Month: December 2023

Executing a successful supplier PPA aggregation

Lauren Tatsuno, December 21, 2023

The climate action journey is long, and luckily numerous companies have already gotten started. Many are taking steps to address their scope 2 electricity emissions through implementing energy efficiency, purchasing energy attribute certificates (EACs), executing power purchase agreements (PPAs), or other measures. While that’s a great start, most organizations’ scope 3, or indirect emissions, make up more than 90% of their total greenhouse gas (GHG) emissions inventory. So, as climate target deadlines quickly approach, it’s time to start taking action on your scope 3 in addition to your scope 2.

When looking at the makeup of your scope 3 footprint, if the electricity emissions in your supply chain are significant, a supplier PPA aggregation could be an ideal reduction pathway to pursue. In a renewable energy PPA aggregation, multiple buyers come together and pool their purchasing power to execute a PPA. When working with your suppliers, you would engage them to do the same in a supplier PPA aggregation. This renewable energy procurement would address not only your suppliers’ scope 2 electricity emissions, but also your scope 3. When considering this approach, it may be effective for you to assume the role of the “anchor tenant” – an offtaker that is taking a sizable portion of the PPA volume. However, simply participating in the aggregation as one of the buyers also demonstrates the commitment of the entire buyer group to developers and can help get deals done.

In this article, we’ll take you through benefits, possible structures, and other components of a successful supplier PPA aggregation.

BENEFITS OF A SUPPLIER PPA AGGREGATION

Moving forward with a PPA aggregation offers several benefits to both companies and their suppliers. There are the obvious environmental benefits that come from any PPA, such as helping to add a new renewable energy project to the grid, but supplier aggregations also help to:

Enable first-time or smaller buyers to gain market access by providing the opportunity to participate in large-scale projects that may have been otherwise inaccessible.

Reduce transaction costs for all participating suppliers by allowing them to pool their resources and effort.

Accelerate suppliers along the learning curve in the renewable energy procurement process by giving them the opportunity to team up and learn together.

Allow your company – and your suppliers – to meet climate action goals sooner than you would otherwise be able to due to the larger renewable energy volumes involved.

Make you an industry leader that is delivering significant reductions to your scope 3 emissions.

PHASES OF A SUPPLIER PPA AGGREGATION

Supplier PPA aggregations are complicated. There are many organizations involved, which each have individual needs that the program must manage effectively. Through our experience with supplier engagement and PPA aggregations, we have found that a successful program typically has the following key components.

1. Supplier engagement and scope 3 measurement

As a prerequisite, it’s best to have measured your scope 3 electricity emissions to confirm whether electricity makes up a meaningful amount of your suppliers’ emissions and understand how they break down by supplier. Once you’ve done that, you’ll use the data to determine three things:

How to encourage supplier participation;
How to segment your suppliers; and
Which suppliers you would like to approach for a PPA aggregation

You can set the stage for a successful PPA aggregation program by aligning it with your goals. Start by defining your expectations, as well as how you will encourage supplier participation—through either mandates or incentives.

As for supplier segmentation, your approach can be based on where your company believes it will have the most success or simply where emissions are concentrated, whether that be by location, type of supplier, or other factors. It’s important to note, however, that the number of suppliers that are good candidates for a PPA aggregation is likely to be a small subset of your supply chain.

2. Supplier education

A key component of supplier engagement is education, and making sure that supplier stakeholders have the necessary baseline knowledge to take action, whether it be through a PPA aggregation or another form of renewable energy procurement. In general, you will want to ensure participating suppliers understand not only the basics of GHG accounting and reductions, but also the landscape of renewable energy procurement options.

For suppliers that are identified as good candidates for a PPA aggregation, you’ll want to make sure they also have an in-depth understanding of PPAs to confirm that they are ready for the complexities of this type of procurement.

