Supply chains seen driving next growth leap in I-REC market: executives

The global International Renewable Energy Certificates market is nearing a structural inflection point, as Asia-Pacific transaction volumes surged from below $1 million to $100-$250 million annually, with industry leaders at the I-TRACK Day India event cautioning that further growth hinges on a fundamental shift in demand generation, especially through corporate supply chains.

"Margin for optimism is having watched the market move from less than a million dollars a year within the APAC region to a floating range in between $100 and $250 million a year. It's been a really, really fun ride to watch that growth," Roble P. Velasco-Resenheim, director of Partnerships and Asia Pacific at the I-TRACK Foundation, said during the event held in New Delhi Sept. 11.

Demand lags supply

Neda Arifi, business development director at Xpansiv, said I-REC issuances had grown from 1 million at the market's inception to around 400 million in the most recent year. However, she cautioned that sluggish redemption rates have made demand generation the market's most pressing concern.

"Up until now, the demand was growing organically, but from now on, we need to generate demand more systematically," Arifi said.

The buyer base is also shifting. Mining, metals and semiconductors -- historically the dominant sectors -- are now being joined by food, consumer goods, packaging and software companies, a sign that I-RECs are finding their way into new industries.

India stood out as a bright spot. Arifi said the country ranks first globally for registered renewable energy facilities on the Xpansiv registry and second in registered capacity, with more than 22 gigawatts enrolled, and a redemption rate of over 85%, among the highest globally.

She projected Indian market volumes of between 24 million and 25 million I-RECs by 2027, with a market value of between $8 million and $11 million at current prices.

Growth has accelerated since 2023, which Arifi attributed in part to the International Carbon Exchange (ICX) becoming a local issuer in India in 2024. Around 40% of redemptions in India are linked to RE100 member companies, while 89% of certificates are tied to voluntary reporting frameworks.

Scope 3 unlocks new buyers

Velasco-Resenheim said the market's biggest untapped opportunity lay not with large corporate brands, but with their suppliers and customers, where electricity loads could be 10 to 25 times larger than the direct corporate load the market currently serves.

"Supply chain load, expect 25x under your total addressable market," he said, pointing to scope 3 category 1 -- electricity use within supply chains -- and scope 3 category 11 -- electricity embedded in finished products -- as the two demand pools brokers and traders should be targeting.

He said the corporate net zero standard now explicitly allows renewable energy certificates consumed in supply chains to be attributed upward to brand-level scope 3 emissions accounting, calling it "a 10x moment in the market" that many participants had yet to act on.

Velasco-Resenheim also flagged the growing overlap between voluntary certificate markets and compliance frameworks, noting that instruments bought for sustainability reporting were becoming relevant to the EU's carbon border adjustment mechanism, adding regulatory urgency to procurement decisions for companies exporting to Europe.

Both speakers said buyers were increasingly asking for more granular, time-matched and supply-chain-specific products, with Velasco-Resenheim describing labels and external data infrastructure as a second layer of market information that would become essential for meeting future buyer demands.

Velasco-Resenheim said suppliers should be approaching buyers as consultants and long-term partners rather than spot transactors, as corporate demand for more complex and programmatic procurement structures grows.