Decarbonization has diversified from simply vanilla to 31 flavors, where a range of goals and strategies are being adopted as companies work to reduce carbon emissions and other environmental impacts. One key strategy that’s emerged has been time-matched procurement of electricity, ensuring that the electricity that’s sourced corresponds to when and how much electricity is used onsite.

Granular energy attribute certificates (EACs), which add transparency by including information on where and when energy is sourced, are crucial to delivering 24/7 carbon-free energy matched on the hour. On this episode, host Lincoln Peyton talks with EnergyTag Executive Director Killian Daly about how the organization is leading the charge for granular certificates, including advising governments around the world on their use and how they can ensure commodities like hydrogen are produced sustainably. They also discuss the complex world of voluntary standards, market impacts, policy implementation, and the ambitious mission of EnergyTag, which is backed by big names like Google and Microsoft. As EnergyTag champions global adoption of more granular carbon accounting standards, Killian will also shines a light on his role in harmonizing these efforts through leading the Carbon Data Specification initiative at the Linux Foundation.

Key Takeaways

1. Granular data is key to transparency and accountability: by supplying information on when energy is generated, granular data enables organizations to better match the energy they source with consumption, better ensuring companies decarbonization efforts’ deliver the desired impacts.
2. Education leads to action: regulatory measures, such as the push for renewable hydrogen in Europe, will help suppliers shape how they source energy and produce commodities like hydrogen, chemicals and steel. Clear definitions of ‘green’ and enforceable standards can safeguard against inefficacy or greenwashing of products.
3. Strategic advantages of sustainable practices: There is a competitive edge companies gain by committing to sustainable practices — from price stability in energy markets to consumer trust in green certification. Going beyond the rhetoric of corporate responsibility, Killian articulates the tangible benefits of embedding sustainability intobusiness models.

Resources

• Learn more about EnergyTag: https://energytag.org/ 
• Case studies of granular certificate use: https://energytag.org/case_studies/
• The Granular Certificate Standard: https://energytag.org/standards/ 
• Canary Media’s series on the green hydrogen debate: https://www.canarymedia.com/articles/hydrogen/the-great-green-hydrogen-battle 

Transcript

Narrator: On this episode of The Decarbonization Race.

Killian Daly: If we change accounting this way, this will drive not only more renewables, but also more storage, more clean, firm technologies that we need when there’s no renewables available, when there’s no wind or sun, we need other things. This change of accounting really has a lot of systemic benefit, especially if it’s done at scale. And I think that’s really important to kind of highlight that. There’s a lot of robust science now showing that actually, if everyone starts to do this, we can bring really significant system decarbonization benefits and help accelerate Decarbonization and resolving the climate issue.

Narrator: Decarbonization has diversified from simply vanilla to 31 flavors, where a range of goals and strategies are being adopted as companies work to reduce carbon emissions and other environmental impacts. One key strategy that has emerged, and one we’ve talked about a lot on the Decarbonization Race has been time matched procurement of electricity, ensuring that the electricity that’s sourced corresponds to when and how much electricity is used on site. Granular Energy Attribute Certificates, which add transparency by including information on where and when energy is sourced, are considered a linchpin to delivering 24/7 carbon free energy matched on the hour. Killian Daly and his team at Energytag is leading the charge for Granular Certificates, advising governments around the world on their use and how they can ensure that commodities like hydrogen are produced sustainably. Killian speaks with host Lincoln Payton about the complex world of voluntary standards, market impact, policy implementation, and the ambitious mission of energytag to advance the use of Granular Certificates in clean energy, sourcing and production of commodities like hydrogen, chemicals and steel.

Lincoln Payton: Well, hello. This is Lincoln Payton, the CEO of Cleartrace Technologies, back with another thrilling installment of the decarbonisation race. And really thrilling today. I’m delighted to introduce Killian Daley. Hi, Killian, good to have you here.

Killian Daly: Hi, Lincoln, thanks very much for having me. It’s great to be here.

Lincoln Payton: Terrific. Well, Killian is certainly going to explain some things to all of us. I would say what Killian is doing is selfishly, also pretty close to the heartstrings of Cleartrace in terms of information, granular, data, accuracy, all leading to Decarbonisation more effectively. So, a very interesting slant. I think it’s fair to say that Killian is one of the renowned experts in this field. He runs EnergyTag, a nonprofit which is focused on enabling real time electricity tracking backed by some of the biggest corporations and we think smartest corporations around this energy carbon game. So really delighted to have Killian here. A couple of other things he does as well…

But let’s start off straight away hearing from him. Killian, what’s your story? What’s your background? As someone who sits in the US but doesn’t necessarily talk with a Brooklyn accent, let’s say it’s probably fair to say our listeners are hearing you may not be from Georgia or Texas. What’s your background? Where are you and where are you.

