Reducing Scope 2 Emissions with Energy Attribute Certificates (EACs): Strategic Implementation Guide

Executive Summary

Energy attribute certificates (EACs) enable companies to demonstrate renewable energy consumption whilst reducing Scope 2 emissions through market-based accounting. The strategic landscape has transformed dramatically since 2023, with base certificate prices collapsing from €7–10/MWh to €0.50–1.50/MWh, whilst quality-certified instruments command premiums of €4–8/MWh.

The GHG Protocol formalised mandatory hourly matching requirements in October 2025, fundamentally changing how organisations approach renewable energy claims. For companies subject to the Corporate Sustainability Reporting Directive (CSRD), dual-method reporting—both location-based and market-based Scope 2 emissions—became mandatory with the first compliance deadline passing in December 2025.

Strategic procurement now requires navigating three parallel developments: regulatory tightening (hourly matching, Green Claims Directive pre-approval requirements), market bifurcation (quality labels versus commodity certificates), and operational complexity (integration with power purchase agreements and battery storage systems).

Understanding Energy Attribute Certificates for Scope 2 Accounting

What Are Energy Attribute Certificates?

Energy attribute certificates represent the environmental attributes of renewable electricity generation separated from the underlying electricity. When renewable energy projects generate one megawatt-hour of electricity, they produce both physical electricity (delivered to the electricity grid) and a corresponding certificate proving the renewable energy use.

The mechanism relies on tracking systems that monitor certificate issuance, transfer, and retirement to prevent double counting. In Germany, the Federal Environment Agency manages the Herkunftsnachweis register (HKNR). European countries predominantly use Guarantees of Origin (GOs), whilst North America employs Renewable Energy Certificates (RECs) and global portfolios utilise International RECs (I-RECs).

According to the U.S. Environmental Protection Agency, energy attribute certificates EACs are recognised instruments for substantiating renewable energy claims and for Scope 2 accounting under the Greenhouse Gas Protocol (EPA, 2024).

Types of Energy Attribute Certificates

Herkunftsnachweise (HKN) for Germany

Herkunftsnachweise serve as official proof that purchased electricity actually comes from renewable sources. Since January 2013, energy suppliers in Germany may only use retired HKNs in the HKNR, ensuring that the same electricity isn't sold twice.

Although Germany produced around 250 TWh of green energy in 2023, only 37 TWh of HKNs were issued. German energy consumers used certificates totalling 185 TWh, with approximately 75% imported from Norway. This discrepancy stems from Germany's double marketing ban, which prohibits subsidised renewable energy projects from issuing HKNs.

Global Certificate Systems

Beyond German HKNs, various types of energy attribute certificates exist worldwide. Most European countries use Guarantees of Origin (GOs), called Renewable Energy Guarantees of Origin (REGOs) in the UK. North America uses Renewable Energy Certificates, whilst global portfolios employ International RECs.

Current price trends show costs ranging between €0.50–1.50/MWh for standard certificates, with quality-certified instruments commanding €4–8/MWh premiums (market data, 2025).

Learn about EU Taxonomy compliance

Market-Based vs Location-Based Approaches

The Market-Based Method

The market-based approach relies on contractual instruments to define electricity characteristics and calculate greenhouse gas emissions accurately. Companies purchase EACs, retire them in the reporting company's name, and demonstrate use of emission-free electricity from renewable resources.

This methodology enables organisations to report zero Scope 2 emissions when they purchase and retire corresponding certificates. The approach proves most effective when combined with renewable energy purchases through power purchase agreements or direct renewable energy development.

The Location-Based Method

The location-based method uses the emission factor of the regional power grid, providing less specific results. A German company purchasing Norwegian hydropower certificates reports zero market-based Scope 2 emissions but non-zero location-based emissions reflecting Germany's grid mix.

CSRD mandates reporting both methods, ensuring transparency about physical versus contractual emissions. This dual reporting requirement under ESRS E1 Climate Change demonstrates whether emissions reductions stem from operational changes or certificate procurement.

Supplier-Specific Emission Factors

Companies seeking to make credible claims should request supplier-specific emission factors from local utilities. These factors reflect the actual energy sources in the company's electricity mix, enabling more accurate carbon accounting beyond the residual mix approach.

The residual mix represents the average emission factor after accounting for all certificates retired within market boundaries. Understanding this distinction proves critical for accurate sustainability reporting under CSRD requirements.

