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Total issuance of I-RECs and TIGRs saw a 130% year-on-year growth last year in the region. There is little doubt that renewable energy certificates (RECs) are growing in popularity as a tool for scope 2 decarbonization in Southeast Asia. The reasons are straightforward, including the tool’s easy-to-understand mechanism, flexible procurement term and amount, and at times, cheaper prices. But there are a few things to watch out for when buying this simple tool in the region.
The matters with unbundled RECs: greenwashing risks and market instability
Greenwashing
Greenwashing concern has surfaced to the forefront of environmental commodities purchase around the world. For RECs, the use is clouded by 1) double counting and 2) environmental attribute overstatement.
Double counting, or otherwise understood as double claiming of the environmental attribute of RECs, occurs when power producers and utilities both claim the RECs from green power. This may be an especially prominent issue in Southeast Asia where ownership disputes of power generation between independent power producers and utilities have been identified.