Climate change poses an existential crisis. It is imperative for businesses to pursue green energy solutions. Renewable Energy Certificates (RECs) have emerged as a crucial mechanism in this journey towards sustainability.
By purchasing these certificates, corporations can claim to have used green energy. This concept is particularly relevant in Singapore, where the push for renewable energy is gaining momentum. In this blog, we will explore how RECs work and the outcomes of using RECs.
How RECs Work
The journey to acquiring Renewable Energy Certificates (RECs) is both an environmental commitment and a strategic business decision. It begins with renewable energy producers, such as wind farms or solar panel installations, generating clean energy. A corresponding REC is created for each unit of this green energy produced, symbolising a quantifiable, verifiable unit of green energy. Each REC is equivalent to one megawatt hour (MWh).
Businesses, irrespective of location, can conveniently purchase renewable energy certificates through platforms like REDEX, which effectively allows them to support renewable energy production. When a company buys a REC, it can claim the environmental attribute associated with the REC and the use of one MWh of renewable energy.
Each certificate is uniquely numbered and tracked to ensure integrity and trust in the REC market. This prevents double counting and ensures that each REC represents an actual contribution to renewable energy production. Both I-REC and APX TIGR provide trackable records that are auditable to facilitate the trading of RECs and verification of unique claims of REC ownership by end-users. For businesses, this verification is crucial for their sustainability claims and reporting.
Benefits of RECs
The adoption of RECs come with numerous benefits:
- Environmental Impact: With appropriate policies, RECs are instruments that can drive demand for renewable energy. By purchasing RECs, companies signal their support of the expansion of green energy infrastructure. This supports advanced technology and innovation in renewable energy sectors and supports the transition from fossil fuels to green energy..
- Economic Incentives: Beyond the environmental aspect, RECs represent a market-based approach to supporting green energy. They provide an additional revenue stream for renewable energy producers, incentivising the development of more sustainable energy projects. This helps balance the supply and demand for green energy, creating a robust and sustainable market.
- Corporate Sustainability: Investing in RECs is a clear demonstration of commitment to corporate sustainability. This aligns with global sustainability goals and addresses increasing consumer and stakeholder demand for environmentally responsible practices.
- Compliance and Regulatory Benefits: In some regions, RECs can be a tool for meeting regulatory requirements related to renewable energy usage or carbon footprint reduction. By purchasing RECs, companies can comply with these regulations more efficiently, often at a lower cost than direct investments in renewable energy infrastructure.
Corporate Case Studies
Numerous corporations have leveraged RECs to significant effect. For instance, Singapore’s largest bank – DBS Bank – was the first company to join the global renewable energy initiative ‘RE100’ in 2017. By installing solar panels at its office buildings in Changi Business Park, and procuring RECs from solar energy companies, the bank’s operations achieved carbon neutrality in 2022.
Similarly, the Formula 1 Singapore Grand Prix switched to carbon-neutral electricity through RECs, which aligns with Formula 1’s goal of reaching net zero by 2030. For the 2022 race, the use of RECs covered 85% of the electricity consumption within the Circuit Park.
Such cases highlight the profound outcome of using RECs. In addition, companies that invest in RECs often see an improvement in their sustainability ratings, enhanced brand image, and a positive response from stakeholders who value corporate responsibility.
The Strategic Value of RECs in Corporate Sustainability
As the world grapples with climate change, RECs have emerged as a critical tool for businesses to demonstrate their commitment to sustainability.
Furthermore, RECs represent more than just a compliance mechanism; they are a testament to a company’s dedication to environmental stewardship and its role in promoting green energy solutions. As developer and operator of Asia’s leading REC trading platform, REDEX can guide and support your business in this journey. Learn more about how Renewable Energy Certificates can be a strategic asset in your corporate sustainability journey.