Explore ESRS reporting standards

Strategic Regulatory Developments

GHG Protocol Hourly Matching Requirements

The Greenhouse Gas Protocol's October 2025 announcement of mandatory hourly matching requirements represents the most significant Scope 2 methodology shift since the market-based method's 2015 introduction. Companies must now match energy attribute certificates to electricity consumption on an hour-by-hour basis rather than annual totals.

The deliverability requirement compounds complexity. Certificates must originate from grid regions capable of physically delivering electricity to consumption locations. This eliminates the previous practice of purchasing annual certificate volumes without temporal correlation to actual consumption patterns.

Practical implementation varies by organisational size. Smaller entities receive temporary exemptions, but the majority of global electricity consumption falls under mandatory hourly matching. Companies must upgrade metering infrastructure to capture hourly consumption data and establish registry connections enabling hourly certificate retirement.

CSRD Dual-Method Reporting Requirements

CSRD's European Sustainability Reporting Standards (ESRS) E1 Climate Change requirements mandate disclosure of both location-based and market-based Scope 2 emissions. This seemingly straightforward obligation creates substantial operational burdens.

Companies must maintain parallel tracking systems: one using regional grid emission factors (location-based) and another incorporating contractual instruments like EACs (market-based). External auditors examine not just certificate purchases but entire data flows—from electricity meters through consumption allocation, certificate procurement timing, registry retirements, and emissions calculations.

Common audit failures include temporal mismatches (certificates from different consumption periods), double counting issues, incomplete documentation, and methodological inconsistencies. Companies subject to CSRD must treat Scope 2 accounting with the same rigour as financial reporting.

Review CSRD compliance best practices

Green Claims Directive Impact

The Green Claims Directive trilogue negotiations established restrictions fundamentally altering how companies communicate environmental achievements. The directive prohibits carbon neutrality claims based solely on purchasing energy attribute certificates or carbon credits without demonstrable operational emissions reduction.

All environmental claims require independent verification before publication, with mandatory five-year renewal cycles. Companies must engage independent verifiers before launching campaigns, extending timelines and increasing costs. This creates strategic tension for organisations that invested in certificate procurement precisely to support marketing claims.

Strategic responses include embracing radical transparency, explicitly distinguishing between market-based accounting benefits and operational reality. Others shift marketing emphasis from environmental attributes toward operational improvements—efficiency gains, on-site generation, or storage integration.

Understand Green Claims requirements

Quality Selection and Procurement Strategy

Understanding Quality Labels

Quality certification schemes differentiate energy attribute certificates by technology type, installation vintage, and additional environmental criteria. Key labels include:

EKOEnergy requires facilities meet strict sustainability criteria beyond basic renewable generation, including biodiversity protection requirements and age restrictions preventing legacy hydropower certification.

Gold Standard emphasises additionality—specific renewable energy projects wouldn't occur without certificate revenue. This proves particularly relevant for certificates supporting new renewable energy development rather than existing facilities.

Green-e provides consumer protection and environmental standards verification for North American operations requiring credible renewable energy claims.

The strategic selection depends on stakeholder expectations. Companies facing sophisticated investor scrutiny should prioritise certified instruments despite premium costs. Organisations with baseline compliance obligations may optimise cost through uncertified certificates whilst acknowledging reduced environmental credibility.

Market Bifurcation: Commodity vs Quality

The contemporary certificate market operates on two parallel tracks. The commodity market trades high-volume, low-cost certificates where price discovery occurs through digital platforms. The quality market involves bilateral negotiations and substantial price premiums justified through additionality narratives.

Commodity market characteristics:

• Standard Scandinavian hydropower GOs: €0.50–1.50/MWh

• High liquidity enabling rapid procurement

• Minimal due diligence beyond registry verification

Quality market characteristics:

• EKOEnergy-certified or equivalent: €4–8/MWh

• Technology-specific attributes (German wind, recent solar)

• Vintage requirements (typically <15 years)

This bifurcation creates strategic opportunities. Organisations prioritising cost minimisation can procure baseline renewable energy claims inexpensively. However, those requiring credible sustainability narratives for investor relations must invest in quality-certified instruments with demonstrable environmental benefits.

Avoiding Double Counting

To avoid double counting, EACs must be tracked and retired in the name of the reporting company. Modern tracking systems provide comprehensive audit trails from electricity generation through certificate issuance, transfer, and final retirement.

