The Myth of Zero-Carbon Power: Why Clean Energy Credits Don’t Tell the Whole Story

The study by NBER, Georgetown University, and the U.S. Department of the Treasury examines the limitations of the three-pillars framework for clean electricity attribution, showing that it reduces emissions by only 30-43% per MWh but does not guarantee carbon-free electricity. It argues that true decarbonization requires expanding renewable energy capacity rather than just refining accounting methods.

The National Bureau of Economic Research (NBER), in collaboration with researchers from Georgetown University and the U.S. Department of the Treasury, has published a study exploring the complexities of tracking greenhouse gas (GHG) emissions from grid-connected electricity. Governments and corporations are increasingly focused on reducing Scope Two emissions, which arise from purchased electricity. However, in a shared electricity grid, it is nearly impossible to determine whether a consumer is using clean or fossil-fuel-based power. Companies like Amazon, Microsoft, and Google have pledged to rely on renewable energy sources, while Executive Order 14057 mandates that the U.S. federal government procure 100% carbon-free electricity by 2030. But how can consumers truly verify they are using clean electricity when all power sources blend together in the grid? In response, many regulators and environmental groups have adopted the three pillars framework, which outlines specific conditions under which electricity can be considered clean.

The Three Pillars of Clean Electricity

The three pillars approach has gained widespread adoption, including backing from the Natural Resources Defense Council, the Sierra Club, and the American Clean Power Association. According to this model, electricity purchases can be credited as clean if they meet three conditions: (1) the power must be generated nearby, (2) it must be matched to consumption on an hourly basis, and (3) it must come from newly built zero-carbon power plants. This method is designed to ensure that clean electricity purchases genuinely reduce emissions rather than simply shifting existing clean power from one buyer to another. The European Union has implemented similar standards, requiring that credited electricity be sourced from power plants built within the last three years.

Despite these efforts, the study finds that even when all three conditions are met, electricity use still reduces emissions by only 30% to 43% per megawatt-hour (MWh) compared to unrestricted electricity purchases. One major issue is the assumption that newly built power plants provide additional clean electricity. In reality, many new renewable energy projects would have been constructed regardless of clean electricity demand, meaning that power labeled as "clean" may not be causing actual emissions reductions.

Regional Disparities in Clean Electricity Availability

The study highlights a crucial but often overlooked factor: not all regions have the same access to low-emission electricity. Some areas, like Texas and California, have abundant zero-carbon generation, while others, particularly in the Midwest and Southeastern U.S., remain highly dependent on fossil fuels. A company operating in Ohio or Georgia may purchase electricity from a nearby wind farm, but since the local grid still relies heavily on coal and natural gas, the actual incremental emissions impact may be significant.

The research uses the Cambium model, developed by the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL), to project electricity generation and emissions trends. It finds that by 2030, only 10% of total U.S. electricity will meet the three-pillar requirements. This means that even if every company adheres strictly to the three pillars, clean electricity demand could easily exceed supply, forcing companies to either pay a premium for limited clean power or fail to meet their sustainability goals. The study also shows that even in regions with large amounts of clean energy, the availability of zero-carbon electricity fluctuates throughout the day, making it difficult for consumers to meet the hourly-matching requirement.

The Limits of Clean Energy Attribution

One of the key takeaways from the study is that restricting what qualifies as clean electricity does not necessarily reduce emissions per MWh but rather limits the total amount of electricity that can be claimed as clean. If businesses can only claim credit for a small fraction of available renewable power, then clean electricity demand may outstrip supply, forcing some companies to reduce consumption or pay higher prices for renewable energy credits. This scarcity could create market incentives for new clean power generation, but it could also slow down progress by making clean electricity artificially expensive.

A critical flaw in current policies is the misinterpretation of "new" as "additional." Some policymakers assume that requiring electricity to come from newly built sources will automatically reduce emissions. However, if those power plants were already planned and expected to be constructed, their existence does not change the overall share of fossil fuels in electricity generation. Instead of focusing solely on restricting clean power claims, the study argues that policymakers should ensure that clean energy demand actually leads to the expansion of renewable energy capacity.

Shifting the Focus to Real Emissions Reductions

The study concludes that while the three-pillars approach improves accountability and transparency, it does not guarantee carbon-free electricity use. The best way to achieve real emissions reductions is not through complex crediting systems but by transforming the electricity grid itself. This means investing in grid-wide renewable capacity, expanding energy storage, and improving infrastructure for electricity transmission. Companies should also prioritize demand-side solutions, such as shifting energy-intensive operations to times when clean electricity is abundant or improving efficiency to reduce overall power consumption.

Ultimately, the research emphasizes that while the three pillars framework reduces the risk of misleading clean energy claims, it is not a substitute for comprehensive decarbonization efforts. Future policies should focus on maximizing actual emissions reductions rather than just refining accounting methods. Instead of merely redistributing existing clean power, governments and corporations must drive new investments in renewables to ensure that additional demand does not rely on fossil fuels.

This means reconsidering how energy procurement strategies are structured. Instead of narrowly restricting clean electricity definitions, policies should encourage the broadest possible expansion of renewable energy. Only by focusing on total system decarbonization rather than administrative classifications can policymakers and businesses make a meaningful impact on climate change.