What the New SBTi Corporate Net‑Zero Draft Means for RECs, Carbon Credits and CDR

The Science Based Targets initiative (SBTi) has released a new consultation draft of its Corporate Net-Zero Standard (CNZS V2.0). The draft updates guidance on how companies use renewable electricity, RECs, carbon credits and carbon removals on the path to net-zero. This article summarises the main changes and outlines what they could mean for corporate climate strategies.

*Note: The SBTi Corporate Net‑Zero Standard V2.0 is still in consultation draft form. Provisions described here may be refined before the final standard is released.

1. Why this draft matters

The Science Based Targets initiative (SBTi) Corporate Net‑Zero Standard is the reference point for credible corporate climate targets. Its second consultation draft for Version 2.0 marks a significant evolution in how companies can use:

• Renewable Energy Certificates (RECs) and other Energy Attribute Certificates (EACs)
• Carbon credits and other forms of beyond‑value‑chain mitigation
• Carbon dioxide removals (CDR), including long‑lived, durable removal pathways

For companies with large electricity footprints and complex supply chains – especially in emerging markets – the draft standard both tightens integrity requirements and creates new, clearer pathways to support decarbonisation.

In this article, we unpack four big shifts and what they mean in practice, then outline how Monsoon Carbon can help you prepare.

2. New Updates for RECs in Scope 2

Under the existing CNZS V1.x, companies could use RECs and other EACs to make market‑based Scope 2 claims, as long as they met the GHG Protocol’s Scope 2 Quality Criteria and moved toward 100% renewable electricity by 2030.

The CNZS V2.0 Second Draft raises the bar in several important ways:

• 100% low‑carbon electricity by 2040: Companies will need to align their ambition with a 100% low‑carbon electricity target no later than 2040, rather than 2030, but under tighter integrity rules.
• New commissioning / repowering age limit: Attributes must come from generating assets that were commissioned or repowered within the past 10 years, tightening to 5 years by 2035. This is designed to channel finance into new or recently upgraded capacity rather than very old plants.
• Stronger geographic matching: EACs must be sourced from the same region of physical deliverability as the load, closing gaps where companies historically bought certificates from far‑away markets.
• Temporal matching as a “north star”: While most companies will still report on an annual basis, the draft points toward hourly or near‑real‑time matching as the long‑term direction of travel, starting with the largest electricity consumers.

3. A new route for Scope 3: Supplier Energy Alignment

The CNZS V2.0 Second Draft keeps that core principle – but introduces a new metric for addressing emissions from Purchased Goods and Services (Category 1) and Capital Goods (Category 2): the Supplier Energy Alignment Target.

Supplier Energy Alignment Target – in simple terms

Companies may now choose to set Scope 3 targets that:

• Increase the share of suppliers’ electricity use that is low‑carbon, based on best‑estimate MWh.
• Follow a linear trajectory toward 100% low‑carbon electricity in the supply chain by 2050.
• Use only renewable or low‑carbon electricity that meets the same integrity rules as Scope 1 and Scope 2 – including the new commissioning date limits and geographic matching.

In practice, this means a company can:

• Engage key suppliers and help them switch their own electricity to eligible low‑carbon sources.
• Use contractual instruments like I‑RECs, GOs or bundled green tariffs for suppliers – as long as they meet the integrity requirements and are not double‑counted.
• Track and report the percentage of supplier electricity that is aligned with these rules.

Why this is a big deal

• It offers a practical lever to decarbonise value chains where direct data and control are limited.
• It recognises that energy is often the dominant emissions source for many suppliers, especially in manufacturing and processing.
• It creates a clear role for high‑quality EACs in Scope 3 – not as offsets, but as a way to align supplier electricity use with a 1.5°C pathway.

4. Beyond‑value‑chain mitigation and carbon credits get formal recognition

Another major shift in the CNZS V2.0 Second Draft is how it treats Beyond Value Chain Mitigation (BVCM) – actions a company takes outside its direct value chain, such as financing high‑quality carbon credits.

In CNZS V1.x, BVCM was strongly encouraged but largely non‑formalised guidance. The V2.0 drafts go much further by setting up an optional recognition programme for companies that take responsibility for their ongoing emissions during the transition.

Two optional “recognition tiers”

The draft introduces two tiers that companies can opt into before 2035:

Recognised

• The company takes responsibility for at least 1% of its ongoing Scope 1–3 emissions via supplementary climate contributions.

Leadership

• The company applies an internal carbon price of at least USD 80 per tCO₂e to 100% of its emissions, and
• Uses this budget to finance activities that deliver ex‑post, verified mitigation outcomes equivalent to at least 40% of its ongoing emissions (for example, high‑integrity carbon credits or removals).

