PwC1EnablingaNetZeroworldExploringcorporatedecarbonisationambitionsandaspectsofrenewableenergyprocurementandcarbonoffsetsinSoutheast

AsiaDecember2023PwC2AcknowledgementsKey

authorsSpecialacknowledgements“ExploringcorporatedecarbonisationambitionsandaspectsofrenewableenergyprocurementandcarbonoffsetsinSoutheast

Asia”wasproducedbyPwCSingapore.International

EmissionsTradingAssociation

(IETA)Bj?rn

Fondén

(InternationalPolicy

Advisory)PwC

SingaporeFang

Eu-Lin

(SustainabilityandClimateChangePracticeLeader)Jennifer

Tay

(AsiaPacificInfrastructureLeader)Shawn

Wang

(SeniorManager)Morgane

Kundert

(InternationalPolicy

Assistant,IETA)Rachel

Woo

(Associate)We

wouldliketothankIETA

fortheircontributionsofknowledgeandinsightsoncarboncreditsandtheglobaldecarbonisationlandscape.Pleasenotethatanacknowledgmentheredoesnotimplyanendorsementoftheviewspresentedinthisreport.PwC

contributorsIan

Milborrow

(Partner,ClimateFinanceandNetZero,PwCUK)Indrie

Tjahjadi

(Director,PwCSingapore)Simon

Burns

(SeniorManager,PwCSingapore)Srikkanth

Ramachandran

(Manager,PwCSingapore)Levine

Thio

(Senior

Associate,PwCSingapore)We

wouldalsoliketothankthefollowingindustryleaderswhoprovidedvaluableinsightsandcontenttothisreport:Alvin

LeeNithyanandamYuvaraj

Dinesh

BabuRegionalHeadofPuro.earth,

APACExecutiveDirector,Climate

ActionData

TrustBryan

McCannRene

VelasquezDirectorofSupply,

ClimateImpactXFounder,CarbonExposureProjectDharsono

HartonoRiza

SuargaCEO,PT.

RimbaMakmurUtamaChairman,

AgrausResourcesGuai

Ti

HoweCFO,REDEXRussell

QuekSeniorManagingConsultant,SouthPoleJen

Wee

KangFounderandCEO,REDEXZhao

TanBoardMember,REDEXNadiya

NairStrategy&Development

Team

Lead-RenewableEnergy&CarbonMarkets(APAC),

ACT

CommoditiesPwC3Contents12Reporthighlights0407ThedecarbonisationlandscapeinSoutheast

Asia2.1

NetZeroambitions2.2

CorporatesarefacingpressuresinSoutheast

Asia(SEA)todecarbonise34UnpackingNetZero133.1

Context3.4

Actionsbeyondacompany’sNetZerotargets3.2

Carbonneutral3.3

NetZero3.5

StepsforcorporatedecarbonisationExploringrenewableenergyprocurementmethodsandrenewableenergycertificates(RECs)174.1

Whyprocure4.3

ConsideringRECrenewableenergyprocurement4.2

RECsinthe4.4

OngoingdiscussionsoncontextofSEARECs56Exploringcarbonoffsets265.1

Whypurchasecarbonoffsets5.2

Carbonoffsettingoptions5.4

Consideringcarboncredits5.5

Ongoingdiscussionsoncarboncredits5.3

CarbonoffsetprojectsinSEAAppendix38Disclaimer:

Thisreportshouldnotbeconstruedaslegal,tax,financialoraccountingadvice,andanyinformationprovidedisnotintendedtobesufficientforyoutorelyontomakeadecision.We

recommend

thatyouconsidertheappropriatenessoftheinformationinthisreporthavingregardtoyourspecificcircumstancesandobtainindependentadvicebeforemakinganydecision.PwC4Report1highlightsEnabling

a

Net

Zero

world

|5PwC51ReporthighlightsReporthighlightsTheThereportaimsto:Thispaperexploresthedifferencesbetweentheseanditsnuances,andthestepsthatcompaniescantaketo

“Reduce”,“Replaceand“Removeor

Avoid”carbonemissions.decarbonisationlandscapeinSoutheast

Asia?

