There is growing demand for renewable electricity all over the world, especially among large companies which report their environmental information through investor-requested disclosure platforms such as CDP (formerly the Carbon Disclosure Project). Institutional investors and asset owners especially in Europe are starting to integrate the climate performance of companies into their investment decision criteria. Science Based Targets (SBT) and Renewable 100% (RE100) are the most popular initiatives among non-state actors. The action lists developed by SBT and RE100 and others for holding the increase in global temperature to less than 2 degrees were integrated into the NAZCA (Non-State Actor Zone for Climate Action) platform by the UNFCCC.
　In order to claim consumption of renewables, CDP and the RE100 initiative call upon corporations to align with GHG protocol scope 2 guidance set by the World Resource Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) which was published in 2015, as a revision to corporate reporting standards set in the 2000s and used widely by corporations for their GHG emissions calculations. Two methods are presented in the scope 2 guidance, specifically, a location-based method and a market-based method. In the location-based calculation, companies use a grid average emissions factor, and in the market based approach, companies use emission factors depending on their contractual measures. Criteria for eligible emission factors are given for the market-based method, and a hierarchy for factors is summarized, based on the principles of avoiding double counting and double claiming.
　Tracking systems are utilized in Europe, the U.S., and many other countries. They are typically operated using IT registry systems where generation facilities produce basic information (a certificate) of their renewable electricity production for every 1 MWh. Consumers claiming for the use of renewable electricity have to retire the certificate, so that there will be no double claiming and double counting. In Europe, national governments appoint “issuing bodies” for the basic data, which is called Guarantee of Origin, while the Association of the Issuing Bodies (AIB) runs the European Energy Certificate Standard (EECS). In the U.S., ISOs and TSOs run Renewable Energy Tracking Systems, and not only their grids, but also their tracking systems are interconnected.
　In Japan, deployment of renewable energy was somehow not developed until the Fukushima accident, followed by the introduction of Feed-in Tariffs in 2012. As a result, tracking systems have not yet been discussed. If you want to procure renewable electricity in the Japanese market, you can purchase 1) green energy certificates or renewable J-credits which are unbundled from the electricity itself, and strictly overseen by the government or a public institute, or 2) renewable electricity products. For the retailers of electricity, renewable attributes from renewable electricity under the FIT scheme can be purchased through non-fossil value certificates starting in May 2018. The purpose of non-fossil value certificates is to enable new electricity retailers to buy non-fossil power, since they are obliged to achieve at least 44% of non-fossil electricity by the year 2030. Non-fossil certificates will be produced according to the power generation statistics gathered by ISOs in Japan for every three months, and retailers can purchase certificates to make renewable electricity products and sell them to electricity consumers. The revenue from this will be used to reduce the burden levied to the electricity tariff.
　Non-fossil value certificates enable electricity consumers to purchase renewable electricity through the FIT system, and widen opportunities for companies to purchase renewables. However, non-fossil value certificates only convey information about whether energy has been generated from renewables, or from other non-fossil energy sources (namely nuclear and large hydro), so consumers cannot choose the types of renewables, the location, or the starting year of the facility. There is growing interest from RE100 companies in choosing the types of renewables, such as sustainability in procurement of biomass fuels, or the additionality of the facilities. The situation will improve with the introduction of non-fossil value certificates, but the environment for global companies for the procurement of renewables in Japan remains unsatisfactory.
　In this report, we suggest the non-fossil value certificate system to convey basic information such as energy source, facility information, etc. Furthermore, national integrated tracking systems are necessary in order to show that there cannot be double counting.
　The Center for Low Carbon Society Strategy will be discussing these issues with stakeholders and aiming to develop an integrated tracking system in Japan.