A global carbon markets company, ClearBlue Markets, has secured $8 million in Series A financing round led by Royal Bank of Canada (RBC) to help support the growth of its technology platform. 

The Canadian-based climate tech firm’s fundraising will allow it to have more exposure in financial markets. The investment from RBC aligns with the bank’s climate strategy to support its clients transitioning to net zero emissions.  

RBC is Canada’s largest bank and one of the biggest in the world based on market capitalization. Apart from Canada, its 17 million clients also come from the U.S. and 27 other countries the bank is serving. 

ClearBlue Markets

ClearBlue Markets offers carbon markets services to companies globally through its advisory expertise and AI enabled technology. These services simplify and bring confidence to firms in meeting their carbon compliance requirements or voluntary net zero goals. 

Other products and solutions the company offers include:

offset strategy development, 
carbon market policy and risk assessments, 
demand and supply analysis, 
price forecasting for offsets, carbon credits and renewable energy credits, 
transaction facilitation, and 
offset development.

The company is headquartered in Canada and has a European office in the Netherlands.

Today, it is serving a 200+ client portfolio that spans local, multinational, and blue-chip companies, which include CRH, Mercuria, JD Irving, Bain Capital Partnership Strategies, Mitsubishi, Energir and VARO Energy.

The $8M Funding

Co-founder and CEO of ClearBlueMarkets, Michael Berends noted that:

“We believe that one tonne of carbon dioxide reduced, avoided, or sequestered contributes to the fight against climate change in meaningful and measurable ways. Continued alignment and investments from key players, like RBC, will drive transparency and confidence in compliance and voluntary carbon markets worldwide for more effective emission pricing and reductions…”

RBC invests in ClearBlue Markets believing that its technology platform will provide its own clients with more access to advisory services and technology they need to transition to a more sustainable future. The bank sees the important role of the company in addressing the global challenge on climate change.  

The round also has participation from existing investor CRCM Ventures. The funding will further enhance the usability of ClearBlue Markets’ tech platform. It will also help expand the functionality of the company’s carbon market tools. 

Overall, the investment will enable the company to serve more clients in more locations. 

Remarking on the investment, ClearBlue CTO and Co-Founder Nicolas Girod said:

“Purpose-driven investments, like the one by RBC, are central to ClearBlue Markets as we expand. They extend our reach and scale beyond what we could do alone and this helps our clients succeed in environmental markets… This strategic investment will unlock capital to double down on technology and see more clients confidently achieve their carbon reduction and net zero ambitions.”

One-Stop-Shop for Carbon Market Needs

ClearBlue has received multiple awards for its advisory, market analysis, and offset development services. These include the coveted 2022 Environmental Finance Voluntary Carbon Markets Award for Best Advisor. 

The company is able to win those awards by being a one-stop-shop for its clients’ carbon market needs.

ClearBlue is also leveraging its extensive carbon pricing experience worldwide to guide emitters through the ever-evolving carbon markets. This allows the company to gain insights and so provide a holistic approach to carbon markets globally. 

Here’s the global coverage of ClearBlue with the specific services it’s providing each region.

Source: https://www.clearbluemarkets.com/markets

ClearBlue also appointed the former CEO of Accenture Canada and current advisor to the Nature Conservancy of Canada, Mr. Bill Morris to its Board of Directors.

His experience in both environment and carbon markets will be helpful as ClearBlue Markets expands globally.

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Also known as green tag, the use of renewable energy credits (RECs) have been on the rise as entities are looking for ways to lower their carbon footprint. 

But as they are somehow similar to carbon credits, many are asking what are renewable energy credits and how they differ from the former. While others are wondering how to buy RECs. 

The questions are valid and are, in fact, very important. 

Renewable sources are the future of the energy transition. They’re not only a clean and sustainable source of energy but they’re also good for the health of the planet and the people. 

This article will explain what renewable energy credits are, how they are different from carbon credits, and how to purchase them.

What Are Renewable Energy Credits?

Formally, RECs stands for renewable energy certificates. They’re a market-based instrument that certifies the holder owns a megawatt-hour (MWh) of electricity from a clean energy source. 

The green tag represents the energy generated by renewable sources such as solar, wind, and hydropower facilities. 

Buying RECs is not the same as buying electricity… Rather, they represent the clean energy attributes of renewable electricity.  

The global market size for RECs was recorded at USD 881.7 billion in 2020. And it’s expected to hit about $2 billion by 2030, growing at 8.4% from 2022.

