Corporations and executives are now taking more active roles in environmental sustainability, shifting from ‘business as usual’ to a transformative paradigm where profits and the planet must co-exist harmoniously. As decarbonisation targets take centre stage, businesses globally and in Australia, are embracing instruments like carbon offsets and Renewable Energy Certificates (RECs) to lower their carbon footprints and to disclose or report progress against programs such as SBTI, RE100, Climate Active, EKOenergy, TCFDThe and CDP.
The credibility of these initiatives depends heavily on the quality of the environmental certificates, as not all are created equal, and some have recently come under fire. This article explores this range of quality, tools, and financial mechanisms and discusses strategies for avoiding greenwashing accusations to make use of what is still a very important mechanism for the world to decarbonise.
Disclaimer: Northmore Gordon (NG) has a deep understanding of certificate markets, and the requirements of all the leading decarbonisation Projects, programs & protocols and helps customers build actual emission reduction pathways. NG has originated over 5 million certificates from a wide range of projects and has delivered for customers ‘Buy & Retire’ of certificates across 18 markets, covering 23 countries. NG holds an Australian Financial Services License. Information in this article is general in nature and shall not constitute advice.
Understanding the use of RECs and Carbon Credits
RECs and especially Carbon Credits, whilst providing an immediate solution are one mechanism to incentivise others to reduce emissions. Businesses should always be working in parallel on their own renewable energy assets and emissions reduction projects within their business. Internal projects, such as energy efficiency can have a negative long-term cost. Internal projects come at high CAPEX, whilst RECs and offsets come from OPEX budgets.
Using Renewable Energy Certificates (RECs)
RECs represent the environmental attributes of renewable energy production. By purchasing and retiring RECs, businesses claim the green benefits of the equivalent renewable energy generation for their site and promote renewable sector growth.
International RECs (I-RECs) are globally recognised, while in Australia, businesses can purchase Large Scale Renewable Energy Certificates and Small Scale Renewable Energy Certificates
Understanding Carbon Credits to Offset
Carbon offsets are credits generated by projects that reduce, avoid, or remove greenhouse gas(GHG) emissions. Companies buy and retire these credits to offset their own emissions. The range of projects offering these offsets can include forest conservation, replanting, renewable energy, methane capture, waste and wastewater treatment, energy efficiency projects, fuel switching and many others.
Globally, Verified Carbon Standard (VCS), Gold StandardAccreditation scheme for voluntary carbon offset and renewable energy projects. The tradable instruments are Verified Emission Reductions (VERs). The Gold Standard label can also be applied to CERs and I-RECs where the project meets the Gold Standard requirements around sustainable development and project additionality. More, and United Nations’ Clean Development Mechanism (CDMA) are popular choices. In Australia, the Carbon Farming Initiative aka the Emissions Reduction Fund is used by businesses seeking to offset emissions using Australian Carbon Credits Units (ACCUs).
As CFOs, sustainability managers, and other executives navigate their decarbonisation journey, carbon offsets and RECs offer powerful tools to meet environmental goals. However, due diligence is critical in choosing the right projects and certificates to support genuine, effective climate action and avoid the pitfall of greenwashing. By aligning with robust standards, seeking third-party verification, and committing to transparency and science-based targets, businesses can not only help mitigate climate change but also build their credibility as sustainable leaders in their industry.
Northmore Gordon has been advising businesses on their decarbonisation strategy for almost 15 years and can provide a full range of carbon, energy and certificate services for your business today.
For more details please visit: - https://northmoregordon.com/
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