Renewable energy certifications may overestimate companies’ environmental efforts

Many large companies’ reliance on a certain type of highly scrutinized energy credit may be an indication that the private sector is far behind in efforts to reduce contributions to climate change, according to new research.

The research, published in early June in the journal Nature Climate Change, focuses on renewable energy certifications (RECs), which are documents that show that a certain amount of energy has been created using renewable methods such as wind or solar.

The research found that many companies would have a much larger carbon footprint without these credits, which many environmentalists consider ineffective.

“in my opinion, [RECs are] “It’s always misleading, because in a physical sense, it doesn’t use renewable energy,” said Anders Bjorn, a postdoctoral fellow at Concordia University and lead author on the study.

The difference once the RECs are removed creates a major discrepancy, putting many companies behind goals aimed at meeting the Paris Agreement. The agreement, adopted in 2015, is an international treaty between 192 countries and the European Union which seeks to drastically reduce greenhouse gas emissions in order to keep global temperature levels from rising by more than 1.5°C.

Companies buy RECs so that they can offset a portion of their carbon emissions. This practice comes from the Greenhouse Gas Protocol, an initiative that provides the primary standard by which companies estimate their emissions. With this emissions accounting method, companies are able to significantly reduce the carbon emissions they report without making major changes to their operations.

Companies have embraced markets like Carbon Credit Programs and Regional Economic Communities that allow them to demonstrate that they are taking steps to reduce their environmental impacts. Many of these programs rely on a file Cash-for-credit system, where the company pays money for a credit created to represent green energy generation. Offsets represent emission reductions, while RECs represent Use of renewable electricity.

Bjorn’s research look at the Science-Based Targets Initiative (SBTi), helping companies meet emissions targets and follow the current greenhouse gas protocol. Through SBTi, more than 1,000 companies have pledged to achieve net zero emissions.

In theory, RECs aim to increase the amount companies invest in renewables. but, A large body of previous research He noted that RECs don’t actually work that way, according to Michael Gillin-Water, a researcher with REC and the executive director and dean of the Greenhouse Gas Administration, a nonprofit organization focused on environmental impact accounting.

All research has shown this unequivocally [the REC market] “Do nothing,” Gilnwater said. “It is fundamentally ineffective in terms of affecting investment in or generation of renewable energy.”

“It is fundamentally ineffective in terms of affecting investment in or generation of renewable energy.”

Michael Gillenwater, REC Researcher and Executive Director and Dean of the Greenhouse Gas Administration

Although the RECs aim to generate investments that will drive the creation of new solar and wind farms, it appears that little, if any, renewable energy has been created because, as Gillenwater explains, “RECs are not enough. “

The study from Concordia University shows how far companies are from the Paris Agreement carbon emissions targets when the amounts offset by the RECs are removed. According to current measurements, 68% of the 115 companies analyzed in the study have reduced their emissions enough to align with the 1.5°C target. But the study found that when RECs are excluded, only 36% of companies meet the target.

The study focused only on Scope 2 emissions, which are emissions related to electricity purchases. According to the study, although companies reduced their Scope 2 emissions by 31%, these companies actually reduced emissions by only 10% when excluding RECs.

“The widespread use of RECs raises doubts about the apparent historical emissions reductions for Paris-compliant companies, as they allow companies to report unrealistic emission reductions,” the study researchers said.

The Greenhouse Gas Protocol is due to review its standards later this year. The researchers advocate a change in how emissions are reported that include a more nuanced understanding of RECs.

SBTi said in Bloomberg statement. “This is an issue that goes beyond SBTi, and we feel that the best solution includes revised accounting principles and guidelines for all users.”

Shannon Lloyd, one of the researchers, emphasized that the problem is not the companies, but the system itself.

“In my opinion, the call for this paper should not be, ‘Let’s point the finger,'” Lloyd said. ‘The call should be, ‘Let’s find out’.