The role environmental certificates play in the decarbonisation journey


What are environmental certificates?

To understand how environmental certificates could help your business, it’s important to first understand how certificates are created and their purpose.

Australia has multiple environmental certificate schemes, including the federal-level Renewable Energy Target (RET), which aims to reduce greenhouse gas emissions in the electricity sector and encourage the integration of more renewable energy sources into the system. The RET comprises two schemes: the Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Target (SRES).

The LRET was designed to encourage investment in large-scale renewable power projects, such as wind and solar farms, which produce large-scale renewable energy within the transmission network. The generation of this energy is tracked using Large-scale Generation Certificates (LGCs), each certificate representing one megawatt hour of electricity generated from an accredited renewable energy source.

LGCs have financial value and can be sold or traded to a liable entity (such as electricity retailers like Shell Energy) with a requirement to surrender LGCs each year under the RET. They can also be purchased or generated by companies looking to voluntarily surrender them to meet renewable energy and emissions reduction targets above the minimum requirement.

For more information on LGCs, watch our Energy Education video below:

How do environmental certificates fit into net-zero pathways?

There are two main ways that environmental certificates can benefit your business: by providing a transparent way to demonstrate that your business is consuming renewable electricity and by helping to offset the cost of implementing any energy efficiency projects, if they are eligible for certificate generation.

In Australia, all electricity – generated from coal, gas and hydro, as well as renewable sources – is pooled into the grid and then supplied to residential and commercial electricity customers. This means that your business can’t guarantee it is using renewable energy as in reality the grid supply is a mix of generation from a variety of different sources, including coal and gas.

In Australia, large business energy customers can access retail supply arrangements where the volume of grid supplied electricity is matched with up to 100% renewable electricity through the purchase and surrender of LGCs. Generation/purchase and surrender of LGCs is the most transparent way to demonstrate that your business is consuming renewable electricity.

Additionally, environmental certificate schemes provide businesses with financial incentives to invest in energy savings projects by helping to offset the costs. Your business may be eligible to generate different types of environmental certificates, depending on the type of energy efficiency project being undertaken – including LGCs. These LGCs can then be voluntarily surrendered to the Clean Energy Regulator against your renewable energy target or sold or traded to help offset the cost of implementing the energy efficiency project.

How do I incorporate renewable energy into my business portfolio?

Adding renewable energy into your retail contract

If you’re a Shell Energy customer, we can help by purchasing and surrendering voluntary LGCs on your behalf to help achieve your renewable energy target faster. You can also achieve your renewable energy targets simply and flexibly online with our newest product, Renewable Energy Contracting Options (RECO). Read more about RECO here or talk to your account manager today to learn more.

If you’re not currently a Shell Energy customer, our expert team can help you learn more about how your business can incorporate renewable energy into your retail contract and business portfolio to help you maximise the value of your energy spend. Get in touch to learn more.

Generating environmental certificates

Australia’s environmental certificate schemes can seem complex to navigate but understanding them and how your business could benefit from generating certificates is a vital step to achieving your emissions reduction goals.

Shell Energy’s expert engineering team is uniquely positioned to help your business understand the different types of certificates, which energy efficiency projects are eligible to generate certificates, and how your business can maximise the value. We have the expertise and experience to take your energy projects from concept to execution and ensure that your renewable projects are maximising the value available to you from certificate generation.

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