When it comes to rolling out a digital asset product, carbon footprint can be the big elephant in the room. Step in Oxygen, a done-for-you enterprise service that allows you to decarbonise your digital asset holdings – and prove it – based on our award-winning digital asset decarbonisation work.
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Customers and stakeholders want to see ESG-aligned principles and more sustainable business models in their digital asset investment products. Take your first step today and play your part in a sustainable future for digital assets.
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Zumo Oxygen was launched in 2023 in response to client demand for a solution to address the carbon footprint of their digital assets. Zumo Oxygen matches digital asset holders to renewable energy solutions, enabling our clients to match the electricity consumption associated with digital assets with 100% renewables, transparently and verifiably. The solution has been developed as a result of extensive research undertaken by Zumo and is a key part of our own net zero strategy.
Zumo Oxygen uses industry data to calculate and forecast the electricity consumption associated with digital assets, and utilises renewable energy procurement in the form of RECs to ensure digital asset activity is verifiably matched with renewables.
There is increasing pressure on all businesses to have credible plans to decarbonise, and to publicly report their progress on reducing their carbon footprint. Because the most material environmental impact of digital assets is electricity consumption, this is a ‘quick win’ in terms of decarbonisation. Zumo Oxygen allows for rapid decarbonisation of digital asset activity using renewable energy procurement. We work with clients to understand any existing decarbonisation targets and to support our clients in developing appropriate strategies for digital assets.
Zumo works with leaders in the field of renewable energy procurement to purchase renewable electricity from across the globe equal to the estimated electricity consumption of the digital asset activity. In the case of Bitcoin – the largest user of electricity – one strategy is to map the renewable electricity purchased to the geographic distribution of Bitcoin mining.
In general, Zumo uses a model developed by Southpole and the Crypto Carbon Ratings Institute to calculate the electricity consumption of digital asset activity. This ‘hybrid approach’ looks at the electricity consumption of a network over a period of time and apportions this based on the holdings and transactions of a particular digital asset. We use publicly available data where this is available – in the case of Bitcoin, we use data from the University of Cambridge.
There may be some instances when it is more appropriate to apportion the electricity consumption to the purchase action of a digital asset. See Zumo White Paper for further information on methodologies and when each may be used.
Renewable Energy Certificates (RECs) are the standard market instrument to prove ownership of renewables, and are recognised as a market instrument by the Greenhouse Gas Protocol. One REC represents ownership of the renewable attributes of one MWh of electricity. RECs are purchased based on the electricity use associated with your digital asset transactions and holdings. Zumo works with trusted partners including Zero Labs, to deliver proof of REC purchases which are recorded and verified on the blockchain.
Zumo works with trusted partners to provide the most appropriate and impactful REC solutions to our clients. Costs depend on the number and type of RECs required, and the renewable energy strategy our clients choose to follow. Contact firstname.lastname@example.org to find out more.
RECs are proof that energy has been generated from renewable electricity sources such as solar, hydro or wind power, and are the only way to verify the ownership and usage of renewable electricity placed on the grid.
A REC is another name for an Energy Attribute Certificate (EAC). It is an accounting instrument representing one megawatt-hour (MWh) of renewable electricity that conveys a property right over the environmental attributes of that MWh, such as a zero emissions factor.
Once a REC reaches the end consumer (beneficiary), the REC is retired (cancelled) in the registry so it cannot be double counted or double claimed.
No. RECs are the standard instrument used globally (under several different names – EACs, GOs etc) that are used to prove ownership of renewable electricity. Without RECs, we would not have seen the tremendous growth in customer-driven renewable energy deployment that we have seen globally in recent years.
Voluntary markets for renewable electricity allow energy customers to drive decarbonisation faster by making decisions that send important market signals today, while also working with governments, regulators, and utilities to increase renewable energy generation.
Yes, there are different types of RECs and associated standards across different markets. The generic name is Energy Attribute Certificate (EAC), and the most common EACs in electricity markets are renewable energy certificates (RECs) in the USA, guarantees of origin (GOs) in the EU, and international RECs (I-RECs) in 50+ countries across Africa, Asia, and Latin America. At Zumo, we use the generic term ‘Renewable Energy Certificate’ to cover all the above as it is the most widely understood term.
No, RECs and offsets are inherently different market instruments and should not be confused. Whilst offsets can be used for any aspect of a company’s carbon footprint (one offset / credit represents one tonne of CO2e), RECs relate to electricity consumption only (one REC represents 1 MWh of electricity). This makes RECs an ideal tool to use for digital assets, where the most material part of the carbon footprint relates to electricity consumption. Furthermore, RECs are recognised by the Greenhouse Gas Protocol (see below).
