CDP Reporting is becoming an important tool to disclose environmental impacts and progress. Energy attribute Certificates and renewable energy certificates are two important instruments for achieving renewable energies goals. It is important for companies to understand how to use the certificates, and their role within CDP reporting.
What are EACs and RECs?
Certificates of Energy Attribute (EACs), and Certificates of Renewable Energy (RECs), are proofs that a certain quantity electricity was produced from renewable sources such as wind, solar or hydro. EACs and RECs have similar functions, but they are different in terms of their geographic scope.
- RECs primarily used in the United States. EACs are certificates that are used worldwide, including in Europe (via Guarantees Of Origin or GOs), Asia, and other regions.
- EACs or RECs allow companies to claim renewable energy, even if they use conventional electricity. These certificates can be used to offset non-renewable electricity use, and help companies meet CDP reporting targets and sustainability goals.
Reporting CDPs: The role of EACs
CDP (formerly known as Carbon Disclosure Project) is an international organisation that encourages cities, companies and governments to reveal their environmental impact. CDP reporting is a way to manage and reduce greenhouse gas emissions (GHG), especially scope 2 emissions that are linked to electricity, heating, or cooling purchases.
Companies must prove their use of renewable energy to report a reduction in Scope 2 emissions. EACs vs RECs can be used to compare the two. Businesses can claim to be using renewable energy by purchasing EACs and RECs. CDP believes that this is an important part of achieving their carbon reduction goals.
EACs vs RECs – Key differences
The main differences between EACs and RECs are based on geography and standards.
- RECs have a specific U.S. market while AACs can be used internationally. The European equivalent of EACs is a Guarantee of Origin, while I-RECs can be found in Asia and on other global markets.
- Tracking Systems Both EACs (energy efficiency certificates) and RECs (renewable energy certificates) are tracked so that they don’t get double counted. It is important to have a chain of ownership for CDP reports. Companies must be able to show this in order to prove that they are using renewable energy.
Businesses operating internationally must know which certificates apply in each region. The correct certificate will ensure that the company’s renewable energy claims can be accepted according to CDP guidelines.
Reporting CDPs with EACs or RECs
When organizations report to the CDP they can claim renewable energy usage by using EACs and reduce their scope-2 emissions. CDP scores are heavily influenced by environmental transparency. Verifiable tools like EACs or RECs can be used to demonstrate renewable energy usage.
CDP scores businesses based on environmental disclosures. This includes how they manage their carbon emissions and use renewable energy. By purchasing and retiring EACs or RECs, companies can improve their CDP scores, showcasing their commitment to sustainability and attracting environmentally-conscious investors.
Best practices for using EACs and RECs when reporting CDP
Companies should use best practices when preparing to report CDP in order to maximize the value of their renewable energy certificates.
- Geo-Alignment: Businesses should buy EACs and RECs based on their location. A company operating in Europe would use Guarantees of Origin while a firm in the U.S. would use RECs.
- Vintage matching: CDP encourages organisations to match the period of electricity consumption and the vintage of EACs or RECs that they purchase. The certificates will reflect renewable energy produced during the same time period as the electricity used.
- Documentation: Companies are required to keep accurate records regarding the purchase and retirement of EACs or RECs. Documentation is crucial for CDP reporting as it gives verifiable proof of renewable energy usage.
Reporting CDP Benefits from EACs and RECs
Using EACs and RECs for CDP reporting has several benefits.
- Improved CDP Scoring: The use of renewable energy is an important factor in CDP scores. Companies can improve their CDP scores by purchasing and retiring EACs and RECs.
- Risk management By reducing their dependence on non-renewable energies, companies can manage climate-related risk, including regulatory change and energy price volatility.
- Investor Attraction Many investors place sustainability as a priority in their decision making. Investors who are concerned about the environment will be more interested in companies with high CDP scores.
Conclusion – EACs and RECs are essential tools for CDP reporting
Both certificates are an effective tool for businesses to reduce emissions and claim renewable energy in the context of EAC vs REC. Understanding the differences between EACs vs RECs and aligning them to the location and vintage of energy usage, as well as following best practices, can help organizations achieve a higher CDP score and demonstrate their commitment towards sustainability. By leveraging these tools, companies can not only meet their renewable energy goals but also enhance their reputation and attract environmentally-conscious investors.
