News & Opinion | June 13, 2022 12:32 pm

Study: Corporations Aren’t Offsetting Nearly as Much Carbon as We Think They Are

Instead of actually cutting back on emissions, companies are buying renewable energy certifications in bulk

A wind turbine on a hill.
Renewable energy certifications might not be the solution we once thought they were.
Xu Wu/Getty Images

There’s a video on the U.S. Environmental Protection Agency’s YouTube channel, uploaded in 2015, which offers an optimistic introduction to “renewable energy credits,” defined as an emerging currency in the renewable energy market.

“They allow people and organizations to choose cleaner sources of energy and reduce their carbon footprints,” the narrator explains. “RECs give you the flexibility to support renewable energy even if you can’t generate it yourself or if your local utility doesn’t offer a green power product…By buying RECs, you’re providing revenue to support renewable energy products.”

For the last 15 years, RECs (also known as green tags or renewable energy certificates) have become enormously popular across a variety of high-profile organizations, as a prong in larger carbon-offsetting programs. The likes of Intel, Whole Foods, the University of Pennsylvania and the Air Force have all purchased hundreds of thousands of megawatt-hours of renewable electricity.

Proponents of RECs have long argued — in a similar vein to that EPA video — that green tags encourage investment in green power, and can help reshape a grid that has relied too heavily on fossil fuels for far too long. But critics have expressed concern that the certificates give corporations license to continue operating as usual, then misrepresent their efforts to combat climate change by simply purchasing the clean energy another entity produced.

In a recent report conducted by Concordia University and the University of Edinburgh Business School, researchers sourced data that suggests dozens of large companies are indeed “overstating” their emissions reductions. RECs comprise an outsized percentage of these corporations’ attempts to achieve climate goals; without them, as outlined in Scientific American, “many of the companies no longer [appear] on track to help keep global average warming under 1.5 degrees Celsius above preindustrial levels.”

These green credits essentially allow companies to “report lower emissions while their real electricity consumption stays the same.” Anders Bjørn, the lead author of the study said in an interview: “[Companies] can report a progressive and rapid annual decline in emissions just by buying more certificates every year than the year before. But when these certificates are unlikely to actually put more renewables on the grid, you’re sort of just taking credit for something that would have happened anyway.”

Corporations love RECs because they’re an easy, turn-key commitment; they now comprise nearly a third of purchased energy for companies setting climate targets (and pretty much any company that takes itself seriously is setting some sort of climate target these days). But the hollow nature of the pledge is putting the planet at risk — without RECs, these companies would just barely be able to meet the Paris Agreement’s global framework to keep global warming below 2°C.

There are some harrowing graphs and charts out there that predict what will happen to Earth if we do surpass 2°C of warming since pre-industrial levels, but the gist is clear: wildfires, megadroughts, heatwaves, a melted Arctic, coastal flooding, all coral reefs gone, a famine unlike anything we’ve ever seen. From a planetary perspective, an extra half-degree of warming is a big deal. As the authors of this study concluded, corporations can’t be trusted to keep us under 2°C of warming on their own — not when they’re content to sign checks that make them look better, but refuse to actually reduce their own emissions.