A particularly effective strategy involves entering direct, long-term power purchase agreements with operators of renewable energy projects. This approach demonstrates commitment beyond passive certificate purchasing and supports new renewable energy development.

The tradability of attribute certificates can promote investment in renewable energy and contribute to the global transition toward clean energy. However, proper documentation remains essential to prevent double counting across multiple entities.

Integration with Broader Decarbonisation Strategies

Combining EACs with PPAs

Energy attribute certificates reach their full potential when integrated within comprehensive climate strategies. When combined with power purchase agreements, direct procurement of renewable electricity, and reduction of Scope 2 emissions through operational efficiency, a holistic approach emerges.

Many companies rely on long-term measures such as expanding on-site generation, entering power purchase agreements, or implementing efficiency projects. Unbundled EACs offer the advantage of cost-effective procurement from renewable energy producers.

Strategic procurement also helps increase demand for renewable electricity and drive energy generation from renewable sources. Modern platforms make trading and reporting certificates easier, promoting transparency and efficiency in renewable energy consumption management.

Explore PPA strategies

Energy Efficiency as Foundation

Successful companies don't rely solely on energy attribute certificates but combine them with other climate protection measures. The optimal hierarchy prioritises:

1. Energy efficiency: Reducing absolute electricity consumption through operational improvements

2. On-site generation: Installing solar, wind, or other renewables where economically viable

3. Power purchase agreements: Long-term renewable procurement supporting new capacity

4. EAC procurement: Addressing remaining consumption with quality certificates

This sequence reflects both environmental effectiveness and economic efficiency. Efficiency investments typically offer positive returns independent of climate benefits. On-site generation provides long-term cost certainty whilst demonstrating operational commitment.

Companies inverting this hierarchy—purchasing certificates without operational improvements—risk stakeholder scepticism regardless of technical compliance. The strategic framework positions EACs as completion mechanism rather than primary decarbonisation tool.

24/7 Carbon-Free Energy Strategies

The concept of 24/7 carbon-free energy (CFE) transitions from voluntary leadership initiative to implicit regulatory requirement. Rather than annual renewable matching, organisations must demonstrate zero emissions electricity consumption during every operational hour.

This requires combination of diversified renewable procurement (solar, wind, potentially geothermal), energy storage enabling temporal shifting, grid services participation optimising storage economics, and potentially hydrogen storage for seasonal balancing.

Companies like Google achieved a global CFE score of 64% through systematic 24/7 approaches, whilst Microsoft's approach to matching renewable energy purchases with real-time consumption data has set new benchmarks for corporate decarbonisation strategies.

Learn about carbon accounting methods

Implementation Across Organisational Types

For Startups: Building Foundations

Early-stage companies benefit enormously from establishing certificate processes before compliance obligations emerge. The administrative burden remains minimal—typically several hours quarterly—whilst creating data foundations that prevent costly reconstruction during due diligence.

A startup consuming 50 MWh annually faces €75–400 annual certificate costs depending on quality selection. The primary investment involves establishing processes—engaging energy consultants for initial setup typically costs €2,000–5,000.

Venture capital investors evaluating ESG integration appreciate systematic processes more than absolute emissions reduction. A startup demonstrating quarterly certificate retirement with auditable documentation signals operational maturity transcending environmental claims.

For Mid-Market Companies: Audit Readiness

Mid-sized companies entering CSRD scope face step-function compliance burdens. The transition from voluntary sustainability reporting to mandatory external audit requires operational upgrades that catch many organisations unprepared.

Critical steps include auditing internal controls, upgrading data systems with segregation of duties, engaging early with auditors to discuss methodology requirements, and conducting trial runs before external audit.

The first audit cycle typically proves most expensive—organisations should expect €30,000–80,000 in incremental costs for Scope 2 audit preparation, with subsequent years declining as processes mature.

Review materiality assessment approaches

For International Corporations: Portfolio Management

Multinational organisations face coordination challenges absent in single-jurisdiction operations. Different subsidiaries may operate under varying regulatory requirements, procure from distinct certificate markets with inconsistent quality standards, and maintain incompatible data systems.

Effective portfolio management requires centralised methodology governance, harmonised data collection, regional market expertise, and portfolio-level reporting capabilities. Technology infrastructure becomes critical at scale, with organisations investing €200,000–500,000 for enterprise-grade management systems.

For Venture Capital: LP Reporting

VC funds integrating ESG frameworks face unique challenges. Unlike operating companies controlling their own procurement, funds must influence portfolio company behaviour without operational authority.