Killian Daly: Now, I’m definitely not from Georgia or Texas. I’m from Cork in the south of Ireland. So that’s where I was born, where I grew up, where I first, I suppose, got into the renewable energy space and wanting to work for Decarbonization, I studied energy engineering and electrical engineering in my hometown, then went on to the UK and over to France, where I studied further and then worked in heavy industry. I basically was a buyer of electricity in a heavy industry company in France called quied, a very large consumer of electricity, where I learned the trade of what it means to consume power, what it means to manage the price risks associated with power, what it means to really decarbonize power supply, and also what it means to pretend or let’s say, to seem to decarbonize power supply, when, in fact, that’s not really what’s happening in reality. That all brought me to this desire to work on this topic with EnergyTag, right? Like move to the nonprofit space.

Lincoln Payton: It’s great for us to have you here because we’ve had a number of theoretical leaders come on and talk about different aspects of Decarbonization. But it’s very compelling, I think, when you’ve actually done the job, ehlekid, one of the major industrial corporations in the world and certainly very power focused to have actually done that. And we often talk here that most of the electricity world is focused on two paradigms, which is price and security of supply. And to have someone who’s actually sat there and focused on what we at Cleartrace think is the next paradigm coming, which is carbon. So, yes, everyone’s going to look for price and security and supply, but they’re also going to look at carbon and how you manage that and how transparent and clear you are with that is really going to be an important paradigm. So congratulations on the background. You’ve been very humble. I know your education background is super impressive.

Lincoln Payton: So that’s great. Also, you’ve moved around to different cultures and learned at the highest level in them. So fantastic. And then the industrial background. Tell us about EnergyTag. What is EnergyTag? Many of the listeners here will have heard of it. What is it? What is the legal setup of EnergyTag, if you like, and then I’ll come back at you with how you ended up there.

Killian Daly: So Energytag is a nonprofit based in London in the United Kingdom, and it’s basically set up to promote the clean energy industry and Decarbonisation through better carbon accounting. When we think of EnergyTag, there’s three pillars to our work. We do work on voluntary standards, so how we actually track clean electricity on an hourly basis using what we call granular certificates. These are like timestamped RECs for folks in the industry. They haven’t been really standardized anywhere in the world today. So what we’re trying to do is bring all the key stakeholders together and say like, hey, how can we do this in a common way so that hourly matching and tracking means the same thing in the US as it does in Europe, as it does in Australia? Because that benefits everyone. We have a common language, a common solution set, and we can kind of talk about targets in the same way. So we think that’s super important.

We also have a markets pillar, so we focus on how can this impact market design, what kind of case studies or feasibility is this for this actually happening in reality? Whether that’s through long term prior purchase agreements, whether that’s through hourly matching or hourly rec pilot projects and demos. So they’re all on our website. We have 15 case studies now. So there’s terawatt hours of this hourly matching that’s already been done by companies like Cleartrace and many others. Super important like this is feasible. And then finally it’s around policy. So ultimately, policymakers need to be aware of all of this innovation that’s going on in the space of carbon accounting. More transparency, more accuracy in carbon accounting of electricity.

Killian Daly: And that that is applied in policy to make better policy that ultimately decarbonizes the grid, decarbonizes industry. Taking, for example, hydrogen, really getting the accounting rules and the tracking right on clean hydrogen is make or break as to whether that technology is a climate solution or a climate problem. It all comes back to accounting. So that’s why we think it’s super important for energy also to focus on that at a kind of a global level, right? We have a global scope on this particular topic of electricity, carbon accounting.

Lincoln Payton: When was EnergyTag set up, by whom? And how did you come to be the driver there? Because with those three pillars of focus there’s the short, the medium and policy approach there, which really could be world changing. So how did it come to be set up and how did you come to sit in this influential chair?

Killian Daly: Thanks for the compliments, always nice. And obviously I tend to agree, but some would say I’m biased, right? So basically, EnergyTag was set up in 2020. It was a COVID project by a guy called Toby Ferenczi, who’s a good friend and has since moved on from EnergyTag to run a startup in the same space. So it was set up by Toby. Also, one of the early creators was our current chair, Phil Moody, who’s still involved director of EnergyTag. So Phil’s the godfather, I would say, of the guarantee of origin or in Europe, he’s been doing this longer than anyone else, ran the association of Issuing Bodies, which oversees the European certification system for 20 years, and then moved on to EnergyTag to focus on. Let’s bring it to the next stage, let’s get more granular, let’s bring it to the modernization that’s needed. So they were the original founders, obviously.

Then there was a lot of organizations, key corporates like for example, Google and Microsoft, some of the big utilities were also involved from an early stage euro, electrics sibas, et cetera, key trade associations, just getting involved, saying like, hey, how do we do this? We know these things need to be modernized. So I got involved originally as a representative from Air Laquid. So that’s how I got involved originally through EnergyTag working groups. Because Air Lakheed is a massive hydrogen producer, one of the largest in Europe. And the EU for a number of years was already thinking about like, hey, how do we actually go about properly setting carbon accounting rules for hydrogen? Hourly matching making sure a hydrogen electrolyzer is only saying it’s renewable if it’s consuming renewable power in the same hour as production. That has been on the table for a while in Europe. So when I was in Air Liquide, basically I was tasked with like, hey, how do we go and do the tracking? Like, how do we actually do this? No one’s doing this. And EnergyTag came up.