3. Renewable energy strategy

Since each of your suppliers will have different preferences and constraints when it comes to purchasing renewable energy, it is important to determine the best-fit implementation pathway for each. More mature companies will be better candidates for PPAs, while others will be better suited to purchasing energy attribute certificates (EACs) to address their electricity usage.

Once these determinations have been made, you can then form cohorts amongst your suppliers to enable strength in numbers. In forming PPA or EAC cohorts, sort suppliers by those with similar needs and attributes, such as geographic load, readiness to procure, and more. It’s also important to make sure suppliers are aligned on their procurement targets, as well as their general project evaluation criteria.

4. PPA execution

All of the prep and engagement work then culminates in actually facilitating PPA aggregations for your cohorts, so that you can ultimately achieve measurable scope 3 emissions reductions. An aggregated procurement includes all of the standard steps – issuing a request for proposals (RFP), evaluating and selecting projects, and negotiating and executing PPA contracts – except instead of a single buyer and decision-maker, all suppliers in the cohort will need to move through the process together as a group.

Once the PPA contract is negotiated and executed, the project will obtain financing and commence construction, ultimately achieving commercial operation ~1.5-2 years after the contract is signed. Then, you and your suppliers will be able to monitor PPA performance and you’ll begin seeing the reductions across your scope 3 footprint.

ESSENTIAL INGREDIENTS FOR A SUCCESSFUL SUPPLIER AGGREGATION

While navigating these engagements, we have found a few essential ingredients to enable a successful PPA aggregation for suppliers:

Leadership:

Whether it is one organization or a consortium of companies facilitating a supplier PPA aggregation, it is helpful for them to be clear on their goals and involved in the process themselves. More direct involvement is better in order to motivate suppliers to participate.

Participants:

It is beneficial to be both thoughtful and realistic about the number of suppliers that you would like to participate in a PPA aggregation program. As mentioned above, the subset of suppliers who are ready and able to execute a PPA is fairly limited, so it’s important to identify those that are most likely to be successful as part of an aggregation.

Getting it done:

If your company doesn’t have the resources internally, make sure to work with a trusted advisor to help facilitate and guide the process with clear planning, scheduling, and communication. Partnering with an expert in both renewable energy procurement and stakeholder management can help keep you and your group of suppliers on track for a successful PPA execution, and avoid an environment with a lack of leadership or expert market knowledge.

ACHIEVING SUCCESS IN A SUPPLIER PPA AGGREGATION

While PPA aggregations are complex, meeting climate goals, especially related to scope 3 emissions, will require increasing collaboration between companies and their supply chains. In our experience, companies cannot be hands off and achieve a successful supplier PPA aggregation – active participation by the convening company encourages supplier participation and leads to a true collaboration that can benefit all parties.

Reach out to learn more about supplier PPA aggregations and how 3Degrees can help you run a successful program.

Why you might consider coaching your suppliers to support their climate action

Madison Haas, December 15, 2023

Steps for coaching your suppliers on climate action

One of the more difficult places to make meaningful reductions is in scope 3, not just because of its size, but also due in part to the emissions falling outside of an organization’s direct control. However, organizations that collaborate with their suppliers will be in a stronger position to implement successful value chain interventions and achieve their climate goals. Additionally, well-executed supplier coaching programs result in the company’s messages and requirements being amplified to suppliers, suppliers having greater success in taking action, and strengthened customer-supplier relationships.

To get there, companies need to first understand the common strategies for engaging suppliers and then dedicate resources to these efforts, while avoiding common pitfalls of supplier engagement. Creating and launching a supplier program is no easy task, but we’ll walk you through why it is impactful and how to get started.

THE NECESSITY OF SUPPLIER ENGAGEMENT

Many companies have set climate targets that they alone cannot achieve; they will need their suppliers to act in order to reduce their value chain emissions.