HighlightthestateofNetZeroambitionsinSEA

(includingcorporates)?

Inspirecorporatestoraisetheirambitions,andtocontributefurthertothedevelopmentofdecarbonisationinSEA?

Informwhatrespectiveemissionreductionambitionsentail?

ProvideconsiderationsforcorporatesinSEA

astheydecarboniseandutiliseRECsandcarboncredits(CCs),includingunderstandingdevelopingareas.UnpackingNetZeroExploringrenewableenergyprocurementmethodsandrenewableenergyReduce

involvesthemitigationofemissionsthroughacompany’sownoperations,whichshouldbethefirstandprimarysteptakenbyanentitytodecarbonise.certificates(RECs)ExploringcarbonoffsetsReplace

sourcesofThe

decarbonisation

landscape

inSoutheastAsia

(SEA):

The

criticalimportance

of

reducing

emissions

inSEAis

driving

both

governments

andcorporates

to

act,

despite

the

uniqueregional

challenges

present.emissionsandenergyfromfossilfuelswithgreeneralternativessuchasrenewableenergy.ThisiscrucialtoreducingScope2emissions.AppendixAsoneoftheregionsmostimpactedbyclimatechangeanywhereintheworld,amajorityofcountriesinSEA

havenowoutlinedtheirNetZeroambitions.WhilecountriesinSEA

aretakingvariousinitiativestooperationalisetheirNetZeroambitions,significantchallengesremainsuchasitshigherexposuretofossilfuels.Nonetheless,countriesinSEA

aremakingitsdecarbonisationeffortsRemove

oravoid

carbon-thisisalsonecessaryintheoveralldecarbonisationjourneytomanagehardtoabateemissionsormakeeffortsoutsidecorporates’businessactivities.However,thisshouldnotbeusedasasubstituteforeitherReduceorReplace.throughnewandemerginggovernmentpolicies.Itisalsoobservedthattherecanbesignificantpotentialforrenewableenergyandnature-basedandRECsandCCscanbeexploredtoaidwithrespectivecommitments.FinancingarisingfromsuchalsosupportfurtherdevelopmentofsuchprojectsinSEA.technology-basedsolutionsintheregion.CorporatesinSEA

areincreasinglytakingactionondecarbonisationduetovariousreasonsincludingincreasingjurisdictionalandinternationalpressures.We

highlightinthefollowingpageanoverviewofconsiderationsovertheuseofRECsandCCsinSEA.Unpacking

Net

Zero:

Corporatecommitments

and

ambitions

and

whatthey

mean.Commitmentsthatcorporatesarechoosingtofollowinclude“NetZero”or“Carbonneutral”,andtakingactionsbeyondtheirNetZerocommitments.Enabling

a

Net

Zero

world

|6PwC6Overview:ConsiderationsovertheuseofRECsandcarboncreditsThesummarybelowprovidesaoneoverviewcoveringthereasonsforcorporatestodecarbonise,commonambitionslevelsobserved,corporatedecarbonisationsteps,aswellasconsiderationsforcorporatestotakeregardingRECsandcarboncredits.ReporthighlightsThedecarbonisationlandscapeinSoutheast

AsiaUnpackingNetZeroExploringrenewableenergyprocurementmethodsandrenewableenergycertificates(RECs)ExploringcarbonoffsetsAppendixPwC7The2decarbonisationlandscapeinSoutheastAsia2.1.

NetZeroambitionsinSoutheast

Asia2.2.

CorporatesarefacingpressurestodecarboniseEnabling

a

Net

Zero

world

|8PwC82Reporthighlights2.1.NetZeroambitionsinSoutheast

AsiaTheAccordingtotheIntergovernmentalPanelonClimateChange(IPCC),inordertolimitglobalwarmingto1.5°C,greenhousegas(GHG)emissionsmustpeakbefore2025andbereducedby43%by20301.Thiswillrequirerapiddecarbonisationandcollaborationacrossboththepublicandprivatesector.Giventhescientificconsensus,manycountriesgloballyhavemadeNetZerocommitments.Over100countrieshavesetNetZerotargets,withmosthavingdonesoInordertoachieveNetZero,countriescantakevarioussteps.

