in power that can run around the clock, such as geothermal, nuclear, or battery storage paired with wind and solar. ### Two Coalitions, Two Philosophies Two camps have formed around the proposed reporting change. One is led by the Emissions First Partnership, co-founded in 2022 by Amazon and Meta.4 Its position is that accounting based on avoided or reduced emissions would do more good than strict hourly matching, because it would steer clean energy purchases toward the places where they avoid the most emissions. On the other side is the Climate Group’s 24/7 Carbon-Free Coalition, whose founding partners include Google, AstraZeneca, Iron Mountain Data Centers, Shree Cement, AirTrunk, and Vodafone UK.5 This group argues that anything looser than hourly matching lets companies claim progress without funding the kind of always-on clean power the grid needs. Both camps have given investors something to consider. Supporters of hourly matching see it as the more rigorous standard, because it ties reported emissions to when power is actually used. Critics argue that hourly requirements would raise reporting burdens and costs and could discourage companies from taking part in voluntary renewable energy programs.6 ### How AI Data Centers Are Testing Big Tech’s Carbon Goals For the technology companies at the center of this debate, the effects are already concrete and measurable. The AI data center buildout is putting heavy strain on their carbon goals: Google’s electricity demand rose 37% in 2025, and Microsoft’s latest sustainability report showed a 25% jump in its emissions, which it attributes to data center expansion and a shift away from non-additional renewable energy certificates.7 Alphabet’s Google is the clearest example of a company responding to that strain. In 2017, Google became the first major company to match all of its annual electricity use with renewable energy purchases, a practice it has continued. Even so, Google now argues that the annual measure doesn’t tell the whole story: companies that match all of their annual electricity use still rely on fossil-fueled power when and where carbon-free generation is not available. Google aims to run on 24/7 carbon-free energy on every grid where it operates by 2030, a goal it calls “a North Star for our operational energy strategy.” However, the company is candid about the difficulty. Carbon-free energy averaged about 65% across its data centers and offices in 2025, roughly flat from the year before, as demand surged.8 Google is trying to close that gap with projects that can supply clean power when wind and solar fall short. Two recent examples show how. The first project is in West Virginia, where Google has agreed to buy the output of a new solar plant paired with batteries. The batteries include a long-duration type that can release stored power over many hours, so the system is designed to supply power around the clock.9 The second project is in Utah, where Google signed a 396-megawatt agreement to buy power from a project that uses enhanced geothermal, a newer approach designed to produce power around the clock in more places than traditional geothermal can. The capacity is expected to come online in 2028.10 Microsoft’s goal is also ambitious. In 2020, it pledged to be carbon negative by 2030 and, by 2050, to remove all the carbon it has emitted since its founding in 1975. It has invested heavily in carbon removal to get there. While that’s a different path from the one we favor, which is investment in new renewable energy, we are encouraged by the scale of its commitment.11 Microsoft also said in 2025 that it had stopped buying non-additional, unbundled renewable energy certificates, a move in the direction of the proposed rule change. A Bloomberg report in May said Microsoft is weighing whether to delay or abandon its 2030 target of matching its electricity use with zero-carbon energy hour by hour. Microsoft has not announced a change, and its July sustainability report reiterated its 2030 goals. We will continue to monitor developments.12 ### What This Debate Means for Investors The new standard for emissions reporting is expected to be published in late 2028.13 However, when companies must follow it will depend on a phased implementation timeline and on the reporting frameworks that adopt it. Whatever the schedule, the standard’s reach goes well past the companies debating it directly. Microsoft and other large technology buyers already require emissions reporting from their own suppliers,14 which means the standard that governs a handful of hyperscale data center operators eventually filters through a much longer chain of vendors and partners. We support the proposed move to hourly, local matching, and we expect it will take patience and education for companies to adopt it. Wind and solar were a great first step, but they are intermittent, and annual matching does not show the gaps. To meaningfully reduce reliance on traditional energy sources, corporations need to support grid infrastructure, new technologies, and projects that can deliver continuous renewable power to the grid. Those are the investments we look for when we research a company. We weigh them alongside many other factors, including liabilities that standard reporting can leave out. Looking further ahead, we are watching for progress toward a standard for Scope 4, or avoided emissions: the emissions a company’s products and services help its customers avoid. Scope 4 is not an official GHG Protocol category, and there is no required method for measuring it, so claims are hard to compare.15 We believe companies that can demonstrate significant avoided emissions, with sound economics behind them, may be well positioned to benefit for