Corporations are exploring new ways to manage carbon reductions in their supply chains to achieve emissions-reduction targets, with a focus on accurate tracking of greenhouse gas (GHG) reductions and related claims. According to the report, this is critical to ensure ownership rights and avoid problems with GHG claims, such as alleged greenwashing and double-claiming.
Insetting, offsetting, mass balance, book-and-claim, and other mechanisms are part of the carbon reduction toolkit, with book-and-claim systems emerging across clean fuels markets, including sustainable aviation fuel and other hard-to-abate sectors like fertilizer and cement.
Standards governing book-and-claim and related GHG claims are evolving, with the recent issuance of ISO 22095, which provides guidance on chain-of-custody models that underpin book-and-claim systems.
How Book-and-Claim Systems Work
Book-and-claim systems decouple the physical delivery of a product from the valuable environmental attributes associated with that product’s production or use, enabling the physical products and their environmental attributes to be transacted as separate commodities.
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These attributes are tracked and traded as Environmental Attribute Certificates (EACs) or, in ISO’s terminology, Transferrable Instruments with Entitlement to Claim (TIECs), with each EAC issued based on a verified underlying production event.
Under a book-and-claim framework, desired attributes, such as low GHG emissions or other sustainability characteristics, are verified, issued, and tracked on a registry or ledger to enable the transfer of those attributes to downstream purchasers.
Benefits of Book-and-Claim Systems
Book-and-claim approaches have long supported clean fuels and renewable energy development through mechanisms such as renewable energy certificates (RECs) in electricity markets, renewable identification numbers (RINs) under the Renewable Fuels Standard, and low carbon fuel standard (LCFS) credits under LCFS state programs, which demonstrate how book-and-claim systems scale low-carbon markets by efficiently mobilizing investments while tracking credible environmental benefits.
They expand alongside the rapid development of voluntary standards and accounting frameworks, with the expansion of book-and-claim systems occurring as companies seek to reduce GHG emissions and invest in low-carbon technologies.
As book-and-claim markets mature, legal considerations play an increasingly central role, with participants needing to carefully define the environmental and GHG attributes being created and transferred, ensure exclusivity where appropriate, and avoid double-counting, with additionality being a core concept gaining increasing attention within these systems.
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Challenges and Opportunities
The development of book-and-claim systems is not without challenges, with companies needing to navigate complex regulatory frameworks and ensure that their systems are transparent and credible.
However, the benefits of book-and-claim systems are clear, with the potential to drive investment in low-carbon technologies and reduce GHG emissions, and as the ISO 22095 standard provides guidance on chain-of-custody models, companies can ensure that their book-and-claim systems are aligned with international best practices, with the renewable energy development being a key area of focus.
Ultimately, the success of book-and-claim systems will depend on their ability to provide a credible and transparent way to track and trade environmental attributes, and as the market continues to evolve, it is likely that they will see increased adoption of these systems across a range of industries.
The Science Based Targets initiative (SBTi) and the GHG Protocol are also playing a crucial role in shaping the development of book-and-claim systems, with the GHG Protocol’s Actions and Market Instruments Standard (AMI Standard) expected to provide greater clarity on how book-and-claim and similar market-based entities are collaborating to align GHG emissions accounting.