Once the power provider has fed the energy into the grid, the corresponding RECs produced can then be sold on the open market as a non-tangible energy commodity. The RECs earned by the certificate holder are tradable. 

In other words, they may be sold to other entities that are polluting as a carbon credit to offset their emissions. 

Businesses can buy renewable energy credits along with their electricity. And the RECs are proof that a certain amount of the electricity was from a renewable source.

How Are RECs Produced?

RECs are produced when a renewable energy source generates one MWh of electricity and sends it to the grid. For instance, if an onshore solar power facility generates 10 MWh of electricity, they also earn 10 RECs that they can keep or sell to others. 

If an entity, either an individual or a company, buys the credits, they’re actually paying for the “renewable” part of the power from the solar farm. The buyer can then say that 10 MWh of their energy or electricity came from a renewable source. 

When a renewable energy certificate has been sold, it can’t be bought again. Each REC has a unique serial number and includes information about where it is from, the type of source producing it, the date of generation, etc. 

Not to mention that the trading of RECs is also monitored and reported. 

How can You Benefit from RECs?

Both investors and consumers are after the green tag your business shows. It means using RECs gives them proof that you are getting your energy from renewable sources. You will get a plus point out of that.

Renewable energy credits also allow you to invest directly in projects like solar farms. This is perfect if your business has stores or locations in different places. 

But keep in mind that relying too much on RECs may also be bad for your reputation… because purchasing RECs without actually doing something to slash your energy use or carbon emissions is not a good idea. 

You should depend on RECs only if you can’t afford to make direct energy use reductions.

Still, in broader terms, RECs do promote the use and production of renewable energy as it raises the demand for renewables. More supply means cheaper RECs, too. With the threat of climate change continuing to loom, this is surely a win for the planet.

So, how do you purchase RECs?

How Do RECs Purchases Work?

Those who want to buy renewable energy credits can use them the same as how they consume conventional energy. There are four different ways to buy or produce RECs, including:

Buying “unbundled” RECs
Power Purchase Agreements (PPAs)
Options from energy suppliers
Self-generation

1. Unbundled RECs

As the name says, unbundled RECs are not paired with the underlying electricity you consume. These RECs are also not tied to any power purchase agreements. 

Instead, they are available at REC retailers at any time, making it the fastest way to access them. Companies often buy them in bulk for their huge electricity use. The credits count only toward your REC goals if they’re produced within the 21-month window for the period you’ll be using them. 

If you’re using RECs for compliance purposes, the Environmental Protection Agency suggests that you distribute them evenly across all your business facilities. It means the distribution is proportional so that each facility will have the same share of their energy use offset by RECs.

2. PPAs

A power purchase agreement (PPA) is a contract made between an “off-taker” and the developer of a renewable energy project. Most often, PPAs are long-term contracts that cover 10 to 20 years. 

Most banks will only lend to project developers if they have a PPA available. That’s because PPA acts as a safe bet that guarantees the lender a specific amount of revenue. 

So, in other words, if you enter into a PPA, you make it possible for your project to be financed and developed. 

As opposed to buying unbundled RECs, the investment can be traced to a new project coming online. The amount of CO2 emissions avoided vary depending on where the renewable project is. 

3. Energy suppliers

Most electricity providers such as utilities and competitive suppliers provide ways for consumers to get renewable energy credits. Examples of short-term commitments are green power or green pricing programs while examples of long-term contracts are green tariffs.  

According to the U.S. Department of Energy, here’s how these programs differ.  

Source: US Department of Energy

4. Self-generation

There are various ways that your property or business facility can generate RECs. These include producing biomass, geothermal heat, wind turbines, and the most common ones are solar panels. 

Popular examples of companies that self-generate renewable energy certificates are Apple and Tesla. Their headquarters feature huge onsite rooftop solar panels where they get most of their energy. 

Tesla dominates the REC market for clean electric vehicles, which is responsible for the company’s string of quarterly profits. It’s otherwise recognized as regulatory carbon credits in its financial reports. Sales from these credits reached a record $1.78 billion in 2022 alone.

Some firms choose to have on-site PPA where they host an on-site system that’s owned, operated, and maintained by another company. Then they just agree to buy the energy from that renewable system for 10 to 20 years. 

While the power doesn’t flow directly to the firm’s outlets but once the on-site system gets online, RECs will be issued in a corresponding amount. In case the RECs generated in this way are more than you use at the location, you can either send them to your other branches or sell them on the voluntary market. 

