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Renewable Energy Certificates

Renewable Energy Certificates (RECs) play a critical role in carbon accounting, particularly under the GHG Protocol. RECs represent proof that electricity has been generated from renewable energy sources and has been fed into the grid. They are instrumental for companies seeking to claim reductions in Scope 2 emissions, which pertain to indirect GHG emissions from the consumption of purchased electricity, heat, or steam.

Understanding RECs​

A REC is issued when electricity is generated from a renewable energy source and delivered to the grid. Each certificate embodies the environmental attributes of this power generation and can be used by companies to substantiate their renewable energy usage, thereby impacting their Scope 2 emissions profile. A REC can be sold or traded independently of the actual electricity.

Using RECs to Manage Scope 2 Emissions​

Under the GHG Protocol, RECs can be utilized in the following ways:

  • Claiming Carbon Reductions: By purchasing RECs, companies can claim that their electricity consumption is sourced from renewable energy. This is significant in regions where the electricity grid is primarily powered by fossil fuels. The purchase of RECs supports renewable energy projects financially and contributes to reducing the environmental impact associated with the company's electricity use.
  • Market-Based Reporting: In the market-based method of Scope 2 accounting, RECs allow organizations to report lower emissions than the grid average. This method allows organizations to report their electricity-related emissions based on the RECs they procure. Thus, if a company buys RECs equivalent to their total electricity consumption, they can claim that their Scope 2 emissions are significantly reduced, reflecting the lower or zero emissions of the renewable sources.

When to Use RECs​

  • Transparency in Claims: When claiming reductions in Scope 2 emissions through RECs, companies must ensure transparency and accuracy in reporting. This involves specifying the quantity of RECs purchased and retiring them correctly to avoid double counting.
  • Avoiding Double Counting: It is crucial that RECs are only counted once. If a company sells its RECs, it cannot claim the environmental attributes associated with them, and the buyer of the RECs would have the right to claim the use of renewable energy.
  • Validity and Timing: RECs should be valid and used within the appropriate reporting period. Typically, RECs should be retired within the year of their generation to be counted towards that year's carbon accounting and reporting.

Conclusion​

RECs are an essential tool in carbon accounting under the GHG Protocol. They allow organizations to substantiate their use of renewable energy, aiding in the reduction of Scope 2 emissions and supporting global renewable energy development. However, organizations must manage and report REC purchases transparently to maintain the integrity of their environmental claims, avoiding issues like double counting and ensuring that RECs are valid and applied correctly. Proper management and strategic use of RECs can significantly contribute to an organization’s sustainability profile while ensuring compliance with the GHG Protocol’s rigorous standards.