Understanding the use of RECs and Carbon Credits<\/strong> <\/p>\n\n\n\n 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. <\/p>\n\n\n\n Using Renewable Energy Certificates (RECs)<\/strong> <\/p>\n\n\n\n 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. <\/p>\n\n\n\n International RECs (I-RECs) are globally recognised, while in Australia, businesses can purchase Large-scale Generation Certificates (LGCs). <\/p>\n\n\n\n Understanding Carbon Credits to Offset<\/strong> <\/p>\n\n\n\n Carbon offsets are credits generated by projects that reduce, avoid, or remove greenhouse gas (GHG) emissions. Companies buy and retire these credits<\/strong> to offset<\/strong> 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. <\/p>\n\n\n\n Globally, Verified Carbon Standard (VCS), Gold Standard, and United Nations’ Clean Development Mechanism (CDM) are popular choices. In Australia, the Carbon Farming Initiative (CFI) aka the Emissions Reduction Fund (ERF) is used by businesses seeking to offset emissions using Australian Carbon Credits Units (ACCUs). <\/p>\n\n\n\n Choosing High-Quality Projects<\/strong> <\/p>\n\n\n\n The quality of RECs and Carbon Credits varies. A credible REC or Offset (such as LGCs, I-RECs, some VCUs, and ACCUs) are issued under a trusted certification body (e.g. Evident for I-RECs and the CER for LGCs) and represents renewable energy that is additional (i.e., the energy wouldn’t have been generated without the incentive provided by the REC). <\/p>\n\n\n\n Carbon Offsets have come under greater criticism that RECs; High-quality offsets are transparent, verifiable, permanent, and provide additional carbon reductions that wouldn’t have happened without the offset project. They should be certified by reputable standard-setters like VCS or Gold Standard, which ensure the environmental integrity of the project and the offset. Today rating agencies (such as BeZero, Calyx, Sylvera, and IDEAcarbon) now exist for Carbon Credits and RECs. <\/p>\n\n\n\n When selecting projects for carbon offsets or RECs, businesses should screen projects and choose those: <\/p>\n\n\n\n <\/p>\n\n\n\n Avoiding Greenwashing<\/strong> <\/p>\n\n\n\n To avoid being accused of greenwashing (misleading or unsubstantiated claims about the environmental benefits) – businesses must ensure transparency in their decarbonisation efforts. The press and shareholder activists are exposing businesses using low-quality projects to offset their emissions or making improper claims. Accusations of greenwashing can be reduced by using Credible Standards & Registries, performing measurement and third-party verification, providing transparency & accuracy about the originating project and following The Integrity Council for Voluntary Markets \u201cCore Carbon Principles\u201d <\/p>\n\n\n\n Financial Mechanisms for RECs and Carbon Credits<\/strong> <\/p>\n\n\n\n Planning a long-term decarbonisation strategy necessitates considering not just the environmental, but also the financial implications of engaging with offsets and RECs. Forward-looking financial strategies such as hedging, offtake agreements, options, and warehousing of offsets can provide companies with more control over their sustainability efforts while mitigating financial risks. <\/p>\n\n\n\n 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. <\/p>\n\n\n\n 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.<\/p>\n","protected":false},"excerpt":{"rendered":" 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…<\/p>\n","protected":false},"author":1,"featured_media":27759,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[115],"tags":[204,71],"class_list":["post-27755","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles","tag-carbon-credits","tag-carbon-emissions"],"acf":[],"yoast_head":"\n![\"\"](\"https:\/\/northmoregordon.com\/wp-content\/uploads\/2023\/08\/shutterstock_1031536702.jpg\")
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