Month: May 2024

Visalia Unified School District – Rooftop Solar

Visalia Unified School District (VUSD) in Visalia, California has taken significant steps to reduce its carbon footprint by installing solar panels across several of its schools. This initiative not only promotes renewable energy, but also decreases the district’s reliance on fossil fuels. Visalia is situated in the San Joaquin Valley, and serves as the economic and governmental center of Tulare County, one of the most productive agricultural counties in the United States. 

VUSD is one of the largest school districts in the region, serving over 27,000 students across 40 schools. The district is dedicated to providing quality education to its students while simultaneously implementing initiatives focused on reducing emissions, including decarbonization, corporate energy, corporate power purchase agreements (PPAs), and renewable energy.

The solar installations play a crucial role in their energy strategy and drastically reduce the district’s energy burden, as funding from the sale of renewable energy certificates (RECs) is used to cover the cost of increasing utility bills. This in turn allows the district to prioritize essential school services.

To learn more about tailored renewable energy procurement options, contact us today.

CO-BENEFITS

Environmental:

  • The implementation of solar lessens the dependence of fossil fuels and mitigates the environmental impact of electricity production.

  • The implementation of solar lessens the dependence on fossil fuels and mitigates the environmental impact of electricity production.

Economic:

  • Sales of the solar RECs allow VUSD to continue providing essential educational services without relying on the general budget to address financial pressures from rising utility rates. 
  • Sales of the solar RECs allow VUSD to continue providing essential educational services without relying on the general budget to address financial pressures from rising utility rates. 

Health:

 

  • The United States’ energy system has created pollution leading to poor health outcomes in underserved communities. The expansion of shared solar improves air quality in LMI communities.


Photo credit: Visalia Unified School District

Demystifying carbon credits: Understanding the Canadian CFR for fleets and EV charging providers

This presentation was recorded at the EV & Charging Expo on May 1, 2024, at the Enercare Centre in Toronto.

Canada’s Clean Fuel Regulations allow fleets, EV charging owners, and renewable fuel developers to generate credits with fuel they supply or use.

In this presentation, you’ll learn how to assess the financial opportunity for your organization, understand who is eligible to generate credits and how the revenue earned from credits can be used, the data reporting and compliance requirements associated with the credit market, and market trends. Speaker: Dave Meyer, Director, Transportation Markets at 3Degrees Group, Inc. 

Interested to learn how your organization can begin generating credits in the new Canadian CFR? We can help! Speak to a transportation advisor today! 

Why PPAs are popular procurement options for corporate and industrial buyers

Wind Turbine

This article was updated in May 2024.

The renewable energy procurement landscape has changed dramatically in recent years in large part due to the increasing pool of potential buyers driven mainly by commercial and industrial (C&I) organizations. This buyer pool has wider, easier access to an array of procurement options and is implementing renewable energy at a record-breaking pace. While there are other options available, power purchase agreements (PPAs) have become the method of choice for many C&I organizations to achieve large scale emissions reductions. 

But deciding if PPAs are right for your organization can be complex. This article helps lay the foundation to answer this question by exploring the procurement of renewable energy through PPAs, both physical and financial (virtual)*. Both types of PPAs can be powerful tools to help companies develop robust clean energy portfolios and achieve sustainability goals. However, they do differ in a number of significant ways, and this article identifies these differences and other factors to consider when evaluating PPA opportunities.

What is a Power Purchase Agreement (PPA)? 

A PPA, at its core, is a contract between two parties where one party sells both electricity and renewable energy certificates (RECs) to another party. In corporate renewable energy PPAs, the “seller” is often the developer or project owner, while the “buyer” (often called the “offtaker”) is the C&I entity. C&I renewable energy PPAs can take two primary forms – physical or financial (the latter often referred to as “virtual”). The best structure for an organization depends on the markets where the offtaker is located and where projects are available, as well as the goals, priorities, and risk tolerance of the offtaker. 

