Designing EAC Markets for the Energy Transition: Navigating Between Voluntary Incentives and Regulatory Signals

RECs in the USA, GECs in China, and Certificates of Electricity Origin in Russia, as well as voluntary standards such as I-RECs, TIGRs, and Carbon Zero.

EACs play a dual role in the energy transition. On one hand, they support adherence to regulated renewable energy targets and facilitate corporate procurement strategies aligned with voluntary carbon accounting frameworks, including the GHG Protocol, the Climate

Group RE100 Initiative, and the Science-Based Targets Initiative (SBTi). On the other hand,

EAC markets face increasing scrutiny regarding their credibility, additionality, and environmental impact. Key challenges include price volatility, fluctuating demand signals, limited temporal and geographic granularity, which undermine the effectiveness of EACs and create risks, including the potential for double counting.

As a result, leading voluntary standards are undergoing substantial revisions. The GHG

Protocol released a second draft of its Scope 2 Guidance, introducing stricter market-based accounting requirements focused on transparency, grid emissions alignment, additionality and temporal accuracy prioritization. In parallel, Climate Group has launched a 24/7 clean energy matching framework that encourages companies to match their electricity consumption with low-carbon energy production on an hourly and location-specific basis. Similarly, the SBTi is tightening its criteria to ensure that renewable energy procurement leads to measurable reductions in emissions. Together, these initiatives reflect a broader shift toward higherquality, more granular instruments designed to stimulate new renewable capacity rather than reallocating existing generation.

However, experience shows that voluntary demand and contractual instruments alone are insufficient to ensure adequate investment in new generation capacity. As a result, many jurisdictions have introduced mandatory targets and complementary incentives. In the United

States, state-level RPS create stable demand for EAC-backed electricity, while the Inflation

Reduction Act (IRA) provides long-term tax credits and bonus incentives for clean energy projects. Net metering encourages distributed solar, and emerging Clean Energy Standards

(CES) expand targets to zero-carbon sources. Globally, emerging policies such as the EU’s

Carbon Border Adjustment Mechanism (CBAM) and China’s expanding green certificate system reflect a broader move toward more integrated and coordinated regulatory frameworks.

This paper explores recent and upcoming reforms to voluntary standards and assesses their implications for EAC design and market functioning. It also examines the role of certificates in developing regulatory frameworks, including CBAM. The paper provides recommendations to enhance the credibility of voluntary and regulated EAC systems, strengthen investment signals, and support the energy transition. The analysis is complemented by a case study simulating a day-ahead Russian wholesale electricity market to assess emissions reductions achieved through renewable energy deployment.