Renewable Energy Certificates (RECs): A Practical Guide for Malaysian Industries to Achieve Green Goals
As sustainability becomes a core business priority, companies in Malaysia are under increasing pressure to reduce their carbon footprint. Among the many strategies to support a greener economy, Renewable Energy Certificates (RECs) have emerged as a powerful tool for organizations aiming to demonstrate their commitment to clean energy.
Whether you’re an SME in Selangor or a multinational manufacturer in Penang, RECs can play a critical role in achieving your ESG goals, enhancing corporate reputation, and aligning with Malaysia’s green transition policies. This article provides an in-depth look at what Renewable Energy Certificates (RECs) are, how they work, their benefits, and how ISSES Malaysia helps businesses take full advantage of this green energy solution.
What Are Renewable Energy Certificates (RECs)?
Renewable Energy Certificates (RECs) represent proof that one megawatt-hour (MWh) of electricity was generated from a renewable energy source and added to the power grid. They function as tradable, market-based instruments that allow buyers to claim the environmental benefits of green energy — without directly consuming it.
Each REC is issued when renewable electricity is generated and delivered to the grid, regardless of where the physical energy goes. Purchasing RECs allows businesses to offset their conventional electricity consumption with an equivalent amount of renewable energy, even if their site is powered by fossil fuels.
In short, RECs enable companies to:
- Claim renewable energy usage
- Offset Scope 2 emissions
- Comply with sustainability frameworks like RE100, CDP, and GRI
How Do Renewable Energy Certificates (RECs) Work?
Here’s a simplified step-by-step breakdown:
- Generation: A solar farm, wind turbine, or other renewable energy plant generates 1 MWh of electricity and injects it into the grid.
- Issuance: For every 1 MWh produced, one REC is issued by an authorized registry (such as I-REC or TIGRs).
- Purchase: A business purchases RECs from the market to match its energy consumption.
- Claim: The business retires the RECs, proving that their operations are powered by renewable energy — at least on paper.
Although RECs don’t deliver physical electricity, they deliver environmental attributes tied to clean energy production. This makes them especially valuable in regions like Malaysia, where direct access to green energy may be limited.
RECs vs. Carbon Credits: What’s the Difference?
A common misconception is that Renewable Energy Certificates (RECs) and carbon credits are the same. They are not.
| Feature | RECs | Carbon Credits |
|---|---|---|
| Purpose | Track and prove renewable energy generation | Offset carbon emissions |
| Unit | 1 MWh of renewable electricity | 1 metric ton of CO₂ equivalent |
| Scope | Addresses Scope 2 emissions | Addresses Scope 1 and 3 emissions |
| Mechanism | Displaces grid electricity with green energy | Removes or reduces emissions through carbon projects |
For businesses focused on Scope 2 emission reductions, such as electricity-related emissions, RECs are the most relevant solution.
Why RECs Matter for Malaysian Businesses
Malaysia is moving toward a low-carbon economy, and RECs are instrumental in bridging the gap between limited local renewable energy supply and growing corporate sustainability targets.
Here’s why RECs matter:
1. Support for Government Green Policies
RECs align with Malaysia’s energy transition goals under:
- The National Energy Transition Roadmap (NETR)
- Malaysia Renewable Energy Roadmap (MyRER)
- Green Technology Master Plan 2030
2. Corporate ESG Requirements
Many Malaysian firms are part of global supply chains and face pressure to align with corporate ESG commitments. Purchasing RECs is a quick, credible way to demonstrate progress.
3. Cost-Effective Sustainability
Compared to installing solar PV or wind turbines, RECs are more accessible and less capital-intensive. They provide a practical green energy solution without major infrastructure upgrades.
4. Improved Reputation
Companies using RECs can proudly claim “100% Renewable Energy Powered” on marketing material, websites, and investor reports. This enhances brand value and trust.
Types of Renewable Energy Certificates (RECs)
There are two main types of RECs available in Malaysia:
1. International RECs (I-RECs)
The International REC Standard is the most recognized global system for tracking renewable energy in regions without a formal REC market. Malaysia is an I-REC-compliant country.
- Managed by the I-REC Standard Foundation
- Accepted by global frameworks like RE100, CDP, and GRI
- Traceable and transparent
2. TIGRs (Tradable Instrument for Global Renewables)
Offered by APX, TIGRs function similarly to I-RECs but have an additional layer of verification. They are often used in high-assurance reporting environments.