For businesses, the most common purchasing ways may be through purchasing unbundled RECs or self-generation through solar energy projects.

The question this time is whether solar projects generate carbon credits? This also points us out to the last query on what are the key differences between renewable energy credits vs. carbon credits. 

Do Solar Projects Generate Carbon Credits?

Yes, they do. Solar projects are one of the common initiatives that companies invest in to produce RECs and these credits are another form of carbon credits. 

In particular, solar projects generate solar renewable energy credits (SRECs). They share the same concept as RECs but are solely from solar energy projects. So, if you decide to self-generate RECs through solar projects, you can specifically earn SRECs and trade them for RECs.  

In the U.S., there’s a federal solar energy tax credit – a tax credit that is claimable on federal income taxes for a percentage of the cost of a solar PV system paid for.

Solar PV systems installed in 2020 and 2021 are eligible for a 26% tax credit. In 2022, Congress passed an extension of the tax credit, increasing it to 30% for the installation between 2022-2032.

Depending on the state you reside in, the price for SRECs varies and they’re often more expensive than RECs. SRECs price range from $10 to $400 while RECs prices go as low as $1 to $8 for wind energy. In some markets, they can be more than that range.  

So, if SRECs are also called carbon credits, what makes the latter different from RECs? 

Renewable Energy Credits Vs. Carbon Credits (Key Differences)

In essence, RECs work the same way as carbon credits. They are both tools that can help individuals and organizations alike to reduce their carbon footprint. But while they are often used in the same talks, they’re not interchangeable.

Let’s learn the difference between the two by defining each concept. 

What are carbon credits?

Carbon credits are tradable certificates or permits that give entities, including countries the right to emit one tonne or 1,000 kg of CO2 or its equivalent gas. 

Carbon credits, also known as carbon offsets in the voluntary carbon market, are a form of climate currency. It means they’re subject to supply and demand and traded in a cap-and-trade market. 

This market became established after the Kyoto Protocol set a limit on the amount of GHG emissions, nationally and globally. It is a compliance carbon market that limits how much total carbon dioxide can be released into the air.

Each entity subject to the cap-and-trade scheme is given a certain amount of carbon credits every year. If they go above their emissions limit, they can buy carbon credits from those who have unused or excess credits.  

In other words, they’re a market-based mechanism to incentivize carbon emissions reductions. But they are not the only tools available… renewable energy credits also exist.

RECs are another option to slash carbon emissions. They’re also a form of climate currency but are used in the renewables market.

Where carbon credits help offset GHG emissions, renewable energy credits offset electricity use from non-renewable sources. 

In a gist, RECs offset kilowatt hours of electricity use instead of carbon emissions. 

Yet, using renewables also help cut GHG emissions by favoring energy sources that don’t emit carbon. They act as an accounting mechanism for renewable energies as they’re fed into the power grid.

RECs and Carbon Credits

Both carbon credits and RECs offer ways for polluters to mitigate carbon emissions and so address global warming. But as you now know, they’re also different tools of climate action with different impacts. 

So, it’s important to understand their key difference: carbon credits cap CO2 emissions while RECs create new energy from renewable sources. 

For most companies, they are using both RECs and carbon credits in their accounting and reporting of emissions. They’re using RECs specifically to offset their energy consumption while they’re buying carbon credits to offset other sources of emissions. 

For instance, they use carbon credits to offset their employees’ air travel emissions or the footprint of their business operations.

But they can use RECs to reduce both their energy use and carbon emissions. If you want to do the same, buying RECs is the option you’re looking for. 

How To Buy Renewable Energy Credits 

Just like buying carbon credits, there are also two types of renewable energy credits purchases – voluntary and compliance. 

You can choose to buy RECs voluntarily, even if you’re not compelled to do so.

In most cases, voluntary buyers of RECs are eco-friendly companies driven by their sustainability goals. But individuals can also buy RECs voluntarily to support renewable energy.

In the compliance market, REC buyers are mandated to use renewable energy sources as a way to limit their footprint. Utility companies are largely subject to REC compliance wherein they must meet a certain percentage of their power coming from renewable sources. 

Compliance buyers can either buy RECs or produce them through renewable energy projects like solar or wind farms.

Regardless of how you get the RECs, they’re an excellent way to promote low-carbon energy sources and reduce the demand for dirty, fossil-fueled power. 

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The U.S. Department of Justice sided with Colorado’s local governments, which is the most recent case of a growing wave of governments pushing for lawsuits against the big oil companies, demanding them to pay for their climate damages.