I got introduced to Energytag originally through the Danish transmission system operator who are incredibly advanced, called EnergyNet, and they’ve been working on this topic as well for a long time. They brought me in and I just loved it. I loved the mission, I loved the technical nature, solving problems with a lot of really smart minds. That’s what Energytag kind of brought together. I found that super invigorating. And then, yeah, a role came up to take over the operations of Energytag. I went for it, got the role and then ultimately things snowballed and I became Executive Director last year and now kind of at the forefront of that initiative, obviously with a lot of great support from our stakeholders and from the likes of Phil who just brings that incredible experience of this industry.

Lincoln Payton: It’s a great story and to the point question, here my finance background. So how are you funded? You’re a nonprofit, there’s clearly a lot of very impressive global corporations and UN elements and a number of other nonprofits and foundations. How are you funded? And in one sentence, what’s the mission statement? I guess you’ve got those three pillars, but what’s the constitution, if you like, of energytag?

Killian Daly: The Constitution is quite simple. It’s to define and build a market for granular certificates that benefit the clean energy industry. So it’s basically to implement these tools that drive demand for clean power every hour of the year. Because if that happens everywhere, then that’s what we’re going to get. We’re going to get clean power every hour of the year and the decarbonization job will be done and markets will have a meaningful role in contributing to that. So that’s our mission statement. In terms of funding, we’re funded purely by grants. So from Philanthropies, that’s our funding model.

Killian Daly: At the moment, we have four funding sources, all you can check it out on our website, which I think is a great model because it gives us independence, which I think is super important to have funding from folks who want to fund, folks working on climate solutions rather than serve a particular interest. That’s really important for us and for our mission. Because let’s be real, not everyone agrees with what we’re doing or the pace that’s being proposed. What we’re doing is essentially saying let’s make carbon accounting more accurate, making it harder to say I’m 100%, making it harder to say I’m zero. Not everyone agrees with that. So it’s really critical for us to.

Lincoln Payton: Have that independence clearly, clear trace those that know us. We’re in favor of the granularity and the transparency and the data, but we are a commercial enterprise as well. So I definitely agree. Easy when someone talks their own book. And there is a business building objective in there, much more powerful in today’s world, trying to affect change with a completely independent perspective. Just before we go into really the big meaty subject, which is about granularity and why and what’s the difference and what’s the types of application. One other very interesting element in your background is you chair the Linux Foundation’s Carbon data specification. So many people here will know the Linux Foundation similarly tries to achieve, I think, and does a pretty good job of floating above things and trying to be objective and independent.

Lincoln Payton: But maybe you can say a couple of words about, first of all, Linux Foundation, but then what exactly you’re doing for them at the same time.

Killian Daly: Yeah, well, obviously, like Linux is in terms of open source software, they are kind of unparalleled in terms of the standards and the work that they’ve done in developing open source standards for the technology I’m sure we’re on right now. A lot of the Internet infrastructure, mobile infrastructure, a lot of it’s based on Linux standards. So Linux is a foundational pillar of the digital world. They do amazing work on open source standards and so they also have an initiative called LF Energy. So Linux Foundation Energy, which focuses on standards in the energy sector. So I’m involved co chairing a working group there on the carbon data specification work of the Linux energy pillar. And basically what that initiative does is seek to develop open source standards for how we access customer data and how we access grid emissions data that would obviously feed like this is very complementary, what Energytag is doing. Energytag ultimately is working on the certification and tracking and matching side of things.

Killian Daly: There’s a layer before that of raw data. It’s really at that interface between the physical electricity world and the data world. And that group is basically working on a set of standards to make that interface and interaction easier and more harmonized. Because today it’s quite a fragmented space. Getting access to that data is not.

Lincoln Payton: Always easy, very essential, and again, quite encouraging because a lot of influential members of that foundation, in addition to the original setup and infrastructure that puts the plan together. A lot of support from a lot of major corporations and influential think spaces. Congratulations on the background. Congratulations on those. Very influential and nicely positioned, from an independence point of view roles with, respectively, EnergyTag and Linux. What’s it all about? Killian okay, people listening to this who say, okay, I know what being green is. Everyone and their dog is on TV saying, we’re 70% renewable, we’re 100% renewable. By 2030, 40, 50, we’ll be this.

Lincoln Payton: What’s your point here? What’s this granularity that I’m hearing about? And what’s this hourly reconciliation and management? What’s the difference between what you’re espousing and what we have today?

Killian Daly: To be clear, it’s about faster decarbonization. And I think any climate NGO who doesn’t have that end goal is fooling themselves. That has to be the end goal. We all will go about it in different ways. The problem we’re focused on is basically a question around what’s clean electricity? What does it mean to consume clean electricity? What’s a valid claim of I’m consuming zero carbon electricity, I’m 100% renewable? We hear these things a lot, they sound great, but actually, when you go in and dig under the hood a little bit, there’s huge problems with how those claims are made today. And essentially they are disconnected from the reality of our electricity grids. And they’re disconnected in two basic ways. They’re disconnected in space, meaning that consumers, for example, in the European Union can claim to consume renewable electricity from Norway in a country.

