Financed Emissions

Hi, For example, as a financial institution, we want to set a science based GHG reduction target for our energy generation portfolio (power) using the SDA Tool;

• Should we use the SDA cumulatively for all the power plants with different technologies (including the renewables not just the fossil fueled power plants) in our portfolio?

• Should we use the SDA-SBT Tool to determine a target for our financed emissions in the energy sector? There is also SDA-Scope 3 Tool, as far as I understand SDA-Scope 3 Tool is developed for the energy companies to determine their GHG reduction target for its Scope 3 emissions.

• For example, we financed %10 of the total investments made for a fossil fuel power plant. Based on the SBTi requirements, should we calculate our target as if all the investments made for the power plant by a consortium of the banks are under our responsibility (Alternatively, our financed emissions equal to whole GHGs or %10 of the GHGs emitted from the power plant)?

Thanks so much.

Hi Buca,

Thanks for your questions.

  1. You should indeed include multiple technologies as long as they are covered by the SDA pathway as included on page 136 of the SBT FI guidance:
    “The scope of the methodology covers projects contributing to electricity generation from fuels such as oil, coal, natural gas, nuclear, biomass and waste, hydro, geothermal, wind, solar photovoltaics (PV) and concentrate solar power (CSP), ocean, hydrogen, and other (IEA 2017). Treatment of investments leading to negative emissions from the power sector, such as bioenergy with carbon capture and storage (BECCS) and carbon capture and storage (CCS) are currently out of scope. This topic will be revisited once the GHG Protocol removal guidance is developed and as part of the SBTi’s net-zero target discussion.”

So indeed, renewables should be included in the baseline calculation.

  1. We currently do not provide a tool for FIs to calculate their financed emissions. You may find manual calculation instructions in Appendix C for electricity generation project finance, and in Appendix D for corporate equity and debt(applicable for electricity generation). Noting that we use PCAF’s guidance for financed emissions calculation, please refer to their website for additional resources that might be available from their end.

Many thanks for the answers.

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