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SBTi allows the use of Environmental Attribute Certificates to meet Scope 3 emissions targets

On April 9, 2024, the board of the Science Based Targets initiative (SBTi) announced its decision to allow the use of environmental attribute certificates (including carbon credits) to meet Scope 3 (value chain) emissions targets. 

Despite the approval of industry groups, which would be facilitated in meeting long-term emissions reduction targets, this announcement raised some objections and oppositions by those who believed that this decision would lead companies to rely on purchasing carbon credits rather than reduce emissions at source, thus resulting in an adverse impact on global emissions reductions.

In a subsequent clarifying statement, the SBTi board specified that any change to SBTi standards, including use of EACs for Scope 3, will be conducted in compliance with the SBTi Standard Operating Procedure, and also anticipated the implementation of ad hoc rules, guardrails and thresholds in order to identify which certificates will be considered valid for Scope 3 emissions abatement purposes. In this way, environmental attribute certificates could function as an additional tool to tackle climate change and accelerate the decarbonization of value chains.

Most recently, on July 30th, 2024, the SBTi board issued four technical outputs, including reports on the effectiveness of Environmental Attribute Certificates in reaching corporate climate change targets, as well as a Scope 3 informative discussion paper, exploring the potential changes in Scope 3 target setting and trying to envision how EACs could be used in science-based target-setting.

In particular, the SBTi has stated that the direct decarbonization of the value chain will remain the top priority, whereas EACs could be used to provide evidence of decarbonization within the value chain, as well as of permanent storage of carbon to counterbalance the impact of residual emissions. Credits could also be used to cover emissions excluded from the current target boundaries, thus outperforming the existing requirements for decarbonization.

DISCLAIMER: the content of this news is for informational purposes only and neither represents, nor can be construed as a legal opinion