Let’s take my home country, Ireland, right? So my dad’s house in Ireland, I was explaining to him, is 100% renewable tariff. He’s green, he’s not causing any emissions. All good. When I actually explained to him what that means, it actually means that certificates from Norway are being transferred on some Excel file to Ireland and being used to supply my father with green electricity. Right? So this is already problematic. There’s a space element, the way we make green claims and the way electricity actually flows are delinked. And there’s a second element around time. And the time element is basically you can buy a certificate from any time of year and use it at another time of year to say that you’re clean or renewable.

So this brings in the 100% solar powered without a battery problem. So it can be the middle of the night and a dark winter’s night in Ireland, and you basically be powered by solar power from Spain, produced in June. That’s the fundamental disconnect we’re seeing. And that’s the normal way.

Lincoln Payton: I think that’s a very important point because a lot of the general public does not understand when people make these claims, what that means. In fact, no, they don’t.

Killian Daly: And going back to my father, he wasn’t exactly delighted we put it that way when I explained to him, because he’s not a fool, he gets it. And in fact, this granular system that we’re proposing. Some say it’s radical or whatever. No, it’s not. It’s actually what normal people would understand or would expect when someone is saying your electricity is green, they would expect it to be pretty local, and they would expect it to come in from more or less the same time, not from six months ago, because electricity is very hard to store.

Lincoln Payton: And by the way, in that statement of yours, very powerful effect there. Because I believe that if the man in the street starts understanding enough what the implications of that is, which is my energy is relatively local. Relatively. Temporal appropriate. A lot of the delightfully vague vocabulary around decarbonization suddenly goes out the window and people say, no. Okay, no. Let’s cut to the chase. Here where’s your electricity pretty much coming from as you’re using it and bringing the man in the street to buy into this.

The whole decarbonization race takes a nice step forward just with that realization, 100%.

Killian Daly: And that’s the basic mechanism, let’s say. That’s the simple way of thinking about it. And I think it’s really important that what we’re saying with this granularity, right? It’s actually that our grids are granular. That’s how it works, right? They have to be balanced in real time all the time. They have to have electricity boundaries. Electricity needs to be able to flow across grids. So we have granular systems, and we need to track them with granular data, and we need to do the accounting with granular accounting. There is no way around that.

That’s the nature of the electricity system. So, yeah, let’s start to acknowledge that systems were set up 20 years ago and they haven’t been modernized that much. I understand. 20 years ago, we just wanted to get any amount of renewables on the grid. Let’s do something that we can do now with the data tools we have today, et cetera. Maybe it made sense and did for the first decade or so, but now it’s really not good enough anymore to have this disconnect between green claims and accounting and the reality of the grids. And if we solve that right, so if we actually do something more local, matched in the same hour, it’s actually shown by science to be very, very powerful. This actually can have large system decarbonization benefits if a lot of folks start to do this.

And this is covered in papers from Princeton, from the IEA International Energy Agency, from the Technical University in Berlin, of one of the top modeling labs in Europe, literally the top energy modelers in the world. The Tom Browns, the Jesse Jenkins, they’ve been working on this topic, and they’re showing, yeah, this has a lot of system benefit. If we change accounting this way, this will drive not only more renewables, but also more storage, more clean, firm technologies that we need when there’s no renewables available, when there’s no wind or sun. We need other things. This change of accounting really has a lot of systemic benefit, especially if it’s done at scale. And I think that’s really important to kind of highlight that. There’s a lot of robust science now showing that actually, if everyone starts to do this, we can bring really significant system decarbonization benefits and help accelerate decarbonization and resolving the climate issue. Going back to the start of this phase of the discussion, again, if we’re not doing that, if we can’t honestly answer how what we’re proposing answers that question, then I think we need to go back to the drawing board.

Lincoln Payton: Super interesting. So it would seem that there’s several benefits here. One is that the man in the street comprehends what we’re talking about. Big benefit, I think, because it moves the whole thinking process. Two, the one I like very much, you sort of mentioned there, is everyone’s taking responsibility for their own energy usage and the carbon consequences thereof, as opposed to buying forgiveness from somewhere else some other time. It’s kind of much more correlated to this is what I’m using and this is the carbon consequence of it. So let’s be aware of that. So the consumer is very focused on it.

And then thirdly, there’s this whole grid effect. And I think it’s very apparent to everybody that some of the examples you used there in terms of storage, solar filling up your storage while the sun’s shining and not having to use brown, other energy or pica plants or whatever it might be, what is the kind of arbitrage range? I know that there’s a number of academic studies out there. You mentioned a couple of them. What are we talking about in different parts of the world as being the difference? If a large energy consumer is using a granular hourly matched type approach to greenness and grids will be different, environments will be different. But what’s the magnitude of difference that we’re talking about here between me as a big corporation buying a bunch of offsets at the end of the year to balance the brown element of the averages month by month in my usage or taking the time, the trouble and the effort today because it’s new and saying I’m going to try if not 100%, but a lot. I’m going to try and move in that direction of granularly matching, carbon reduced or carbon free energy to my actual consumption, temporal and locational. What are we talking about here? Is it a couple of percent? Is it significant? Is it game changing?