Physical PPAs 

Physical PPAs are most commonly used by organizations that have heavy, concentrated load in a specific location or grid region (e.g., data centers). This is because under a physical PPA, the seller delivers the renewable electricity to the offtaker, who actually receives and takes legal title of the energy. Physical PPAs are best suited for competitive retail or direct access energy markets, such as Texas, Illinois, and California. They are possible – but significantly more difficult – in a regulated market. A physical PPA is structured as follows: 

  1. The offtaker buys renewable energy directly from a seller.
    In a typical renewable energy PPA, the developer builds, owns, and operates the renewable energy project, and sells the output to the buyer at a specified delivery point.
  2. The offtaker takes title to the energy at the delivery point, as well as associated RECs.
  3. The offtaker is responsible for moving the energy away from the delivery point to its load, typically done through 3rd-party service providers.

Virtual (Financial) PPA or VPPA 

Unlike a physical PPA, a virtual PPA (VPPA) is a financial contract rather than a contract for physical power. The offtaker does not receive, or take legal title to, the electricity and in this way, it is a “virtual” power purchase agreement.

In a VPPA, an offtaker agrees to purchase a project’s output and associated RECs at a set fixed price. The developer then liquidates the energy at market pricing and passes the revenue through to the offtaker.  More specifically:

  1. Similar to a physical PPA, the seller in a VPPA is oftentimes a developer who builds, owns, and operates a project and delivers the energy output to the specified delivery point.
  2. The offtaker agrees to pay the seller a fixed price for renewable energy delivered to a specific point, typically a market hub or project busbar. This fixed price is the guaranteed price the developer will receive – no less and no more – irrespective of the floating market price.
  3. The seller generates and liquidates a project’s energy at market pricing. When the floating market price exceeds the fixed VPPA price, the developer passes the positive difference to the offtaker. When the converse is true – the market price is below the VPPA fixed price – the offtaker must pay the developer the difference.
  4. The offtaker retains all of the RECs associated with the delivered energy, as long as that is specified in the contract.

This type of structure is called a contract for difference (CFD). 

VPPA - how it works

In this way, the seller is guaranteed a fixed price for the output it sells – which is critical for developers that are looking to finance new projects. These projects can be particularly attractive for buyers that want to contribute to the development of new renewable energy resources and that have electricity load that is widely dispersed.

VPPAs are typically only available in organized markets such as a regional transmission organization (RTO) or independent system operator (ISO), which serve as third-party independent operators of the transmission system, ultimately responsible for the flow of electricity within its domain. This is for two important reasons: 

  1. First, VPPAs require market liquidity – where the developer, an independent power producer (IPP), is permitted to sell its power directly into the grid. This is the case in RTO/ISO regions, but not necessarily so in a vertically integrated market where a single entity is responsible for the generation, transmission, and distribution of electricity. 
  2. Second, the economics of a VPPA hinge on the difference between the floating market price and the VPPA price. RTO/ISO regions have publicly available market pricing that serves as the basis for calculating VPPA financial settlements.

Importantly, because no energy actually changes hands, the VPPA offtaker does not need to make any changes to how it purchases the electricity required for its operations.

Why enter into a PPA?

There are three primary benefits of a PPA, regardless of whether it is physical or virtual:

Financial: PPAs can provide a hedge against future energy fluctuations. In a physical PPA, the hedge value is realized because the cost of the purchased volume of electricity is kept flat at the PPA rate while standard electricity rates tend to increase over time. In a VPPA, the value is realized when revenues from the VPPA increase because market pricing has risen above the PPA price – offsetting similarly rising retail electric rates. It’s important to remember though, a hedge instrument is not intended to create upside but rather to manage downside exposure. Be wary of VPPA projections that show hockey stick-shaped forward energy price curves promising high net present values (NPVs). 

Environmental: Both wind and solar projects have zero associated emissions and generated RECs apply to the Greenhouse Gas (GHG) Protocol scope 2 market-based reporting methodology. And, if the PPA is for a new-build project, offtakers can easily and credibly claim that they are helping to add new renewable energy to the grid (many use the term “additionality” to describe this) – a level of impact beyond simply purchasing RECs from an existing project. 