Companies are continuing to set climate targets at accelerated rates. Climate targets require companies to not only reduce their own operational emissions (scopes 1 and 2), but also to reduce emissions in their value chain (scope 3). Value chain emissions often make up a large portion of a company’s footprint, yet they can be the most challenging to measure and reduce. These value chain emissions are outside the company’s direct control and require action by upstream and downstream suppliers – in fact, scope 3 emissions accounting and targets are designed to promote this type of action.

Companies with climate goals that extend to their value chain are realizing that supplier action is a key factor for success.

It is, therefore, not uncommon that when companies outline a plan to meet their goals, they also define requirements for how their suppliers must contribute. With these requirements asserted, companies begin engaging directly with suppliers on the topic of climate action. Requirements can be communicated in many ways, from updated supplier contracts or codes of conduct to surveys and requests for data via various platforms. Common requests of suppliers include:

Reporting and disclosing greenhouse gas (GHG) emissions information
Setting an emissions reduction target aligned with the customer company’s criteria, for example, via the Science-based Target Initiative (SBTi)
Procuring renewable energy to cover customer-related operations (often in alignment with the timeline and quality criteria set out by the customer company – for example following the RE100 standards)

Along with the requirements, companies must determine how they will motivate suppliers to participate in the program. Companies will decide what incentives (“carrots”) will be used to motivate suppliers to act, what mechanisms will be used to reward good work, and if there will be any repercussions for non-compliance to requirements (“sticks”). For example, companies requesting supplier action could reward supplier participation with public recognition or more favorable contract terms, or employ a consequence for non-compliance, like canceling the contract. Companies also need to prioritize what suppliers to include in their supplier programs. Effective supplier engagement programs are typically geared toward suppliers with a high emissions impact or those that make up a sizable portion of the company’s spend.

Once these requests reach suppliers, regardless of where they are on their own climate journeys, suppliers often look to the company making the request for support in taking action.

Outside support and expertise is commonly needed for any company (both suppliers and reporting companies) to meet these requests. Sometimes suppliers need basic support, such as an introduction to the climate action landscape; other times suppliers need more intensive support, such as when purchasing renewable energy. At this point, suppliers may not know that support is available to them. Therefore, oftentimes we see vendors not responding at all to requests or submitting incomplete data rather than asking questions to help fulfill the request.

In the case where companies need suppliers to take action and have resources to dedicate to these efforts, providing direct support to suppliers is often an effective choice.

Some companies choose to dedicate teams to engaging directly with suppliers. However, many companies don’t have the internal resources (namely staff or expertise) to manage supplier questions or provide direct one-on-one support but do recognize that dedicating resources or budget toward value chain emission reductions is critical to achieving their goals and choose to work with outside climate experts.

GETTING STARTED WITH A SUPPLIER PROGRAM

Supplier coaching can be provided across various topics, from GHG measurement and reporting, to target setting and emission reduction planning, to renewable energy procurement. The support provided will look different for every supplier, as it’s important to ensure it’s tailored to meet the individual needs of suppliers. Common methods of support for suppliers include:

Educational workshops & webinars – communicate climate basics and specifics of customer company’s programs relevant to suppliers. These workshops can range from general climate action to very targeted topics, for example, details of renewable energy procurement options in a single country.
One-on-one coaching – provide dedicated access to climate experts with whom suppliers can ask questions or seek advice on roadblocks that arise as they start taking action.
Research & analysis – conduct research and determine supplier’s options for fulfilling sponsor company’s request, such as:
1. Presenting detailed assessments of renewable energy options directly to suppliers or
2. Engaging with them to quantify emissions and set a climate target. Direct engagement and target mapping will allow suppliers to greatly accelerate their efforts and ensure they align with the customer company’s requirements.

With a supplier program, you have to meet suppliers where they are and provide decision-useful, actionable support. With cost being a primary consideration for many companies, ensure it is taken into account in all materials. Be respectful of the level of time and expertise suppliers can dedicate to each effort and ensure all requests are streamlined. Finally, empathize with common roadblocks like data limitations, confidentiality concerns, and internal buy-in in order to provide realistic solutions that translate to results. These results – including emissions reductions, improved measurement, cost savings, etc. – mutually benefit the customer company and the supplier.