Killian Daly: No, it’s massive. But I’ll get to that in a second because you touched on something very important. I think it’s really important to highlight. Step one is just to acknowledge where you’re at. It’s not, I’m going to be 100% matched with clean power every hour by 2030. That’s what Google have said. But that’s Google, they have a certain level of resource and ambition and highly commend them for that. But not everyone should be expected to do that tomorrow morning.

But I think asking people to say, like, hang on, actually measure where you’re at now, are you at 50, are you at 60, are you at 40? And say, let’s have a credible path towards 100. That’s what actually I think everyone should start doing. Just being honest with yourself, with your stakeholders, and say like, hey, this is where we’re at, and then we get on a journey towards more granularity. That journey narrative is really, really important. And getting to 100%, that really is 100% rather than 100%, that is giving an illusion of 100%. But actually there’s much more work to be done. So I think that’s a really key point on the actual to take a concrete example on the different benefits here. So one of the best examples of this is Princeton’s modeling on the clean hydrogen tax credit as part of the Inflation Reduction Act.

So the government is actually deciding at the moment in the US. What’s the carbon accounting methodology to use. So what Princeton did is they did a number of scenarios. So they did a granular hourly matched scenario and they also did, okay, you just have to do annual matching. So you can basically take solar credits from day, use them at night. That’s the alternative case. Right. They found that basically, hydrogen produced with hourly matching has incredibly low system level emissions, zero or near zero. Annual matching in the modeling that they did is very ineffective and would lead to hydrogen that actually is far more emissions intensive than gray hydrogen or fossil hydrogen is today.

Lincoln Payton: Wow.

Killian Daly: To give you the benchmark, you’re talking maybe zero to one kilograms of Co 2 hydrogen for the hourly matching, and well over 15, up to 20 kilos of Co 2 hydrogen for annual matching. So this is hundreds of millions of tons a year of extra emissions from bad accounting. So we’re not talking on the margin here, at least in the US case. We’re talking about industry defining decisions. It’s really, really important, and again, just to try and put it into people’s heads a bit, the reason for that is that basically, if you do annual matching, you go out and buy the cheapest possible solar energy certificates. You run your electrolyzer all year, all day, all night, you burn gas, you launch up coal plants, and you basically say, don’t worry, it’s all clean. Whereas with hourly matching, you can’t really do that. Right.

You have to address the hard hours. If you’re in California at time there’s no sun, you have to go out and contract geothermal, you have to build batteries, you have to contract wind, you have to not consume. And that basically creates a completely different world.

Lincoln Payton: Right?

Killian Daly: It really creates a world where you’re just burning way less fossil fuel because you have to behave in a different way.

Narrator: Hydrogen is gaining traction as a fuel feedstock and energy storage medium. With the potential to play a crucial role in decarbonization efforts. The section 45 v tax credit was part of the US. Inflation Reduction Act, passed in 2022 and has fueled huge interest in green hydrogen, providing substantial financial incentives for sustainable hydrogen production and utilization. Both the United States and the European Union have committed to investing heavily in hydrogen development. The Inflation Reduction Act allocates $8 billion for regional clean hydrogen hubs, while the European Union’s Hydrogen Strategy outlines plans for €9.3 billion in hydrogen investments by 2030. The rapid growth of renewable energy sources such as solar and wind power is creating an opportunity for hydrogen to act as a versatile energy storage medium. Hydrogen can be made sustainably through electrolysis if produced using carbon free electricity and then stored and utilized when needed.

The Section 45 V Tax Credit is expected to have a significant impact on the hydrogen industry in the US. By providing substantial financial support for hydrogen production projects. This incentive is expected to attract new investments, stimulate technological advancements and lower the cost of producing clean hydrogen. Energytag has been a strong advocate for hydrogen production using carbon free energy. That is both additional meaning producers do not utilize existing carbon free generation that would be helping emissions on electric grids and that is time matched to when hydrogen is produced. Hydrogen has the potential to decarbonize various sectors, including transportation, power generation and industrial processes. By harnessing hydrogen’s versatility and leveraging the available financial incentives, the world can move towards a cleaner and more sustainable energy future.

Lincoln Payton: I think that’s a fantastic example of the big forward looking challenge and opportunity here. Hydrogen with mathematics around it, and that is stark. I have to say the difference there is really acute. Right, a couple of quick points and then we’re going to go into that whole green certification opportunity. You mentioned a couple of things I want to go back on. So first of all, start knowing where you stand on a granular, detailed basis and then starting to move down that journey. You don’t have to be 100%, because that’s actually quite hard and takes time to achieve that. So putting on my clear trace hat now we have a number of large clients in the public domain, so I can mention their names, who have said we want to be leaders, we want this to be part of our mantra, if you like.

Let’s Brookfield Properties, one of the largest real estate players in the world, but certainly in the US. Hudson Yards, New York portfolio 100% 24/7 matched and using it as a sales aid in leasing to tenants who can now have 100% carbon free energy. Tenancy Iron Mountain, one of the biggest data center players in the US. Very forward looking. Same thing. Using the fact that they are hitting twenty four seven and managing it and can say to anyone who wants to use their facilities or colocate, we are 100% carbon free, very forward looking. This. Is great branding for these entities.

