Renewable energy certificates allow companies to overstate their emission reductions

Many companies purchase renewable energy certificates to report reduced emissions, but this may not lead to actual emission reductions. We need emission accounting that is both accurate and that incentivizes companies to make impactful contributions to decarbonizing electricity grids. Messages for Policy Renewable energy certificates allow companies to report emission reductions, although certificates may not cause an increase in renewable energy generation or reduce emissions. Proponents of renewable energy certificates should offer evidence to support the claim that certificates lead to more renewable energy generation under certain conditions. To drive actual emission reductions, policymakers and accounting standard developers should limit the use of ineffective renewable energy certificates. Impact investors should prioritize real emission reductions by screening for the use of ineffective renewable energy certificates. Companies that want to be seen as climate leaders should avoid the use of ineffective renewable energy certificates, to minimize the risk of perceived greenwashing.