Climate Litigation against Big Oil Companies

Oil giants have known the dangers of burning fossil fuels for decades. With their persistent efforts to block action that will control carbon pollution, they were able to also deny that the science behind the claim was not clear. 

But since the world knew that the big oil companies are aware of the damages their products make to the climate, a wave of lawsuits from counties, cities, and states came forward. These climate litigations, reaching almost 2 dozen now, seek to place fossil fuel companies on trial for deceiving the public.  

However, not a single one of them made it to trial. They’ve been bouncing around between state and federal courts, with oil giants in control to delay any decision. 

The DoJ brief on the Colorado case, Suncor v. Boulder County, against two oil companies – Suncor and Exxon – might soon end the inaction. The brief argued that the case should be heard in state court, not federal, which is favorable to the plaintiffs.

The Colorado case started in 2018 when the city and county of Boulder sued Suncor Energy as well as Exxon. They seek millions of dollars to improve their infrastructure to cope with climate change. 

The Colorado government claimed that the oil giants are violating the state’s consumer protection laws by selling fossil fuels in the state. That’s despite the fact that these oil companies definitely know that their products would damage the climate. 

Burning of fossil fuels can result in more damaging disasters such as wildfires, floods, droughts, and more fatal heat waves, which is what the state is witnessing today. 

Experts noted that the DoJ brief on the Colorado case is an action by the Biden administration supporting the climate lawsuits. A law professor said that the governments are now siding with climate advocates. 

When the Supreme Court reviews this case, it can be a turning point for climate litigation against oil companies.

Other Climate Lawsuits Filed

State governments across the US have filed lawsuits claiming that oil giants, namely Exxon, Shell, Chevron, and BP, deceived the public about the damage of their products, which caused devastating climate disasters.  

In 2017, California cities and counties began the trend by suing plenty of fossil fuel companies for deceptive marketing. The plaintiffs use the state’s tort laws that protect the public from misleading advertising. 

Attorneys general in other states followed suit. 

In 2018, Rhode Island also filed a similar lawsuit against big oil companies for deceiving people about the dangers of climate change. 

A year after that, the New York state accused Exxon of misleading shareholders about climate change. But a judge ruled that the state attorney general failed to show enough evidence against the oil giant. 

In 2020, another climate lawsuit was filed in Hawaii. The city and county of Honolulu were after the oil companies, pushing them to pay for their climate damages. The big oil defendants include Exxon, Sunoco, and Chevron. 

Despite an ongoing appeal from the fossil fuel industry, a Hawaii judge ordered that a discovery process begins. It is a pre-trial step in which both parties collect pieces of evidence from documents and witnesses.

Amidst the progress of the lawsuits, oil companies continue to argue that the case isn’t really about deceptive marketing. It’s more about the broader question of climate change, which should be moved to the federal courts.

A law professor at the University of Hawaii commented on this, saying:

“The fossil fuel companies are afraid of state courts… They are petrified of state courts who are closer to the problem, closer to the issues, and absolutely terrified of going in front of juries of real people.”

The oil companies also argue that local governments have been encouraging the production and use of oil and gas. 

Proponents of climate lawsuits against fossil fuel companies likened the litigation to cases against big tobacco companies in the 1990s. Cigarette companies were ordered to settle damages of over $240 billion after decades of denying that smoking can cause cancer. 

Tobacco companies agreed to pay annual sums of money to the states to compensate for healthcare costs related to smoking.

So, if the climate lawsuits ended up favoring the plaintiffs, they would compel oil companies to also pay for climate damages. It will also make the banking sector think that investing in fossil fuels is a risky business. 

Judges have repeatedly rejected oil companies’ line of reasoning and the plaintiffs maintained that the lawsuits belong in state court. It’s now up to the Supreme Court to weigh on the case.

Supreme Court Decision: federal vs. state court

The Supreme Court turned to the solicitor general for help to decide on where the Colorado case belongs. The official said that the case should not be removed to federal court but remain in the state court.

There are two options for the Supreme Court to push these climate lawsuits forward. It can agree to hear the case or it can take it up. Either way, the lawsuit will proceed back in the state court. 

In that case, it will impact other pending climate lawsuits, with all the cases being heard in state courts.   

If the SC decides to hear the case, the trial can happen in the fall and the court can decide next year. In this case, all other similar cases would be on hold until the final decision comes down.

