Three conditions on a certificate — time, geography and a ledger

For a certificate to be used towards a target it has to meet conditions. Those conditions are not in one place; they are spread across the standard and the SBTi evidence synthesis. For practical purposes they gather into three.

Time

A condition was proposed that a certificate be claimed within a set period after it is issued or booked (evidence synthesis, p.38). Buy and hold it too long and it becomes unclear which period the reduction belongs to.

Geography

There is a condition that certificates reported against a regulatory obligation should be traded only within the geographic scope that regulation defines (evidence synthesis, p.39).

For electricity the standard already requires it outright. V2.0 requires geographical matching of electricity consumption, either directly or through attributes, based on deliverability regions (p.47).

A ledger

There has to be a registry that tracks issuance and trading and retires a claimed certificate. The evidence synthesis concluded that the evidence submitted supports the use of registries "to reduce the risk of the same volume of renewable fuel being reported twice" (p.36).

Logistics has one more layer

A transport chain carries a shipowner, a vessel operator, a freight forwarder and a cargo owner at the same time, and each reports emissions for the same voyage. Left alone, one reduction gets written four times.

One system in the evidence synthesis solved it like this: a certificate may be claimed by several stakeholders, but the system limits the claimant to one shipowner, one ship operator, one freight forwarder, and one cargo owner (p.50).

The whole chain writes the same reduction into its own books, without it being written twice in the same role. For that to work at all, there has to be a record of what was reduced, and by how much, on which voyage.

This article expands one section of LCS EAC special report 1, Do the Reductions You Buy Become Yours? The full report works from the SBTi Corporate Net-Zero Standard V2.0 and SBTi Evidence Synthesis Report Part 2 as primary sources, with the printed page number given for every quotation.