Marketing: PPAs are a well-understood renewable energy procurement mechanism that can be shared with internal and external stakeholders. They also move the needle on a double bottom line – helping to achieve important corporate environmental goals while also making a positive impact on the grid through
the addition of new renewables, which makes for powerful brand and marketing narratives.

 

PPAs have financial, environmental, and marketing benefits.

Physical vs. Virtual*

Despite these shared benefits, physical and virtual PPAs do differ in some material ways:

Regulatory: Physical PPAs require that the offtaker obtain power marketing authority from the Federal Energy Regulatory Commission (FERC) to purchase wholesale power from the power producer. While not insurmountable, doing so may be outside of the offtaker’s core business or simply be too time-consuming. An offtaker can engage a third party already authorized to buy power at wholesale, serving as the market participant. This, of course, has its own risks (see below). Because no power is changing hands in a VPPA, the offtaker does not require FERC authority.

Financial: Depending on which accounting standard your company uses, a VPPA may be considered a derivative, which requires more complex accounting treatment. Generally VPPAs are not considered derivatives under U.S. GAAP, while they typically do qualify as derivative contracts under IFRS.

Transmission/Delivery: Physical PPA offtakers need to consider what happens with the energy once they receive and take title to it and find a solution to move the purchased energy to the offtaker’s locations, requiring transmission, distribution, and delivery. C&I offtakers typically contract with third party providers for these services because perfectly syncing the deal terms of these services (typically limited to a couple to several years) with those of longer-term PPAs is unlikely and can add a compounding layer of risk and complexity to the overall transaction.

Location: As mentioned above, physical deal structures where the energy is delivered to an offtaker’s facility are limited to competitive retail markets (i.e., PJM, Northeast, ERCOT and other isolated states in MISO and WECC). VPPAs have broader potential, possible in any RTO or ISO. Furthermore, because VPPAs are financial in nature and don’t involve moving electricity, they are not inherently location-dependent. This means offtakers can find the most attractive project and not be limited to projects located within its immediate region. It also allows offtakers to consolidate their country-wide demand to capture economies of scale.

Internal Approvals: PPAs require learning on multiple levels for an organization, as VPPAs tend to be a new procurement mechanism for most offtakers, requiring education on technical and non-technical topics alike. Not to be under-estimated, VPPAs require cross-departmental coordination within organizations and strong stakeholder alignment. Once a VPPA is in place, new processes will need to be developed to manage the long-term contract and the monthly financial settlements. All this takes time, effort, and persistence.

Each of these factors should be considered when evaluating PPA opportunities.

 PPAs and VPPAs have important differences.

Risky business?

Although PPAs are increasingly common among the C&I segment, they require a buyer that can get comfortable with the specific risk profile of this contract type. There are tradeoffs in every deal structure, and special attention should be paid to the following risks and potential mitigation measures.

  • Energy Market Risk: In a VPPA, the primary risk factor that a buyer must get comfortable with is wholesale electricity market risk, which is not something that most corporates are familiar with as part of their core business. Because a VPPA’s value is based on a floating wholesale electricity market price, the importance of understanding the forces which can affect that price – and drive it up or down – can’t be overstated. Factors that can impact future electricity pricing include: 
    • Changes in electricity demand
    • Natural gas pricing
    • Energy capacity additions and retirements (renewable and conventional)
    • Transmission and distribution upgrades
    • The regulatory environment
    • Extreme events / severe weather occurrences
    • And more
  • Project Development risk: Most often, C&I buyers are looking to contract for a new build renewable energy project, which means there is always the risk that the project developer will not ultimately get the project built, or that it cannot be built on the developer’s original budget or timeline. Typically project financing and construction takes between 18 to 24 months after a PPA contract is signed, which doesn’t include the time already spent to execute the deal. With the amount of effort to get a PPA in place, Buyers will want to mitigate as much of this risk as possible, which means fully vetting the project development progress to-date as well as the track record of the developer.
  • Contracting risk: The PPA itself is a very large and complex contract that requires in-depth negotiations between the C&I buyer and renewable project developer on many key commercial and legal terms. As PPA market dynamics are always shifting based on the supply and demand for projects, so too are the specific terms that buyers and sellers are willing to agree to. It is important for Buyers to understand the implications of these key commercial terms, since they have a material impact on the financial value of the PPA as well as the overall amount of risk that the Buyer is taking on.  

