As global corporations accelerate their climate action toward net-zero targets, Scope 2 emissions—those arising from purchased electricity—have become a key focus area. Renewable Energy Certificates (RECs), which represent proof that one megawatt-hour (MWh) of electricity was generated from a renewable source and added to the grid, are a primary tool for addressing these emissions. Integrating a REC strategy into a company’s net-zero roadmap not only helps reduce reported emissions but also aligns operations with stakeholder expectations, regulatory frameworks, and market-based accounting mechanisms such as the GHG Protocol. In 2022, the global market for energy attribute certificates (EACs), including RECs and similar instruments like Guarantees of Origin (GOs) in Europe and I-RECs in emerging markets, surpassed 1.5 billion MWh in transactions, highlighting their increasing role in corporate sustainability initiatives (I-REC Standard).
Scope 2 emissions are reported in two ways under the GHG Protocol: location-based, which reflects the average grid mix of emissions where energy consumption occurs, and market-based, which considers specific instruments like RECs, Power Purchase Agreements (PPAs), and green tariffs. The market-based method gives companies the opportunity to reduce their Scope 2 emissions by purchasing RECs corresponding to their electricity consumption. For example, if a company in the U.S. consumes 100,000 MWh annually, and purchases an equivalent amount of Green-e® certified RECs, it can claim zero market-based Scope 2 emissions for that electricity use (Green-e).
However, these claims must be robust. The GHG Protocol mandates that RECs used for accounting must be issued within 12 months of electricity consumption and be from the same market or regional grid where the electricity was consumed. Additionally, companies must disclose residual mix emissions when using the market-based method to ensure transparency. Without clear documentation and proper matching, RECs can be considered “double-counted,” undermining credibility.
A credible REC strategy should be grounded in three core principles: additionality, geographic relevance, and temporal alignment. Additionality ensures the REC purchase supports the development of new renewable capacity rather than simply displacing existing projects. Geographic relevance ties the REC origin to the region of consumption, while temporal alignment means the generation and usage occur within the same reporting year.
REC strategies can be segmented into three tiers of ambition:
Global companies are increasingly moving toward the third tier. For instance, Google’s 24/7 Carbon-Free Energy goal seeks to match every hour of electricity consumption with real-time renewable energy procurement, going beyond standard annual REC matching (Google Sustainability).
To integrate RECs into a net-zero roadmap, organizations must ensure their use complements broader emissions reduction measures, rather than replacing them. RECs should be used to cover residual Scope 2 emissions after energy efficiency, onsite renewables, and direct procurement options are exhausted. This sequencing—often referred to as the "mitigation hierarchy"—is critical to ensure environmental integrity.
Furthermore, frameworks such as the Science Based Targets initiative (SBTi) impose strict rules on market-based instruments. For Scope 2 emissions, SBTi allows RECs but discourages their use as a substitute for real decarbonization in the long term. According to SBTi’s latest guidance, companies should aim for at least 80% renewable electricity by 2025 and 100% by 2030 using credible instruments (SBTi Criteria).
Investors and ESG raters also scrutinize the quality and transparency of REC usage. The Task Force on Climate-related Financial Disclosures (TCFD) encourages companies to disclose their reliance on instruments like RECs separately from operational performance. By embedding REC strategy into TCFD-aligned reporting, companies can enhance trust with stakeholders and demonstrate robust climate governance.
As the energy transition accelerates, RECs will continue to play a vital, though nuanced, role in net-zero strategies. Their value lies not in merely offsetting Scope 2 emissions but in enabling companies to accelerate renewable energy adoption and demonstrate climate leadership. To achieve this, companies must adopt high-impact REC procurement approaches that prioritize transparency, integrity, and alignment with global best practices. With regulatory landscapes tightening and stakeholder scrutiny intensifying, the future belongs to organizations that treat RECs not as an afterthought, but as a strategic pillar of their decarbonization journey.
For those starting or refining their REC integration, key recommendations include:
In doing so, companies can ensure that their Scope 2 emissions reporting supports—not undermines—their broader climate commitments.
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Energy-related emissions—largely from electricity, heat, and fuel use—are driving corporations in the U.S. and Europe to redefine their climate strategies, with policy, investor pressure, and technology shaping their approaches.
