Climate change: Renewable energy certificates undermine corporate mitigation targets

The use of renewable energy certificates by companies to claim emission reductions may undermine science-based mitigation target, according to a study published in Nature Climate Change. These findings demonstrate the necessity of accurate corporate accounting for emissions reductions.

Companies face increasing pressure to reduce their emissions and to align with the temperature goals set out in the Paris Agreement. Current emission accounting standards allow companies to report zero emissions for the part of their purchased energy that they match with renewable energy certificates — tradable certificates validating one megawatt-hour of electricity (or heat, steam or cooling) generated from renewable energy sources and added to the energy grid. Whether corporate purchases of these certificates lead to actual reductions is, however, in doubt.

Using disclosure data from 115 companies between 2015 and 2019 (including information on reported emissions and how they were calculated) Anders Bjørn and colleagues reveal that while companies reported a 31% reduction in emissions from purchased energy, two-thirds of this claimed reduction was linked to certificates that were unlikely to have resulted in actual mitigation. The real reduction in emissions, the authors suggest, was actually closer to 10%, a figure that does not align with the 1.5 °C goal and only barely lines up with the well below 2 °C target set out in the Paris Agreement.

The authors suggest that corporate emission accounting standards should limit the use of renewable energy certificates and only approve ones that have been proven to lead to actual emission reductions.