IN Brief:
- PepsiCo APAC has received certificates linked to 1,000 tonnes of low-carbon ammonia.
- The environmental attributes are separated from the physical ammonia through a book-and-claim structure.
- Accounting treatment remains subject to evolving standards, claims requirements, and internal controls.
Envision Energy has delivered environmental attribute certificates linked to 1,000 tonnes of low-carbon ammonia to PepsiCo APAC, using a book-and-claim structure intended to address emissions associated with fertiliser inputs without physically supplying the ammonia through PepsiCo’s existing agricultural network.
The certificates form the first delivery under an agreement running from 2026 to 2030. They are associated with ammonia produced at Envision’s Chifeng Net Zero Industrial Park and are being issued and managed through the S3 Markets environmental-attribute registry.
Envision estimates that the initial attributes could correspond to an emissions-reduction opportunity of approximately 5,000 tonnes of carbon dioxide equivalent. The figure is preliminary and company-supplied, while PepsiCo’s use of the certificates remains subject to evolving accounting guidance, claims requirements, and internal controls.
The transaction does not mean PepsiCo has physically received 1,000 tonnes of ammonia. Under the book-and-claim model, the lower-carbon product and its environmental attributes are separated. The physical ammonia can enter one supply chain while the documented attributes are allocated to a buyer elsewhere, provided the registry prevents the same benefit from being claimed more than once.
The attribute travels when the commodity does not
Fertiliser emissions are difficult for food and beverage companies to address because ammonia production frequently sits several tiers upstream from the purchase of crops. A brand owner may influence agricultural standards and sourcing programmes, but it does not necessarily procure ammonia or finished fertiliser directly.
Transporting low-carbon ammonia from Inner Mongolia to each agricultural operation using crops supplied to PepsiCo would add cost and complexity, particularly while production capacity and dedicated distribution remain limited. Separating the environmental attribute allows demand to be recorded without requiring a matching physical shipment to every participating farm.
That flexibility increases the evidential burden. The registry must connect each certificate to documented production, emissions, sale, allocation, and retirement, while buyers need controls demonstrating that the associated benefit has not also been retained by the purchaser of the physical product.
The underlying carbon-intensity calculation must also be sufficiently consistent for the resulting claim to withstand scrutiny from auditors, customers, regulators, and standards bodies. A certificate is useful only when its origin, ownership, and retirement can be followed through an auditable chain.
PepsiCo has said the arrangement allows it to address upstream agricultural inputs without changing existing procurement or production arrangements. That describes both the attraction and the limitation: the mechanism can operate alongside the current supply chain, but the initial transaction does not replace conventional fertiliser on a named farm with a physical low-carbon product.
Long-term purchases of attributes could nevertheless improve the commercial case for lower-carbon ammonia production. An additional revenue stream may give project developers clearer demand signals before dedicated physical distribution reaches every buyer, helping them make investment decisions against contracted interest rather than general corporate commitments.
Procurement teams will need to treat the certificates as governed assets. Buying criteria, approved registries, contractual definitions, retirement procedures, audit trails, and rules for allocating benefits across products or regions must be established before claims can be incorporated into wider sustainability reporting.
The agreement runs until 2030, giving the parties time to test whether book-and-claim becomes a bridge towards physical lower-carbon fertiliser supply or remains a parallel market in environmental attributes. The model can move evidence more efficiently than ammonia, but its credibility depends on the controls attached to every certificate.