What Are the Key Differences Between Renewable Energy Certificates (I-REC) and Carbon Reduction Certificates?

Regulations and developments such as the Paris Agreement, the EU Green Deal, the Sustainable Development Goals (SDGs), and mechanisms like the Carbon Border Adjustment Mechanism are driving every sector and company toward transformation to reduce carbon emissions and minimize environmental impact.

This transformation makes it mandatory to improve environmental impacts in areas such as energy consumption, the use of natural resources, and carbon footprint management. At this point, renewable energy and carbon reduction certificates are becoming increasingly important.

These certificates also appear as key tools that help companies offset their carbon footprints and achieve sustainability goals. However, the International Renewable Energy Certificate (I-REC) and carbon reduction certificates are often confused with each other. In this article, you can learn the differences between these two certificate types, where they are used, and which certificate you should choose depending on the situation.

What Is a Renewable Energy Certificate (I-REC)?

I-REC (International Renewable Energy Certificate) is developed by The International REC Standard. It is an international certificate representing the environmental benefit of electricity generated from renewable energy sources. An I-REC is issued for every megawatt-hour (MWh) of renewable electricity produced. It proves to energy consumers that the electricity they purchase is generated from renewable sources. I-REC is used by companies to reduce only Scope 2 emissions, helps reduce environmental impacts, and supports sustainability goals. Compared to carbon reduction certificates, I-REC is generally lower cost.

What Is a Carbon Reduction Certificate?

Carbon reduction certificates are obtained through projects designed to reduce emissions—such as renewable energy projects or carbon offset projects. Certificates guarantee the accuracy of emission reductions and are approved by independent verifiers. These certificates have international validity.

Globally, the most widely used and prestigious carbon reduction certificates are considered to be Gold Standard and VCS (Verified Carbon Standard), also known as Verra.

Carbon Reduction Certificate: What Is Gold Standard?

Gold Standard is a certification system that provides the highest environmental and social standards for carbon offset and sustainability projects. The system not only reduces carbon emissions through these projects, but also aims to contribute to local communities and sustainable development goals.

Carbon Reduction Certificate: What Is VCS?

VCS (Verified Carbon Standard), widely known as Verra, is an international standard used to ensure the integrity of carbon credit projects and to prove that emission reduction targets have been achieved.

What Is the Difference Between Gold Standard and VCS Certificates?

Gold Standard focuses on environmental and social benefits, while also highlighting the impacts of projects on local communities. VCS covers a broader range of sectors and offers diversified projects to deliver carbon reductions. Both certificates are widely accepted in carbon markets, and are recognized for credibility and international validity.

Key Differences Between Renewable Energy Certificates and Carbon Reduction Certificates

I-REC is used to demonstrate that the source of energy is renewable. In contrast, carbon reduction certificates such as Gold Standard and VCS indicate that a certain amount of emissions has been offset. Although both certificates serve emission reduction targets, the choice should be made based on the objective you are pursuing.

Table 1. Key Differences Between I-REC and Carbon Reduction Certificates

Differences

Renewable Energy Certificate (I-REC)

Carbon Reduction Certificate

Unit

Megawatt-hour (MWh)

1 ton CO2 (or equivalent)

Source

Renewable energy producers

Projects that reduce or avoid greenhouse gas emissions

Purpose

Demonstrate the use of renewable electricity, support claims around renewable electricity usage, and encourage uptake

Demonstrate emission reductions and support emission reduction activities

GHG Inventory and Reporting

Reduce Scope 2 emissions from purchased electricity for an organization

Offset or reduce Scope 1, Scope 2, or Scope 3 emissions for an organization

Where Do I-REC and Carbon Reduction Certificates Fit in Carbon Footprint Management? Calculate, Reduce, Offset!

When you calculate your carbon footprint correctly, you can evaluate performance and decide which reduction options to follow. At this point, the role of I-REC and carbon reduction certificates is critical. These certificates are effective tools to help your organization reduce and balance its carbon footprint. In particular, companies that calculate and implement carbon reduction steps but have difficulty achieving further reductions often turn to carbon certificates to offset their remaining carbon footprint.

I-REC certificates are used to offset the environmental impacts of energy purchases within Scope 2. These certificates prove that the electricity used is generated from renewable energy sources, supporting sustainability goals by showing that organizations’ supplied energy comes from renewable sources.

Carbon reduction certificates are generally issued to organizations involved in various projects related to reducing greenhouse gas emissions. Their purpose is to offset emissions. Carbon reduction certificates are issued as a result of projects that directly reduce emissions or eliminate emissions, enabling organizations to document their efforts to combat climate change.

An accurate carbon footprint management strategy includes not only reporting emissions, but also supporting environmentally responsible energy sources and projects as part of a broader sustainability approach—offsetting emissions within the bigger strategy.

Which Carbon Certificate Is More Suitable for You?

When deciding on renewable energy and carbon reduction, it is important to clarify your targets. If your aim is to document that the electricity you purchase comes from a renewable source, you can choose a Renewable Energy Certificate (REC). On the other hand, if you want to balance carbon emissions, you can choose carbon reduction certificates.

With 3pmetrics, reduce and offset your carbon footprint! Through renewable energy and carbon reduction certificates, you can document that you are using clean energy and support your sustainability and net zero goals. For more information on international renewable energy certificates (I-RECs) or carbon reduction certificates, get in touch with us.

Source

• Gold Standard
• U.S. Environmental Protection Agency. (2018). Green power partnership: Renewable energy certificates and offsets. U.S. Environmental Protection Agency.
• Verified Carbon Standard (VCS)