Institutional frameworks for renewable energy certificates: Insights from Japan and South Korea

Policy instruments significantly shape a nation’s energy transition success. Trends like green supply chains, the EU’s Carbon Border Adjustment Mechanism (CBAM), and corporate sustainability efforts have prompted market-oriented countries to adopt Renewable Energy Certificates (REC) to enhance competitiveness and meet emissions targets, especially in manufacturing-heavy economies. This study examines the functional differences among Feed-in Tariffs (FIT), Renewable Portfolio Standards (RPS), and REC, traces the historical development of RECs, and evaluates their implementation in Japan and South Korea using academic studies, technical reports, official documents, and grey literature. The key insights derived from the analysis are as follows. First, REC, FIT, and RPS all play critical roles in advancing energy transitions and reducing carbon emissions. However, RECs uniquely serve as a high-precision tool for corporations to calculate Scope 2 greenhouse gas emissions, particularly when compared to carbon offset mechanisms. Second, the development processes and trajectories of REC systems in Japan and South Korea demonstrate that, in nations dominated by manufacturing or export-oriented industries, effective communication among international sustainability organizations, governments, and industry stakeholders facilitates the strategic alignment of policy adjustments. Third, voluntary REC markets can accelerate investments in renewable energy and incentivize corporate adoption of renewables, whereas mandatory REC markets are more effective in expanding overall market scale. Fourth, certificates have emerged as a fundamental component of a country’s renewable energy policy toolkit. • Examining the role of renewable energy certificates in energy transition. • Evaluating the efficacy of certificate markets across diverse regions. • Investigating the systems in Japan and South Korea as case studies. • Analyses of official data and supplementary sources. • Renewable energy certificates provide significant impetus for energy transition.