ENERGY ATTRIBUTE CERTIFICATES - EACs

Physical electricity indicates nothing of its’ origin and its’ environmental impact throughout the generation and transmission processes. Under these circumstances, renewable energy becomes indistinguishable from non-renewable, traditional energy sources and a form of a tracking and accounting mechanism is needed. EACs provide solution to this as the sole instrument to identify the source of generated electricity.  

Energy produced from renewable sources can be bundled with these certificates or can be sold separately. Bundled means that the EACs procured, are linked with the associated energy, most probably via a Corporate Renewable PPA(Power Purchase Agreement). Whereas unbundled EACs are not linked to the energy, thus can be sold in environmental commodities markets. There is an essential difference between two as bundled EACs has the potential to provide additional value to the renewable energy value chain whereas unbundled EACs are not able to make additionality claims since they are procured apart from the electricity associated.  

Fewer corporates use unbundled EACs to gain environmental claims, in other words, to certify the energy procured from traditional, fossil fuels, to meet their sustainability goals – yet not all corporates prefer this since unbundled certificates offer little-to-none positive externality to the environment and there are also ethical concerns and ongoing debates about the practice in the globe. One side claims that this practice is “greenwashing” and is not perceived as sustainable enough since it’s not aligned with sustainability pledges. The others claim that as long as a corporate has bought the renewable claims, the sustainability pledges can be fulfilled that way, and thus, all should be well.  

Although generally serving the same purpose, EACs differentiate from each other in terms of regional/local procedures and therefore go by different names such as RECs, I-RECs, Guarantees of Origin, Green Tags, YEK-G in different parts of the world. 

RECs 

RECs are developed and managed at state-level in North America. North Americans RECs are not as standardized as the other certificates around the world as one state registry might not recognize the RECs issued by other states. This creates compatibility problems for companies operate in more than one state. 

GOs 

Whereas in Europe, Guarantees of Origins (GOs/GoOs) require each EU Member state must have a functioning, compatible registry and all required to take relevant actions to stimulate greater renewable electricity production. Each country has its own indicative target, depending on issues such as historical experience with renewables. This structure is mandated by EU-RED II (Renewable Energy Directive II).  

I-RECs 

I-RECs, which are market-based, digital certificates which verifies the ownership of 1 MWh of electricity generated from a renewable energy resource. After registration, application and issuing stages are completed, I-RECs are booked as unique units and can be traded on the markets as a commodity (book-and-claim system). I-RECs can also be procured apart from the electricity from the environmental commodities markets throughout the world.  

The I-RECs stand for the environmental and social externalities of producing 1 MWh of renewable energy. Once the I-RECs regarding the energy purchase are procured, these externalities are covered. One can regard these certificates as property rights over Greenhouse Gas Protocol Scope 2 emissions - emissions caused by the electricity production process. Energy buyers are required to obtain these certificates along with the procurement of renewable electricity in order to prove that the energy procured is renewable.  

The purpose of I-REC is to facilitate environmental disclosure by organizations. Once the certificates are obtained, redemption of these certificates – removing them of use and circulation is necessary to claim the environmental benefits and to make a disclosure statement. After redemption, each redeemed certificate can be found on the registry, containing the information regarding the date of redemption, technology type or other criterias. This feature allows for the easy auditing/certification of mandatory compliance and voluntary consumer claims.  

YEK-G 

YEK-G is the Turkish renewable certificate developed by EPİAŞ/EXIST (Turkish Market Operator) by using blockchain technology, in order to track all the processes of the electricity produced, stimulation of the use of renewables, protection of environment and last but not least, make renewable energy accessible to everyone – from corporations who have large amounts of electricity consumption to the individual users. Energy suppliers, within the scope of their procedures, will be able to verify and certify the renewable electricity in their portfolio.  

On the other hand, consumers will be able to obtain information regarding the source of electricity purchased and will be able to choose from them, thus contributing to the environment. 

EAC schemes contribute to a country’s energy transition by putting an additional, merchantable value in renewable energy production. As it provides an extra income stream, certificate trading might reduce reliance on national renewable support schemes for the producers and their projects.