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Renewable energy certificates threaten the integrity of corporate science-based targets

Author

Listed:
  • Anders Bjørn

    (Concordia University
    Concordia University
    Concordia University)

  • Shannon M. Lloyd

    (Concordia University
    Concordia University)

  • Matthew Brander

    (University of Edinburgh Business School)

  • H. Damon Matthews

    (Concordia University
    Concordia University)

Abstract

Current greenhouse gas accounting standards allow companies to use renewable energy certificates (RECs) to report reductions in emissions from purchased electricity (scope 2) as progress towards meeting their science-based targets. However, previous analyses suggest that corporate REC purchases are unlikely to lead to additional renewable energy production. Here we show that the widespread use of RECs by companies with science-based targets has led to an inflated estimate of the effectiveness of mitigation efforts. When removing the emission reductions claimed through RECs, 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. If this trend continues, 42% of committed scope 2 emission reductions will not result in real-world mitigation. Our findings suggest a need to revise accounting guidelines to require companies to report only real emission reductions as progress towards meeting their science-based targets.

Suggested Citation

  • Anders Bjørn & Shannon M. Lloyd & Matthew Brander & H. Damon Matthews, 2022. "Renewable energy certificates threaten the integrity of corporate science-based targets," Nature Climate Change, Nature, vol. 12(6), pages 539-546, June.
    • Handle: RePEc:nat:natcli:v:12:y:2022:i:6:d:10.1038_s41558-022-01379-5
    DOI: 10.1038/s41558-022-01379-5
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    References listed on IDEAS

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    1. Wang, Derek D. & Sueyoshi, Toshiyuki, 2018. "Climate change mitigation targets set by global firms: Overview and implications for renewable energy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 386-398.
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    Cited by:

    1. Juan Ignacio Iba~nez & Alexander Freier, 2023. "Don't Trust, Verify: Towards a Framework for the Greening of Bitcoin," Papers 2305.01815, arXiv.org.
    2. Maida Hadziosmanovic & Shannon M. Lloyd & Anders Bjørn & Raymond L. Paquin & Nadine Mengis & H. Damon Matthews, 2022. "Using cumulative carbon budgets and corporate carbon disclosure to inform ambitious corporate emissions targets and long‐term mitigation pathways," Journal of Industrial Ecology, Yale University, vol. 26(5), pages 1747-1759, October.
    3. Hechelmann, Ron-Hendrik & Paris, Aaron & Buchenau, Nadja & Ebersold, Felix, 2023. "Decarbonisation strategies for manufacturing: A technical and economic comparison," Renewable and Sustainable Energy Reviews, Elsevier, vol. 188(C).
    4. Li, Peixian & Ng, Jeremy & Lu, Yujie, 2022. "Accelerating the adoption of renewable energy certificate: Insights from a survey of corporate renewable procurement in Singapore," Renewable Energy, Elsevier, vol. 199(C), pages 1272-1282.

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