Recommended fund-level frameworks include establishing minimum standards, providing procurement resources through negotiated volume discounts, implementing consistent methodology enabling aggregation, and supporting capacity building through portfolio company training.

The LP reporting challenge shouldn't drive excessive portfolio company burden. Funds should align requirements with company stage, leverage platform resources, focus on trajectory over absolute performance, and communicate realistic timelines for portfolio-wide transformation.

Explore ESG for venture capital

Procurement Documentation and Reporting

Data Management Best Practices

Systematic monitoring of certificate transactions proves essential to meet requirements of the Greenhouse Gas Protocol and ESRS. Modern software solutions automate the entire process—from purchase and retirement to sustainability reporting.

Accurate and clearly recorded data enable concrete actions. Where possible, current and specific emissions data should be used rather than residual mix approaches. Automated systems facilitate allocating data to specific consumption periods and support both location-based and market-based reporting methods.

This thorough data collection forms the basis for transparent communication with stakeholders and effective strategy development. The use of digital tools and blockchain-based tracking systems enhances traceability and trust in certificate markets.

Transparent Stakeholder Communication

CSRD brings expanded reporting obligations for more than 50,000 companies in Europe, including external audit requirements. ESG-relevant information must be disclosed in management reports in accordance with ESRS standards.

For Scope 2 emissions, applying both the location-based and market-based methods proves critical. All energy consumption in Scope 2 should be documented using market instruments such as Guarantees of Origin and RECs. All recorded metrics must be validated through verified processes covering all scopes.

The growing urgency of climate change means carbon accounting will remain with us for the foreseeable future, with demands for disclosure and aggressive emissions reduction only intensifying.

Continuous Strategy Updates

Continuous review of certificate strategies proves crucial to respond to regulatory requirements and market changes long-term. The Federal Cartel Office increasingly relies on software-based market monitoring and plans to expand AI use.

It's important to actively monitor legislative changes and assess their impact on business operations. Regular strategy adjustments ensure alignment with evolving regulations and market conditions.

Decarbonisation targets should be reviewed regularly, with measures such as energy savings or efficiency improvements implemented. Since almost 40% of global greenhouse gas emissions stem from energy generation (International Energy Agency, 2023), continuous reassessment of procurement strategy remains essential.

Future Trajectory Through 2030

Regulatory Intensification

The regulatory environment will almost certainly intensify requirements rather than relax them. Key developments include:

EU ETS 2 expansion (2028): The emissions trading system extends to buildings, transport, and small industrial sources. Rising carbon prices (projected €130+/tonne by 2040) increase the economic value of demonstrable emissions reduction.

Green hydrogen requirements (2030): RED II/III Delegated Acts mandate monthly renewable electricity matching for hydrogen production through 2029, transitioning to hourly matching from 2030 onwards.

Green Claims Directive implementation (2027): Following finalisation of trilogue negotiations, enforcement begins across EU member states requiring substantive claim restrictions and pre-approval requirements.

Track regulatory developments

Technology Integration Opportunities

Certificate strategy increasingly intersects with broader energy technology deployment. Battery storage integration enables sophisticated strategies combining renewable procurement with grid services revenue. Companies installing battery systems can time-shift renewable electricity consumption, participate in frequency regulation markets, and achieve genuine 24/7 carbon-free energy matching.

German battery storage benefits from grid fee exemptions generating 15–25% cost savings. However, storage adds complexity requiring specialised expertise and integration with certificate procurement strategies.

Review battery storage opportunities

Global Market Expansion

Whilst European markets dominate current corporate attention, global certificate systems experience rapid growth. International REC markets in Brazil, Mexico, and Saudi Arabia show substantial volume increases—Brazil issued 54 million I-RECs by mid-2025, exceeding full-year 2024 totals.

The global renewable energy certificate market reached USD 27.99 billion in 2025, with projections indicating growth to USD 45.45 billion by 2030 (10.2% CAGR). This expansion reflects increasing corporate net zero targets and strengthening renewable energy consumption mandates worldwide.

Frequently Asked Questions

What are energy attribute certificates?

Energy attribute certificates represent the environmental attributes of renewable electricity generation separated from the underlying electricity. When a renewable energy facility generates one megawatt-hour of electricity produced, it creates both physical electricity (delivered to the electricity grid) and a corresponding certificate.

