Managing Corporate Carbon Emissions With Book-And-Claim

Corporations across sectors are exploring new ways to manage carbon reductions in their supply chains to achieve emissions-reduction targets. When doing so, it is critical to ensure accurate tracking of greenhouse gas (GHG) reductions and related claims, and to safeguard ownership rights to obtain the full value of supply chain investments and avoid problems with GHG claims, such as alleged greenwashing and double-claiming. Insetting, offsetting, mass balance, book-and-claim, and other mechanisms are increasingly part of the carbon reduction toolkit.

Book-and-Claim Basics

Book-and-claim (B&C) systems are rapidly emerging across clean fuels markets, including sustainable aviation fuel (SAF) and other hard‑to‑abate sectors like fertilizer and cement, where physical delivery constraints can limit decarbonization options. Standards governing B&C and related GHG claims are evolving, with ISO’s recent issuance of its Chain of Custody — Part 3: Requirements and Guidelines for Book and Claim standard (ISO 22095) and continuing consideration by the Science Based Targets initiative (SBTi) and the GHG Protocol, which is currently developing its Actions and Market Instruments Standard (AMI Standard). Participants must navigate important legal considerations, including the interaction of B&C mechanisms with state and federal incentives, the defensibility of environmental claims, and careful contractual allocation of rights, pricing and delivery risks, and liabilities.

How It Works

Book-and-claim systems decouple the physical delivery of a product from the valuable environmental attributes associated with that product’s production or use. This enables the physical products and their environmental attributes to be transacted as separate commodities, with the latter tracked and traded as “Environmental Attribute Certificates” (EACs) or, in ISO’s terminology, “Transferrable Instruments with Entitlement to Claim” (TIECs). Each EAC must be issued based on a verified underlying production event, ensuring that attributes are not created independently of real-world activity. Under a B&C framework, desired attributes, such as low GHG emissions or other sustainability characteristics, are verified, issued, and tracked on a registry or ledger to enable the transfer of those attributes to downstream purchasers, either independently or bundled with the underlying product or fuel. This structure allows buyers to access and financially support desired lower-carbon products, fuels, or supply chain components, and to claim the environmental or GHG benefits, even when direct physical delivery of that specific commodity or product is impractical or impossible. This, in turn, can create new revenue streams for producers and drive investment in production infrastructure and, ultimately, expand availability of low-carbon products, fuels, and components.

B&C approaches are not new. They have long supported clean fuels and renewable energy development through mechanisms such as renewable energy certificates (RECs) in electricity markets, renewable identification numbers (RINs) under EPA’s Renewable Fuels Standard, and low carbon fuel standard (LCFS) credits under LCFS state programs. These programs demonstrate how B&C systems scale low-carbon markets by efficiently mobilizing investments while tracking credible environmental benefits.

Clean Fuels and SAF

B&C mechanisms are gaining momentum in voluntary clean fuels markets, particularly for SAF. SAF supply remains constrained by a variety of practical and economic factors, including feedstock availability and production costs, while aviation demand is global, making B&C a practical bridge between near‑term demand and longer‑term infrastructure build‑out. Similar concepts are emerging for other emissions‑intensive and supply‑constrained sectors, including fertilizers, cement, steel, and chemicals, as companies seek scalable tools to address Scope 3 emissions and value‑chain decarbonization commitments and investments.

The expansion of B&C systems is occurring alongside the rapid development of voluntary standards and accounting frameworks. ISO 22095 provides guidance on chain‑of‑custody models that often underpin B&C systems, while the GHG Protocol and SBTi increasingly shape how companies evaluate and report the use of market‑based instruments. Of particular note, the GHG Protocol AMI Standard is expected to provide greater clarity on how B&C and similar market-based entities are also collaborating to align GHG emissions accounting to ensure consistency across the market.

Key Considerations

As B&C markets mature, legal considerations play an increasingly central role. Participants must carefully define the environmental and GHG attributes being created and transferred, ensure exclusivity where appropriate, avoid double-counting, and evaluate how B&C transactions interact with federal and state incentive programs such as tax credits, grants, state LCFS programs, and federal renewable fuel standards. Additionality—which requires a causal link between claimed emissions reductions and the action underlying the claims—is another core concept gaining increasing attention within B&C systems, with a focus on when and how it should be applied. Finally, green marketing approaches must be thoughtfully developed with an awareness of the variety and particularity of sustainability approaches and updated over time to stay current with ever-evolving best practices.

Book-and-claim or similar environmental commodities contracts should align with evolving standards and disclosure expectations, address verification and registry risks, allocate liability through appropriate indemnities, and support defensible public claims amid heightened scrutiny of environmental marketing and reporting.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.