Offtakers should have a clear understanding of all the risks associated with a PPA transaction so they can make informed decisions based on the potential outcomes, ultimately structuring a transaction in line with their specific risk tolerance.

The importance of a trusted advisor

Both physical and virtual PPAs offer a strong environmental impact story to C&I organizations, and they can be more financially attractive than alternative options – however, they do come with material complexity and risk. Corporate VPPAs have become increasingly common in today’s market but they are not the right fit for every organization. We recommend working closely with a trusted advisor to determine the best option(s) for your organization.

Interested in learning more about PPAs and VPPAs? Get in touch today to start the conversation.

*Due to legal and regulatory restrictions in certain jurisdictions, this material is only intended to be accessed in those jurisdictions where to do so would not constitute a violation of the local marketing laws.  This material is provided as general information only.  It does not constitute an offer to sell or the solicitation of an offer to buy any investment.  Nor does it constitute the giving of investment advice. For more information click here.

Get to know a top scope 3 category: Category 1: Purchased Goods & Services

Scope 3 Category 1: Purchased Goods and Services

Scope 3 emissions are made up of 15 categories of emissions and typically account for a vast majority of an organization’s total emissions footprint. Of those 15 categories, Category 1, Purchased Goods & Services, ranks in the top three highest emissions sources for organizations across all sectors. 

Want to learn more about your Category 1? 

Download our infographic for a sector-specific guide to Purchased Goods & Services if you’re in Technology, Consumer Goods & Retail, Food & Beverage, Chemicals, or the Paper and Forestry sector.

 

DOWNLOAD YOUR SCOPE 3 GUIDE

 

Ready to discuss how your organization can take control of its scope 3? We can help you identify the highest priority areas to get started today.

Carbon removals: How strategic engagement can accelerate your net zero goals

According to the Intergovernmental Panel on Climate Change (IPCC), global society must remove billions of tons of greenhouse gas (GHG) emissions annually by 2050 to achieve a net zero economy. In response to this climate imperative, organizations that provide guidance on achieving corporate net zero goals, including the Science Based Targets initiative (SBTi), are mandating the eventual use of carbon removals. These standards require organizations to reduce emissions across their value chains as much as possible (>90%), then match removals to any remaining (i.e. residual) emissions in their net zero target year. 

In this article, we will explore the current carbon removals landscape, providing background on third party guidance, carbon removal project types, market developments, and considerations for investment.

Definitions and Project Types 

Carbon removals represent one metric ton of carbon dioxide equivalent (MT CO2e) that is removed from the atmosphere and durably stored within a carbon sink or reservoir. 

A few criteria are critical for identifying credible carbon removals. One such criteria is permanence (also called durability). Permanence refers to the length of time over which sequestered carbon will be stored in natural or geologic sinks. The durability of removal projects can vary quite dramatically – some store carbon for fewer than 100 years, while others can potentially store carbon over a thousand years if monitored effectively. As of now, there is no single threshold or standard that dictates how long carbon must be stored to qualify as a ‘removal’, although logic tells us that the longer GHG can be stored, the more beneficial to mitigating climate change. 

Another key criterion for removals related to the concept of durability is risk of reversal, which refers to the possibility of stored carbon being released back into the atmosphere. High-quality removal credits should have measures in place to protect and/or insure against reversals. Credible removal projects also demonstrate net negativity. In simple terms, this means that a project does not generate more carbon (e.g., from energy use, transportation, etc.) than it removes via the project activity itself.

A number of different types of projects can effectively remove carbon from the atmosphere. These include:

  1. Biological projects (also referred to as “nature-based” projects) that sequester and store carbon in natural ecosystems
  2. Engineered projects that use new technologies to remove carbon from the atmosphere, and 
  3. Hybrid projects that are a combination of the two. 

