Around the world, countries are responding to the demand for cleaner energy by creating products that allow buyers to reduce their greenhouse gas emissions. Simply, these products can be grouped into three categories:
Power Purchase Agreements—Power purchase agreements (PPAs) allow buyers to enter into contracts directly with renewable energy generators to source their electricity, often at a competitive, or even lower, rate than conventional fossil fuel-based electricity. In emerging international markets like Mexico and India, these agreements are become more and more common because they do not face the same restrictions that they do in the U.S. For example, deals can be done anywhere in Mexico, and in India, deals as small as 1 megawatt can be executed. PPAs allow buyers to lock-in the competitive electricity price, which offers protection against volatile and unpredictable energy markets.
Energy Attribute Certificates—Energy attribute certificates (EACs) are tradable certificates that represent the environmental attributions of renewable energy generation. In North America, these certificates are called RECs, or renewable energy certificates. In the European Union, Guarantees of Origin (GOs) are used. In emerging markets around the world, where credible verification schemes don’t currently exist for EACs, the I-REC has been developed. Typically, EACs are created in a 1:1 ratio when renewable power is generated. When paired with purchased electricity, EACs allow buyers to claim that they are using renewable energy, and, in many cases, that their Scope 2 emissions are zero.
Carbon Offsets—Carbon offsets represent greenhouse gas emissions that have either been prevented from entering the atmosphere or eliminated from the atmosphere. They are used as a mechanism to counterbalance unavoidable sources of emissions such as business travel, as the buyer can match their purchase of carbon offsets to their Scope 1, Scope 3, and, in some cases, Scope 2 emissions to potentially achieve carbon neutrality. Credible carbon offsets that are registered with one of several agencies are also considered to possess additionality, meaning that they displace actual emissions and directly impact climate change mitigation efforts. Carbon offsets are sourced from a variety of global projects in the areas of agricultural gas capture, landfill gas capture, forestry, and fuel switching, among others.