The other one I’ll mention is JPMorgan Chase, of course, big brand footprint there who are managing on a forward looking granular basis and using that to get to the targets they want to get in a very provable technical way. So I guess the question I would say to you is from where you’re sitting, we see those guys as leading the charge. They want to be leaders. They want to go to this highest standard of accounting and therefore decarbonization performance. What are you seeing the rest of the world doing that’s a couple of big nice names. Are other Fortune 100, Fortune 500 players getting on this bus and moving down that direction. And given what you just said about the arbitrage between granular and non granular and the reporting, how do you get people to move? How do you get other corporations who are not just those want to be at the front, want to be the best? How do you get them moving?

Killian Daly: Sometimes voluntarily going out there and doing something more difficult is not always easy. We have a lot of examples of other great examples, I think of organizations going out there and doing this. One I like to always refer to is more at a country level. But actually Taiwan, it’s an interesting case because in Taiwan they only allow you to make granular claims. They don’t allow annual matching. So Taiwan as a country has set up their rec systems to only allow granular matching because they want a green certificate market that actually helps them balance the grid with green energy. And the only way of doing that is actually respecting time.

Lincoln Payton: How did that come about? I mean, did it come about from the practical need to balance the grid? Okay. And I guess they’re small enough and I mean, I’m sure there’s quite a bit of activity there because there’s some good industrial, high quality and service base.

Killian Daly: But a very advanced economy and everything. But yet again, they made that decision, I think for multiple reasons. Obviously for this, I think for credibility. Basically. I know the people who set up that system. They come from the power sector. They are power sector people who know the rules of the grid. I think that was fundamental in how they set up their systems.

They saw essentially a system where you could take a certificate produced at 1 hour and use it six months later. They just saw that as not really being a good enough system for making green planes in Taiwan. And I think it’s a fantastic example.

Lincoln Payton: It is. I love it and it actually thank you very much. It leads beautifully into my follow on point, which was you also touched on super important point regulation. So when we talk about different corporates and you’ve got some very leading high brand members supporting you, I mentioned a couple of those that are really leaders in the space of decarbonization and managing energy and carbon data to get where they want to get and frankly, to be able to prove it in a high quality way. That’s all the reputational pressure bucket, if you like. This is my brand, this is who I am as a corporation. We will do things the best way, the clearest, transparent way. Okay.

What about the regulatory push that is coming? We see a couple of real estate laws in the US that are pushing in that direction. Is it fair to say, first of all, Taiwan notwithstanding, that Europe is leading the world in this respect, the regulatory side of things? Or is that a misnomer that we have on the US side of the Atlantic?

Killian Daly: I think the US. Has also been active. Like one key example that I always refer to in Europe is the European rules around what is renewable hydrogen, which after a glide path requires hourly matching, same grid. And they have a lot of new demand coming on. So they’re asking for new supply of renewables as well. So that’s this three pillar criteria to make sure that hydrogen is truly renewable. That was a completely landmark piece of legislation. The EU was the first government to actually go out there and say, no, this is truly green, and to put that in law.

So that clearly was, I think, a major sign from Europe and I think something that I would expect to be applied not just for hydrogen, but in many other sectors. Because what is green? Well, that question is common to many, many industries and an adjective that is.

Lincoln Payton: Used so prolifically these days and with such abandon.

Killian Daly: Yeah. And exactly as we covered at the beginning of the conversation, sometimes it’s kind of a joke, right? What’s being called green today, I cannot understand sometimes. How is that green? So we shouldn’t expect massive subsidies that are going to the production of green products like hydrogen if they’re based on faulty accounting upstream, they’re just going to subsidize more fossil fuels, let’s be clear. And it’s going to be called green. That’s really bad, that’s wasting taxpayers money. And then there’s also the voluntary side of things where a company is saying I’m green and actually not really doing much to make the system greener. And that’s also problem. So we have both sides here.

There’s like this granularity and this hourly matching and all this type of stuff which sounds wonky actually is all feeding into answering the question of what’s green in a much more better, science based way. Right. And that’s what we’re trying to do here. Depending on how the US. Defines its hydrogen rules, which is coming very soon, the US. Could also be one of the leaders in the world along with the EU. I think this is just the beginning, right. I think all around the world now, we see in India, conversations are beginning as well.

I know there’s a lot of activity in Japan as well around this topic is like, there’s a common problem around green not really being green. And this conversation around, well, how do we fix things up here? So I think that that’s super important to have that regulatory push. Maybe to just skip back a bit to a question that you had earlier about other corporates. There’s many examples from, I think, the tech sector, in particular the likes of the Googles and Microsoft, who’ve set these goals. Like, we’re going to be 100% clean on an early basis by 2030. I think that’s fantastic. I think we need to bring more industries on board. I do expect a lot of the Re 100 companies to start to move in that direction as well.