decades. ### Frequently Asked Questions What is the GHG Protocol? The GHG Protocol is the standard many companies follow to calculate and report their greenhouse gas emissions. What are Scope 1, Scope 2, and Scope 3 emissions? Scope 1 is a company's direct emissions, such as fuel it burns in its own boilers or vehicles. Scope 2 is the emissions behind the electricity, steam, heating, and cooling it buys. Scope 3 is everything else along its value chain, from suppliers' production to customers' use of its products. How does Scope 2 carbon accounting work today? The GHG Protocol's 2015 Scope 2 Guidance allows a company to compare its electricity use with its clean power purchases across a full year. Many companies buy renewable energy certificates, which document that a unit of power came from a renewable source, and apply them against their usage. What is the difference between annual and hourly carbon accounting? Annual accounting lets a company line up its power consumption with clean power bought at any time during the year. Hourly matching, also called 24/7 matching, would pair the two hour by hour. Who is on each side of the hourly matching debate? Amazon and Meta co-founded the Emissions First Partnership in 2022 to push for credit based on avoided or reduced emissions rather than matched electricity. The Climate Group's 24/7 Carbon-Free Coalition, with Google and AstraZeneca among its founders, backs hourly matching, arguing that looser rules let companies take credit without paying for round-the-clock clean power. How is AI affecting Big Tech's carbon goals? The AI data center buildout is straining the climate goals of the largest technology companies. Alphabet's Google saw its electricity demand rise 37% in 2025, and Microsoft's emissions rose 25%, driven by data center growth and its move away from non-additional renewable energy certificates. Microsoft is pursuing its pledge to be carbon negative by 2030 and has invested heavily in carbon removal. What is Google's 24/7 carbon-free energy goal? Google aims to run on carbon-free energy every hour of the day on every grid where it operates by 2030. It was the first major company to match all of its annual electricity use with renewable purchases and now backs projects such as solar with long-duration batteries and enhanced geothermal. When will the new GHG Protocol Scope 2 rules take effect? The GHG Protocol expects to publish the revised standard in late 2028, but compliance timing hinges on a phased rollout and on which reporting frameworks adopt it. What could the GHG Protocol changes mean for investors? The outcome could change the evidence a company needs to support a clean energy claim. Under current guidance, companies can report identical Scope 2 figures while sourcing very different power. What are Scope 4 emissions? Scope 4 is an informal term for avoided emissions, the reductions a company’s products and services help its customers achieve. It is not an official GHG Protocol category, and there is no required method for measuring it. Companies cannot subtract avoided emissions from their Scope 1, 2, and 3 totals. --- 1Greenhouse Gas Protocol, “About Us,” accessed October 2026. 2Greenhouse Gas Protocol, “Scope 2 Guidance: Executive Summary,” 2015; OneStop ESG, “GHG Protocol Scope 2 Revision,” August 19, 2026. 3NewClimate Institute, "24/7 Renewable Electricity Matching Is a Far More Credible Approach…," October 10, 2024; OneStop ESG, "GHG Protocol Scope 2 Revision," August 19, 2026. 4Meta, “Putting ‘Emissions First,’” December 17, 2022 (via CSRwire); NewClimate Institute, “24/7 Renewable Electricity Matching,” October 10, 2024. 5The Climate Group, “International Businesses Back New Initiative to Boost Carbon-Free Power…,” September 24, 2024; NewClimate Institute, “24/7 Renewable Electricity Matching,” October 10, 2024 (founding members). 6Argus Media, “GHG Protocol Faces Pushback on Scope 2 Reforms,” July 2026. 7Google, “2026 Environmental Report,” 2026 (electricity demand); ESG Today, “Microsoft’s Carbon Footprint Jumps 25% as AI Buildout Challenges Climate Goals,” July 13, 2026. 8Google, “2026 Environmental Report,” 2026, pp. 27–28 and 72, and appendix data tables. 9Google, “Our New Partnership Brings Long-Duration Energy Storage to West Virginia,” September 2, 2026; Eos Energy Enterprises, “MN8 Energy, Google, and Eos Energy Enterprises Bring Advanced Clean Energy Solutions to West Virginia,” September 2, 2026. 10Fervo Energy, “Fervo Energy and Google Sign 396 MW PPA,” September 1, 2026; Trellis, “Meet the Drilling Entrepreneur Unlocking Geothermal Power for Google,” accessed October 2026 (enhanced geothermal). 11Microsoft, “Microsoft Will Be Carbon Negative by 2030,” January 16, 2020; ESG Today, “Microsoft’s Carbon Footprint Jumps 25% as AI Buildout Challenges Climate Goals,” July 13, 2026 (carbon removal program). 12Microsoft, “Progress on the Road to 2030,” February 13, 2025 (unbundled certificates); Bloomberg News, “Microsoft in Talks to Ax Energy Pledge Amid Data Center Boom,” May 6, 2026, reprinted by Advisor Perspectives (reported target review); ESG Today, “Microsoft’s Carbon Footprint Jumps 25% as AI Buildout Challenges Climate Goals,” July 13, 2026 (reiterated 2030 goals). 13Greenhouse Gas Protocol, “GHG Protocol Announces Key Standard Development Updates,” July 29, 2026. 14Microsoft, “Developing a Sustainable Procurement Strategy” (Supplier Code of Conduct requirement that suppliers provide Scope 1, 2, and 3 emissions data), accessed October 2026; Weaver, “Microsoft’s Approach to Carbon Emissions in the Supply Chain” (also covers Apple’s supplier requirements), accessed October 2026. 15Persefoni, “Scope 4 Emissions Explained,” updated April 29, 2024. 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