Renewable energy credits (RECs) and greenwashing

New research shows that while an increasing number of companies are making ambitious and climate promises and claiming they’re powered by renewable energy, many of their pledges are often exaggerated as a result of an over-reliance on Renewable Energy Certificates (RECs). RECs are received by paying into renewable energy projects, but they are not a certification that a company is utilizing renewable energy; some view them as a method of circumventing addressing the issue.

The study, published in the journal Nature Climate Change, revealed that while current greenhouse gas accounting standards allow companies to use RECs to report a “reduction in emissions from purchased electricity (scope 2)” as progress towards meeting their science-based targets, this has led to an “inflated estimate,” of their effectiveness of mitigation efforts.

Moreover, it outlined that if these claims through RECs were removed, companies’ combined 2015–2019 scope 2 emission trajectories are “no longer aligned with the 1.5 °C goal, and only barely with the well below 2 °C goal of the Paris Agreement.” Likewise, while RECs are intended to bring more clean energy online, this is not the case. Anders Bjørn, a postdoctoral fellow at Concordia University and the lead author of the study, commented: “What we can see in our study is that companies in most cases are buying certificates that are not doing much, if anything, for the climate, whether they know it or not.” He added: “Too many consumers, media, even investors might actually think that the company is physically using 100 percent renewables. And that is just not the case.”

Bjørn also said that while there is an uptake in renewable energy, it's not happening fast enough, and outlined that there needs to be policies in place to ensure real change is enacted: “Companies can only do so much on a voluntary basis. I think we need new policies to actually reduce emissions, rather than just assuming that companies will do it by themselves.”