Renewable energy certificateREC
An instrument representing the attributes of one megawatt-hour of renewable electricity, which may be traded separately from the energy. Certificate systems include RECs, guarantees of origin and I-REC(E); eligibility and claim rules depend on the market.
How it works
A registry issues one certificate for each megawatt-hour a qualifying plant generates, based on metered data. Each certificate records the plant, its technology, its location and the date of generation. Whoever holds the certificate owns the claim to that renewable generation. To use the claim, the holder retires the certificate in the registry, so no one else can count it.
Certificates can be bundled with power under a PPA or bought separately from an eligible plant. Under the GHG Protocol's Scope 2 guidance, market-based claims use contractual instruments that meet its quality criteria. These can include energy attribute certificates, qualifying direct contracts and supplier-specific information. Where certificates are issued for the electricity, the buyer must retain the associated attributes for its claim; buying the power alone is not enough. Certificates also serve regulatory compliance, with eligibility and prices varying by market, vintage and technology.
Why it matters
A renewable claim needs exclusive rights to the generation attributes, evidenced through certificates or other qualifying contractual instruments. The PPA should say who owns those attributes and how they are transferred or retired. Market boundaries, generation periods and the rules of the reporting framework matter. Proposals to update Scope 2 accounting include tighter time and location matching, so buyers should distinguish the current guidance from proposed changes.
A worked example
A buyer consumes 100,000 MWh a year. Its PPA supplies 70,000 MWh with certificates bundled. It retires a further 30,000 eligible unbundled certificates at $3 each, costing $90,000. Spread over consumption, that adds $90,000 ÷ 100,000 MWh = $0.90/MWh. This can support annual renewable matching if all instruments meet the applicable quality criteria. It does not establish that supply matched consumption in every hour.
Illustrative figures.
Across markets
In India, certificates are issued under central regulations and traded on the power exchanges, mainly to meet renewable purchase obligations. In the US, regional tracking systems issue RECs, used both for state compliance and for voluntary claims, at very different prices. Europe uses guarantees of origin under the Renewable Energy Directive, issued nationally and transferable across countries. They serve disclosure and corporate claims rather than compliance obligations.
Sources
Sources checked . Sources for Scope 2 contractual instruments and the distinction between current guidance and proposed updates. Certificate eligibility also depends on the relevant market and claim.