Energy Attribute Certificates (EACs) are guarantees of origin for renewable energy that companies can use to credibly reduce their Scope 2 emissions and transparently demonstrate their use of green electricity. A single EAC represents the generation of one megawatt hour (M "Wh) of electricity from renewable sources such as wind, solar or hydropower. These certificates enable companies to underpin their climate strategies with verifiable data and actively support the global transition to carbon-free energy.

EACs are known by different names in different markets:

• Guarantees of Origin (GoOs) in Europe
• REGOs in the United Kingdom (UK)
• Renewable Energy Certificates (RECs) in the USA
• N-ZECs in New Zealand
• Tradable Instruments for Global Renewables (TIGRs) in Indonesia and Singapore‍
• J-credits in Japan
• Large-scale generation certificates (LGCs) in Australia‍
• Green Electricity Certificate (GEC) in China‍
• International Renewable Energy Certificates (I-RECs) for non-regulated markets

EACs as a key instrument for reducing Scope 2 emissions

In a world where companies are increasingly being encouraged to reduce their emissions along the entire value chain, EACs are one of the most effective ways to make significant progress in the short term. Without guarantees of origin, companies cannot make credible claims about their use of renewable energy. By acquiring and retiring EACs, companies can achieve a market-based calculated redution of their Scope 2 emissions and transparently document their progress in sustainability reports and climate strategies.

EACs and decarbonization: more than just certificates

Although EACs offer companies the opportunity to formally declare their energy consumption as green, they are no substitute for a long-term decarbonization strategy. Sustainable companies combine the use of EACs with measures such as Power Purchase Agreements (PPAs), direct investment in renewable energy plants or the implementation of efficiency programs to reduce energy consumption.

However, EACs are crucial for companies that do not have direct access to renewable energy sources or whose electricity market is not sufficiently converted to renewable energy. By increasing the demand for renewable energy, companies promote the expansion of the renewable energy industry beyond their own climate strategy.

EACs vs. CO₂ compensation: the decisive difference

In contrast to carbon offsets, which compensate for emissions outside the company's own value chain, EACs are a direct decarbonization measure for the company's own energy consumption (Scope 2). While offsets aim to neutralize emissions through climate protection projects outside the company's own business activities, EACs enable companies to actually reduce their own carbon footprint in terms of electricity consumption.

EACs are therefore not just an instrument for meeting regulatory requirements, but a central pillar of any climate strategy that aims to achieve credible and verifiable emission reductions.

The role of EACs in the new SBTi Net-Zero Standard V2

The SBTi framework has become the gold standard for corporate net-zero strategies, helping more than 3,000 companies align their emissions reduction plans with the 1.5°C global warming limit. The draft Corporate Net-Zero Standard V2 of the Science Based Targets initiative (SBTi) defines Environmental Attribute Certificates (EACs) as tools for quantifying, verifying and tracking the environmental benefits of projects or activities, and divides them into two main categories:

1. ‍Carboncredits: These certify the results of projects that reduce, avoid or remove carbon emissions. ‍
2. Energy and raw material certificates: These convey the environmental performance of activities. These include certificates for electricity, fuels and other raw materials.
   

In the revised draft of the standard, the SBTi now proposes to extend the use of EACs for the reduction of Scope 3 emissions (indirect emissions along the value chain). This could provide companies with additional tools to achieve their climate targets. The SBTi plans to set specific guard rails and thresholds for the use of these certificates to ensure that they contribute effectively to emissions reduction and are in line with the principles of the mitigation hierarchy.  

It is important to emphasize that the SBTi continues to focus on direct emission reductions. The use of EACs should be considered as a complementary measure, particularly for emissions that are currently difficult to mitigate. These adjustments aim to provide companies with more flexible and effective ways to achieve their climate targets, while maintaining the integrity and credibility of their climate action.

With the update of the Net-Zero standard, the SBTi is emphasizing the need for an increased transition to carbon-free energy. Companies are now explicitly required to use 100% carbon-free energy by 2040 and to demonstrate this through EACs or other direct measures.

Other important changes in the SBTi Net-Zero Standard V2

• Explicit targets for Scope 2: Companies must prove that they have switched completely to clean energy sources.
• Increasing transparency: EACs must be documented with clear proof of origin.
• Stricter requirements for Scope 3: Companies with significant Scope 3 emissions should implement extended reduction strategies.

This makes it clear that EACs are no longer just an option, but an essential component of a science-based decarbonization strategy.

‍"With a limited carbon budget, it is more important than ever to help companies move faster towards net zero."
- Francesco Starace, Chairman of SBTi

What happens next?

The public consultation period for version 2.0 runs until June 1, 2025, and companies and stakeholders are invited to provide feedback, which will be reviewed before the final standard is published at the end of 2026. Companies planning targets for 2025 and 2026 can continue to use the existing standard, but from 2027 all new targets must comply with version 2.0.

Advantages and challenges of EACs

Advantages:

1. Reliability and transparency: EACs offer a verifiable way to reduce Scope 2 emissions.
2. Compliance with regulatory requirements: They help companies to meet standards such as SBTi, CDP and RE100.
3. Flexibility in energy procurement: companies can use certificates strategically depending on their location and energy requirements.
4. Improving market position: Customers and investors prefer companies with clear sustainability strategies.

Challenges:

• Differences in quality: Not all EACs are equal - additional criteria such as labels or choice of location should be taken into account.
• Market volatility: Increasing demand can lead to price fluctuations.
• Long-term strategy required: Companies should think beyond the mere purchase of certificates and integrate their own decarbonization measures.

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Best practices for the use of EACs

The effective use of Energy Attribute Certificates (EACs) requires strategic decisions regarding market boundaries, generation timing (vintage) and technology. These factors are crucial to maintaining the credibility of climate strategies and achieving the greatest possible impact.

1. observe market boundaries

Companies should give preference to purchasing EACs from the countries or energy markets in which their electricity consumption takes place. In Europe, for example, it is possible to use guarantees of origin from different countries within the European electricity market. In North America, EACs can be traded between the USA and Canada. However, there are regional limitations - using certificates from distant markets can reduce the integrity of the decarbonization strategy.

2. comply with vintage criteria

The period in which the renewable electricity was produced should match the year of consumption as closely as possible. International standards such as Green-e® Energy recommend that EACs are issued within a defined period before or after the year of consumption. Companies should ensure that their EACs are not outdated to ensure credible emission reductions and meet regulatory requirements.

3. technology selection and sustainability standards

Not all renewable energies are assessed equally. While solar, wind and hydropower are often considered preferred options, certain standards such as RE100 are more restrictive when it comes to biomass or hydropower. Companies should make sure that their EACs come from sustainable energy sources and - if necessary - are certified with additional labels such as EKOenergy or D-RECs to make a higher climate contribution.

Our conclusion: EACs as an integral part of a fully comprehensive climate strategy

With recent developments in the SBTi methodology, EACs are becoming the standard tool for companies looking to achieve credible climate targets. The new requirements demand stricter compliance with carbon-free energy sources, making guarantees of origin such as EACs essential.

Whether as a short-term measure to reduce Scope 2 emissions or as part of a comprehensive net zero strategy, companies should prioritize the strategic use of EACs to successfully achieve their climate targets.