Mitigation outcomes used for this programme must:

• Be permanently retired and not used for any other offsetting, compliance or NDC purposes.
• Be reported separately from Scope 1, 2, and 3 abatement, avoiding double counting against SBTi targets.

From 2035 onwards, Category A companies will face a mandatory minimum responsibility requirement for ongoing emissions, progressively ramping up toward full neutralisation at net‑zero.

Why this matters

• Carbon credits and other mitigation contributions are no longer treated as an afterthought – they are part of a structured framework for financing climate action beyond the value chain.
• Companies that move early can differentiate themselves through recognised leadership status, backed by clear quantitative thresholds.
• The bar for credit quality is high: credits must represent real, additional, measurable, and permanent outcomes, with no double use.

5. Carbon removals move centre‑stage

All versions of the SBTi Corporate Net‑Zero Standard agree on one point: carbon dioxide removals (CDR) are mandatory to neutralise residual emissions at the net‑zero target year.

The CNZS V2.0 Second Draft deepens and clarifies this by:

Differentiating removals by storage durability:

• Long‑lived removals: storing carbon for centuries to millennia (e.g. geological storage, durable mineralisation, stable biochar).
• Short‑lived removals: storing carbon for decades (e.g. many biological and nature‑based removals).

Requiring that at net‑zero:

• At least 41% of residual emissions must be neutralised with long‑lived removals.
• The remaining 59% may come from short‑lived removals, additional long‑lived removals, or a mix of both.

Post‑2035 responsibility for ongoing emissions

Looking beyond the net‑zero year, the draft also introduces a Post‑2035 Responsibility Requirement for Category A companies:

• Companies will need to progressively address their ongoing (pre‑net‑zero) emissions using a mix of short‑lived and long‑lived removals.
• The share of long‑lived removals in this mix is expected to increase over time, with illustrative values rising from 17% in 2035 to 41% by 2050.
• Outcomes used for this requirement must be kept separate from core abatement targets, again avoiding double counting.

Takeaway

CDR is no longer just a distant 2050 conversation. Companies – especially those planning to align with SBTi – should start considering durable removal strategies and suppliers today, including how these fit alongside reductions, RECs and carbon credits.

6. What this means for companies – especially in emerging markets

For corporates with footprints in Asia, Africa and Latin America, the CNZS V2.0 Second Draft sends a clear message:

• Integrity is non‑negotiable: The era of cheap, low‑additionality certificates is ending. EACs, carbon credits and removals will all need to meet tougher integrity criteria.
• Electricity decarbonisation remains the foundation: Achieving 100% low‑carbon electricity across both operations and supply chains is central to the net‑zero journey.
• Value chains matter: Supplier Energy Alignment Targets provide a new, practical lever to address Scope 3 through better electricity procurement in the supply chain.
• Beyond‑value‑chain action is expected, then required: Companies are encouraged – and later required – to take responsibility for the warming impact of their ongoing emissions through credible mitigation and removals.

For many organisations, these shifts will require:

• Updating internal net‑zero roadmaps and Scope 2/3 strategies.
• Reviewing existing REC and EAC portfolios against the new commissioning and deliverability rules.
• Developing supplier engagement programmes focused on electricity decarbonisation.
• Designing internal carbon pricing and climate contribution policies that can support future recognition under SBTi.
• Building a diversified portfolio of high‑quality carbon credits and durable removals, sequenced over time.

7. How Monsoon Carbon can help

Monsoon Carbon works at the intersection of renewable energy instruments, carbon markets and project development – with a focus on emerging markets where additional climate finance is most needed.

We help you to:

• Use RECs to power your business with renewable electricity – assessing your current electricity footprint and supplying Renewable Energy Certificates (RECs) that align with leading standards and good practice.
• Provide credible carbon credits – building portfolios that support your broader climate strategy and demonstrate real, traceable impact.
• Engage and support your suppliers – working with your key suppliers to help them access and use RECs or other renewable energy options so they can reduce their Scope 2 emissions and therefore your Scope 3 emissions.

8. Looking ahead

The CNZS V2.0 Second Draft is still under consultation, but its direction of travel is clear:

• Do more to cut emissions within your value chain.
• Use RECs and EACs in ways that genuinely transform the power system.
• Channel more finance into high‑integrity mitigation and removals beyond your boundaries.

Companies that start aligning now will be better prepared when the final standard lands – and better positioned to demonstrate real, verifiable climate leadership.

If you’d like to discuss what these changes mean for your organisation, or how to future‑proof your REC and carbon credit strategies, the Monsoon Carbon team would be happy to help.