• Decarbonization refers to the process of reducing greenhouse gas emissions, particularly carbon dioxide (CO2), which is a major driver of climate change. The goal of decarbonization is to lower the amount of carbon released into the atmosphere, primarily through reducing the reliance on fossil fuels (coal, oil, and natural gas) and transitioning toward cleaner, more sustainable sources of energy. This effort is central to combating global warming, meeting climate targets, and reducing the environmental impact of industrial and commercial activities.
• The process of decarbonization involves various strategies, including:
  • Switching to renewable energy sources like solar, wind, and hydropower, which generate little or no carbon emissions.
  • Improving energy efficiency by using less energy to accomplish the same tasks, such as through better insulation, more efficient machinery, and low-energy lighting.
  • Electrification of industries and transportation systems to replace fossil-fuel-powered systems with clean electricity.
  • Carbon capture technologies that remove CO2 directly from the atmosphere or from industrial processes.
• For businesses, decarbonization is not only essential for meeting climate goals but can also offer financial benefits, such as reducing energy costs, attracting eco-conscious consumers, and ensuring compliance with increasing regulatory demands.
• In addition to the direct emissions a company generates, businesses must also consider Scope 3 emissions. These are indirect emissions that occur throughout the entire supply chain, from the production of raw materials to the end-use and disposal of products. Addressing Scope 3 emissions is an important aspect of comprehensive decarbonization, as these emissions often make up the largest share of a company’s total carbon footprint.

• Decarbonizing is a challenging process for any business, but small and medium-sized enterprises (SMEs) face unique obstacles compared to larger corporations. While big companies may have more resources and infrastructure to support sustainability efforts, SMEs often have to navigate a tougher landscape. Here are key reasons why SMEs face more hurdles in decarbonization:
• 1. Limited Financial Resources
  • Large corporations typically have more capital to invest in energy-efficient technologies, renewable energy sources, and sustainability initiatives. In contrast, SMEs often operate with tighter budgets, which can make it harder to invest in the upfront costs of decarbonization, such as upgrading equipment, implementing energy-saving systems, or purchasing renewable energy.
• 2. Lack of Dedicated Sustainability Teams
  • Big corporations often have entire departments focused on sustainability, with dedicated teams of experts driving decarbonization strategies. SMEs, on the other hand, may lack the manpower or specialized expertise to develop and implement comprehensive sustainability plans. This can lead to a lack of direction or difficulty in navigating complex decarbonization strategies.
• 3. Limited Access to Technology and Innovation
  • Large companies can more easily access cutting-edge technologies and innovations that facilitate decarbonization, such as renewable energy systems, carbon capture technologies, and smart energy management tools. SMEs may find it harder to access these technologies due to high costs or limited availability, making it harder to transition to low-carbon alternatives.
• 4. Supply Chain Complexity
  • For SMEs that are part of larger supply chains, reducing carbon emissions can be especially challenging. Larger corporations often require their suppliers to meet specific sustainability standards, but smaller suppliers may not have the resources or capabilities to meet these demands. As a result, SMEs may face pressure to decarbonize while struggling to influence or change the practices of their own suppliers.
• 5. Regulatory and Reporting Challenges
  • While large corporations often have the resources to stay on top of environmental regulations and carbon reporting requirements, SMEs may find it more difficult to comply with evolving laws, track their emissions, and report their progress. Many SMEs lack the tools and knowledge to measure their carbon footprint accurately or meet reporting standards, which can be a barrier to achieving decarbonization goals.
• 6. Customer and Market Pressure
  • Large companies often face significant pressure from investors, customers, and stakeholders to meet sustainability goals, which can drive their decarbonization efforts. SMEs, however, may not experience the same level of scrutiny or may find it more challenging to meet customer expectations, especially if their customers prioritize sustainability but aren’t willing to pay a premium for it.

• Greenhouse gas (GHG) emissions are categorized into three scopes to help businesses understand and manage their environmental impact.
  • Scope 1 emissions are direct emissions from owned or controlled sources. This includes emissions from company-owned vehicles, on-site energy use, and industrial processes.
  • Scope 2 emissions are indirect emissions from the generation of purchased electricity, steam, heating, or cooling that a company consumes. These emissions occur off-site, at the facilities that produce the energy.
  • Scope 3 emissions are indirect emissions that occur across the entire value chain, both upstream (e.g., emissions from suppliers and the transportation of goods) and downstream (e.g., emissions from product use, waste disposal, or product end-of-life).