Companies typically use RECs to reduce their emissions from their electricity use (Scope 2 emissions). Some companies are also starting to apply RECs to reduce emissions from electricity use across their value chains (Scope 3). RECs are typically reported through the market-based accounting method outlined in the Greenhouse Gas Protocol’s Corporate Standard. This reflects the fact that the RECs give the holder the property right over the zero or near-zero emission attributes. This means that companies that achieve 100% renewable electricity and have the RECs to prove it can report they have zero carbon emissions associated with their electricity consumption.
Electrons enter the electricity grid from many different sources, including renewables (such as wind and solar power), fossil fuels (such as natural gas or coal), and nuclear. Because of this, there is no way to know exactly what energy source your electricity comes from, and companies located in areas with a high density of wind or solar electricity generation have no more right to claim this renewable electricity than any other company on the grid.
In order to create a market incentive for the procurement of renewables, the ‘attributes’ of the electricity (e.g. how and where it was generated) are sold separately to the electricity itself. This is fundamentally how renewable electricity markets operate in all parts of the globe.
RECs are sold ‘bundled’ (with the electricity) or ‘unbundled’ (separately to the electricity). In general, for companies that are responsible for using electricity directly, bundled RECs are best (and other options, such as Power Purchase Agreements, may be better still). However, where RECs are purchased for supply chain electricity consumption (Scope 3), as is the case for digital asset holders, unbundled RECs are required given that those holders are not the direct electricity consumers.
RECs are a key part of the solution, but they are not a silver bullet.
As the urgency to decarbonise all sectors intensifies, and the global drive to reach net zero ramps up, guidance is evolving to meet constantly increasing demands. Arguably, improvements need to be made to the REC market to respond to these increasing demands. We expect to see an evolution of the RECs market in the coming years.
Arguably too, the best environmental solution is simply not to use the electricity in the first place, and where that’s not possible, to have reduced consumption as far as possible. For digital asset holders, this is not something they have direct control over. Whilst RECs are the most effective solution at our disposal today, the transition to net zero will require sweeping changes across all sectors. Zumo is actively participating in discussions and working groups to anticipate and shape future requirements. We will build these into our service offering to ensure it remains progressive in this constantly evolving space.
As with many other market instruments to reduce carbon emissions, RECs have been subject to some criticism, and companies should use RECs proportionally as part of a wider net zero strategy that focuses on emissions reductions.
The purchase of RECs to match the electricity consumption associated with digital asset activity does not change the fact that electricity has already been consumed – and this electricity may not have been renewable. This is why Zumo is active in several working groups and has contributed to key guidance for the digital assets sector – driving the verified use of renewables at source is the most preferable option environmentally.
However, the voluntary RECs market remains the only way for companies to make an active decision to verifiably procure 100% renewable electricity.
What claims can I make about renewable electricity consumption?
RECs are the standard instrument used to verify renewable energy procurement credentials. Without holding RECs (or other EACs), there is no standardised way to verify renewable procurement credentials or related claims.
The claims you can make depend on the use case. Zumo works closely with our clients to ensure their messaging is aligned with best practice, their own activities and their ambitions.
Likely claims include:
It’s easy to fall foul of greenwashing guidelines unintentionally. At Zumo we work closely with our clients to ensure claims and descriptions are accurate, but ultimately responsibility for this lies with you. We also provide clear communications guidelines. For more information on greenwashing guidelines in the UK, please see the ASA guidelines and the CMA’s Green Claims Code. The FCA is also due to publish greenwashing guidance.
This greenwashing guidance is constantly evolving, and there are some particular things to note:
As of 2023, the ASA guidelines include a requirement to qualify terms such as ‘net zero’ or ‘carbon neutral’ – arguably, this would also apply to claims such as ‘decarbonised digital assets’.
Contextualisation is considered to be important – material information about the company’s overall environmental impact is relevant and any sustainability claims should be made in this context.
Digital assets have created new electricity demand globally due to mining and validation activities. Luckily, it is possible for miners to power their electricity use with renewables as well as for others in the digital assets ecosystem to match the electricity consumption associated with their digital asset activity with renewables.
Powering digital assets with renewables ensures companies are taking a proactive position to increase global demand for renewables and help accelerate investments in electric grid decarbonisation.
We believe they can. When you purchase RECs it is guaranteed that the corresponding renewable electricity has been generated and that this electricity is your property. The money spent on each REC helps to support the renewable energy project to which it relates, and is a renewable energy subsidy, which will help to scale the growth of the renewables market. As money flows into REC-backed clean energy projects, the suppliers of that renewable energy are incentivised to continue building and expanding renewable energy infrastructure to cater to the demonstrated demand.
The value of the REC follows supply/demand dynamics: as demand for a particular type of renewable energy in each market rises, the price of the REC in that market increases—increasing revenues that then help attract more investments to meet demand.
For more information on Zumo Oxygen, or to talk to one of our team, please contact email@example.com