Get Informed About Energy Attribute Certificates (EACs or RECs): A Buyer’s Guide

A straightforward way for companies to start an emission reduction pathway is to reduce their scope 2 emissions – these are the indirect emissions from the electricity purchased and used by the organisation.

With minor exceptions, energy attribute certificates or EACs should be the go-to instrument by which businesses claim the use of renewable electricity based on clear evidence. Whether you procure your EACs through a power purchase agreement (PPA), a green tariff, or unbundled from the underlying electricity generation, your organisation will need EACs to make a credible claim.

But it's not as simple as just buying EACs. There are international standards, usage criteria, and other nuances to take into account. This post will help you make sense of these different elements and set you up to buy EACs credibly and effectively.

EACs are the worldwide instrument for reducing electricity-related scope 2 emissions

A single EAC represents the environmental attribute of one MWh (megawatt-hour) of electricity. An EAC can be sold together with the electricity ("bundled"), or separate from the underlying electricity ("unbundled"). As a globally engaged climate solutions company, South Pole can provide you with unbundled EACs.

EACs transfer a green power claim to the owner of the EAC; upon retirement of the EAC, the owner reduces its scope 2 electricity-related emissions. Scope 2 emissions are, in a nutshell, the indirect greenhouse gas emissions associated with the purchase of electricity, steam, heat, or cooling.

There are different EAC types (eg. GOs, RECs, I-RECs, TIGRs), depending on the governing standard, but they function similarly. They all have their own tracking systems to eliminate double counting through strict vetting of the flow of electrons and the associated attributes.

EACs are not the same as carbon credits

Unlike with carbon credits, the legitimacy of EACs does not depend on their additionality. An EAC is a claim to have used renewable electricity, not to have created it. Further, while carbon credits help fund global climate action and emission reductions beyond a company's value chain, EACs translate into a credible emission reduction within a company's value chain – specifically when it comes to tackling an organisation's scope 21 electricity-related greenhouse gas emissions. This is enabled by the retirement of EACs combined with the application of an appropriate grid emissions factor (expressed as 'tonnes of CO2equivalent / MWh').

Some approaches to buying EACs are better than others

Prospective buyers usually come to South Pole with a host of different questions: Which EACs should I buy? Do geography and period of generation need to be considered? What about technology? Are some EACs better than others? Are EACs impactful?

The answers to these questions play an important role in suggesting the procurement strategy appropriate to each organisation.

To help you navigate the EAC purchase process, we've listed some of our top observations on different procurement approaches.

No EACs means no reduction of scope 2 emissions

Unless you're implementing a major energy efficiency programme (e.g. actually reducing your energy consumption), you'll need EACs to reduce your scope 2 emissions. Some RE100 members may, however, be able to claim default renewable electricity consumption in markets with highly renewable grids where no market-based instruments exist. To date, this is only possible in Paraguay, Uruguay, and Ethiopia, as defined in RE100s' Technical Criteria.

Buying EACs with internationally recognised compliance is strongly advised

The purpose of EACs is to enable a legitimate claim to be made about the use of renewable electricity. That legitimacy is derived from international sustainability reporting frameworks and initiatives (further referred as "standards") such as the Greenhouse Gas Protocol, Disclosure Insight Action (CDP), and RE100. According to their respective objectives, these standards stipulate different criteria for the appropriate use of EACs.

While companies may exercise some discretion in the purchase of EACs, depending on their target ambitions and budget availability, choosing to ignore these recognised criteria may result in claims that are not viewed as fully legitimate by key stakeholders.

In cases where companies have exhaustively tried to apply relevant guidance but external factors are an impediment (e.g. the supply of EACs is limited), they are encouraged to disclose any challenges they have faced transparently and, where possible, advocate for the transition to renewable electricity.

For best practice, stick closely to the the guidance from international standards on market boundary, vintage, and technology type

International standards, like the GHG Protocol, CDP, and RE100, provide clear guidance on the appropriate use of EACs. The three key criteria to understand are (1) market boundary (relating to geography), (2) vintage (relating to time), and (3) technology (solar, wind, hydro, etc.) Depending on the international standard that organisations are following, there might be other EAC criteria that could be relevant, such as the age of the device.

