Glossary›Emissions accounting and measurement›Renewable Energy Certificates and LGCs
Glossary term
Cluster D · D48
Tier 1 · differentiator
Renewable Energy Certificates and LGCs
Definition
A Large-scale Generation Certificate is a tradeable certificate created under the Renewable Energy Target, each representing one megawatt hour of eligible renewable electricity generated by an accredited power station. LGCs are registered, transferred and surrendered through the Clean Energy Regulator’s REC Registry. Surrendering them is what substantiates a voluntary renewable electricity claim.
Renewable Energy (Electricity) Act 2000
· Clean Energy Regulator, Large-scale Renewable Energy Target ·
In force
On this page
In practice
Certificates are where private businesses most often believe they have reduced their emissions when, for AASB S2 purposes, they have not changed the number they are required to report. Getting this straight early avoids a disclosure that has to be corrected.
The mechanics. An accredited renewable power station creates one LGC per megawatt hour generated. The certificate is registered in the REC Registry, then traded. Electricity retailers and large direct users are liable entities under the Renewable Energy Target and must surrender a set quantity each year against their share of the national target. That surrender is a compliance obligation, not a voluntary claim.
The distinction that matters to a reporting entity is between those two kinds of surrender.
Kind of surrender
What it is
What it supports
Compliance surrender
The certificates a retailer surrenders to meet its Renewable Energy Target liability.
Nothing for you. The renewable attribute is already reflected in the grid average and is therefore already inside the location-based emission factor everyone uses. A customer cannot claim it again.
Voluntary surrender
Certificates the entity buys and surrenders on its own account, above the mandated level.
This is what substantiates a claim, and it is the basis for a market-based Scope 2 figure.
Two operational rules to hold. Vintage matters: a certificate generated years before the reporting period is a weaker claim, and the GreenPower programme applies a vintage limit that has tightened over time. Vintage rules differ by scheme and they change, so name the scheme and check the current rule rather than carrying a number forward. Do not publish a vintage figure without confirming it against the scheme’s current rules that reporting period. And surrender is the operative act, not purchase: holding LGCs in a registry account substantiates nothing, because an unsurrendered certificate can still be sold to somebody else who will claim it.
The disclosure consequence is direct. Under AASB S2 the mandatory Scope 2 figure is location-based, and surrendering LGCs does not change it. Certificates are disclosed as contractual instruments under paragraph 29(a)(v), and they may support a voluntary market-based figure alongside.
What the assurer does with it
The assurer treats a certificate claim as a documentary assertion and tests it documentarily. They ask for the REC Registry surrender statement, in the entity’s own name, for certificates whose generation period matches the reporting period, in a quantity that agrees to the megawatt hours being claimed.
They accept a registry surrender record reconciled to the electricity consumption it is claimed against. They reject a purchase invoice with no evidence of surrender, a broker confirmation on its own, certificates surrendered in a related entity’s name with no supporting arrangement, certificates covering a different period, and a claimed quantity exceeding consumption.
They also check the claim is not made twice, once in a market-based Scope 2 figure and again in a separate carbon neutral or renewable electricity statement elsewhere in the annual report.
Commonly confused with
Carbon credits, specifically Australian Carbon Credit Units. An LGC represents a megawatt hour of renewable electricity generation. An ACCU represents a tonne of abatement or sequestration. They are created under different legislation, traded in different markets, and used for different claims. Surrendering LGCs affects a market-based Scope 2 figure; surrendering ACCUs affects a net emissions or carbon neutral claim and has no effect on gross Scope 1 or Scope 2. Also confused with Small-scale Technology Certificates, which come from the small-scale scheme and are measured differently.
Sources
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Review status
Review required
Last reviewed
15 September 2026
Editorial pass, unsigned
Reviewer required
Carbon accounting specialist and registered company auditor
Next scheduled review
1 August 2027
next expected National Greenhouse Accounts Factors release
Part of
Cluster D, Emissions accounting and measurement
49 terms from the head term carbon accounting down to individual Scope 3 categories and the mechanics of factors, boundaries and data quality. The largest cluster in the glossary.
Related terms
The contract structures certificates usually arrive through
Which of the two figures a surrender actually moves
The required disclosure a certificate claim does not change
Related questions
We have sites in several states. Does that change our emission factors?
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Yes, for electricity. Location-based Scope 2 factors differ by state and territory because grid intensity differs, so you need electricity consumption split by site and state and then the matching factor for each. Scope 1 fuel factors are national and do not change from one state to another.
Where do Australian emission factors come from?
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The National Greenhouse Accounts Factors, published each year by the Department of Climate Change, Energy, the Environment and Water. They give Scope 1 factors by fuel and Scope 2 electricity factors by state and territory. NGER-registered corporations must use NGER measurement methods for their NGER reporting.
Other terms in this cluster
Renewable Energy Certificates and LGCs