Theseincludebutarenotlimitedtothefollowing:decarbonisationlandscapeinSoutheast

AsiaUnpackingNetZeroApplymarketmechanismsaimedatdeliveringemissionsreductionssuchascarbontaxesoremissionstradingschemes(ETS)ExploringrenewableenergyprocurementmethodsandrenewableenergyApplyindustry-relatedregulationse.g.energyefficiencyforbuildings,incentivisingtherolloutofelectricvehiclesadoptioncertificates(RECs)between2019and20202.ExploringcarbonoffsetsSoutheast

Asia(SEA)isespeciallyIncentivesforlowcarbonbusinessessusceptibletotheworstimpactsofclimatechange3,andtheregioniscontinuingtomakeeffortstodecarbonise4.OfthoseSEA

countrieswhichhavesettargets,mostdidsobetween2020and2022.AppendixPlanningforadiverseenergymixwithmorecleanenergyTheprogressofimplementationstrategiesinSEA

andotherpartsoftheworldarehighlightedin

Table

1.Figure

1:

TimelineofSoutheast

AsiacountriessettingNetZerotargetsMar

2020May

2021LaosNetZeroby2050Oct

2021ThailandNetZeroby2065Sep

2022IndonesiaNetZeroby2060Halveemissionfromitspeakby2050withaviewtoNetZeroassoonasviableinthesecondhalfofthecenturyUpdate

on

Feb

2022toNetZerobyoraroundmid-centuryUpdated

on

Oct

2022toNetZeroby2050Sep

2021MalaysiaNetZeroby2050Sep

2021Vietnam,BruneiNetZeroby20501

Code

Red

-

Asia

Pacific’sTime

To

Go

Green(2021),PwC

AsiaPacific2

Southeast

Asia’s

Challenge

of

Decarbonizing

While

Growing

Rapidly

(2022),CenterforStrategicandInternationalStudies(CSIS)3

IPCC

Sixth

Assessment

Report(2022),IPCC4

Net

ZeroTracker

Database(2023),NetZero

TrackerEnabling

a

Net

Zero

world

|9PwC9Table

1:

OverviewofdecarbonisationtargetsandinitiativestakenbySEA

countriesandglobalpeers5

6.ReporthighlightsTheCountryBruneiNet

ZerotargetsCarbonmechanismsExample

RE

strategies/regulationsRE*

targetsdecarbonisationlandscapeinSoutheast

Asia30%generationby2035EnergyWhitePapersetsframeworkNetZero2050UnpackingNetZero27.7%hydro,PowerDevelopment17.9%solar,etccapacity

MasterPlan2022-20407by20307CambodiaIndonesiaLaosCarbonNeutral2050Exploringrenewableenergyprocurementmethodsandrenewableenergy44%generationby2030**82023NationalbudgetRenewableEnergyDevelopmentNetZero2060NetZero205030%consumptionby2025RenewableEnergyDevelopmentStrategyinLaoPDRcertificates(RECs)70%capacityby20509NationalEnergy

TransitionRoadmap(NETR)9ExploringcarbonoffsetsMalaysiaMyanmarNetZeroearliestby205011%

newcapacityby203010MyanmarEnergyPolicy(2015),NationalElectricityMasterPlan(2014)10NoNetZerotargetshavebeensetAppendixREmixof35%by2030and50%by2050GreenEnergy

AuctionProgramme(GEAP)11GreenEnergyOptionProgramPhilippinesSingaporeNoNetZerotargetshavebeenset4GWofrenewableelectricityimportsby2035

Plan20302GWpdomesticsolarSingaporeGreenNetZero2050capacityby2030***30%consumptionby203712PowerDevelopmentPlan2018-2037ThailandVietnamEUNetZero2065NetZero2050****60%solarandwindcapacityby205013SupportmechanismfordevelopmentofRE201445%mixby2030RePowerEUPlanEconomyNetZeroby2050500GWcapacityby2030