Companies purchase and retire these certificates to claim renewable energy use even if they physically consume grid electricity. The mechanism relies on tracking systems preventing double counting through certificate issuance, transfer, and retirement monitoring.

Is energy consumption Scope 2?

Purchased energy consumption—electricity, heat, cooling, and steam—constitutes Scope 2 under GHG Protocol classification. This contrasts with Scope 1 (indirect emissions from owned sources like natural gas boilers) and Scope 3 (value chain emissions).

Energy attribute certificates specifically address Scope 2 electricity emissions through market-based accounting. Companies calculate Scope 2 using two methodologies: location-based (using regional grid emission factors) and market-based (incorporating contractual instruments).

CSRD mandates reporting both methods, providing transparency about whether emissions reduction stems from operational changes or certificate procurement.

Can carbon offsets be used for Scope 2 emissions?

Carbon offsets and energy attribute certificates serve different purposes within emissions accounting frameworks. Certificates specifically address electricity's renewable attributes, whilst carbon credits compensate for GHG emissions through investment in reduction projects elsewhere.

The Greenhouse Gas Protocol explicitly distinguishes between these instruments. Companies should use certificates for Scope 2 market-based accounting and may use offsets for Scope 1 or Scope 3 emissions that cannot be operationally reduced.

The Green Claims Directive restricts environmental claims based solely on offsets without demonstrable operational improvements—a provision extending to certificate-based claims as well.

Compare carbon market instruments

Is renewable energy Scope 2?

Renewable energy consumption still technically constitutes Scope 2 (purchased energy), but the market-based accounting methodology allows companies to report zero Scope 2 emissions when they purchase and retire corresponding certificates from renewable sources.

The location-based methodology continues reflecting regional grid emissions regardless of renewable procurement. A German company purchasing Norwegian certificates reports zero market-based Scope 2 emissions but non-zero location-based emissions reflecting Germany's grid mix.

This dual reporting requirement under CSRD ensures transparency about physical versus contractual emissions and demonstrates whether companies achieve net zero emissions through operational changes or certificate procurement.

How Fiegenbaum Solutions Supports Implementation

Navigating the complex intersection of regulatory requirements, market dynamics, and operational realities requires specialised expertise that most organisations lack internally. Fiegenbaum Solutions approaches certificate strategy as integral component of comprehensive ESG and climate risk frameworks.

The consulting approach combines regulatory expertise (deep understanding of CSRD, Green Claims Directive, and Greenhouse Gas Protocol evolution), market intelligence (current pricing data and procurement optimisation), technology integration (connecting procurement with broader energy management), and audit preparation (designing documentation meeting external audit requirements).

For startups, the focus emphasises establishing foundational processes preventing future data gaps. Mid-market enterprises receive support navigating first CSRD audits and upgrading internal controls. International corporations benefit from portfolio coordination. Venture capital funds access frameworks integrating strategy across diverse portfolios.

Explore sustainability consulting services

Conclusion

Energy attribute certificates have evolved from simple compliance instruments into sophisticated strategic tools requiring careful integration within broader operations. The 2025 market transformation—characterised by price bifurcation, hourly matching requirements, and regulatory intensification—demands organisations approach procurement with strategic rigour.

For startups, establishing systematic processes prevents data gaps complicating investor due diligence. Mid-market enterprises navigating CSRD compliance must upgrade internal controls meeting external audit requirements. International corporations require portfolio-wide coordination balancing methodology governance with operational autonomy.

The strategic imperative extends beyond regulatory compliance. Credible renewable electricity procurement enhances investor relations, satisfies customer sustainability goals, and potentially reduces exposure to rising carbon prices. However, these environmental benefits materialise only through thoughtful implementation—purchasing cheapest certificates without quality consideration undermines stakeholder trust.

Successfully navigating this complexity requires either substantial internal expertise development or partnership with specialised advisors understanding the intersection of regulatory requirements, market dynamics, and operational realities. The investment positions organisations to leverage renewable energy purchases for genuine business value creation rather than mere compliance exercise.

Sources

• Environmental Protection Agency (EPA). (2024). Renewable Energy Certificates.

• GHG Protocol. (2024). Scope 2 Guidance: Market-Based Method.

• European Commission. (2024). Corporate Sustainability Reporting Directive.

• Federal Environment Agency (UBA). (2024). Herkunftsnachweisregister.

• International Energy Agency (IEA). (2023). World Energy Outlook.

• GHG Protocol. (2025). Scope 2 Public Consultation: Hourly Matching and Deliverability.