How CEOs Can Optimize I-REC Strategy and Tax Equity

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A French multinational has asked us for I-RECs to meet its sustainability commitments. A Mexican listed company is seeking them to fulfill a commitment and avoid the associated penalties. Certificate brokers are also approaching us in response to the demand they are seeing.
Each request comes with different pressures. Some companies are preparing for requirements they expect to face. Others already have commitments to meet and consequences to manage. For a Mexican business serving international customers, that distinction determines how much time it has to act.
What concerns me is how often sustainability reaches the executive agenda only when time is running out. Companies appoint someone to lead it, announce commitments, and move on. But when delivery requires funding or a decision from finance, the person responsible can find themselves waiting for permission.
I-RECs make that gap visible. They have a market value, a delivery process, and rules governing what a company can claim. They force a conversation that should have taken place when the commitment was made.
An I-REC(E) represents the renewable electricity attributes of 1megawatt-hour of generation. A carbon credit is measured in tons of carbon dioxide equivalent and represents an emissions reduction or removal under its applicable methodology. The two instruments serve different purposes. Buying electricity attributes does not, by itself, offset a company's remaining emissions. The EPA explains this distinction.

The Issue of Double Counting

Another misunderstanding I encounter concerns double counting. A company may own solar equipment while the associated renewable attributes belong to someone else. If it sells those certificates, it cannot also use them to support its own renewable electricity claim. That claim requires the relevant attributes and evidence that they have been redeemed for the beneficiary. Equipment ownership alone does not settle the matter. GHG Protocol's Scope 2 Guidance addresses these accounting requirements.
Buyers should not treat every certificate as interchangeable, either. Generation location, technology, and period all matter, as do the rules of the commitment being fulfilled. A certificate can be valid yet unsuitable for a particular buyer's requirements. Before comparing prices, procurement needs to understand exactly what evidence the company has promised to deliver. I-TRACK's guidance makes clear that reporting frameworks have their own acceptance requirements.
This is where management has a choice.
Buying certificates is a sensible route for a company facing an immediate deadline. It also serves companies that cannot pursue a Tax Equity investment. I would not advise a business to miss a commitment while waiting for a new project to be built. In the projects we work with, allowing roughly a year before new generation produces I-RECs is a reasonable starting point. That timeline belongs in the strategy from the beginning.
For companies with available tax capacity, I favor evaluating an investment that generates financial returns alongside a supply of certificates. Mexico's Article 34, Section XIII provides the 100% deduction for eligible renewable generation equipment that underpins this approach. The provision appears in the Income Tax Law.
Tax Equity structures can align that fiscal benefit with the initial payment for productive solar assets. The company acquires assets that generate financial returns and an agreed supply of I-RECs, while a specialized partner manages development and operations. Those assets can be located away from the company's factories, allowing the business to pursue the investment without installing solar at its own facilities.
The economic purpose is to put capital otherwise expected to leave the business as income tax to work in productive assets. In a 30/70 structure, the fiscal effect aligns with the 30% initial payment, while the remaining contractual balance is paid over time under the agreed financing terms. The CFO can evaluate that investment alongside the recurring cost of purchasing certificates.
A manufacturer with a near-term reporting deadline could buy the certificates it needs now while beginning to develop that investment route for future years. Both decisions belong in the same plan. Waiting until the deadline to consider either leaves the business with fewer options.

Involving the CEO, CFO

That is why I want the CEO and CFO involved. A sustainability manager should be able to bring them an investment case, access the relevant financial information and secure a decision in time to execute it. The role needs a budget and sufficient authority to coordinate finance, procurement and operations.
I see companies leave sustainability until the end while continuing to describe it as a priority. The test comes when the executive responsible asks for resources. Can that person commit a budget? Can they get a decision from the CFO? Who resolves the issue when another department refuses to cooperate?
Management may decide that a particular sustainability investment does not deserve capital this year. It should make that decision openly and take responsibility for the commitments that remain. Holding someone accountable for results while withholding the means to deliver them is poor governance.
I would ask every CEO reading this to look at the person responsible for sustainability and make an honest decision about the role. Give it real ownership, resources and priority. If you intend to keep it purely decorative, remove the role and explicitly assign its outstanding obligations elsewhere. Both are legitimate management decisions. The person holding the job deserves to know which one you have made.