Overall, through supplier coaching engagements, companies are able to support their suppliers in taking action while ensuring their investment in reducing value chain emissions is effective.

3Degrees can provide direct support to a company’s suppliers on their behalf, allowing companies to focus on their own internal initiatives while providing suppliers with the highest level of expert support. Please get in touch with us if you are interested in learning more about our supplier coaching services.

Pricing, impact, and other corporate considerations for RNG

Adam Long, December 20, 2023

Renewable natural gas (RNG) is an exciting solution for addressing greenhouse gas (GHG) emissions from natural gas combustion. To date, RNG has been used primarily in U.S. transportation markets associated with compliance programs, but the voluntary market for corporate buyers is growing quickly. The target market among corporations is those with significant natural gas consumption that they cannot easily electrify in the near term.

Assessing whether RNG may be a good solution for your company starts by looking at your GHG emissions inventory. If your scope 1 emissions are more than 100,000 MMBtu per year (~30 GWh) from natural gas consumption and you don’t have plans to electrify in the next 10 years, then RNG could be a good fit. If not, there are other climate solutions to prioritize before pursuing RNG, such as switching to renewable electricity and addressing emissions in your supply chain.

While RNG can be an effective tool for decarbonization, it is not suitable for all corporate buyers and several considerations must be validated prior to RNG purchasing. The key considerations are as follows:

Let’s walkthrough each of these considerations for RNG buyers.

Consideration 1: Renewable Natural Gas Price

Price is typically one of the most important decision factors for companies considering whether or not to pursue an RNG procurement. Renewable Thermal Certificates (RTCs) represent the environmental attributes associated with RNG and they can cost significantly more – currently six to eight times higher – than the natural gas itself in the U.S.

The higher price for RNG is due to its use in transportation compliance markets, known as Clean Fuel Standards (CFS). RNG developers have their choice of market when selling their product, which often results in voluntary buyers needing to match the compliance market price to procure RNG. However, because the value of the CFS market can be volatile and is unknown in the long term, some developers are willing to agree to long-term contracts with voluntary buyers for prices that are lower than the current compliance market, although still well above the natural gas commodity price.

Consideration 2: Renewable Natural Gas Feedstocks

The biogas that is used to create RNG can come from a variety of sources, or feedstocks. There are many feedstock project options available for alignment with your company’s mission, values, and impact preferences. The feedstock options vary in price, carbon intensity, and co-benefits. There are tradeoffs that result when companies prioritize certain factors, such as higher prices for greater carbon displacement or lower prices for projects that may have less environmental integrity. It is critically important to be aware of these tradeoffs and conduct appropriate due diligence to understand the risks.

For example, some crops can be used as a feedstock for RNG. While crops as a feedstock are more common in Europe than they are in the U.S., these feedstocks are part of the debate around food versus fuel and how growing crops for RNG production, rather than for food, could divert resources from food production. There can also be criticisms about the farming practices used to grow these crops that can result in the degradation of soil health and environmental quality. This critique of crop-based RNG is an important consideration for any company, but especially for food companies as the use of crops as a feedstock may directly conflict with their mission and values, posing a major reputational risk.

RNG can also be made from food waste, landfill gas capture, dairy effluent, animal manure, and more. In order to choose, it’s helpful to filter through the project options with your company’s needs and mission in mind. To continue the example of purchasing RNG as a food company, you could incorporate the concept of circularity in sourcing your RNG from a project that uses food waste as the feedstock.

Consideration 3: GHG Reporting Validity

Each GHG reporting standard, whether voluntary or compliance, has its own set of rules and guidelines as to what is accepted. The primary example is the Greenhouse Gas Protocol (GHGP), which is still reviewing whether RTCs can be used to claim scope 1 emissions reductions. While other voluntary standards, like the Climate Registry, allow RTCs, there are others that align with the GHGP and note that their GHG accounting role is still under development.