Biological projects, including reforestation, improved forest management, and soil carbon sequestration, often store carbon over short, decadal timescales and are subject to a relatively substantial risk of reversal. However, credits from these projects are available in the market today and facilitate large-scale  carbon sequestration, ecological conservation and protection of existing natural landscapes. On the other end of the spectrum, engineered projects like direct air capture (DAC) can store carbon underground for potentially thousands of years with minimal reversal risk, but credits from these projects are extremely scarce and often prohibitively expensive in today’s market.

Standards and Market Pioneers

The global removals market is still relatively small, but has seen significant growth over the last few years.  While only 3% of all carbon credit projects exclusively issued removals in 2023, total demand for carbon removals continues to increase year-over-year. Meanwhile, standard-setters and infrastructure providers are attempting to support this new demand by providing third-party assurance and standardization to the market.  Major carbon crediting programs, namely Verra, Climate Action Reserve, Gold Standard, and ACR, are publishing new methodologies and guidance on various types of removals. We’re also seeing the emergence of standards and registries dedicated entirely to removals, such as Puro.earth and Isometric.

However, uncertainty remains over how net zero standards that structure market demand will define “eligible” removals. Corporate buyers still await guidance from the Science-based Target Initiative on which types of removals will be able to neutralize residual emissions at the net zero target year. Regardless, the SBTi has recommended that companies start buying a wide variety of carbon removals today in order to help the market scale for future demand. 

Despite the uncertainty around quality criteria for net zero removals, several of the world’s largest tech companies are taking action to support the development of emerging carbon removal technologies. Microsoft, for example, has committed to becoming carbon negative by 2030 – meaning it will remove more carbon than it emits – and has pledged to remove every metric ton of carbon it has emitted since its founding in 1975. To support market growth, Microsoft is taking an open-source approach to its pioneering CDR purchases by publishing its learnings and criteria for high-quality carbon removals.

Governments are also looking to grow demand for removals by incentivizing procurement and adding credibility to the market. In the United States, the Department of Energy (DOE) launched a Carbon Dioxide Removal Purchase Pilot Prize, which will award $30 million to suppliers of high-durability CDR. The DOE also plans to publish a leaderboard for corporate carbon removals purchases through its Voluntary CDR Purchase Challenge. Meanwhile, the European Union Parliament has agreed to a preliminary Carbon Removals Certification Framework, which will define criteria for high-quality removals and aims to grow the supply of EU-based removals projects.

Corporate Strategies for Carbon Removal Procurement 

With a growing CDR market and pressure to demonstrate climate leadership, companies are beginning to consider how to incorporate removals into their broader decarbonization strategies. These companies are navigating complicated questions around when to start purchasing carbon removals, which types of removals to buy, and how to choose between numerous contracting options that offer varying benefits.

The Oxford Principles for Net Zero Aligned Offsetting lay out one credible pathway for developing a net zero-aligned climate strategy that gradually incorporates carbon removals. According to Oxford, organizations should purchase a blend of emission reduction/ avoidance credits and removals with a higher risk of reversal (i.e. removals to the biosphere) today. Then, at 2030 and beyond, companies should start steadily increasing the proportion of removals with low risk of reversal (i.e. removals to the geosphere, such as DAC). By 2050, organizations should be exclusively sourcing removals with low reversal risk to counterbalance any residual emissions. 

Once organizations have decided how to incorporate removals into their decarbonization journey, they must develop procurement plans to support their short- and long-term strategies. There are a variety of procurement structures that organizations can consider when evaluating opportunities to work with carbon removals projects, including spot purchasing, long-term offtake, forward offtake commitments, or prepayment. Each option has its own benefits and risks; spot purchasing and long-term offtake agreements offer less delivery risk, while forward offtake and prepayments provide a powerful mechanism for supporting nascent projects that require upfront capital to scale.

Across the board, there is no single “one size fits all” approach for supporting carbon removal. Each organization should carefully consider its own risk tolerance and investment goals when developing a removals strategy. At 3Degrees, we recognize the value in all types of removals approaches, and therefore encourage our clients to support a wide variety of project types at different stages of maturity. To this end, we will be announcing a new carbon removal offering on May 27 that will allow companies to integrate meaningful and verifiable contributions to carbon removal. Stay tuned for more details.

