From the engine that keeps the refrigerator running to the high-voltage supply powering an x-ray machine, electricity supports many essential functions of human life today. It fuels (pun intended) human development, catalyzes economic growth, enables scientific and technological advancements, and more.
However, electricity production and consumption are also major drivers of global greenhouse gas emissions. In 2023, emissions associated with global energy use reached 37.4 billion tonnes, a fifth of which is consumed as electricity. That is equivalent to the annual emissions of more than 2,000 coal-fired power plants.
Because electricity is so integral to daily life, and demand for it will only continue to grow, it is critically important that we obtain it from renewable energy sources.
The Impacts of Renewable Energy Are Broad and Large-Scale
A shift to renewable energy sources can have wide-ranging impacts, the most obvious one being the provision of clean, low emissions electricity. This is also the most scalable impact. A change to renewable energy sources can be undertaken, by an entire company, if not entire sectors and regions, and therefore has the potential to result in large-scale decarbonization, possibly of an entire power grid.
Renewable energy sources are also reliable. If coupled with suitable storage systems, renewable energy sources can provide electricity even during downtime (e.g., dispatch of stored solar energy at night).
Beyond that, renewable energy can provide electricity to people in underprivileged areas because it does not rely on fossil fuels. In these areas, having access to electricity also enables people to invest in new income-generating opportunities, from incubating eggs to operating sewing machines.
Overall, renewable energy creates a great deal of employment opportunities per MW installed and has a ripple effect across entire economies as it generates jobs across a broad value chain. For example, the development of a renewable energy plant creates additional jobs in construction, transport, and maintenance during installation and operation. Likewise, rural electrification via renewable energy not only boosts productivity in agriculture and small businesses, but also reduces fuel import bills, freeing up capital for other development sectors.
In short, a shift to renewable energy creates a win-win situation. It supports global climate goals and contributes to sustainable development while also providing livelihoods for local communities and enhancing their overall well-being.
Carbon Markets and Renewable Energy: It’s (a Bit) Complicated
When renewable energy options first emerged, carbon markets provided an important way of channeling finance to such projects. Data reports show that since 2010, about a third of all carbon credits issued come from renewable energy projects.
Over time, renewable energy became one of the main sources for grid-supplied electricity growth in some countries. As a result, renewable energy projects in these regions no longer depended on carbon finance and therefore no longer met the additionality requirement that is a well-established component of most/all greenhouse gas (GHG) crediting programs.
As a result, Verra decided to limit the eligibility of renewable energy projects in the Verified Carbon Standard (VCS) Program when it launched an updated version of the program in 2019. Under version 4, only grid-connected renewable energy projects in least developed countries (LDCs) were permitted to register with the program.
However, the ubiquitous global uptake of renewable energy did not materialize. While some countries saw huge growth, some have not, and to this date many regions remain massively underserved with a supply of clean energy, which is detrimental to their decarbonization objectives—and to global climate goals as well.
When We Know Better, We Do Better
Because Verra is committed to advancing critically needed climate action in support of global climate goals, we are now considering an expanded scope of eligibility for renewable energy projects. Proposed updates to ACM0002 Grid-connected electricity generation from renewable sources, v22.0 (external), along with an update to the relevant VCS rules, would expand the eligibility of grid-connected renewable energy projects in the VCS Program to low-, lower-middle-, and upper-middle income countries.
Every renewable energy project in these regions that applies for registration in the VCS Program would still undergo Verra’s comprehensive review process and be required to demonstrate that it meets the program’s stringent additionality requirements.
Rigorous reviews by independent third-party validation/verification bodies (VVBs) ensure that projects meet these requirements. All internal review processes are underpinned by strengthened and expanded capacity and enhanced monitoring of VVBs.
Verra has also recently revised the additionality tools and electricity quantification tool that projects will need to use in conjunction with ACM0002 with the intent of aligning with the Integrity Council for the Voluntary Carbon Market’s (ICVCM) position on renewable energy (external) and Core Carbon Principles. Verra plans to submit the revised methodology to the ICVCM for its assessment.
The guardrails are in place for the scaling up renewable energy projects that are critically needed for advancing climate action – and that can change the lives of people around the world.