‘RECs’ to the rescue: How renewable energy certificates can pave the way to achieving bold business goals
Marie Bluett | Mar 20th 2017

Leading companies have signed long-term commitments to power their operations with renewable energy, lower their carbon footprint and contribute to the UN Sustainable Development Goals (SDGs). However, these ambitions are often challenged by procurement constraints, legislative restrictions or a lack of transparency regarding the available products and solutions. Premium renewable energy certificates (RECs) can offer a welcome solution to these challenges.

Last year, nearly 90% of new power added across Europe came from renewables. This move to renewable has, to a large extent, been driven by companies.

The global push for renewables stems from a growing amount of businesses committing to use power from 100 percent renewable sources, and signing up to prominent initiatives like We Mean Business or RE100 at an exceptional rate. At the same time, rules on renewable energy procurement are becoming increasingly more standardised across the globe. On the grassroots level, consumers are adding to the transition by taking the matter of climate change into their own hands.

This plethora of complementary trends and developments are driving the demand for renewable energy solutions to unprecedented highs. Behind corporate walls, sustainability and procurement officers are now facing a tough challenge: How to underpin ambitious renewable energy targets with reliable solutions?

 

Luckily, the global renewable energy market is not the wild wild west anymore. There are rules and regulations in place, even in places where national energy tracking systems do not yet exist. The World Resource Institute’s (WRI) Greenhouse Gas Protocol on Scope 2 Guidance has become somewhat of a bible for the renewable energy market. According to the guidance document, the fundamental basis for any renewable energy consumption claims is that they need to be aligned with megawatt hour (MWh)-based tracking instruments. In fact, energy attribute certificates – such as renewable energy certificates (RECs) or Guarantees of Origin – provide evidence for using a certain type of energy or electricity from renewable sources, and top the list in terms of precision for consumption accounting.

 

Source: World Resource Institute (WRI) Greenhouse Gas Protocol on Scope 2 Guidance

 

This clarification on how RECs can be used to lower and account for emissions from the generation of purchased or acquired electricity (Scope 2 accounting), has furthermore made them the number one instrument utilised by RE100 signatory companies for achieving their bold renewable energy consumption targets. In fact, two-thirds of emissions from electricity consumption are currently being targeted through unbundled energy attribute certificates, as highlighted below:

Source: RE100

The popularity of RECs is due to the fact that they are legitimate, reportable, and accessible. RECs contain and disclose the renewable origin and associated emission rate from which the underlying electricity is generated, and come under various names: these include ‘RECs’ in North America, ‘Guarantees of Origin’ in Europe, and ‘I-RECs’ in regions without national tracking systems. RECs are either regulated by national legislation or standards, audited and reliable and act as an ideal accounting instrument for MWh tracking from the origin to the final customer.

The encouraging state of play at present is that leading companies have signed long-term commitments to power their operations with renewable energy, lower their carbon footprint, and contribute to the UN Sustainable Development Goals (SDGs). However, meeting multiple global sustainability targets simultaneously can be a challenge. RECs offer a perfect opportunity to achieve low-emission and renewable energy consumption targets whilst also supporting local communities. The latter can be achieved by commitments to high-value RECs that come in various shapes and sizes. The pioneer in this space since 2009 has been the GoldPower product. By purchasing GoldPower, buyers can communicate that they are helping to transform the way the world creates electricity. Thanks to the quality criteria set forth by the Gold Standard Foundation, only carefully selected, high-quality renewable energy projects qualify for GoldPower. Without the additional value generated by the environmental attributes these projects would have never been viable, hence consumers can claim real impact. Furthermore, GoldPower benefits local communities and the environment whilst helping to achieve the SDGs.

When speaking about renewable energy, one cannot ignore the growing discourse around power purchase agreements (PPAs) as another corporate renewable energy solution: Over the past several years, gigawatts’ worth of PPAs have been signed by organisations. By entering into a renewable PPA, electricity and environmental attributes are bundled and sold together to an end-consumer. PPAs also promise to provide a long-term hedge against rising and volatile energy prices, and, ultimately, any eventual price on carbon.

On the flip side, PPAs require long-term commitments, multi-million dollar investments, and are not readily available in all regions of the world. In contrast, purchasing renewable energy unbundled in the form of RECs allows for buyers to dip their toes into the water before jumping straight in. RECs can be purchased for a part of or for the full energy consumption of a consumer, either for one or multiple years. No matter how big the financial commitment may be, RECs allow renewable energy consumption in a straightforward and reliable manner, helping to furthermore substantiate renewable energy claims.

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Consumers today are truly in the driver’s seat when choosing which renewable energy instrument is the ideal fit for them.  Lowering risk, saving money and boosting brand value by aligning with the United Nation’s Sustainable Development Goals – all benefits that forward-thinking companies can already expect to cash in for parting from fossil fuels and integrating renewable energy into their business with the use of labeled RECs. Companies who stay ahead of the curve and profit from the ongoing transition to the low-carbon economy will be the ones that are quick to act.

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