Renewable Energy Certificates may overstate corporate environmental efforts

The reliance of many main firms on a sure kind of extremely scrutinized vitality credit score might be an indicator that the non-public sector is way behind efforts to restrict contributions to local weather change, in line with new analysis.

The analysis, printed in early June within the journal Nature Climate Change, focuses on renewable vitality certificates (RECs), that are paperwork that present that a certain quantity of vitality has been generated utilizing renewable strategies like wind or photo voltaic. 

The analysis discovered that many firms would have far bigger carbon footprints with out the credit, which many environmental consultants contemplate to be ineffective.

“In my opinion, [RECs are] always misleading, because in a physical sense, they are not using renewable energy,” stated Anders Bjørn, a postdoctoral fellow at Concordia University and the lead creator on the examine.

The distinction as soon as RECs are eliminated creates a serious discrepancy, placing many firms behind targets meant to fulfill the Paris Agreement. The settlement, adopted in 2015, is a global treaty amongst 192 countries and the European Union that seeks to considerably cut back greenhouse fuel emissions to be able to preserve international temperature ranges from rising by greater than 1.5 levels Celsius. 

Companies buy RECs in order that they will cancel out a portion of their carbon emissions. This follow comes from the Greenhouse Gas Protocol, an initiative that gives the first normal by which firms estimate their emissions. Through this methodology of emissions accounting, firms are capable of considerably cut back the carbon emissions they report with out making important adjustments to their operations.

Companies have embraced markets reminiscent of carbon credit programs and RECs that permit them to point out that they’re taking steps to scale back their environmental footprints. Many of those applications depend on a cash-for-credit system, the place an organization pays cash for a credit score created to symbolize the era of inexperienced vitality. Offsets symbolize emissions reductions, whereas RECs symbolize use of renewable electricity.

Bjørn’s analysis checked out the Science-Based Targets initiative (SBTi), which helps firms abide by emissions targets and comply with the present Greenhouse Gas Protocol. Through the SBTi, over 1,000 firms have made commitments to attain net-zero emissions.

In idea, RECs are supposed to enhance the quantity that firms put money into renewable vitality sources. However, a large body of previous research has indicated that RECs don’t really work this manner, in line with Michael Gillenwater, a REC researcher and government director and dean of the Greenhouse Gas Management, a nonprofit group that focuses on environmental influence accounting.

“All the research has pretty unambiguously shown that [the REC market] does nothing,” Gillenwater stated. “It’s basically ineffective in terms of influencing renewable energy investment or generation.”

Although RECs are supposed to create investments that will drive the creation of recent wind and photo voltaic farms, little if any renewable vitality really appears to be created, as a result of, as Gillenwater explains, “REC certificates just aren’t worth enough.”

The examine popping out of Concordia University exhibits simply how far off firms are from Paris Agreement carbon emissions targets when the quantities offset by RECs are eliminated. By present measurements, 68% of the 115 firms analyzed within the examine have lowered their emissions sufficient to align with the 1.5°C aim. But the examine discovered that when RECs are excluded, solely 36% of firms meet the goal.

The examine centered solely on Scope 2 emissions, that are the emissions associated to the acquisition of electrical energy. According to the examine, though the businesses allegedly decreased their Scope 2 emissions by 31%, these firms had really solely decreased emissions by 10% when RECs are excluded.

“The widespread use of RECs raises doubt on companies’ apparent historic Paris-aligned emission reductions, as it allows companies to report emission reductions that are not real,” the researchers stated within the examine.

The Greenhouse Gas Protocol is about to revise their requirements later this yr. The researchers advocate for a change to how emissions are reported that features a extra nuanced understanding of RECs.

“We are aware there is growing concern about companies using low-impact instruments to reduce their market-based scope 2 emissions, from an emissions accounting point-of-view, without driving real-world change,” the SBTi stated in a statement to Bloomberg. “This is an issue that extends beyond the SBTi, and we feel that the best solution involves revised accounting principles and guidance for all users.”

Shannon Lloyd, one of many researchers, emphasised that the issue is just not the businesses, however the system itself. 

“In my mind, the call for this paper shouldn’t be, ‘Let’s point fingers,’” Lloyd stated. “The call should be, ‘Let’s figure this out.’”