Renewable energy certificates

Edit online

A renewable energy certificate (REC) provides proof of the generation of green energy. You can capture RECs in your location-based reporting and market-based emissions reporting.

IBM® ESG Suite records emissions reductions, which result from the purchase of RECs, separately from scope 2 totals.

Market-based emissions

The primary reasons why an organization purchases and manage RECs in Envizi ESG Suite are as follows:
  • To quantify the amount of renewable energy consumed.
  • To quantify the GHG reductions achieved through purchasing carbon neutral power in the context of Scope 2 location-based emissions reporting.
  • To quantify the impact of RECs when reporting on Scope 2 market-based emissions.
For more information on market-based emissions reporting and configuration, see Market-based Emissions report.

Background information

RECs can be purchased with electricity. When bundled with electricity, they are typically referred to as green power (see Figure 1). They can also be purchased on their own and are often referred to as unbundled certificates in this scenario. The environmental benefit of generating green power is separated from the electricity itself.
Figure 1. Energy attribute certificates
A diagram that shows electricity as a commodity bundled with EACs.
RECs are referred to by different names in different regions. REC is the term typically used in the US. In Europe, RECs are often referred to as EACs or GOs. The list includes:
  • REC (Renewable Energy Certificate)
  • EAC (Energy Attribute Certificate)
  • GO (Guarantees of Origin)
  • I-REC (International Renewable Energy Certificates)
  • LCG (Australia Large-Scale Generation Certificate)

RECs provide information about the attributes of the energy that was produced, such as the resource used and the emissions that are associated with its production.

An organization might purchase RECs to reduce their overall scope 2 emissions. According to the GHG Protocol - Corporate Standard, it is necessary to report all scope 2 emissions from purchased grid electricity separately from offsets and RECs. However, organizations may still want to see the impact of RECs on scope 2 totals in the same way as an organization’s overall carbon footprint can be reduced by using carbon offsets.

In Envizi ESG Suite, this is handed by recording emissions reductions resulting from REC purchases separately from Scope 2 totals. The Performance by Scope dashboard that is displayed in Figure 2 is a good example of where Scope 2 emissions are summarized separately from RECs and offsets. In this way, organizations are able to clearly see their Scope 2 location-based emissions resulting from grid electricity purchases separately from RECs and offsets.
Figure 2. Activity by scope
A Screenshot of the home page of the Market-based emissions report.
Note: While there are 3 categories of REC purchases handled by the Market-based Emissions PowerReport, only RECs related to green power purchases or bundled RECs are included in the green GHG Reduction total row in Figure 2. For more information on market-based emissions reporting and configuration, see Market-based Emissions report.

Emissions calculation for GHG reduction total - Example

As an example, an organization consumes 1000 kWh of grid power at a location in the UK through an electricity product that provides 70% green power. Envizi uses the grid electricity emission factor from the DEFRA factor set, which for 2023 is a value is 0.207 kgCO2e/kWh. The following 3 calculations are made:
Scope 2:
100% * 1000 kWh * 0.207 = 207 kgCO2e
GHG Reduction:
70% * 1000 kWh * -0.207 = -144.9 kgCO2e
Net GHG Inventory Total:
207 kgCO2e -144.9 kgCO2e = 62.1 kgCO2e

Disabling the GHG reduction calculation

If your organization prefers that RECs do not calculate GHG reductions, this can be achieved by capturing a custom emission factor with the following settings:

  • Region = Earth
  • Data type = Electricity - Green [kwh]
  • kgCO2e/unit = 0

If you do not see the Electricity - Green [kWh] data type in the pick list, contact the IBM Envizi team to add the data type.

Difference Between RECs and offsets

RECs are credits that represent the environmental and other non-power attributes of renewable electricity generation and are a component of all renewable electricity products, that is, one REC for every 1 MWh or 1,000 kWh. RECs are measured in single megawatt-hour increments and are created at the point of electric generation. Buyers can select RECs based on the generation resource, for example, wind, solar, geothermal, when the generation occurred, and the location of the energy source.

RECs cannot be purchased as a method of carbon offset, and only carry the environmental attributes of renewable energy. The two mechanisms are different and serve different purposes: Carbon offsets allow companies to reduce their liability for greenhouse gas emissions, with each carbon offset financing a one ton reduction in carbon dioxide (CO2e) emissions through a variety of projects. RECs account only for renewable energy generation—most often electricity—and thus represent a direct impact on the energy system. RECs in effect reduce emissions associated with power consumption.

Note: This important distinction between a REC and a carbon offset is that RECs are measured in kWh and carbon offsets are measured in tonnes of CO2e. While RECs are carbon neutral, it is in their application or apportionment against electricity consumption that can show reduced emissions.