We’ve seen Re 100 actually announce recently that they’re going to start a 24/7 type initiative and scope that out. So there is a goal beyond Re 100. Another thing that is always going to be important when you’re convincing corporates is that what’s the business case here? So how might this actually make me more competitive? Because my products are truly green, and if you buy my products, you’re not going to be accused of greenwashing. I think that’s key there’s. Also, when we think of power purchase agreements or like long term contracts, actually, this 24/7 hourly matching, what it really does is it matches your demand with a supply of clean power. So if you do that to a very high extent, you have a really good Hedging case. So, like, locking in the price of your electricity in the long run. I know you come from financial no.

Lincoln Payton: This is great because this is one of my questions that as we move to the price and security of supply so I think it’s a really key point because this is going to resonate with a lot of our listeners. So please go ahead.

Killian Daly: Yeah, and that’s what I did before, right? I was involved in doing very large terawatt hours a year, tens of terawatt hours a year, sometimes of hedging of electricity prices, which hedging basically means let’s lock in our power price for the future or a part of it so we can have stability, we can have visibility in a world where electricity prices are just becoming increasingly volatile and crazy. We’ve seen that in Europe in the last couple of years. So that more stability you can get from like a nearly 24/7 type PPA. That’s just good risk management. It’s good for decarbonization, but it’s also good for managing risk. And that’s a beautiful marriage, I think. And that’s something that we need to see a lot more of going forward. Actually, there’s a really good study launched yesterday by Eurolectric.

So it’s the European electricity industry and Pexapark who are like one of the leading PPA consultants in Europe on this very question, showing the hedging benefits of hourly matching and 24/7 PPAs over your standard type PPAs. And I think that benefit is going to be critical for getting on the likes of my old company who are massive electricity consumers, really electro intensive, who electricity is make or break. They cannot get it wrong. So there needs to be this Hedging Benefit angle to it as well.

Lincoln Payton: I love this point, Killian, because again, we have to be honest about the commercial world, which is there is an altruistic angle. And maybe one satisfaction of that for the big corporate is the branding. We are reporting to the highest quality standards and when we make a target, we hit it and we can prove it. It’s accurate. That’s good branding. But the Pecuniary benefit is always going to help things go faster. And when we look at what has happened to energy prices over the last two or three years with all of the macro events, whether it’s Eastern Europe, whether it’s weather extremes, that that Hedging Benefit risk, managing the price of some of your supply really takes on a good value. So I hope this will add another shot of adrenaline into the arm of the corporates looking to decide on these things and goes back to that conversation of how did the leaders get the next group to come along and say, yes, this is smart way to do things.

Killian Daly: It’s super, super important because ultimately, clean technologies don’t have fuel costs, they have financing and capex costs. They need money at the beginning and then the price of electricity is more or less decided. So if you want to lock in long term prices for electricity, investing in those assets is a great thing to do because the volatility of electricity markets is from fossil fuels, let’s be clear about that, right? I know there’s some counternarratives to that, but that’s nonsense. The volatility is because fossil fuel production of electricity is all about opex or fuel costs, right? It’s all about that, getting your gas at the right price, et cetera. And those commodities are super volatile. So moving to 24/7 clean PPAs, you’re basically getting yourself away from that volatile world. You’re going away from carbon, but you’re also going away from the crazy volatility of gas.

Lincoln Payton: Super important point and I love it. And maybe one of our headlines here when we put this out, switching just a little bit to alternate types of approach, scope two. What would be the best way in your mind for the GHG approach to define scope two and the measurement around it? And second point that links into that, I’m going to throw out a word that a lot of people know, emissionality, which is perhaps a little different or a different angle to a route to what we’re talking about here. What are your thoughts on that? Clearly you come from a particular angle, but what would you recommend and encourage the GHG principles to suggest and where does emissionality fit in this whole picture and what is it, first of all, for everyone listening.

Killian Daly: I’ll address the first part first. So clearly we’re doing a lot of work on the update of scope tube greenhouse gas protocol. I think today’s standards are not good enough, and to make them better, it needs to require that if you’re going to claim to consume clean electricity that has to be from a deliverable area, it must be deliverable. That is just I cannot get around that fact. We’re talking about electricity can’t claim to consume something that can’t be delivered to you and it must be in the same error. This annual averaging and this annual matching as we’ve gone through ad nauseam now in this podcast, it’s just not representing the physics of the grid. And by the way, that’s how power markets are designed, right? And they’re designed for a very good reason to keep the grid in balance. And that’s what it’s all about. 

So if you have an approach that is not respecting the physics of the grid, I can’t understand it. To be simple, we need that physical reality to come into carbon accounting, and that means hourly matching and deliverability. There is an alternative being proposed by some that’s called emissionality or carbon matching, which essentially is very opposite. It says let’s not think about deliverability. Let’s allow a consumer to buy attributes from anywhere in the world. And to say that that essentially offsets their consumption wherever they’re consuming, that’s radically different. It basically looks like a carbon offset market rather than a power market. And I ultimately feel that electricity scope to accounting should approximate a power market, not approximate an offset market.

