Month: March 2020

Exploring I-RECs: A renewable energy option in international markets

wind turbines in Asia

In 2015, the World Resources Institute (WRI) unveiled new guidance for Scope 2 emissions accounting within the Greenhouse Gas Protocol Corporate Standard. This update introduced a market-based accounting mechanism that gives companies the opportunity to reduce their Scope 2 emissions through the purchase of renewable energy certificates, PPAs, and other contractual instruments. This provision has driven a new focus on global energy purchasing, with more organizations looking for options across the globe.

Product Profile

The I-REC, an international renewable energy certificate, represents transferrable proof that one MWh of electricity was produced from renewable energy sources and added to an electrical grid. Purchasing an I-REC allows the buyer to claim consumption of one MWh of renewable energy. I-RECs can originate from wind, solar, ocean energy, biomass, hydropower, landfill gas, aerothermal, geothermal, and landfill gas projects. 3Degrees only transacts I-RECs issued in countries authorized by the International REC Standard and traded on the I-REC Registry. This standard establishes rules and regulations for a transparent system that simplifies claims and eliminates double counting issues, making products compliant with Scope 2 reporting guidelines. Valid renewable energy claims also depend on additional factors, such as whether production and consumption occur within an appropriate market boundary.

Regulatory Considerations

In some cases, the I-REC Secretariat implements country-specific restrictions on certificate issuance to ensure environmental integrity and prevent double counting. For example, issuance would be prohibited for generation that is counted toward a state-mandated renewable energy delivery quota. Every country’s regulatory environment is unique, and even though a policy may not lead to double counting, it may nonetheless change the scope of claims an I-REC purchaser can make. 3Degrees’ Regulatory Affairs team reviews each country in which I-REC issuance is authorized to comprehensively understand and communicate the integrity and impact of our clients’ I-REC purchases.

Interested in learning more about global renewable energy options? Read our blog on Navigating the Opportunities and Pitfalls of International Renewable Energy Markets or this case study on how Verisk is successfully addressing emissions from its global energy load.

Staying Connected on What Matters

bench overlooking nature

We’ve all probably heard the phrase, “If you don’t have your health, nothing else matters”. Given the current global pandemic situation, this phrase has never felt more true. 

We want to let you — our trusted clients, friends, partners, and colleagues — know that 3Degrees is committed to staying connected with you on what matters.

Right now, we understand that most of you are grappling with new workplace and home realities. So are we. Following guidance from CDC and local authorities, 3Degrees closed our physical offices in March. Like most of you, we are adjusting to working remotely, sometimes with pets and/or children making cameo appearances on video calls. Many of us are also managing other stresses, such as worrying about elderly loved ones, being unable to visit sick and elderly parents, or having to cancel once-in-a-lifetime events like weddings, graduations, and memorials. The effects are far-reaching and deeply personal. 

While these are unsettling times, they’re also a heartening reminder how individuals and communities can pull together to confront a common challenge. We’ve already seen examples of how this global pandemic is spurring amazing creativity and innovation that should provide lasting benefits long after we are on the other side of the current crisis. Many of the same characteristics that are critical to an effective COVID-19 response, such as compassion, perseverance, and care for vulnerable populations disproportionately affected, are also critical to addressing the longer-term, ongoing challenge of climate change. 

We remain passionate about our mission to help businesses and their customers take urgent action on climate change — which remains a critical issue. And, people’s health, their families, and their livelihoods are what’s currently weighing on everyone’s mind. Focusing your attention on these important concerns right now is understandable. And 3Degrees will continue to be here when you’re ready to re-engage in efforts around renewable energy, transportation decarbonization, and other climate solutions. 

Looking ahead, we’re working on many ways we can stay connected remotely. On the immediate horizon, we’ll be participating in an April 14th webinar with Bloom Energy on GHG Accounting and Emissions Reduction Techniques. If you’re ready to engage, we’d love for you to join us. And yes, kids and pets are welcome to make cameo appearances.

Here’s to staying connected on what matters.

The Role of Carbon Offsets in Corporate Sustainability (part II)

city clouds

Part II – Carbon Offset Best Practices

In our first article in this series, The Role of Offsets in Corporate Sustainability, we explored common carbon offset project categories, and how offsets can play an important near-term role in companies’ broader sustainability efforts. We also highlighted why offsets sometimes are sometimes criticized, and discussed why or why not those critiques are valid.

In this second article in the series, we take a closer look at best practices for organizations that utilize carbon offsets as one of many tools in their sustainability toolbox.

First, reduce your emissions wherever possible

The first step in any company’s climate action plan should be to reduce all emissions that are within its direct control, including its own operations and supply chain. This action may take many different forms depending on the nature of the organization, but all organizations should develop and implement a carbon reduction strategy. Typically, this begins with an audit of operations, an internal evaluation, coordinating with suppliers in the supply chain, or any other process to identify sources of emissions and calculate the company’s total greenhouse gas (GHG) emissions footprint. After the sources have been identified, companies can set emission reduction targets and develop plans to specifically address the impacts associated with those sources and activities. 

