The purpose of EACs and their role in the renewable energy transition
As more and more companies around the world are voluntarily sourcing renewable energy (RE), corporates and supply chains are turning to Energy Attribute Certificates (EACs) to demonstrate progress on their renewable energy consumption targets and greenhouse gas (GHG) emission reduction targets.
In this article, we focus on the purpose of EACs and discuss the role they play in the renewable energy transition.
What are Energy Attribute Certificates (EACs)?
Energy Attribute Certificates (EACs) are contractual instruments that represent information about the origin of energy generated and are the most popular instrument for corporate renewable energy (RE) sourcing.
The Purpose of EACs
EACs serve various purposes depending on business context and geographies. They are used to meet compliance targets, such as the Renewable Portfolio Standards in the US, to meet disclosure requirements such as the GO system in Europe, and to meet voluntary emission reduction or RE targets such as SB or RE100.
There are two main types of EAC systems: international EAC systems, such as GO in Europe, I-REC and TIGRs, and country specific EAC systems, such as the REC system in the US and India, GEC in China, NFC in Japan, and LGC in Australia. International EAC systems are available in multiple markets. It is the I-REC system that we see most widely used, especially in Asia. Country-specific EAC systems are available in some markets and are typically used as compliance systems.
International EAC Systems
Increasingly, EACs are being utilised by corporates and supply chains to demonstrate their progress against GHG emission reduction and RE consumption targets. Since EACs convey direct emissions associated with energy generation (tons/MWh), they can therefore be used to verify progress against GHG emission reduction targets and reporting of lower Scope 2 emissions.
By allowing corporates to track the origin of electricity and prove the consumption of renewables, EACs can support claims made in annual sustainability or impact reports to customers or investors – giving credibility to claims via an electronic tracking system, which tracks from the point of generation to the point of consumption.
Where do EACs fit in the bigger picture of the renewable energy transition?
The beauty of EACs is that they are a scalable solution for electricity (electricity only), meaning there is no limitation on how much of a corporate’s electricity consumption can be claimed as renewable energy. The drawback is that there is never a solid business case for EACs, as they always come at a cost to the business. As a result, we recommend corporates leverage them as a buffer whereby a business may have implemented other RE solutions, such as onsite solar or power purchase agreements (PPA), which have a stronger business case but lock in consumption volumes for the long term. Topping up with EACs gives flexibility to reduce volumes procured if electricity demand drops.
EACs can also serve an important role in encouraging the construction of new renewable energy projects. With companies of all sizes able to buy EACs, they act as a tool for corporations to demonstrate collective consumer demand for renewable energy and send a market signal to
support the building of more renewable energy generation facilities. Overall, this has a positive impact on accelerating the renewable energy transition and thus are viewed as a valuable tool in a corporate’s RE portfolio.
Where some RE solutions might be difficult to access in certain geographies, EACs are widely available across many countries and in some cases the only option available. Consequently, they are an accessible mechanism for many corporates to easily demonstrate progress against their RE targets. Our view is that EACs work best in combination with other RE solutions as part of an integrated strategy over the long term. This is where act renewable’s advisory expertise lies in not only supporting corporates with the procurement of EACs via brokers and sharing the different EAC schemes available, but looking at how EACs can form part of a larger RE solutions portfolio, alongside the likes of PPAs.
Are you looking for training or guidance on the renewable energy transition?
Our team is on hand to support your business with its renewable energy journey. Check out some of the Q&As from our recent webinar on ‘Unpacking the Complexities of EACs’, or reach out to our team here.
get in touch
Want to know more? Reach out to the team for support in accelerating the corporate renewable energy transition: contact@actrenewable.net