Energy Attribute Certificates (EACs), such as Renewable Energy Certificates (RECs) or Guarantees of Origin (GOs) are certificates that prove that 1 megawatt hour (MWh) of renewable energy, such as solar or wind, has been produced and injected into the electricity grid. These certificates are separate from the physical distribution of the electricity, and they endorse that a certain volume of energy comes from a renewable source. To ensure the credibility of the claim, each EAC includes information about the environmental attributes of the energy such as the source, technology, origin, time and date of production, name of the power production site, among other Information.
EACs are obtainable in different countries and there are several markets and registries around the world. The most common types of EACs are GOs, RECs and I-RECs. Guarantees of Origin (GOs) are exclusively used for voluntary purposes, and they are traded and cancelled in different European countries. Whereas the Renewable Energy Certificate System (RECs) are the main certificates used In the United States and Canada, and they can be used both for compliance reporting and for voluntary purposes. On the other hand, the International REC Standard (I-RECs) is an issued standard In different Latin American, Asian and African countries where no other local market mechanism exist. GOs, RECs and I-RECs are valid for companies reporting on the Carbon Disclosure Project (CDP), and GHG Protocol, as well as those committed to the RE100 Initiative.
As previously explained in our “Calculating Carbon Footprint” article, Scope 2 emissions include those GHG emissions that come from purchased electricity, steam, heating and cooling purchased by a company for its own use. According to the GHG Protocol, “Scope 2 represents one of the largest sources of GHG emissions globally: the generation of electricity and heat now accounts for at least a third of global GHG emissions.” In order to reduce your company’s Scope 2 emissions, EACs are one of the most important instruments to claim the environmental benefits related to the energy consumption, as it is a flexible and cost-efficient option to meet the company’s sustainability targets.
According to the GHG Protocol Scope 2 quality criteria, companies buying EACs must purchase the exact number of certificates to match their electricity consumption for a given consumption period at a specific location, then, the certificate needs to be cancelled/retired by the company (or by a supplier on behalf of the company) to make the claim regarding the energy consumption and this information must be disclosed in order to assure the credibility of the claims.
Some companies calculate the emissions from their local power grid, which we call the ‘location-based method’. Others look to contracts with their electric utilities and/or EAC providers, which we call the market-based method’. The GHG Protocol requires that companies use both methods. The location-based method reveals what the company is physically putting into the air, and the market-based method shows emissions the company is responsible for through its purchasing decisions. Both pieces of information tell an important story about the company’s carbon footprint and carbon reduction strategy. Purchasing unbundled EAC would be applied towards a company’s scope 2 market-based emissions reporting and has become one of the most cost-effective strategies for companies to compensate their scope 2 emissions market-based emissions.
After cancelling EACs matched to their energy consumption, companies can declare the use of renewable energy, as well as the environmental benefits related to this claim. These certificates are an essential part for companies addressing their emissions and they have become a credible claim regarding the use of renewable energies and their commitment towards the reduction of their scope 2 emissions, as well as meeting their renewable energy goals.
One of the main benefits for companies to buy EACs is the fact it is a strategy that does not require long-term commitments or high costs and investments such as Power Purchase Agreements or on-site generation. By acquiring the certificates, purchasers contribute to the remuneration of power generated from renewable sources, demonstrating their commitment towards a decarbonized economy.
If you would like to learn more about EACs, understand the relevant voluntary systems related to the use of EACs and explore if this could be suitable for your organization and your sustainability strategy, please feel free to reach out to us here to set up a meeting.