Use offsets as a bridge to long-term, industry-specific solutions for decarbonization

It is nearly impossible for even the most efficient and sustainable organizations to completely avoid activities that result in GHG emissions. Some industries are already subject to GHG regulations, such as the oil and gas industry in California. However, in other industries that aren’t yet regulated, many organizations are stepping up to take voluntary action. Until the largest industries – such as transportation and agriculture – are fully decarbonized, it will not be possible for organizations to address the entirety of their climate impacts through internal changes. Lack of viable technologies, resource constraints, and other obstacles can make the path challenging. This is where carbon offsets play an important role. Offsets can be an instrument that allows corporations to add onto baseline activities that are already working toward sustainable operations. By investing in emission reduction projects, organizations can take immediate action on their Scope 1 (direct) and Scope 3 (indirect) GHG emissions that are otherwise difficult to address.

Ensure you support high-quality emission reduction projects

It is critical to remember that not all offsets are equal in their impact. Organizations need to be thoughtful when sourcing carbon offsets, ensuring they are from projects that are third-party verified using internationally recognized standards that are managed and maintained by independent, not-for-profit organizations. The ultimate goal is to support emission reduction projects that align with the company’s industry or supply chain, or its geographic, social, and economic impacts. 

Is there a role for carbon offsets to play in corporate sustainability? Yes, absolutely. But it’s important to remember that carbon offsets are just one tool available to companies seeking to build a comprehensive sustainability strategy. And while offsets are not a singular solution to climate action, they can offer an important mechanism for corporations to achieve near-term climate goals and address hard-to-reduce emissions sources.

For gas utilities, voluntary RNG programs can play an important role on the path to decarbonization

Renewable Natural Gas programs

Many natural gas utilities are currently developing strategic plans to reduce their greenhouse gas emissions or realize they will be asked to do so soon. Integrating renewable natural gas (RNG) is an important component of every utility’s plan to decarbonize, and many are considering whether to offer RNG as a voluntary, premium product to customers. We’ve traveled the country and engaged in conversations with key stakeholders from numerous gas utilities over the past year and, understandably, they are grappling with some significant strategic questions:

  • How do we know a voluntary RNG program is the right approach as we think about decarbonization?
  • It’s very early in the conversation and the landscape is quickly evolving. Would we be better suited to sit on the sidelines for a bit and wait to see how this pans out before making a decision about a voluntary RNG program?

While voluntary programs are not a substitute for a comprehensive approach to decarbonization, they can play an important role for any utility looking to lead. And, while the above questions are completely valid, our perspective is this: well-designed and implemented voluntary programs offer many benefits to gas utilities and can be a “no regrets” investment, even if the utilities’ broader decarbonization strategies are not fully cemented yet. Here are a few reasons why…

Address Customer Needs and Drive Increased Satisfaction

For utilities that are beginning to hear from their customers about desire for lower-carbon options, a voluntary program will make sense whether or not mandates for RNG are on the horizon. This is a lesson learned from the voluntary green power market — voluntary customers want to be leaders and mandated percentages of cleaner fuels will not be enough to keep leaders happy. For example, a municipal or corporate customer that has a set goal to be carbon neutral by 2040 is going to want to decarbonize a large percentage (even 100%) of its natural gas supply quickly, not be told there is a 5% mandate for RNG by 2030. In this way, voluntary programs complement mandates — they allow leaders to lead, and the rest of the customer base pays only for smaller, mandated volumes.

In addition, a voluntary RNG program can meet the needs of a utility’s residential customers. These programs provide residential customers with choice, which they value, and the data shows that when these customers are offered options, their CSAT scores jump. Thanks to successful green power programs on the electric side, we can be confident that there is a residential market for premium, green products from a gas utility.

Build a Platform for Learning and Development

Customers who participate in utility voluntary renewable programs are willing to pay a premium to move the market forward. At first, that may mean that the voluntary program enables the utility to gain operational experience procuring or developing RNG supply. As the program grows, it could also provide an additional vehicle to fund the development of new local projects or to support not-yet-mature technologies with pilot funding.

Exhibit Environmental Leadership

Given the broad range of options for gas utilities considering a decarbonization strategy, developing and launching a voluntary RNG program is fairly proactive. These utilities have the opportunity to help frame the nascent conversation about the role of gas with respect to decarbonization; additionally, talking about an alternative to fossil-based gas naturally leads to broader conversations with customers, stakeholders, and commissioners. A voluntary program broadens a utility’s overall decarbonization strategy, which is likely to include efficiency, pipeline upgrades, and possibly rate-based RNG over time.

 

Is a voluntary RNG program the be-all-end-all solution for gas utilities as they tackle decarbonization? Likely not. But for forward-thinking utilities, there isn’t going to be a single approach or solution, and a voluntary program can play an important, strategic role in a gas utility’s comprehensive decarbonization plan.