RenewableenergyinvestmentIndiaUKNetZero2070NetZero205070GWsolarby203W14PowerUpBritain-EnergySecurityPlan1480%generationby2030America’sStrategytoSecuretheSupplyChainforaRobustCleanEnergyTransitionUSNetZero2050NetZero2050(insomestates)50%consumptionby2035ClimateChangeResponse(ZeroCarbon)AmendmentNewZealandAct201915ImplementedInprogressofimplementationConsiderationstakenNonewsonimplementations*Renewableenergy(RE)targetsthathavebeenannounced**

Target

isconditionaliftheJETP

commitmentcanbemet***ThailandhasanETSexchangelaunchedandacarbontaxunderconsideration****VietnamhasETSlegalised-PilotCarbonExchangefrom20255

Policies

database(2023),IEA10

Renewable

Energy

Situation

In

Myanmar(2023),

TechnologyandInformaticsInstituteforSustainability11

Green

Energy

Auction

Program

in

the

Philippines(2021),DepartmentofEnergyPhilippines12

Thailand

-

Renewable

Energy(2021),International

Trade

Administration13

Vietnam’s

Eighth

National

Power

Development

Plan(2023),PwCVietnam14

Powering

Up

Britain

-

Energy

Security

Plan

(2023),HMGovernment15

New

Zealand

2023

Energy

Policy

Review

(2023),IEA6

ICAPETS

Map(2023),InternationalCarbon

ActionPartnership(ICAP)7

Power

Development

Masterplan

2022-2040(2022),RoyalGovernmentofCambodia8

JETPInvestment

Plan

Launched;

Indonesian

Government

Aims

for

SwiftImplementation(2023),JETP9

Summary

of

the

National

EnergyTransition

Roadmap:

Navigating

thetransient

stage(2023),PwCMalaysiaEnabling

a

Net

Zero

world

|10PwC

10Southeast

Asia’

potentialanddecarbonisationeffortsSoutheast

Asia’scontextUtilisationofRECsandCCsbycorporatesReporthighlightsBasedonPwC’sreports“CodeRed-

AsiaPacific’s

Time

toGoGreen”16

and“Regionalelectricitytradein

ASEAN-

Theroadaheadtoanintegratedandgreenerelectricityfuture”17,SEA

needstoaccelerateitspaceofdecarbonisation.However,SEA

isalsofacingitsuniquechallenges.

Thesechallengesinclude,butarenotlimitedto:TheincreasingprovisionofrenewableenergyinSEA

couldalsobenefitcorporatesineffortstodecarbonisetheiroperations.ThedecarbonisationlandscapeinSoutheast

AsiaWiththeregionrequiringcapitalandfinancetoimproveitsinfrastructureandtechnology,privatecapitalandfundingcouldhelptoharnessandcapitaliseonthepotentialofrenewableenergyintheregion.Renewableenergyprocurementmethodssuchasrenewableenergycertificates(REC)providebothfinancefortheserenewableenergyprojectsinSEA

andactasrecognisedcertificatesforcompaniestoclaimrenewableenergyusageandreducetheirScope2emissions.UnpackingNetZeroExploringrenewableenergyprocurementmethodsandrenewableenergy1.

Dependenceonfossilfuels2.

Risingenergydemandsduetoexpectedeconomicgrowth183.

Unevendistributionofrenewableresources4.

AbsenceofregionalelectricitytradingplatforminSoutheast

Asiacertificates(RECs)ExploringcarbonoffsetsGiventhecontext,SEA

canbeseentoberelativelylessadvancedinitsprogressofimplementingdecarbonisationstrategiesandleverscomparedtootherpartsoftheworldduetouniquechallenges.Similarly,theappropriateuseofcarboncredits(CCs)couldbeleveragedupontofurtherdirectcapitalintonature-basedsolutionsandtechnologicalinnovationsthatcanhelpremovecarbonfromtheAppendixatmosphere,reduceemissionfromexistingprojectsoravoiditbeingproducedinthefirstplace(formoreinformation,seepage29).Astheglobalvoluntarycarbonmarket(VCM)continuestogrow,currentlyatoverUSD2billion,itisapotentialfinancingtoolforaregionwithvastcarbonoffsettingopportunities21.Furthermore,countriessuchasMalaysia,Indonesia,andVietnamhaveforestcoverofapproximately55%,53%and47%respectively,providingmanyopportunitiesforforestmanagement,afforestation,andREDD+projects.?RenewableenergypotentialHowever,SEA

doeshavenotablepotentialinareassuchasrenewableenergydevelopment.Forexample,theprospectsforwindpowergenerationinVietnamaresignificant,withanestimatedpotentialof311

GW19.