• Greenhouse gas (GHG) emissions reporting often distinguishes between market-based and location-based methodologies for calculating Scope 2 emissions. These methodologies provide different approaches to account for emissions from purchased electricity, steam, heating, or cooling.
• 1. Market-Based Scope Emissions
  • Market-based emissions reflect the emissions associated with the specific energy procurement choices of a company, such as purchasing renewable energy certificates (RECs), power purchase agreements (PPAs), or grid power from specific suppliers.
  • A company purchasing wind energy through Renewable Energy Certificates (RECs) might report zero emissions for that electricity under the market-based method, even if the local grid mix includes fossil fuels.
• 2. Location-Based Scope Emissions
  • Location-based emissions reflect the average emissions intensity of the local electricity grid where the energy consumption occurs, regardless of specific procurement choices.
  • For example, a company in a region with coal-heavy electricity generation will report higher emissions under the location-based method, even if they purchase RECs or green energy.

• Scope 3 emissions often represent the largest share of a business's total carbon footprint but are also the most difficult to measure and control. These emissions are linked to activities outside a company’s direct operations, including those from its suppliers, customers, and the broader value chain. For example, emissions from the production of raw materials, business travel, the use of sold products, and the disposal of waste all fall under Scope 3.
• Understanding and addressing Scope 3 emissions is critical for effective decarbonization. While a company can more easily reduce Scope 1 and 2 emissions through energy-efficient measures and renewable energy adoption, Scope 3 requires collaboration with suppliers, customers, and other partners to drive broader changes. Companies that prioritize Scope 3 emissions not only contribute to significant reductions in global emissions but also meet increasing demands for transparency and sustainability from consumers, investors, and regulators. Tackling Scope 3 can help create a more sustainable and resilient value chain, encouraging a shift toward greener practices throughout an entire industry.

• Mitigating Climate Change
  • Decarbonization is essential for reducing carbon emissions, the main driver of global warming. By cutting emissions, we slow the rise in global temperatures, helping to stabilize the climate and avoid extreme weather events like heatwaves, floods, and droughts.
• Protecting Ecosystems and Biodiversity
  • Climate change threatens ecosystems and biodiversity. Rising temperatures and shifting weather patterns disrupt habitats and endanger species. Decarbonization helps reduce these environmental stresses, protecting wildlife and preserving natural ecosystems for future generations.
• Reducing Air Pollution
  • Burning fossil fuels releases harmful air pollutants that contribute to respiratory diseases and other health problems. Decarbonizing through cleaner energy sources significantly lowers air pollution, improving air quality and public health, particularly in urban areas.
• Preserving Natural Resources
  • Fossil fuel extraction depletes finite natural resources and damages ecosystems through practices like mining and drilling. By shifting to renewable energy, decarbonization reduces the environmental harm caused by resource extraction, conserving these vital resources for the future.

• Access to New Markets and Opportunities
  • In many sectors, there is growing demand for sustainable products and services. For SMEs in manufacturing, agriculture, and other industries, decarbonization can create new revenue streams. By adopting cleaner production methods or offering carbon-neutral products, SMEs can access new customers who prioritize sustainability. Some sectors even offer eco-certifications that SMEs can use to attract business from customers seeking greener alternatives.
• Attracting Investment and Financing
  • As climate change concerns grow, investors, lenders, and venture capitalists are increasingly looking for businesses that are committed to sustainability. SMEs that embrace decarbonization can access green financing options, including lower-interest loans, grants, and sustainability-linked investment funds. In some regions, governments and financial institutions provide incentives for businesses to transition toward carbon-neutral operations.
• Compliance with Regulations and Avoiding Penalties
  • Governments around the world are enacting stricter environmental regulations and imposing carbon taxes or cap-and-trade schemes. By decarbonizing early, SMEs can stay ahead of compliance requirements and avoid potential fines or penalties. In some cases, businesses that meet or exceed regulatory thresholds may even be eligible for tax breaks or other benefits.
• Supply Chain Resilience
  • Sustainable practices often extend beyond a business’s operations and into its supply chain. By working with suppliers who prioritize decarbonization and sustainability, SMEs can help future-proof their supply chains against disruptions caused by climate-related risks. This includes reducing dependence on volatile resources and ensuring continuity even in the face of stricter environmental policies.
• Improved Competitiveness and Market Position
  • Consumers are more conscious of the environmental impact of the businesses they support. By implementing decarbonization strategies, SMEs can differentiate themselves in the marketplace as sustainable brands. This can lead to increased customer loyalty, attract environmentally-conscious consumers, and open up new market opportunities.
  • In industries where sustainability is becoming a key purchasing decision factor, being ahead of the curve with carbon-reduction practices can give SMEs a competitive edge.

