Overview 

In June 2026, the Science Based Targets initiative (SBTi), the leading framework for voluntary corporate emissions targets, already adopted by more than 10,000 companies worldwide, published version 2.0 of its Corporate Net-Zero Standard. Among the many changes it introduces, one carries particular weight for companies with existing gas or electricity procurement programs: a significant tightening of how market-based instruments can be used to meet climate targets. 

The update reshapes how companies can use energy attribute certificates (EACs), certified biomethane, and commodity certificates to meet their Scope 1, 2, and 3 targets. 

Key Details 

The Core Shift: From Contracts on Paper to Physical Delivery 

The standard's central novelty is this: progress is now measured against a physical GHG inventory, or in other words what a company can demonstrate was actually delivered to it, rather than a market-based inventory built solely from certificates and contracts. 

Running through the entire standard is a single guiding principle: SBTi has chosen proof over convenience. 

Does This Mean Market-Based Instruments Are Out? No. 

Market-based instruments still have a role, but a narrower and more demanding one. 

First, Energy Attribute Certificates such as Guarantees of Origin (GOs) and I-RECs, which represent megawatt-hours of electricity from renewable sources, remain usable for one of the two Scope 2 target types companies can choose: Low-Carbon Electricity (LCE) Targets. 

Second, the standard clarifies that instruments demonstrating a real, physical link to a company's own energy use can count toward the physical GHG inventory. Examples include certified biomethane flowing through the gas grid, or electricity purchased under a PPA contract tied, for instance, to a specific wind or solar farm. Because these instruments correspond to a traceable physical flow of energy, their emission reductions can be reflected directly in a company's physical inventory. 

Physical Traceability: The Idea at the Heart of It All 

Physical traceability means a company can point to a real, physical connection between the energy it claims credit for and the energy it consumes; not merely a certificate purchased in isolation, detached from any real delivery. 

Consider the difference: buying a certificate labeled “renewable electricity” sourced from anywhere in the world versus buying power from a wind farm physically connected to the same grid your factory draws from. The first is easy to buy but hard to verify. The second is harder to arrange but leaves a real, auditable trail. 

How Is Physical Traceability Established? 

The standard specifies that the physical inventory “may use chain-of-custody models that establish physical traceability with the reporting entity.” 

Chain-of-custody (CoC) models are systems for tracking a product's sustainability attributes as it moves from its point of origin (e.g., a renewable power plant or a biomethane injection point) through to the end user, ensuring the environmental claim stays linked to a verifiable physical pathway. Common models include: 

• Identity preservation — the exact physical unit (e.g., electrons from one specific generator) stays segregated and traceable all the way to the buyer. 

• Mass balance — the certified product is physically mixed with conventional supply in a shared system, such as a gas grid, but the volumes are reconciled administratively so that what's claimed out matches what was put in. 

• Segregation — certified and non-certified material are kept physically separate throughout the supply chain, without being blended at any point. 

• Controlled blending — certified material may be blended with non-certified material under defined technical conditions, with the certified share tracked and capped accordingly. 

Under SBTi V2.0, book-and-claim instruments on their own generally fall short of the new physical traceability bar, while mass-balance and identity-preservation models are positioned to qualify. 

The Two Instruments Best Positioned to Qualify 

Two market-based instruments currently stand out as best suited to meet SBTi's requirements and be reflected in the physical inventory: 

1. Certified biomethane, tracked through gas-grid mass balance, a system that follows the volume of green gas injected into the grid, even though the actual molecules mix with conventional gas. 

2. Power purchase agreements (PPAs) tied to a specific generator, which establish a direct, identifiable link between a buyer and a named renewable source. 

Both offer a real, checkable link between claim and delivery. For companies that rely on gas, this represents the clearest near-term opportunity created by SBTi V2.0. 

SBTi is expected to issue further guidance by Q1 2027 clarifying exactly which market-based instruments can be accounted for in the physical inventory. Should certified biomethane and PPAs be formally confirmed as eligible at that point, companies would be able to apply them not only to Scope 2 targets but potentially to Scope 1 and Scope 3 as well, a change that would meaningfully increase demand for both instruments. 

Tighter Rules for Unbundled Certificates 

Companies pursuing a Low-Carbon Electricity (LCE) alignment target (one of the two available Scope 2 options) alongside a standard emission-reduction target can still use unbundled EACs such as GOs or I-RECs, provided the generating source qualifies as low-carbon (direct emissions of 0.048 kg CO₂/kWh or less; nuclear power is included). 

However, using these certificates now comes with three new conditions that raise the bar considerably: 

1. Geographical matching — the electricity must originate from within the same “deliverability region.” Exact boundaries are expected to follow the GHG Protocol's upcoming Scope 2 guidance and its emphasis on pricing zones. 

2. Hourly matching — companies drawing more than 10 GWh a year from a national grid must report the share of their low-carbon electricity that was matched hour by hour, rather than averaged across the year. 

3. A 15-year generator age limit — certificates linked to older power plants no longer qualify, regardless of how clean the plant's output actually is. 

Together, these three conditions push Scope 2 procurement toward instruments that reflect when and where power is genuinely delivered, rather than an annual volume recorded on paper. 

What This Means for You 

SBTi V2.0 does not remove market-based instruments from the corporate decarbonization toolkit, it narrows which ones count and raises the bar of proof for the rest. 

Companies with existing gas or electricity procurement programs should review their current contracts now against the new traceability, geographical-matching, and hourly-matching rules, and begin planning their transition toward compliance. 

Companies without an SBTi target of their own should also expect growing pressure from customers and suppliers pursuing their own Scope 3 goals. Those that begin testing their current instruments against these criteria now — ahead of the 2027 and 2028 milestones — will be best positioned as markets shift their focus toward verifiable, physical decarbonization progress. 

How GO2 Markets Can Help 

GO2 Markets helps companies assess how their current gas and electricity procurement holds up against SBTi V2.0's physical-traceability requirements, and where PPAs or mass-balance-tracked biomethane could strengthen their position ahead of the 2027 guidance. Our Advisory team can review your portfolio against the new geographical-matching, hourly-matching, and traceability rules, and help you plan a realistic transition path. 

Sources 

• SBTi Corporate Net-Zero Standard V2.0, June 2026