Additionally,VietnamhasalsosurpassedMalaysiaand

ThailandtoreachthelargestinstalledcapacityofsolarpanelsinSEA20.Asidefromnature-basedsolutions,someofthelargestcarboncreditprojectsintheregionstemfromemergingtechnologicalsolutionstopromotelow-carboninfrastructuresuchasbiomasscookstoves,ricehuskbiocharanddirectaircapture.CountriessuchasthePhilippinesalsoshowpotentialinwindpower,whichisexpectedtodrivetheregionalmarketgrowth.Concurrently,governmentshavealsobeguntopreparestrategicplanstopursuerenewableenergy.

Forexample,Cambodia'sPowerDevelopmentPlanaimstohavetwo-thirdsofthecountry'spowerderivedfromrenewableenergyby2030.

Asawhole,therearegrowingopportunitiesforSEA

toenhancetheroleofrenewableswithinregionalenergymixesandinturndeliverdecarbonisation.Assuch,withthenecessarycapitalandfinance,renewableenergyandcarbonoffsetprojectscannotonlyhelpcountriesinSEA

toreachtheirnationaltargets,butcorporatestoleverageandharnesssuchfinancingoptionstodecarbonise.

Againstthatbackdrop,thisreportaimstoexploretheuseofrenewableenergyprocurementandcarbonoffsetsandspecifically,thenuancesofRECsandcarboncreditsandgiveconsiderationtooperationalisethepotentialuseofRECsandcarboncreditsforcorporatedecarbonisation.16Code

Red

-

Asia

Pacific’sTime

To

Go

Green(2021),PwC

AsiaPacific17Regional

electricity

trade

in

ASEAN

-The

road

ahead

to

an

integrated

andgreener

electricity

future(2022),PwCSingapore18Southeast

Asia’s

Green

Economy:

Cracking

the

Code(2023),Bain&Company19

ASEAN

Renewables:

Opportunities

and

Challenges(2023),IEA20

Why

companies

should

consider

Southeast

Asia

for

their

renewable

energyprojects(2023),SingaporeEconomicDevelopmentBoard21

Southeast

Asian

countries’ambitions

for

voluntary

carbon

market

(2023),ReccessaryEnabling

a

Net

Zero

world

|11PwC

11ReporthighlightsThedecarbonisationlandscapeinSoutheast

AsiaUnpackingNetZeroExploringrenewableenergyprocurementmethodsandrenewableenergycertificates(RECs)2.2CorporatesarefacingpressurestodecarboniseExploringcarbonoffsetsInrecentyears,therehasbeenincreasingpressureandabrighterspotlightoncompaniestodisclosetheirsustainabilityandclimatechangeeffortsandinitiatives.Theevolvingreportingstandardsandcompliancelandscape,madeupofstandardssuchasthosefromthe

TaskforceforClimate-relatedFinancialDisclosures(TCFD)andtheInternationalSustainabilityStandardsBoard(ISSB),areensuringcompaniesarebeingheldincreasinglyaccountableinthisarea.ThisincludescorporateaccountabilityforGHGemissions,effortstodecarbonisetheiroperationsandsettingtargetsfortheirenvironmentalperformance.Companiesarebeginningtotakestepsinpursuitofdecarbonisationandrespondtothesevariousexternalandinternalincentivesandpressures.AppendixThetablebelowprovidesasummaryofthemostcommonreasonswhycorporatesdecarbonise.Table

2:

Reasonsforcorporatestodecarbonise22Reasons

todecarboniseDescriptionInternal

orexternalNational

orregionalcomplianceNationalorregionalregulationswhichrequireacompanytoreduceemissions,useacertainamountofrenewableenergyorotherdecarbonisationregulations.ExternalExternalExternalDisclosurecomplianceRequirementstodisclosesustainabilityinformationmayputacompanyinapositionwheretheyareincentivisedtodecarbonise,forexample,needingtodisclosedecarbonationtargetsandefforts.Supply

chaincomplianceBusinesscustomersofacompanywhomaywanttodecarbonisetheirsupplychaineithervoluntarilyortocomplywithregulationssuchastheEU’sCarbonBorder