• Energy Attribute Certificates (EACs) or Renewable Energy Certificates (RECs) are tradable, market-based instruments that certify that a certain amount of electricity has been generated from renewable sources. Each REC represents the environmental benefits of producing one megawatt-hour (MWh) of renewable energy, regardless of where or how it was generated.
• RECs serve as proof of renewable energy generation, allowing businesses, governments, and individuals to claim that they are supporting renewable energy production or meeting sustainability goals. They play a crucial role in incentivizing renewable energy generation, as the sale of RECs provides additional revenue to renewable energy producers, helping to fund new projects.

• Market-Based System: RECs are bought and sold in a marketplace, and their prices can fluctuate based on supply and demand.
• Supporting Sustainability: By purchasing RECs, businesses and organizations can offset their carbon emissions, even if they do not produce or purchase renewable energy directly. RECs are specifically applicable to Scope 2 emissions, helping organizations account for indirect emissions from purchased electricity.
• Compliance and Voluntary Use: Many businesses use RECs to comply with renewable energy mandates or to voluntarily meet corporate sustainability goals. Governments may also require companies to buy a certain number of RECs as part of renewable energy standards or carbon reduction commitments.
• Scope 1 and 3 Emissions: While RECs address Scope 2 emissions, carbon credits are applicable for Scope 1 emissions (direct emissions from owned or controlled sources) and Scope 3 emissions (indirect emissions across the value chain), supporting broader carbon reduction strategies.
• In essence, RECs allow businesses to participate in the renewable energy transition without needing to directly produce renewable energy themselves, making them a cost-effective and flexible tool for companies aiming to meet their decarbonization goals.

• No Infrastructure Needed
  • Unlike large companies that can invest in renewable energy generation (e.g., rooftop solar panels or on-site wind turbines), most SMEs don’t have the resources to install these systems. By purchasing RECs, SMEs can contribute to renewable energy generation without the upfront costs, maintenance, or technical expertise involved in setting up their own renewable energy systems.
• Flexibility
  • Unlike investments in physical renewable energy infrastructure, purchasing RECs offers flexibility. SMEs can easily adjust their level of commitment to renewable energy based on evolving business needs or changes in regulatory requirements.
• Inevitable (governments are increasing regulations and policies)
  • Regulatory Compliance
    • Meeting Government Regulations: Governments around the world are increasingly enforcing regulations related to carbon emissions. For instance, some jurisdictions require companies to meet Renewable Portfolio Standards (RPS) or carbon reduction targets as part of climate action goals. RECs can help businesses meet these compliance requirements without the need for major infrastructure upgrades, allowing them to stay ahead of regulatory pressures.
    • Avoiding Penalties: As carbon regulations become stricter, businesses that fail to meet sustainability requirements may face fines or other penalties. Purchasing RECs ensures that businesses can reduce their exposure to carbon-related penalties, particularly in regions where carbon taxes or emissions caps are in place.
• Can Buy Time
  • Renewable Energy Certificates (RECs) offer companies a practical and affordable way to offset emissions and support renewable energy generation while they invest in longer-term decarbonization efforts. For businesses that are not yet ready to make large capital investments in renewable energy infrastructure, RECs provide a bridge solution, enabling companies to demonstrate their commitment to sustainability and reduce their carbon footprint immediately.
  • By purchasing RECs, companies can buy time to strategize, secure funding, and implement comprehensive decarbonization plans—ultimately moving toward a more sustainable and carbon-neutral future at a manageable pace.
• Easy to Use
  • Businesses don’t need technical knowledge of renewable energy to purchase RECs. The process is user-friendly and designed for ease of use. Most platforms offer:
    • Simple User Interfaces: Platforms like CnerG’s REC marketplace have intuitive interfaces that guide users through the entire process. From selecting your desired RECs to completing the purchase, everything is designed to be as simple as possible.
    • Customer Support: If you have questions or need help understanding the process, platforms typically offer customer support to assist with any technicalities or specific requirements.

At CnerG, we understand that small and medium-sized enterprises (SMEs) are looking for practical ways to reduce their carbon footprint and meet sustainability goals. Our Renewable Energy Certificate (REC) Marketplace Platform provides the tools you need to track your emissions, manage REC transactions, and collaborate with your supply chain—all while simplifying the decarbonization process. Here’s how we can help:

• Track and Report Your Carbon Emissions Easily
  • Our platform makes it simple for you to measure your carbon emissions and track your progress toward sustainability goals. With our carbon accounting tools, we automatically calculate the carbon savings from your REC purchases, helping you stay compliant with environmental regulations and easily report your efforts.
• Manage Supply Chain Sustainability
  • If you’re part of a larger supply chain, our entity management features allow you to monitor and influence your suppliers’ sustainability efforts. As a parent company or larger business, you can recommend and track REC purchases from subsidiaries and suppliers, ensuring everyone is aligned with your decarbonization goals.
• Simplify REC Transactions
  • We’ve made it easy for you to buy and trade RECs, helping you offset your carbon emissions effortlessly. Our platform provides access to a wide range of renewable energy credits and streamlines the entire process, reducing administrative hassle so you can focus on your core business.
  • Additionally, companies can specify their unique REC requirements—regardless of type or volume—and CnerG will accommodate these needs by aggregating demand, eliminating concerns about minimum order quantities.
• Build a Sustainable Network
  • We also help you create a network of sustainability-minded partners. If you're working with larger companies, they can recommend specific RECs to you, making it easier to participate in the renewable energy marketplace and improve your environmental practices.
• Achieve Long-Term Sustainability Goals
  • Our platform supports you in setting and achieving your long-term decarbonization targets. With reliable tracking tools and industry-standard verification, we help you stay on track with your sustainability commitments, while demonstrating your progress to stakeholders.
• At CnerG, we’re committed to making it easier for SMEs like yours to decarbonize, track emissions, and collaborate with your supply chain on sustainability. By simplifying REC transactions and providing powerful tools for carbon emission calculation, we help you meet your environmental goals—while also supporting your business with transparency, cost savings, and long-term growth.

• Renewable energy refers to power generated from sources that are naturally replenished on a human timescale, meaning they are virtually inexhaustible and do not produce harmful emissions. Unlike fossil fuels, which take millions of years to form, renewable energy sources can be sustainably harvested and used with minimal environmental impact.
• The primary types of renewable energy include:
  • 1. Solar Energy: Generated through the use of solar panels that convert sunlight into electricity.
  • 2. Wind Energy: Generated by wind turbines that convert the kinetic energy of wind into electrical power.
  • 3. Hydropower: Utilizes the flow of water, typically from rivers or dams, to generate electricity through turbines.
  • 4. Biomass: Organic materials, like wood, agricultural residues, or waste, are used to produce heat or electricity.
  • 5. Geothermal Energy: Harnesses the heat stored beneath the Earth's surface for electricity generation or direct heating.
• Renewable energy is essential to decarbonization, as it generates minimal to no greenhouse gas emissions compared to traditional fossil fuel-based energy sources. By transitioning to renewables, organizations can significantly reduce their Scope 2 emissions—those associated with purchased electricity—helping to meet global climate goals. As the world accelerates efforts to lower emissions, renewable energy serves as a cornerstone for powering economies sustainably while minimizing environmental impact.

• RE100 is a global initiative uniting the world’s most influential companies committed to sourcing 100% of their electricity from renewable sources by a set target year, typically 2050 or earlier. Launched in 2014, RE100 encourages businesses to transition to renewable energy to significantly reduce their carbon footprint and support the global shift toward a low-carbon economy.
• In addition to this, RE100 provides companies with access to peer learning, policy support, and local market insights, all aimed at achieving the mission of zero-carbon grids globally by 2040.
  • Membership in RE100 requires companies to make a public commitment to reach 100% renewable energy for their global operations. This commitment often involves a combination of the following strategies:
  • Direct procurement of renewable energy through power purchase agreements (PPAs) or long-term contracts with renewable energy producers.
  • Investing in renewable energy projects such as wind farms or solar installations.
  • Buying Renewable Energy Certificates (RECs) to offset their energy consumption with renewable energy.
• By joining RE100, companies not only contribute to the global effort to combat climate change but also reap benefits such as:
  • Enhanced Brand Reputation: Consumers and investors increasingly favor companies with strong sustainability credentials.
  • Attracting and Retaining Talent: A commitment to sustainability helps companies appeal to employees who are passionate about environmental responsibility.
  • Risk Mitigation: Transitioning to renewable energy reduces exposure to the volatility of fossil fuel markets and future regulatory penalties
• As of today, hundreds of companies worldwide, including major names like Google, Apple, Microsoft, and Unilever, have committed to 100% renewable energy through the RE100 initiative, helping to lead the charge in the transition to a sustainable energy future.

• Carbon Credits are permits or certificates that allow the emission of one metric ton of carbon dioxide (CO₂) or equivalent greenhouse gases. They are part of a market-based approach to combat climate change by encouraging reductions in emissions. Credits are generated by projects like renewable energy, reforestation, or methane capture, which actively reduce or remove greenhouse gases from the atmosphere. Companies or individuals can purchase these credits to offset their emissions, either voluntarily or to meet regulatory requirements.
• Carbon Credits play a key role in decarbonization efforts. They fund sustainable projects, drive investment in clean technologies, and provide a pathway for businesses to transition toward carbon neutrality. The credits not only reduce global greenhouse gas emissions but also support innovation and accountability in addressing the climate crisis.