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Amid growing concern about climate change and facing pressure from investors, regulators, and consumers, companies are feeling the urgency to shrink their carbon footprint. This is particularly true in Singapore, where ambitious climate targets contend with geographical constraints that limit large-scale renewable energy projects. These constraints make Renewable Energy Certificates (RECs) a valuable alternative for meeting corporate sustainability goals.
RECs offer a simple, credible way for companies to claim the environmental benefits of renewable electricity (RE) without investing directly in RE infrastructure. They support local projects, contribute to the renewables sector, and help companies comply with regulations while improving sustainability credentials. As demand increases and decarbonization commitments accelerate, securing RECs early allows a company to manage costs, avoid procurement risks, and align with evolving compliance frameworks.
Buying RECs is among the most accessible steps a company in Singapore can take to lower the carbon footprint of its commercial and industrial sites. They are suitable for companies just beginning their decarbonization journey and those that need to bridge gaps in long-term RE plans.
RECs, also known as Energy Attribute Certificates (EACs), are market-based instruments representing the non-power attributes of RE. They track the origin of renewable energy, guaranteeing that 1 megawatt-hour (MWh) of electricity has been generated from a renewable source and delivered to the grid. By enabling claims of RE use, RECs help reduce Scope 2 emissions associated with electricity consumption. They are widely used on voluntary markets and have compliance use cases, supporting emissions accounting, disclosure, and validation.
Companies can obtain RECs in various ways. Most businesses in Singapore purchase “unbundled” RECs, which are sold separately from energy supply contracts, and thus from the physical renewable electricity they represent. This provides flexibility in procurement, as buyers may claim RE consumption without actually using the renewable electrons. Alternatively, RECs can be obtained through long-term power purchase agreements (PPAs), which “bundle” RE together with certificates.
To finalize a RE claim, RECs must be “retired” through tracking registries such as I-REC, Green-e, or APX, to prevent double-counting, ensuring no other entity can use the REC again and claim the same environmental benefit. This final step reinforces transparency and credibility in sustainability reporting.
Singapore’s energy landscape presents unique challenges. Limited land and RE generation capacity make local RECs inherently scarce—and more valuable—and the country’s renewable energy policies are a work in progress. This combination of factors leads to several strategic advantages for those who acquire local RECs early.
Companies sourcing RECs from Singapore-based projects or securing surplus RECs from locally contracted corporate PPAs gain access to transparent and verifiable sustainability assets. This enhances ESG claims, demonstrates direct support for the national energy transition, and resonates more than cross-border alternatives with investors, business partners, and customers that prioritize responsible corporate practices. In these ways, sourcing local RECs delivers a distinct competitive advantage.
Singapore ranks among the top three most challenging countries in which to procure renewable energy, and the race to acquire RE is officially on. As corporate decarbonization goals accelerate, local REC demand is expected to outpace supply. Early adopters can secure availability and favorable pricing ahead of market congestion.
Singapore’s evolving renewable energy policies favor early and local REC sourcing, as emphasized in national standard SS 673, which recommends sourcing RECs from the same market boundary in which the company operates and consumes electricity. Leading reporting frameworks like RE100 and the Science-Based Targets initiative (SBTi) also may have location-based requirements. RE100 requires EACs to be generated and retired in the same country or market where the RE is consumed, unless a specific cross-border mechanism is recognized, as in the EU. All of which reinforces the strategic value of local RECs.
Acquiring local RECs demonstrates support for Singapore’s renewable energy transition, enhancing a company’s reputation as a sustainability leader. By contributing directly to Singapore’s renewable energy ecosystem, businesses not only meet carbon reduction goals but also align with national priorities. In a region where clean energy resources are limited, taking proactive steps to secure local RECs shows a commitment to responsible corporate practices.
While ASEAN’s power grid integration efforts may eventually enable cross-border REC transactions, waiting for an internationally recognized framework carries considerable risks. Regulatory uncertainty, infrastructure limitations, and future restrictions on RE exports could delay or complicate access to compliant cross-border RECs. With each country prioritizing its own energy security, there is no clear timeline for a unified cross-border system.
Even if feasible, cross-border REC trade is unlikely to offer a cost-effective solution in the near term. Infrastructure investments and long project lead times could drive up the cost of imported RE, making local RECs a more stable and financially prudent option. As corporate sustainability commitments grow and policies drive up REC demand, prices are expected to rise. Early adopters can lock in lower prices, avoid procurement risks, and align with global best practices in emissions reporting.
With rising sustainability commitments, evolving regulations, and tightening REC supply, businesses in Singapore face a clear choice: secure local RECs now or risk future cost uncertainty and compliance challenges. Waiting for cross-border REC trade to materialize means exposure to multiple factors that could complicate rather than simplify sustainability strategies. By acting today, companies can lock in cost-effective REC pricing, strengthen ESG credentials, and stay ahead of shifting compliance requirements. If local supply is available, it is advisable to act now rather than wait for imports.
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