Renewable Energy Certificates provide a practical and cost-effective pathway for Australian businesses to meet renewable energy and carbon reduction goals. Whether your organisation is just starting its sustainability journey or enhancing its ESG credentials, RECs offer flexibility, credibility, and impact.
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In Australia, the push towards sustainability and decarbonisation has never been stronger. Businesses are increasingly under pressure to reduce their carbon footprint and demonstrate tangible environmental responsibility. One of the most effective ways to achieve this without significant infrastructure investment is through Renewable Energy Certificates (RECs).
Renewable Energy Certificates are a recognised mechanism that verifies the generation and use of renewable electricity. They help businesses meet renewable energy targets and play a critical role in carbon reporting and compliance.
This guide explores how RECs work, the different types available in Australia, and how businesses can leverage them to advance their sustainability objectives while supporting the renewable energy sector.
Renewable Energy Certificates (RECs) are tradable environmental commodities that represent proof that one megawatt-hour (MWh) of electricity was generated from a renewable source such as wind, solar, or hydro.
When renewable energy is generated and fed into the grid, it cannot be physically tracked. RECs serve as a verification tool, assigning a unique serial number to each MWh of electricity produced. These certificates are then sold separately from the physical electricity, allowing businesses to claim the environmental benefits.
| Benefit | Description |
| Carbon Offset | RECs help offset Scope 2 emissions related to electricity use. |
| Sustainability Credentials | Demonstrate commitment to clean energy to stakeholders and investors. |
| Flexibility | Businesses can purchase RECs from various sources based on budget and goals. |
| No Infrastructure Required | Enables participation in clean energy markets without building on-site systems. |
| Regulatory Compliance | Supports adherence to energy and emissions reporting requirements. |
Australia has two primary types of RECs under the Renewable Energy Target (RET) scheme:
LGCs are created by accredited large-scale renewable energy power stations (e.g., wind or solar farms). These certificates are used primarily by large businesses and energy retailers to meet their compliance obligations under the RET.
STCs are generated from small-scale systems such as rooftop solar, solar water heaters, and small wind turbines.
Businesses aiming for net-zero emissions can purchase RECs to offset their Scope 2 emissions, which stem from electricity use. This allows them to claim the use of renewable electricity in sustainability reports.
For certain industries and operations, using RECs supports compliance with mandatory reporting and emissions reduction schemes. This includes aligning with the National Greenhouse and Energy Reporting (NGER) scheme.
Investors and stakeholders increasingly assess environmental credentials. Incorporating RECs into CSR and ESG frameworks enhances transparency and demonstrates proactive climate leadership.
RECs are typically acquired through:
| Procurement Method | Pros | Cons |
| Spot Market | Immediate availability, price flexibility | Price volatility |
| PPAs | Long-term cost stability, project-specific certificates | Requires longer contract commitment |
| GreenPower | Simple setup, government-backed program | Higher premium compared to direct market purchases |
The price of LGCs can significantly affect a business’s renewable energy strategy. LGC prices fluctuate based on supply-demand dynamics, policy changes, and corporate demand.
To optimise costs, businesses should:
While both RECs and carbon offsets support emissions reduction, they operate differently:
| Feature | RECs | Carbon Offsets |
| Purpose | Certify renewable electricity use | Neutralise emissions through projects (e.g., reforestation) |
| Scope Covered | Scope 2 (indirect electricity emissions) | Scope 1, 2, or 3 emissions |
| Geographic Impact | Country-specific (e.g., Australia RET) | Global applicability |
| Use Case | Sustainability reporting, compliance | Voluntary emissions reductions |
Renewable Energy Certificates provide a practical and cost-effective pathway for Australian businesses to meet renewable energy and carbon reduction goals. Whether your organisation is just starting its sustainability journey or enhancing its ESG credentials, RECs offer flexibility, credibility, and impact.
By understanding REC types, market options, and integration strategies, businesses can take confident steps toward a cleaner energy future.
To maximise your investment in renewable energy certificates, partner with industry experts like Energy Action. With decades of experience and deep market insight, Energy Action helps businesses procure, manage, and report on RECs effectively, ensuring both compliance and real-world sustainability impact.
A Renewable Energy Certificate (REC) is proof that one megawatt-hour (MWh) of electricity was generated from a renewable energy source and fed into the power grid. It enables businesses to claim the environmental benefits of renewable electricity use.
No, RECs and carbon offsets are different. RECs verify renewable electricity usage and reduce Scope 2 emissions, while carbon offsets compensate for emissions by funding projects that reduce or remove carbon from the atmosphere.
Businesses benefit from RECs by enhancing sustainability reporting, meeting compliance requirements, supporting renewable energy development, and improving brand reputation among stakeholders.
Yes, small businesses can buy RECs, particularly through government programs like GreenPower or aggregated buying through consultants. This enables them to support clean energy without large infrastructure investments.
Legitimate RECs are issued with a unique identification number and tracked through the Clean Energy Regulator’s REC Registry. Partnering with reputable suppliers or advisors helps ensure transparency and authenticity.