As a result, it’s important to:

Review the standards to which your company reports in detail in order to ensure that they allow the use of RTCs; or

Decide that your organization will invest in RNG for ingenuity purposes or mission alignment, rather than the reporting aspects.

While it will take time, 3Degrees believes that the GHGP will define a transparent, comprehensive methodology that allows for the use of RTCs to adjust gas emissions. Until then, we recommend companies use the frameworks put forward by regulatory programs, while also consulting with their auditors and being transparent about their use of market-based accounting. More detail on GHGP guidance around RNG can be found in this article.

Consideration 4: Environmental integrity

To have the desired impact, make credible claims, and avoid reputational risk, it is important to choose a project with sound integrity (i.e., it’s doing what it says and doing it well). There are several environmental risks that RNG projects can pose, and below are a few to look out for:

Projects that don’t have necessary safeguards in place to prevent environmental damage, like manure projects that contribute to waterway pollution;
Projects that have negative public perception because of the environmental harm that its feedstock contributes to, like landfill gas projects; and
Projects that offer inflated environmental claims that are unsubstantiated.

Conducting deep project-level due diligence is required to ensure that factors like those above do not cause unnecessary hurdles in your RNG procurement process or expose your company to avoidable reputational risks.

Consideration 5: Social and environmental co-benefits

While we’ve been largely focusing on costs and risks associated with RNG, there are often benefits outside of the obvious environmental attributes that can increase the social and/or environmental benefit of your investment. Some examples include: investment into projects that provide additional revenue to farmers and local communities; water quality improvements through RNG projects that reduce harmful runoff; projects offering a source of biogenic CO2 to replace fossil-based alternatives; or air quality improvements from projects such as landfill gas conversion.

As with the feedstock selection, picking a project that has co-benefits that align with your company’s mission and values is a best practice. A food company might find it highly mission aligned to focus on co-benefits from projects using food waste diverted from landfills and bringing investment into the farming community.

Conclusion

RNG can be a great solution to address your GHG emissions from natural gas consumption, but a key component of evaluating your company’s decision to pursue RNG, or not, is making sure you evaluate the factors outlined above. While this list contains many primary considerations, it’s not exhaustive and there are additional factors to consider, such as location of the project, and opportunities to match RTCs with actual gas consumption throughout the year, among others.

Reviewing each of these considerations will help ensure that your company is making an informed, impactful purchase that best meets its needs. Please get in touch with one of our expert RNG advisors to help you assess RNG considerations and run a successful procurement.

Webinar Recording: Canada Clean Fuel Regulations (CFR) – Overview and Opportunities

Daniel Holdridge, December 7, 2023

Recorded December 6th, 2023

Canada’s Clean Fuel Regulations (CFR) is an incentive program designed to encourage the use of clean transportation fuels, the production of those fuels and reduce GHG emissions from the transportation sector. The program is open to private and public fleets alike and presents an opportunity to reduce a fleet’s total cost of ownership and create new revenue streams for decarbonization. The program came into effect in July of 2023 and credit generation has begun.

In this webinar you will learn about:

The functionality and timeline of the CFR program
The potential value and revenue to be realized from participating in the CFR
The CFR registration, verification, and compliance reporting processes.

Watch the webinar

Speakers:

Dave Meyer, Director, Transportation Markets
John Somers, Sr. Development Manager, Transportation Markets

What are renewable energy certificates (RECs)?

3Degrees Staff, December 4, 2023

Organizations are increasingly setting ambitious clean energy commitments and goals. Renewable energy certificates (RECs) are a critical tool to help organizations meet those goals.

Normally, when purchasing electricity from the power grid, your energy comes from a mix of sources that emit high carbon emissions, like oil and coal, or low to zero carbon emissions, like solar and wind. The mix depends on factors like location and time of day, but there’s typically no way to discern which power source your electricity is coming from at any point in time. However, organizations (or individuals) can purchase RECs to claim the use of renewable energy from the grid.