The Path Ahead

Every organization has a unique role to play in supporting the carbon removals market, and not every organization can play every role (nor should they). Buyers should consider a number of factors when developing their strategy, including how specific projects fit into their broader organizational priorities (e.g., those that fall in their geographic footprint) and sustainability goals (e.g., those that generate co-benefits that align with their mission). Ultimately, buyers should work towards finding a sweet spot where their removal goals intersect with their values, risk appetite, and areas of influence to determine how to meaningfully support the market.

Want to learn more about carbon removals? Download the full white paper. Ready to discuss how your company can engage in the removals market? Get in touch with our team today. 

Japan NFCs: Are they right for your organization?

Navigating Japan’s renewable energy landscape as a corporate buyer is no small feat, given the complexity noted in the most recent RE100 Report. The report points out that Japan is one of the most challenging markets for renewable energy procurement, according to RE100’s member companies. Japan has a comparably low share of renewable energy in its generation mix and several procurement options that each have their own unique challenges and benefits. Yet, for forward-thinking organizations that are committed to reducing scope 2 electricity emissions from their operations in Japan, mastering this market is not only beneficial but essential. A full understanding of the various procurement options available can help ensure your company selects the best fit solution. 

In this article we will explain the newest energy attribute certificate (EAC) to enter Japan’s renewable energy market, Japanese Non-Fossil Value Certificates (NFCs), including the product’s background and nuances to be aware of when using NFCs to meet your organization’s renewable energy goals and emissions reduction targets. 

What are Japanese NFCs?

Japanese NFCs are EACs used in Japan’s compliance and voluntary renewable energy markets. NFCs can be used to reduce a company’s greenhouse gas (GHG) emissions from purchased electricity, also known as scope 2 emissions, in Japan. NFCs, like all EACs in Japan, are measured and traded per 1 kilowatt hour (kWh) of electricity produced, rather than 1 megawatt hour (MWh), which is standard in the US, EU, and other countries.

NZECS (New Zealand Energy Certificate System)
J-Credit, Japan I-RECs, GECs & Japan NFCs (Non-Fossil Value Certificates)
LGCs (Large-scale Generation Certificates)
TIGRs (Tradable Instruments for Global Renewables)
TIGRs & GECs (Green Electricity Certificates)
NZECS (New Zealand Energy Certificate System)
J-Credit & TIGRs & NFCs (Non-Fossil Value Certificates)
LGCs (Large-scale Generation Certificates)
TIGRs (Tradable Instruments for Global Renewables)
TIGRs & GECs (Green Electricity Certificates

NFCs are traded on the Japan Electric Power Exchange (JEPX), which holds NFC sales auctions quarterly. NFCs currently represent the largest share of EACs available in the Japanese renewable energy market, dominating the share of other EAC options in Japan, such as Green Energy Certificates (GECs), J-Credits, and Japan I-RECs, which each have their own set of considerations for buyers. Due to market size, NFCs may offer a lower price point than other options.  

Understanding the Japanese NFC Markets: Voluntary & Compliance 

NFCs were first created in 2018 by the Japanese government to account for and trade the environmental attributes of renewable energy supported under the Japanese feed-in tariff (FIT) program, which was established in 2012. The purchase of NFCs was originally limited to electricity retailers only, in order to meet their renewable energy sales compliance obligations at that time. However, the market evolved in 2021 when the Japanese Government created two distinct NFC trading markets: 

  • Non-FIT NFC Market: the current compliance market that remains limited to electricity retailer purchases only; and
  • FIT NFC Market: a voluntary trading market that is now open to corporate purchasers and brokers under certain conditions. 

“FIT NFCs” are issued for all grid-connected renewable electricity generation provided by facilities receiving the government-sponsored FIT. Solar, wind, small and medium hydropower, geothermal, and biomass generators all qualify for the FIT. A FIT generator receives the FIT for 20 years, after which time it is considered a “graduated FIT” facility. Unbundled FIT NFCs are now traded on the new FIT NFC market. “Non-FIT NFCs” are issued for generation that is not receiving the FIT, including both renewable energy sources (large hydropower, post-FIT solar, and other renewables) and non-renewable energy sources (nuclear, waste plastic). While buyers cannot purchase non-FIT NFCs directly, they can get non-FIT NFCs through bilateral contracts with electricity retailers or through virtual power purchase agreements (VPPAs) with developers.

