If your organization procures or is interested in Energy Attribute Certificates, carbon credits, or other environmental commodities, SBTi’s finalized Corporate Net-Zero Standard V2.0 (CNZS V2.0) draws a clear line between which instruments count as true emissions reduction and which don’t. For a broader overview of what’s changing under V2.0, see Agendi’s article on the standard.
This piece focuses on the question that matters most to environmental markets and procurement teams: when can a purchased instrument be used to support target implementation, and when can it not?
- Energy Attribute Certificates (EACs), Power Purchase Agreements (PPAs), and other qualifying commodity certificates are eligible for target implementation — they can support a company’s progress toward its near-term and long-term scope 1, 2, and 3 targets, subject to integrity criteria.
- Carbon credits purchased on the open market are generally not eligible for target implementation. They’re explicitly excluded from the “projects” pathway when sold or transferred to a third party, and are instead directed toward SBTi’s separate Ongoing Emissions Responsibility (OER) program and net-zero neutralization requirements.
- The same integrity backbone (CNZS-C25) applies across every instrument type — activity matching, quantification, verifiability, temporal alignment, and double-counting prevention are non-negotiable regardless of which instrument a company uses.
Differentiating Market Instruments
CNZS V2.0 separates instruments used for target implementation into two regulatory tracks:
| Track 1 – Market Instruments (C27) | Track 2 – Projects (C26) | |
| Covers | EACs, PPAs, and other contractual arrangements conveying emissions or physical attributes of an underlying activity | Emissions reductions or removals generated through discrete projects |
| Can it support target implementation? | Yes, if it meets C27 integrity criteria | Only in limited cases — most market-purchased carbon credits are excluded |
| Key exclusions | N/A (subject to volume matching, attributional accounting, attribute preservation) | Hypothetical-scenario reductions; credits used for OER or comparable schemes; credits sold/transferred to a third party; ex ante, unrealized reductions |
| Notable exception | — | Value-chain-generated “insets” can still qualify if implemented by/for the company and not sold on, per C26.1 |
Where Carbon Credits Do Fit In
Carbon credits aren’t excluded from the standard altogether — they’re simply routed to different parts of it:
Ongoing Emissions Responsibility (OER). Category A companies must, from 2035, address a share of their ongoing emissions through recognized mitigation outcomes, which can include carbon credits. CNZS-C43.4 sets specific conditions: credits must be permanently retired at the time they’re claimed, and mitigation outcomes can only be reported as a contribution when not simultaneously claimed by another actor for compliance, offsetting, or compensation purposes. Critically, per C43.1, mitigation outcomes supported through OER cannot also be counted toward scope 1, 2, or 3 target implementation — the two tracks are kept separate to prevent double-counting.
Net-zero neutralization. At a company’s net-zero target year and thereafter, CNZS-C46 requires that residual emissions be neutralized using eligible carbon removals, which may include removal credits. These must meet the integrity criteria in C42, and companies must report whether removal credits used for neutralization have been authorized by the host country and subject to corresponding adjustments (C46.6).
For environmental markets participants, the practical takeaway is that carbon credits retain real value under CNZS V2.0 — just for a different purpose (neutralization and OER) than EACs and other market instruments (target implementation and progress).
The exception: when emissions reductions or removals are generated within a company’s own operations or value chain (sometimes called “carbon insets”), they can count as an eligible project under C26 as long as they meet the eligibility criteria in C26.1, including that they’re implemented by or on behalf of the company rather than purchased on the open market.
A Note on Claims and Communication
The track a purchased instrument sits in doesn’t just determine eligibility, it also determines what a company can say about it. EACs and PPAs sit within the target implementation pathway, so they can still legitimately be cited in support of progress toward a science-based target, provided the C25/C27 criteria are met. Carbon credits increasingly can’t carry that language, since credits routed through OER or neutralization are explicitly walled off from target implementation (C43.1), framing a credit as having helped a company “meet” or “offset” its scope 1, 2 or 3 target no longer holds up under the standard.
This shift further clarifies the role of carbon credits. Before V2.0, corporate use of carbon credits sat in a poorly defined space, with no standardized framework governing how these credits related to target claims. OER changes that: credits now have a defined, auditable role, with SBTi signaling it expects a sharp increase in demand from carbon credits from corporates with net-zero goals following the update. For buyers, that means a clearer mandate to build a credit strategy now, rather than uncertainly about how credits can be used.
Integrity Criteria That Apply Across the Board
Regardless of which track an instrument falls into, CNZS-C25 establishes baseline integrity requirements that apply to projects, market instruments, and energy attribute and commodity certificates alike:
- Activity matching (C25.1): Actions must correspond to the same activity type, product, material, fuel, or energy source as the company’s underlying activity in its inventory.
- Quantification (C25.3): Outcomes must be transparently and conservatively quantified using recognized methodologies.
- Verifiability (C25.4): Companies must maintain auditable documentation sufficient for independent third-party assurance.
- Temporal alignment (C25.5): Actions generally must correspond to activities within 12 months of the company’s underlying activity, unless longer timeframes are justified by production cycles, storage periods, or established market vintage limitations.
- Double counting prevention (C25.7): Companies must use systems that provide unique identification and tracking, and refer to third-party-recognized registries where available.
Market instruments specifically carry additional requirements under C27, including volume matching (the volume of instruments matched to an activity cannot exceed the volume of the corresponding activity in the inventory), attributional accounting consistent with GHG Protocol requirements, and — notably — attribute preservation (C27.4), which prohibits allocating emissions attributes in ways that concentrate benefits on a subset of products beyond what physically occurred (what the standard describes as “carbon bank” models).
One area still under development: SBTi has signaled that further guidance on recognized third-party frameworks, registries, and certificate schemes is forthcoming, which will shape which specific programs and instruments are considered pre-qualified for use.
What This Means for Your Procurement Strategy
For companies building or advising on procurement strategy under CNZS V2.0:
- EACs and PPAs remain the primary implementation tools for scope 2 targets, and they can be used regardless of whether a company sets its scope 2 target on an absolute emissions or low-carbon electricity alignment basis.
- Carbon credit portfolios should be evaluated on a dual-purpose basis — as a tool for OER participation and net-zero neutralization, rather than as a lever for near-term target progress.
- Instrument sourcing matters as much as instrument type. Even eligible market instruments must be traceable to specific activity pools or systems, and companies should expect registry and third-party recognition requirements to tighten as SBTi’s forthcoming interoperability guidance is published.
- Carbon Insets occupy a distinct middle ground — value-chain-generated reductions or removals can count toward target implementation as projects, but only if they’re not sold or transferred to a third party, and only if they meet the same integrity backbone applied everywhere else in the standard.
How Deduci Can Support You
Reach out to us at info@deduci.com or drop into one of our webinars to get more insights on how the updated standards affects your company’s strategy.