The SBTi Corporate Net-Zero Standard v2.0: Frequently asked questions

The Science-Based Targets initiative (SBTi) released the second version of its Corporate Net Zero Standard (CNZS), a framework for emissions reduction target setting widely used by corporate companies. While the Standard v2.0 is currently available for use, it is not yet mandatory. SBTi recommends companies to use it for target-setting from 2028, and it will be mandatory for target setting for the 2030-2035 cycle.

Energy Attribute Certificates (EACs) are considered valid instruments to claim ownership of the environmental attributes of renewable energy and to contribute to the decarbonisation of shared electricity and gas grids. The CNZS v2.0 also introduces some changes in how, when, and where EACs can be purchased and how their use must be reported. These are some of the most frequent questions on how to use EACs for renewable electricity and gas in line with the new standard.

What are the levels of action recognised by the CNZS v2.0?

The CNZS v2.0 introduces three different levels of action:

• Activity level: Actions that reduce emissions either directly caused by your company or caused in the companies supply chain. This includes Scope 3 to the extent that a company can change suppliers based on emission factors.
• Activity-pool level: Actions that take place in a shared grid—such as electricity and gas—where several companies combined contribute to total system emissions and efforts of decarbonisation. EACs are valid at the activity-pool level.
• Sector level: Where options at the activity or activity-pool level are limited, companies can take other relevant actions for long-term decarbonisation of the sector within which your company causes emissions. EACs are valid at the sector level.

Can my company report EAC purchases as part of our physical GHG inventory?

No, you should not report EAC purchases towards your physical GHG inventory. You should report EAC purchases as efforts at decarbonising energy grids (activity pools) or sectors.

Can my company use EACs for Scope 1 if it sources energy from a shared grid or storage tank?

Yes, your company can use EACs towards your Scope 1 energy consumption. For these to be valid, you must report how your purchases are expected to contribute to grid decarbonisation, describe how your purchases are complementary to direct intervention in your own emissions from energy consumption, and specify the market boundary you are using.

Is there a temporal matching requirement for renewable gas EACs?

Yes, you must purchase EACs from within the same 12-month-period as your consumption.

Does the CNZS v2.0 introduce new market boundaries for EACs for electricity?

Yes, the CNZS v2.0 defines market boundaries, also known as deliverability regions, along bidding or price zones in Europe, other territorial regions in North America, and some countries and national borders for most countries without zonal pricing.

Does the CNZS v2.0 require hourly matching of electricity EACs?

Yes, but only for companies with an annual consumption of at least 10 GWh per deliverability region (market boundary) and which are classified as Category A companies.

Until 2030, SBTi will show recognition for companies that achieve at least 50% hourly matching. The threshold will increase to 75% before 2035 and to 90% after 2035.

What is a Category A and Category B company?

Category A companies are defined as:

1) organisations with a net turnover of more than € 450 million, or with more than 1,000 full-time employees;

2) companies whose Scope 1 & 2 emissions are greater than 10 000 tCO2e or meet at least two of the following criteria: a balance sheet over € 25 million, a net turnover above € 50 million, a full-time employee count of at least 250.

Category B companies are all those which do not fulfil the criteria above, regardless of their location.

Are there any new quality criteria for EACs?

Yes, SBTi introduces a series of integrity criteria for EACs:

• EACs must convey information about the physical attributes of the energy carrier and carbon intensity from production and use. For biomethane EACs, the carbon intensity can be substantiated with a Guarantee of Origins plus a Proof of Sustainability or another audit / certification.
• Companies must be able to account for their attributed emissions in their inventory in line with GHG Protocol requirements.
• Attributes purchased through EACs must be proportionally assign throughout your processing stages.
• You must purchase EACs from systems and frameworks that demonstrate grid decarbonisation.

SBTi requires reporting companies to quantify the scale and outcome of your EAC purchase as it contributes to grid decarbonisation. How should companies do that?

Companies should describe to their auditors the added value EACs give to renewable energy producers. They can also purchase EACs from power plants whose investment costs are not yet fully paid down or from younger power plants to increase their effect on new capacity installation.

Can my company use EACs towards electricity consumption in Scope 3?

Yes, you can use EACs towards electricity consumption in Scope 3.

Should my company purchase EACs directly or request suppliers / customers to do so on our behalf?

Both options are available. You can set a Scope 3 target for supplier and / or customer alignment and work to encourage your suppliers and customers to purchase renewable energy.

You can also set a Scope 3 target for upstream goods and services, identify the energy carriers you want to decarbonise, and purchase correct EACs within the same system boundary.

If you are unable to purchase the correct renewable energy type within the correct system boundary, you can also engage in sector-level action.

What kind of documentation should my company retain for audits?

Always retain contracts for purchase of renewable energy. Where they exist, always make sure there are cancellation statements from a third-party run registry identifying the beneficiary (you or a company in your value chain), and location. If you purchase your EACs from an energy supplier in a bundled contract, make sure that your contract specifies delivery of cancellation statements with the correct beneficiary.

Are carbon removals valid under the CNZS v2.0?

Carbon removal and reduction projects, referred to by the SBTi as “projects”, are valid but most meet several criteria:

• They must result in measurable reductions or removals.
• They must be performed by your company or on the behalf of your company (by a third party).
• Their emissions reduction claims must not be based on hypothetical scenarios.
• For Scopes 1 & 2, they must be reflected in the company’ physical GHG inventory
• As part of a voluntary programme, you may receive added recognition for funding recent removal projects. Projects must not be more than five years older than your reporting year.

When is the CNZS v2.0 mandatory from?

The v2.0 will be mandatory for target setting from 2028 onwards. Companies that already have targets should use v2.0 to set targets for the 2030-2035 cycle. Companies that have current commitments to set targets based on v1.0 are encouraged to use the old version for their first targets as long as these are committed before the end of 2027.