There’s already those options out there. Some may differ. That’s perfectly fine. Everyone can have their opinion on this. There’s actually quite a lot of academic literature out there now again from Princeton, from NREL as well, really cautioning against that type of approach where we take things like short run marginal emissions and use them essentially as a proxy for the amount of emissions you’re offsetting when we want to drive long term investments and decarbonization incentives. There’s quite a lot of literature out here showing that that’s not a great approach. And I haven’t really seen any academic studies to the country yet. I’m going to back the Granular accounting approach for now anyway.

Lincoln Payton: I’m always open no look very clear. There’s certainly the case that for quite a number of years, any action taken in decarbonization is very positive. Do it, do stuff, it makes a difference. But as we try to really make difference, I think the very powerful factor that I adhere to is that man in the street comprehension. The moment you start talking offsets, frankly, you lose a whole swarth of the public. When you talk consume carbon, reduced energy, profile yourself. I think people understand that. It’s quite simple.

The moment you start talking about all these various layers of offset, it might be good and it might be helpful, but it loses a whole part of the story because the man in the street is now not following it and frankly not really buying it.

Killian Daly: I completely agree. There’s all this evidence that actually this is the best thing for the system. But also, crucially, going back to the basics, this just makes sense. I can explain this to my mom or dad and they kind of get it right. Like they’re like, yeah, okay, good. That’s what you’re doing, that’s good. If you start talking about decarbonizing a factory in the Netherlands with electricity from Thailand, I think people are like, hang on, what exactly that sounds like this offset stuff I’ve heard about on the news. And it’s not saying, of course, doing investments, know if you’re really building renewables and going out and doing that in like, that’s cool, but I don’t think it should be absolving you of your responsibilities where you’re actually consuming and buying electricity.

Lincoln Payton: I’ll make a small confession. Killian, which is your dad, has made a significant impression on me and I’m going to use him in a number of talking points going forward.

Killian Daly: He’s probably going to kill me for mentioning him so much.

Lincoln Payton: No, in fact, we may do a small follow up podcast and we’re going to have him on.

Killian Daly: You don’t want to get him going. He’s much less politically correct than I.

Lincoln Payton: Am and I’m bad. He’s just the man we need. Look, let me ask you a couple of questions just to finish up. You’ve done a lot of interesting things already. Great academic background and cultural educational background as well. So terrific. Very interesting commercial role and as you said, a really dynamic and significant industrial player in the power world. And now the EnergyTag drive.

First of all, where do you hope EnergyTag will be two years from now? And that’s persuading enlisting lobbying policy. So a couple of years for EnergyTag and then four or five years for Killian. Where would you like to be? Where do you see yourself? So a couple of years for EnergyTag, little longer for Killian.

Killian Daly: Clearly in terms of EnergyTag in the next couple of years, in two years time, I hope we’re coming to the end, number one of a process on international accounting standards, the greenhouse gas protocol that has concluded that we’re going to granular accounting by year X and that needs to happen globally. That’s very clear. I hope that we’ve been successful in the campaigns that we’re running now and we’ll obviously be ramping up much, much more in the future in achieving that end goal. I also hope that a lot of the work we’re doing around harmonization of tracking, sort of trying to make sure that everyone’s basically talking the same language and we think about certificates. That’s another key pillar of us that that is becoming a global norm in two or three years time as well. So that we’re really enabling this and removing barriers that are unnecessary to this happening in the same way globally. And also on the policy side, I really hope that green products everywhere and that’s something we’ll definitely be working towards anytime we can and knocking on every door we can, are using science based, fact based granular techniques to make sure that green is green. And that’s happening in some cases today, but it’s not happening in way too many cases.

Killian Daly: And so we’re going to keep on fighting that fight as long as we can to change that.

Lincoln Payton: We’re right there with you on that. And you maybe there’s nothing after EnergyTag. It is the objective and it goes forever, but maybe for you, what do you see?

Killian Daly: Nothing lasts forever, I suppose. One thing’s for sure is I absolutely will spend my career in the energy sector, that’s for sure, and working on things that drive Decarbonization. So I will do whatever is possible, I suppose, or whatever I can to contribute to that and to use the knowledge I have to contribute to whatever challenge comes up in the future.

Lincoln Payton: Fantastic. It’s really been a pleasure and an enjoyable conversation and the time has flown by. Any points that you would like to make that you haven’t made?

Killian Daly: I just encourage people to look into this and to get educated about green claims and about how important it is to make these claims in the right way, either voluntarily or for regulators through compliance mechanisms. Green must mean green. Clean must mean clean. Otherwise we are fooling ourselves and we’re not going to get to net zero. So I really encourage people to get educated and take action on it. Obviously, working with the likes of Cleartrace and many others actually out there with the solutions, with the technologies, that’s how you actually get involved. Folks like me can spread the message, but it’s ultimately in actually going and doing this that change happens. So that would be my message. Get educated and get moving.

Lincoln Payton: Fantastic. Look really personally and professionally super interesting to spend the time with you. Thank you very much. Congratulations on where you are and thank you for joining us on the Decarbonization race.

Killian Daly: Well, thank you so much for having me. It was an absolute pleasure to have this chat.

Narrator: Thank you for joining us on the Decarbonization race. For more resources to help you lead the pack in the most important race of our lifetimes, visit Cleartrace.io/podcast.