Market Challenges and Evolution

The introduction of separate NFC markets and opening of FIT NFCs trades to voluntary buyers initially faced criticism, due to the fact that the certificates were not tracked with their corresponding environmental attribute information. This made it difficult for buyers to understand the source of their purchased certificates and raised concerns that generation issuing NFCs could be double-counted if not properly tracked. Additionally, companies looking to make specific renewable energy purchases to meet the requirements of reporting standards and initiatives, such as the GHG Protocol (GHGP), RE100, and CDP, could not guarantee that buying NFCs would be a compliant purchase.

Fortunately, improvements have been made. JEPX now tracks all FIT NFCs, although the environmental attribute information is not included at the time of sale in quarterly auctions. Auction participants, including brokers and end-use buyers, can apply to add the corresponding attributes to the NFCs after purchase. Since the August 2023 auction, auction participants are now also able to request certain environmental attributes for their expected purchases ahead of the auctions. This change allows participants to ensure their NFCs will meet specific criteria, such as technology type or online date. As before, the attribute information is physically added to the FIT NFC after the auction. 

When tracked with corresponding environmental attributes and issued from qualifying facilities, FIT NFCs are recognized for renewable energy claims by CDP and RE100. 

Observe the Validity Period 

NFCs are bound by strict vintage rules for consumption claims by voluntary buyers. FIT NFCs are valid for consumption only from April of their issuance year to June of the following year, at which time they automatically expire. Again, the good news is that the staggered issuance and validity period will not affect the eligibility of FIT NFCs for scope 2 claims under the various reporting standards. With awareness of these nuances, FIT NFCs may be an attractive, lower-cost option to meet an organization’s renewable energy goals in Japan.

Important Takeaways 

Advantages of FIT NFCs:

  • Newest EAC available for voluntary scope 2 claims in Japan
  • Cost competitive given market supply
  • Environmental attribute information is tracked and can be added to FIT NFCs to ensure compliance with GHG Protocol, RE100, and CDP requirements

Factors to be Aware Of:

  • Environmental attribute information is not provided at auction date; buyers should ensure it is added
  • Buyers may be able to request certain environmental attributes such as online date or specific energy technology
  • As NFCs are issued in kWh, to make clear renewable energy consumption claims with NFCs, buyers should discuss kWh or MWh consumed as opposed to the number of certificates purchased.

Interested in exploring the different renewable energy products in Japan, and learning if FIT NFCs are right for you? Get in touch with us. 

Lime achieves 100% renewable energy goal for shared e-scooters, e-bikes, and facilities with global EAC portfolio

Lime scooters being charged with renewable energy.

Executive Summary

Lime, the world’s largest shared electric vehicle company, has voluntarily committed to 100% renewable energy. While it sources significant renewables locally, it supplements its electricity load with energy attribute certificates (EACs) through a partnership with 3Degrees.

The fluctuating market dynamics and varying electricity loads in the regions where Lime operates present hurdles to sourcing 100% renewables. Despite these challenges, 3Degrees successfully facilitated Lime’s access to these markets efficiently and seamlessly. Additionally, 3Degrees provided essential guidance to Lime, ensuring the company has a strategy to effectively fulfill its voluntary commitment each year.    

Using global intel from 3Degrees, Lime built a strategy and procured a global EAC portfolio of distributed electricity load for three years. Through its purchases, Lime achieved:

  • 100% renewable energy
  • Global portfolio of EACs for 3 years across 33 total countries
  • Lime’s renewables procurement has put it 5 years ahead of its scope 1 and 2 science-based target

 Read the full case study below.


Background

Lime, the world’s largest shared electric vehicle company, is on a mission to build a future where transportation is shared, affordable and carbon-free. This commitment was first demonstrated in 2019 when it introduced its first electric vehicle, the original e-bike, and the decision to charge all batteries on 100% renewable energy. Today, Lime’s climate target has evolved to encompass all Lime facilities –      over 100 worldwide – powered solely on renewable energy.

