As corporate climate strategies mature, companies are recognizing that achieving meaningful decarbonization requires confronting emissions far closer to their core operations. For many organizations, Scope 1 emissions represent the most persistent and difficult component of their footprint. These emissions arise from on-site combustion of natural gas for heating, industrial processes, and thermal energy production. While renewable electricity markets have developed robust instruments such as RECs and I-RECs to address Scope 2 emissions, solutions for Scope 1 have been slower to mature. Renewable Thermal Certificates, also known as RTCs, have emerged as the primary mechanism for addressing this challenge, yet their market dynamics are fundamentally different from those of renewable electricity attributes.

RTCs represent the environmental attributes of renewable natural gas injected into a common carrier pipeline. When companies retire RTCs equivalent to their thermal consumption, they can claim a reduction in direct emissions. This mechanism provides a powerful pathway for decarbonizing heat and process energy without requiring immediate changes to equipment or fuel supply. However, the RTC market is shaped by forces that extend far beyond voluntary corporate demand. Understanding these forces is essential for companies seeking to secure long-term supply and control Scope 1 exposure.

The most consequential driver of scarcity in the RTC market is the dominance of transportation fuel compliance programs in the United States. The federal Renewable Fuel Standard and California’s Low Carbon Fuel Standard have created significant incentives for producers to sell renewable natural gas into the transportation sector. The credits generated under these programs can produce revenue multiples that far exceed what voluntary thermal buyers can typically justify. As a result, producers direct much of their supply to the compliance market, leaving a limited volume available for corporate buyers seeking RTCs.

This supply constraint has become more pronounced as transportation regulations have expanded and as carbon intensity reduction targets have increased. RNG producers now face strong economic incentives to optimize their output for the transportation sector. For voluntary buyers, this means the price of RTCs is often determined by the opportunity cost of selling into high-value compliance markets. Volatility in federal and state credit prices can therefore feed directly into the cost structure for RTCs, creating uncertainty for companies attempting to plan long-term procurement strategies.

Supply scarcity is only one half of the equation. The accounting landscape for thermal energy attributes remains incomplete. While several voluntary standards recognize the use of RTCs for Scope 1 reductions, the GHG Protocol has not yet finalized comprehensive guidance on thermal accounting. This uncertainty introduces strategic risk. Companies must be prepared for the possibility that reporting expectations may shift once formal guidance is published. Although current trends suggest RTCs will remain a viable instrument, the absence of definitive rules requires buyers to maintain strong documentation and be prepared to adjust reporting methodologies.

This accounting uncertainty has not slowed demand. In fact, it has increased interest in RTCs as companies look for ways to manage Scope 1 exposure while planning for future regulatory developments. Industrial facilities that rely on natural gas for process heat often have limited short-term alternatives. Electrification of industrial heat remains technically and economically challenging for many applications. As a result, companies seeking to decarbonize now, rather than wait for emerging technologies to mature, rely on RTCs as an immediate and scalable solution.

A further complication arises from the limited geographic distribution of RNG production in North America. Most RNG projects are located in regions with favorable feedstock availability, such as agricultural states, landfill-rich municipalities, or wastewater treatment systems. The physical logistics of producing and upgrading biogas restrict supply in ways that electricity markets do not experience. These structural constraints reinforce scarcity and underscore the need for buyers to adopt multi-year procurement strategies rather than rely on spot availability.

This environment has led many companies to pursue long-term contracting as a way to secure stability. By committing to multi-year purchases, buyers can negotiate more favorable pricing and reduce exposure to the volatility of compliance credit markets. Developers benefit as well. Long-term demand commitments can help them secure financing for new projects, facilitating additional RNG production capacity and expanding future supply. This symbiotic relationship between buyers and developers represents one of the most promising pathways for addressing supply scarcity while supporting renewable infrastructure growth.

AFS Commodities USA plays a critical role in helping companies navigate these complexities. The firm provides detailed analysis of compliance credit markets, RNG production trends, and policy developments that influence RTC availability and pricing. This insight allows clients to assess risk accurately and design procurement strategies that reflect both current market conditions and long-term trajectories. AFS also conducts due diligence on RNG facilities, ensuring that clients procure certificates from verified, high-quality sources with transparent environmental data and documented lifecycle emissions performance.

The firm also guides clients through the evolving reporting landscape. By monitoring the development of thermal accounting standards and assessing the requirements of voluntary reporting frameworks, AFS helps companies ensure that their use of RTCs aligns with current best practices. This includes maintaining detailed documentation, verifying certificate retirement, and preparing for potential changes once the GHG Protocol finalizes its guidance. This proactive approach reduces exposure to future reporting risk and enhances the credibility of sustainability disclosures.

Looking ahead, the RTC market is likely to remain tight. Transportation fuel compliance programs will continue to absorb a significant portion of available supply, particularly as carbon intensity reduction targets become more aggressive. RNG production will gradually expand, but growth will be constrained by feedstock availability, project economics, and regulatory oversight. Companies that wait to engage with the RTC market risk facing higher prices, limited availability, and greater competition for high-quality attributes.

The organizations that act early and adopt a long-term strategy will be better positioned to manage Scope 1 exposure and maintain progress toward decarbonization goals. Renewable Thermal Certificates are not a complete solution for industrial thermal decarbonization, but they provide an essential tool that bridges the gap between current technological constraints and the future of low-carbon heat. With informed procurement and expert guidance, companies can navigate scarcity, manage risk, and support the continued development of renewable thermal infrastructure across North America.