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New Electricity Conversion Factor highlights Net Zero challenge

19 June 2023

The road to achieving carbon net zero targets might have just got that bit more challenging for many organisations. But why?

Conversion factors are published by the UK Government each year and are used to convert energy use into greenhouse gas emissions. This data can then be used to report on an organisation’s emissions.

The 2023 conversion factors were published on the 7th of June 2023 and include an increase in the (Scope 2) CO2e emissions factor for electricity from 0.19388teCO2e (2022 data) to 0.207074teCO2e (2023 data), an increase of 7.1%.

This is due to the greater use of natural gas and coal for electricity generation during 2022. The increase will mean that companies will need to report higher emissions for their electricity use. This could lead to companies with carbon reduction commitments not meeting their targets next year as the original expectation from most observers was for electricity to continue getting greener.  But what contributed to the higher conversion factor?

The UK has been importing clean, cheap electricity from France for many years. France generates most of its electricity from nuclear power, which is a low-carbon source of energy. In 2022, there were two reasons why we no longer imported the usual amount of electricity from France:

  • The rest of Europe was facing a gas shortage, so France and the UK had to export more electricity to their neighbours.
  • More than half of its fifty-six reactors were taken offline for repairs which had been delayed due to the Covid-19 pandemic.

This meant that the UK had to generate more electricity than usual. The UK’s main sources of electricity generation are gas, coal, and wind. Burning coal and gas to generate electricity produces greenhouse gases (GHGs), which contribute to climate change. In 2022, the UK’s GHG emissions from electricity generation increased.

Fortunately, the increase in the use of gas for electricity generation appears to have been a temporary “blip”, The French nuclear fleet is now back online, so the UK is expected to return to importing more electricity from them in 2023. This will help to once again reduce the UK’s reliance on fossil fuels and lower its GHG emissions.

The changes to the conversion factors in 2023 will affect businesses in two ways over the next year:

  • Reporting requirements: Companies will need to update their emissions reporting to reflect the new conversion factors.
  • Proactive carbon management matters: The changes to the conversion factors will put increased pressure on companies to further reduce their energy consumption to compensate for the higher conversion factor. They will need to run that bit harder just to stand still. This reinforces the need for an active and regular review of your net zero transition plan to ensure that you stay on track.

The changes to the conversion factors could be a challenge for some but also illustrate the need for businesses to take a proactive approach to implementing a range of measures to address their scope 1,2 and 3 carbon emissions. Don’t rely on the “greening of the grid” to do all the hard work for you and don’t forget that reducing consumption will save money and will also reduce emissions, no matter what the prevailing conversion factors are.

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