AdjustmentMechanism.StakeholderpressureThereisincreasingpressurecomingfrombusinesscustomers,investorsandinternalstafftodecarbonise.ExternalInternalInitiatives(RE100or

SBTi)A

companymaywanttopurchaseRECsandcarboncreditsintomeettargetssetbyinitiativessuchastheRE100orSBTi.

Assuch,careshouldbetakentobefamiliarwithwhatisallowedundersuchinitiatives.VoluntarysustainabilityambitionA

companymayhavetheirownambitionstobemoresustainableandtodecarbonise.

ThismayalsoincludethedesiretosupporttheunderlyingprojectsgeneratingRECsandCCs.Internal22

PwCanalysisEnabling

a

Net

Zero

world

|12PwC

12ReporthighlightsWithinSEA

therehavebeenanincreaseofcorporatessettingdecarbonisationtargets,however,notalltargetsarevalidatedorbasedontheSBTi,suchisrepresentedinthefigurebelow.Formoreinformationondecarbonisationtargets,refertothenextsection.ThedecarbonisationlandscapeinSoutheast

AsiaFigure

2:

Statisticsofthetop50-listedcompanies’

(bymarketcapitalisation)decarbonisationUnpackingNetZerotargetsinselectedSEA

countries23.Exploringrenewableenergyprocurementmethodsandrenewableenergy80%60%certificates(RECs)Exploringcarbonoffsets40%20%0%AppendixIndonesiaMalaysia

Philippines

SingaporeThailandVietnamDecarbonisationtargetsverifiedbySBTiDecarbonisationtargetsbasedonSBTi

butnotverifiedOtherdecarbonisationtargetsInternational

pressures

-

Spotlight

on

the

EU

Carbon

BorderAdjustmentMechanism

(CBAM)TheCarbonBorder

AdjustmentMechanism(CBAM)isacarbontariffoncarbonintensiveproductswhichwillrequireEUimporterstoreporttheGHGsreleasedduringproductionofspecificresourcesandin2026.From1October2023,CBAMhasenteredintoeffect,startingwithatransitionalphasethatrunsuntiltheendof2025.Therefore,CBAMmayhaveakeyimpactoncertainproductsfromaffectedcompanies.Inaddition,therecanbepressurestodecarboniseanorganisation’ssupplychainemissions,ofwhichsuppliersresideinSEA.Figure

3:

ExportvalueofCBAM-relevantcommoditiestotheEU,basedon2019tradedataSEA

economies’

dependenciesonEUexportsrangefrombetween8and25%24.TheeffectsofsuchregulationscouldhaveasignificantimpactoncertainSEA

countriesandindustries,andserveasadrivertodecarbonise.$1200$1000$800$600$400$200$0ThecountriesofSEA

mostaffectedbyCBAMareVietnam,Indonesia,and

Thailandlargelyduetotheexportofplastic,iron,chemicals,andaluminumtotheEU25

(moreinformationonCBAManditsimpactsonSEAcanbefoundinAppendix

C).IndonesiaCementThailandVietnamAluminiumFertilizerChemicalsPlasticsandarticlesthereofIron&steel23

Sustainability

Counts

II

-

State

of

sustainability

reporting

in

Asian

Pacific

(2023),PwC24

The

Observatory

of

Economic

Complexity(2023),MIT25

Trading-off:

Exploring

the

potential

implications

of

the

EU’s

new

Carbon

Border

Adjustment

Mechanism

for

Southeast

Asian

economies

(2023),NewClimatePwC

13UnpackingNetZero33.1.

Context3.2.Carbonneutral3.3.

NetZero3.4.

Actionsbeyondacompany’sNetZerotargets3.5.