Once the climate lawsuits proceed to trial, juries would most likely see a decades-long trail of evidence showing how oil companies deceived the public about climate change like the “Exxon Knew” controversy. 

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The European Commission (EC) proposed the Net-Zero Industry Act to ramp up manufacturing of clean technologies in the EU and make the bloc prepared for the clean energy transition. 

The Act is part of the $270 billion Green Deal Industrial Plan announced by EC President Ursula von der Leyen in Davos last month. The Plan will support Europe’s race to green transition and boost its net zero industry. 

The EU net zero ecosystem doubled in value from 2020 to 2021, hitting 100 billion Euros. But currently, the region still largely relies on imports for most of its net zero technologies as follows: 

Over 90% of solar photovoltaic (PV) wafers and other PV components are from China 
More than ¼ of electric cars and batteries are also from China 

In fact, China accounts for 90% of global investments in net zero technology manufacturing facilities and the proposed Act will try to change that.

What is the Net-Zero Industry Act?

The Net-Zero Industry Act will create a simpler and more predictable legal framework for net zero industries in the EU. It will make the region’s energy system more sustainable and secure while creating better conditions for net zero projects.

The goal of the Act is to make Europe’s overall strategic net zero tech manufacturing capacity reach at least 40% of the bloc’s deployment needs by 2030.  

Achieving this aim will help the EU speed up progress toward its energy and climate targets and move towards climate neutrality. Moreover, the Act will boost the region’s industry competitiveness, create green jobs, and support Europe’s efforts to be energy independent. 

As per the EC President: 

“We need a regulatory environment that allows us to scale up the clean energy transition quickly. The Net-Zero Industry Act will do just that. It will create the best conditions for those sectors that are crucial for us to reach net-zero by 2050… Demand is growing in Europe and globally, and we are acting now to make sure we can meet more of this demand with European supply.” 

With that, the Net-Zero Industry Act sets out a clear framework to reduce the EU’s reliance on highly concentrated imports. 

The proposed legislation supports, in particular, strategic net zero technologies that can significantly contribute to the EU’s decarbonization goals. These include: 

solar photovoltaic and solar thermal, 
onshore wind and offshore renewable energy, 
batteries and storage, 
heat pumps and geothermal energy, 
electrolyzers and fuel cells, 
biogas/biomethane, 
carbon capture, utilization and storage, and 
grid technologies 

The Act also supports other net zero tech sustainable alternative fuels technologies, advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle, small modular reactors, and related best-in-class fuels. 

Key Drivers of Net Zero Technology Investments

The Net-Zero Industry Act will attract investment into net zero technologies above through the following actions as stated on the EC site.

Creating enabling conditions: 

The regulation will improve conditions for investment in net zero technologies by: (1) enhancing information, (2) cutting red tape in developing projects, and (3) making permit-granting processes simpler and faster. 

The Act also proposes to prioritize Net-Zero Strategic Projects, which are considered essential for reinforcing the resilience and competitiveness of the EU net zero industry. These specifically include projects that store captured carbon emissions. 

Boosting carbon capture: 

The Act seeks to achieve a yearly injection capacity of 50 Mt in strategic carbon storage sites in Europe by 2030. Notable contributions will be from oil and gas companies operating in the EU. 

With this goal, developing carbon capture and storage in the region will become a viable climate solution, especially for hard-to-abate sectors. 

Strengthening skills: 

Through Net-Zero Industry Academies, training and education will be provided to ensure there would be enough skilled workforce to support the production of net zero technologies. This will also help create quality jobs for the industry. 

Facilitating access to markets:  

The Act demands public officials to factor in sustainability and resilience criteria in public auctions of net zero tech. This will promote supply diversification in the sector. 

Promoting innovation: 

Lastly, the Net-Zero Industry Act enables Member States to establish regulatory sandboxes for testing net zero tech and bolstering innovation. 

Implementation: Who oversees the Act?

The Net-Zero Industry Platform will be responsible for overseeing the measures or actions proposed by the Act. The Platform will bring together the EC and Member States to exchange information and coordinate actions. 

Industry experts and representatives are also welcome to contribute knowledge and expertise to the Platform. Together, they will see to it that data is available for tracking progress toward the goals of the Act. 

The Platform will drive investment and foster contacts across the EU’s net zero sectors. It will help identify the needs, barriers, and best practices for projects across the bloc.

Its actions and decisions will be most likely guided by the following net zero technology trends:

The proposed Act needs discussion and agreement by the European Parliament and the EU Council before it comes into force.

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