With hundreds of thousands of vehicles operating in cities around the world, Lime sources significant renewables locally. Collaborating with more than three dozen facilitators, Lime purchases renewable energy through utility companies or other location-specific renewable energy suppliers. When local sourcing isn’t feasible, Lime utilizes energy attribute certificates (EACs) to cover its remaining electricity load.

Recognizing the importance of a reliable partner to source EACs and provide guidance on its voluntary commitment to 100% renewable energy, Lime chose to partner with 3Degrees.

Challenges

The regions where Lime operates change year to year, as does Lime’s electricity load in each due to the evolving nature of global transportation needs. Procuring varying amounts of renewable energy each year across global markets can be difficult, especially when small volumes are needed from a handful of markets. 3Degrees worked with Lime to seamlessly facilitate access to these global renewable energy markets and provide market pricing insights to support Lime’s decision making. 

Following Lime’s initial commitment to 100% renewable energy, another challenge emerged: timing its EAC purchases to align with its yearly electricity quantities. Understanding this requirement, 3Degrees provided essential guidance to Lime, ensuring the company was consistently meeting its voluntary commitment each year.

How We Helped

3Degrees advised Lime on the most credible global EAC options and helped them assess risk in each market, enabling the company to make informed and cost-effective procurement decisions. Lime procured its first global EAC portfolio through 3Degrees and continued to work with the 3Degrees team to refine its procurement strategy for the second and third year. In North America, that entailed procuring Green-e® certified renewable energy certificates (RECs), alongside other equally credible global options. Notably, all of its EACs were procured from non-emitting technologies – largely wind or solar.

To ensure Lime met annual reporting deadlines, the 3Degrees team shared best practices regarding renewable energy procurement timelines and vintages, assisting Lime in accelerating its purchasing timeline to align with these best practices.

This initiative has helped Lime reduce its scope 2 emissions by 100%, helping the company advance its 2023 net-zero science-based target which requires a 90% absolute emissions reduction for scopes 1 and 2. The company is five years ahead of this target and, in 2023, reduced company-wide emissions intensity by more than 50 percent.

Results

  • Achieved 100% renewable energy
  • Global portfolio of EACs for 3 years across 33 total countries
  • Lime’s renewables procurement has put it 5 years ahead of its scope 1 and 2 science-based target

“Several years ago, many thought the transportation sector was furthest away from decarbonizing, since it has been so reliant upon burning fossil fuels for more than a century. At Lime, we’re now deploying a shared fleet of hundreds of thousands of e-bikes and e-scooters, powering more than 500 million rides with energy sources like the wind and the sun. Decarbonizing transportation isn’t just the future, it’s happening today.”

— Andrew Savage, VP Sustainability at Lime

Catalyzing Renewable Energy Adoption Among Your Suppliers (webinar)

Is your supplier engagement program action-oriented? Does it inspire your suppliers to take an action that reduces their emissions, right now? If not, you are not alone. Most supplier programs are more circumspect – they ask suppliers to consider interim steps: set a goal, calculate a footprint, or even, attend a webinar!

Engaging suppliers directly on relevant solutions can be an effective way to move from programmatic discussions to action – and a great path for direct engagement is encouraging and enabling suppliers to adopt renewable energy. Supplier renewable energy adoption can lead to material reductions in their reported scope 2 emissions, and is broadly accessible around the world. Still, first-time renewable energy purchasers find lots of sticking points: a lack of pricing transparency, financial risks, evolving industry best practices, and geographically specific limitations. 3Degrees is working to break down these barriers.

Register to view our webinar where 3Degrees’ Chief Sustainability Officer and VP, Customer Solutions & Innovation, Erin Craig, Director, Energy & Climate Practice, Terese Decker, and Director or Product Portfolio, Ryan Pawling walk through:

  • Strategies for action-oriented supplier engagement
  • Pathways to renewable energy procurement
  • An exciting new tool suppliers can use for renewable energy education and procurement

REGISTER TO WATCH