Both I-RECs and TIGRs are suitable for Malaysian businesses looking to claim renewable energy usage.
Industries in Malaysia That Benefit Most from RECs
Renewable Energy Certificates (RECs) are particularly beneficial for energy-intensive sectors or companies with international exposure:
● Manufacturing & Industrial
From electronics to textiles, RECs help reduce the carbon footprint of production lines powered by grid electricity.
● Corporate Offices & Tech Parks
Offices aiming for LEED or GreenRE certification can use RECs to enhance sustainability scores.
● Data Centres & Cloud Services
Energy-hungry data centres can offset electricity consumption with RECs to meet internal and client-driven sustainability metrics.
● Food & Beverage
Malaysian F&B companies can improve traceability and meet international standards for sustainability sourcing.
● Hospitality & Retail
Hotels and malls can leverage RECs for eco-labelling and green tourism marketing.
How to Procure Renewable Energy Certificates (RECs) in Malaysia
Partnering with a verified and experienced provider is essential. ISSES Malaysia offers complete support in REC procurement.
Here’s how to get started:
Step 1: Assess Your Energy Consumption
Determine your annual electricity usage (in MWh) to calculate how many RECs you need.
Step 2: Select the Right REC Type
Choose between I-RECs or TIGRs based on your industry, reporting requirements, and geographic considerations.
Step 3: Purchase & Retire the RECs
ISSES handles the purchase, retirement, and issuance of official REC certificates, ensuring full compliance.
Step 4: Report Your Achievement
Use the certificates for internal ESG reporting, external stakeholder communications, and regulatory submissions.
How ISSES Malaysia Supports Your REC Journey
As a leader in industrial sustainability solutions, ISSES Malaysia (Industrial System Supply & Engineering Services Sdn Bhd) provides full-scope REC services tailored to Malaysian businesses.
Our Services Include:
- REC sourcing and advisory
- Emissions calculation and Scope 2 analysis
- Reporting compliance (RE100, GRI, CDP, SBTi)
- Integration with energy efficiency upgrades
- Local and international certificate verification
Whether you’re a first-time buyer or expanding your green portfolio, ISSES ensures you gain maximum environmental and reputational value from every REC purchased.
Common Misconceptions About RECs
❌ RECs Are the Same as Renewable Energy
RECs don’t deliver physical electricity. They deliver environmental benefits linked to renewable generation. They do not replace the actual power you use but compensate for its environmental impact.
❌ RECs Are Only for Big Corporates
Even SMEs and mid-sized manufacturers in Malaysia can purchase RECs. ISSES helps tailor REC volumes to match any scale of operation.
❌ RECs Are Greenwashing
When sourced transparently and used correctly, RECs are a legitimate, internationally recognized instrument for sustainability accounting — not greenwashing.
Case Study: Malaysian Electronics Manufacturer
A Penang-based electronics manufacturer, facing pressure from global clients to meet Scope 2 emission targets, partnered with ISSES to procure 2,000 I-RECs in 2024.
Results:
- Claimed 100% renewable energy for its operations
- Improved CDP rating from C to B
- Secured a new export contract with an EU-based client citing sustainability compliance
This example shows how RECs can unlock new business opportunities and enhance international competitiveness.
The Future of RECs in Malaysia
As Malaysia targets 70% renewable energy capacity by 2050, RECs are set to become more integrated into business operations. Future trends include:
- Increased Demand: More businesses, even in traditional sectors, will seek RECs to stay competitive and meet ESG demands.
- Digital Platforms: Blockchain-based REC tracking systems will provide greater transparency and traceability.
- Government Mandates: Policies may soon require companies to offset a portion of energy consumption with verified renewable sources.
By investing in Renewable Energy Certificates (RECs) today, Malaysian companies can future-proof their operations and stay ahead of regulatory and market expectations.
Conclusion: Start Your Green Journey with RECs Today
Renewable Energy Certificates (RECs) offer a practical, scalable, and internationally recognized way for Malaysian businesses to demonstrate environmental leadership. Whether you’re working toward carbon neutrality, improving ESG ratings, or meeting global client expectations, RECs are a proven pathway to greener operations.
With ISSES Malaysia as your trusted partner, navigating the REC ecosystem becomes simple and effective. From advisory to certificate issuance, we provide end-to-end solutions that deliver measurable value.
Ready to power your operations with renewable energy — without changing your electricity provider?
Contact ISSES Malaysia today to explore how RECs can accelerate your sustainability goals.
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