StepsforcorporatedecarbonisationEnabling

a

Net

Zero

world

|14PwC

143ReporthighlightsWithnationalNetZerotargetsbeingsetinSEA,itisalsoimportanttounderstandthevarioustypesofcommitmentswhichcompaniessettoestablishtheir3.3.NetZeroNetZeroatagloballevelinlinewiththeParisagreementreferstoabalanceofcarbonsourcesandsinkstoachievetemperaturegoals29

(formoreontheParisagreement,seeAppendix

A).NetZerotargetsforbusinessesrequirethemtofirstreducecorporateGHGemissionsatapacealignedwiththeParisgoalsby2050,andthentackleresidualemissionswithcarbonoffsets.ThedecarbonisationlandscapeinSoutheast

Asiadecarbonisationambitions.UnpackingNetZero3.1ContextThissectionexplorestheprimarycommitmentsacompanycanmake,howoffsetsareappliedtosuchcommitments,aswellasthenuancewithinrelevantterminology.ExploringrenewableenergyprocurementmethodsandrenewableenergySomecompaniesmayadditionallychoosetoalignwiththeSBTi.TheSBTi

containsitsownrequirementsforachievingtheNetZerobasedontheNet-ZeroStandard.AccordingtotheStandard,companiesmustusepermanentcarbonremovalandstoragetoneutralisethefinal<10%ofresidualemissionsthatmustbeeliminatedafteracompanyhasachieveditslong-termtargetandcutemissionsby>90%30.Inotherwords,SBTi

targetsdonotrecognisecarbonoffsetsascountingtowardsinterimtargets,andonlyallowforremovalsoffsettingtocounterbalanceresidualemissions.certificates(RECs)3.2.CarbonneutralExploringcarbonoffsetsCarbonneutraliscommonlyunderstoodwhereanorganisation’semissionsare“balanced”or“neutralised”bypurchasinganequivalentvolumeofemissionsoffsets26.CorporatecarbonneutralitycommitmentsmainlyonlytakeintoconsiderationofcarbondioxideemissionsbutmayincludeotherGHGemissions.

Additionally,coveredbusinessactivitiesshouldincludeScope1,2,andmayincludeScope3emissions(formoreinformationonScope1,2,and3emissions,pleaserefertopage16).AppendixAscarbonneutralitymaybeachievedwithoutnecessarilyhavingreducedemissionsbyamountsconsistentwithreachingNetZeroatagloballevel27,thepursuitofcarbonneutralitydoespresentapotentialriskofconcealingtheneedformoreambitiousdecarbonisationefforts.

Assuch,companieswhowishtosetcarbonneutralitycommitmentsshouldstilldecarbonisetheiroperationstothebestoftheirability.

A

recentstudy28

showsthatitisusuallythecase,ascompaniesthatarematerialusersofcarboncreditsdecarbonisetwiceasfastasthosewhodonot.29

What

is

Net

Zero?(2023),UniversityofOxford30

The

Corporate

Net-Zero

Standard(2023),SBTi26

Achieving

Carbon

Neutrality(2020),CarbonOffsetGuide27

Net-Zero

Jargon

Buster

-

a

guide

for

common

terms(2021),SBTi28

Corporate

emission

performance

and

the

use

of

carbon

credits(2023),MSCIEnabling

a

Net

Zero

world

|15PwC

15ReporthighlightsThedecarbonisationlandscapeinSoutheast

AsiaUnpackingNetZeroExploringrenewableenergyprocurementmethodsandrenewableenergy3.4.

Actionsbeyondacompany’sNetZerotargetscertificates(RECs)WhiledecarbonisingatapacealignedwiththeParis

Agreementiscritical,companiesareoftenalsoencouragedtoavoiddelayingcriticalinvestmentsintoclimatesolutionswhichareavailabletoday31.

ThepurchaseofcarboncreditscanbeseenasameansoftakingfurtheractionbeyondcorporatelevelNetZeroambitions.Inaddition,otheractionsfromcorporatesthatcancontributetothepursuitofglobalNetZero,outsideofacompany’sownNetZerocommitment,includethepurchaseofRECsasinvestmentstofurtherrenewableenergydevelopments,ratherthanthembeingusedtoreduceScope2emissions.ExploringcarbonoffsetsAppendixTable

3:

Summaryofcommitmentambitionlevelsandtheu