50 Shades of Green - Electricity Procurement
Is the electricity you use to power your business really green? What does "green electricity" even really mean? There are a lot of different terms out there and it's easy to get confused.
In general, electricity is considered green when it has been generated from 100% renewable energy (e.g. wind or solar). However, some companies use carbon offsets to make green claims.
What is a Carbon Offset?
The Law Insider explains that a carbon offset is:
A reduction in greenhouse gas emissions e.g. solar
An increase in carbon storage e.g. planting a tree
Many countries have carbon credit schemes that allow emissions to be offset by the purchase of a carbon credit. Some businesses will offset the emissions from their electricity usage by buying carbon credits equivalent to their scope 2 emissions. Once the business retires the carbon credit, they can make green and/or carbon neutral claims.
In Europe and North America, generating 1 MWh of renewable energy creates a renewable energy certificate. Whoever retires the certificate is able to make green claims. In the US these certificates are called RECs, in the UK REGOs and in the EU GOs. There is also an international certificate: the I-REC. These instruments can be traded between renewable energy generators and customers. A company can only make a renewable energy claim once they retire the certificate and take it out of circulation.
Carbon Credits: A Real World Example
A wind farm in Cumbria sells the electrons it generates to Centrica. Centrica sells the electricity to a school. The wind farm sells the REGOs it generates to a bank which then retires the REGOs.
Who can claim they are powered by green energy?
b) the school
c) the bank
That's right! The answer is c) - only the bank can claim it is powered by green energy as the bank retired the REGOs.
Buying Renewable Energy
If the bank wants to buy renewable energy instead of offsetting its emissions using REGOs, it can buy renewable electricity from its supplier.
Electricity supply companies can supply consumers with renewable energy by:
1. Buying electricity directly from an existing renewable project, like that Cumbrian wind farm.
2. Buying electricity from new renewables, helping to get new projects online.
3. Buying electricity from lots of different sources (e.g. wind, coal and natural gas) and buying carbon offsets.
It can be hard to know which of these your supplier is doing when you are shopping for renewable electricity. Innovative Energy Consultants uses our decades of experience in the Energy industry to provide your business with the information needed to manage costs, risks and understand the impact of your choices on your carbon footprint and the grid mix.
Contact us today for a free 30 minute consultation and find out more about how we can help your business grow sustainably!
This is the first article in the 50 Shades of Green series, subscribe using the form below to be the first to know when new articles are live. Green gas, behind the meter generation and scope 1, 2 and 3 emissions are just some of the topics we plan to cover.