“RECs legally convey the attributes of renewable electricity generation, including the emissions profile of that generation, to their owner and serve as the basis for a renewable electricity consumption claim. As such, the REC owner has exclusive rights to characterize the quantity of their purchased electricity associated with the RECs as zero-emissions electricity,” explains the U.S. Environmental Protection Agency (EPA).

In this article, we’ll take a closer look at:

What RECs are;

The different types of RECs and similar instruments; and

How to buy RECs to reach your environmental goals.

RECs defined

A REC is a market-based instrument that represents the non-power benefits of one megawatt-hour (MWh) of energy generated from a renewable energy source and delivered to the grid. These non-power benefits, such as the zero-emissions profile of renewable electricity, can only be claimed by the REC holder. RECs allow organizations to claim the use of renewable energy and to reduce their scope 2 emissions, i.e., indirect emissions from their purchased electricity, under the GHG Protocol’s Scope 2 Guidance.

“When electricity is generated, the electrons are all mixed together on the grid, and there is no way to know the sources from which they were generated. RECs make it possible for consumers and businesses to choose clean energy and not have it be claimed by anyone else,” explains the nonprofit Center for Resource Solutions (CRS).

A REC is also sometimes called a renewable energy credit. While RECs and renewable energy credits are generally considered to be interchangeable terms, the more accepted one is renewable energy certificate.

Bundled vs. unbundled RECs

Organizations can purchase RECs combined with the underlying electricity or separately. When the REC and the MWh of electricity are sold together, that’s known as a bundled REC. When the REC is sold separately from the underlying electricity, that’s known as an unbundled REC.

While it’s possible to use a power purchase agreement (PPA) to buy electricity directly from a provider that sells bundled RECs, not everyone has this capability. For one, regulated electricity markets often do not allow for the use of PPAs. An alternative, virtual or financial PPA, can be used in regulated markets, yet these are typically complex financial transactions that carry price risk due to the variability of electricity rates. Instead, purchasing unbundled RECs can enable you to meet renewable energy goals while sticking with your current electricity provider.

Although some organizations are skeptical about the impact of unbundled RECs, these instruments can help support the clean energy transition. By directing funds towards renewable energy projects, an unbundled REC purchase provides a market signal for support of renewable energy development. Even if that energy doesn’t make its way directly to your facilities, you’re still helping to improve the overall mix of renewable vs. fossil fuel energy in an electricity grid.

Types of REC projects

RECs can come from any source of renewable power, but two of the most common are solar energy and wind power projects.

For example, REC projects in 3Degrees’ portfolio include ones like the Armadillo Flats Wind Project, which is a wind farm that operates in Oklahoma. Oil wells once dominated this region, but now it contains a growing wind and renewables industry.

Another one of 3Degrees’ REC projects is Posigen Rooftop Solar, which produces rooftop community solar that, in addition to providing clean energy, has a social co-benefit of providing more resources to an underserved, historically excluded community.

Outside of wind and solar projects, other types of renewable energy projects can include hydropower, biomass, or geothermal projects.

Certification for RECs

While RECs are a legal instrument in many states to account for the environmental benefits of renewable energy, according to CRS, there’s not a unified, governmental body that issues and manages RECs. Instead, different organizations have their own certification programs.
Perhaps the most well-known voluntary REC certification program is Green-e® from CRS.

Green-e®’s certification criteria include that the renewable energy “must be generated from new facilities, marketed with complete transparency and accuracy, and delivered to the purchaser, who has sole title. Green-e® staff verifies the entire chain of custody of certified renewable energy from generation to retirement to ensure individuals and businesses are getting exactly what they paid for,” explains Green-e®.