1. Market Boundry. Companies should buy EACs that were produced in the country or countries where they consume electricity. For example, a company consuming electricity in Colombia should use EACs that were generated in Colombia to claim the use of renewable electricity in Colombia. EACs from a neighbouring country may be cheaper, but Peruvian or Brazilian EACs cannot generally be used to make claims in Colombia. Market boundaries typically match country borders, with a couple of important exceptions. The United States and Canada together form the North American market; most continental European countries form the European market. In other words, an EAC generated in Texas can be used to claim the use of renewable electricity in Alberta; similarly, one generated in Finland can be used in Italy.
2. Vintage. Vintage is defined as the period of energy generation during which the EAC was produced. Organisations are encouraged to follow the vintage criteria that are specific to the EAC scheme from which they're buying. For example, Green-e® Energy requires that sales which are made in a given calendar year must be generated within the 12 months of that calendar year, the six months before the calendar year began, or the three months after the calendar year ended. Recognising that the regulations of all markets and EAC types are different, organisations are encouraged to match their consumption period to the EAC vintage and consider Green-e guidelines as best practice. For example, a company that consumed electricity in 2023 should use EACs that were generated during 2023 (or as close as possible to that year, i.e. in the second half of 2022 or the first quarter of 2024). When requesting an EAC quote, companies should bear in mind that older vintages (e.g. from the second half of the previous year) represent a more cost-effective option which still complies with the vintage criteria.
3. Technology selection. Common technologies include solar, wind, geothermal, hydro, and biomass. The selection of the technology has an important effect on cost: currently, solar and wind EACs tend to be the most expensive. Companies may consider this when budgeting for EAC procurement. It is also important to note that some standards only recognise certain technologies to make renewable claims or may only accept them if their sustainability is certified. For example, RE100 does not recognise nuclear energy as an energy resource that can be used to meet an RE100 target. Similarly, RE100 only recognises renewable electricity generated from biomass and hydropower that is also sustainable.

High-quality EACs can drive more impact

Some EAC consumers may prefer to distinguish themselves by going above and beyond the minimum international guidelines. Typically, this means driving substantial impact with their EAC purchases.

One way to do this is to source EACs with sustainability labels, e.g. the EKOEnergy label. This label allocates a portion of revenue to funding new renewable energy projects in developing countries. South Pole won the EKOenergy's Oak Award in 2021 and 2022 for selling the largest volumes of EKOenergy in 2020 and 2021, respectively.

D-RECs are another high-impact EAC type that certifies the generation of small-scale distributed renewable energy in developing regions. The D-REC Initiative, which stands behind the standard, is a not-for-profit, multi-stakeholder, industry-led organisation. South Pole is part of the D-REC secretariat that developed the EAC type. Issued via the I-REC Standard, who have supported the development of the product, D-RECs help to increase the number of projects available from which to purchase EACs in developing countries and emerging markets by connecting small-scale projects to environmental markets, often for the first time.

D-REC EACs are available in markets across Africa, Asia and Latin America. Some examples of D-REC programmes to date include the certification of renewable energy generated by solar irrigation pumps on rural smallholder farms in India, replacing the use of polluting diesel-powered pumps, and a rural electrification programme powering more than 1,000 previously powerless households in Haiti via solar mesh-grid technology.

How can you go further? Matching EACs on an hourly (rather than annual) basis

The use of EACs is evolving. Increasingly, some organisations prefer to match EACs to their consumption on an hourly, rather than annual, basis. This accounts for the fact that energy generation at certain hours of the day (for example, the so-called "shoulder hours" when the sun has gone down but the wind hasn't started blowing yet) are more valuable.

Hourly matching (sometimes also referred to as "24/7") requires more granular tracking at the time of generation and consumption. Specifically, it requires that EACs be time-stamped specific to their hour of generation and that this is used to match the hours of consumption.

While 24/7 matching is certainly the next step for enhancing current practices in electricity procurement, it should be highlighted that it may not be a feasible option for all industries and markets.

South Pole has an impact-driven mission to make hourly matching possible and has recently invested in Renewabl, a platform specialising in the procurement of hourly-matched EACs.

Market changes

South Pole strongly recommends that corporations keep abreast of changing guidelines and regulations around the use of EACs.

Our dedicated Renewable Energy Solutions team can help you navigate EAC market complexity. We're here to support you with your renewable electricity roadmap development and implementation.

Here are a few additional sources you may consider to keep up to date:

• RE100 criteria
• The GHG Protocol is in a consultation process to assess the need for GHG Protocol Corporate Standards and Guidance Updates. This includes the scope 2 guidance. Findings from the scope 2 survey can be found here.