Not only does buying a REC certified by a program like Green-e® bring confidence in the authenticity of a renewable energy project, but it also helps avoid problems like double-counting emissions benefits. High-quality certification programs ensure that a REC is properly accounted for and retired within a registry after being sold. This way, organizations can feel confident incorporating REC purchases into their scope 2 accounting and meeting other voluntary or compliance goals, like renewable portfolio standards (RPS).

RECs vs. EACs

RECs are used as a way to account for the additional benefits of renewable electricity production in the U.S. and Canada. Around the world, other countries have similar instruments that use different names. All of these instruments fall under the umbrella of energy attribute certificates (EACs).

For example, most of Europe uses what’s known as guarantees of origin (GOs). Like RECs, these represent the emissions intensity of one MWh of energy coming from a particular source, but GOs can apply to both renewable and non-renewable energy sources. However, 3Degrees only provides GOs connected to renewable sources.

Another type of EAC is an international renewable energy certificate (I-REC), which is essentially the same as a REC, but used in more than 50 countries.

◉ I-REC & LGCs (Large-scale Generation Certificates)
◉ TIGRs & I-REC
◉ T-RECs & TIGRs & I-REC
◉ J-Credit & I-REC & NFCs (Non-Fossil Value Certificates)
◉ TIGRS & GECs (Green Electricity Certificates)
◉ TIGRS & Korea RE100 Certificates (REC)

◉ RECs (Renewable Energy Certificates)
◉ I-REC (I-REC standard certificate)
◉ AIB GO (AIB Guarantee of Origin)
◉ Non-AIB GO or REGO (Non-AIB Guarantee of Origin or Renewable Energy Guarantee of Origin)
◉ NZECS (New Zealand Energy Certificate System)
◉ LGCs (Large-scale Generation Certificates)
◉ TIGRs
◉ T-RECs & TIGRs
◉ J-Credit & NFCs (Non-Fossil Value Certificates)
◉ TIGRS & GECs (Green Electricity Certificates)
◉ TIGRS & Korea RE100 Certificates (REC)

Map current as of Q3 2023

How can you buy RECs?

The energy providers that generate RECs often sell these certificates to REC retailers, such as organizations involved in energy and climate initiatives. If you want to buy Green-e® certified RECs, for example, you can find a list of certified green power providers on their website.

When looking to purchase RECs, it’s important to consider more than just the price and MWh represented. You want to make sure you’re purchasing from a reputable source so that you can confidently make associated renewable energy claims.

You should also consider what went into creating the REC by digging into the renewable energy project details, like looking at the location, technology, project timeline, and co-benefits. For example, you could purchase RECs that also reinvest in the communities where you operate to align better with your ESG strategy.

If you’d like to discuss how buying RECs can help address your electricity emissions and reach your sustainability and compliance goals, please get in touch. 3Degrees is an award-winning seller of renewable energy that can help you figure out how RECs fit into your energy and emissions strategies.

FAQs

Want some quick insights into what renewable energy certificates (RECs) are and why you should consider buying them? Take a look at these FAQs.

How do RECs work?

RECs work by representing the non-power benefits (e.g., emissions intensity) of renewable energy on a shared grid. Each REC represents the emissions of one MWh of renewable electricity generated and sent to the grid.

Sometimes the energy and associated RECs are bundled together, and sometimes the energy and associated RECs are unbundled and sold separately. Either way, purchasing a REC is an acceptable way to make renewable energy use claims, because even if you aren’t directly receiving energy from renewables (considering energy gets mixed within the grid), the REC transfers ownership of the environmental attributes and substantiates the claim of the buyer.

Why purchase RECs?

Buying RECs can be a great way to reduce your scope 2 emissions and provide market-based support for a clean energy system that ultimately contributes to the fight against climate change. If you don’t have the ability to generate clean energy on-site, such as from solar panels, or you’re transitioning your energy plan toward green energy, you can still purchase zero-emission electricity and reach your renewable energy goals by buying RECs.

For more FAQs, see our article on RECs and other global EACs here.