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Defending Renewable-Energy Certificates

An imperfect system for a fossil-fuel world, green credits are still valuable.
October 2, 2015

Not surprisingly, my article illuminating the system of certificates by which many companies purchase rights to the green attributes of renewable-power generation (“How Corporations Buy Their Way to Green”) proved controversial. In particular, two of the people I spoke to for the story—Letha Tawney, the director of utility innovation at the World Resources Institute, and Jared Braslawsky, the director of the International REC Standard—wrote to say that I’d misunderstood the system and misled readers. I disagree; the point I made was that RECs are an imperfect and interim step on what needs to be an accelerated path to integrating large amounts of renewable energy onto the existing power grid. In the spirit of further amplification and clarification, I’ll present their viewpoints here along with a brief response.

Their points can be grouped into three main statements:

1. RECs are the only way to insure that a company is purchasing power from renewable sources.

That’s because electrons all look alike. Unless you have an off-grid office or factory powered completely from on-site renewable generation, there’s no such thing as a pure stream of renewable energy. 


Even if companies source directly from local production stations or through a power purchase agreement, they must have RECs from that generation source to prove their consumption. RECs are the only way to allow for consumer product choice in the electricity market. You can never follow an electron from its point of production to its point of consumption and just because you “live near wind or solar resources” does not mean you own the attributes to that production without the associated RECs.


The claim of using renewable energy passes with the unique REC—regardless of whether the company also buys the energy or not

2. RECs are different from offsets.


RECs are fundamentally different instruments than carbon offsets. Voluntary carbon offsets are, at their core, certified emission reductions associated with a project deemed to be beyond a business-as-usual baseline. They can originate from both off-grid projects, such as land-use projects, and on-grid projects, such as renewable generation. RECs are not referred to as “credits” or “offsets” and are not created as a result of a calculation. RECs carry with them nothing more than the factual information of the type and source of grid delivered electricity production. Consumers must own the rights to the associated RECs to prove they have purchased that electricity. 

For a valid consumer claim, RECs, representing actual produced electricity, must be purchased and consumed within a single market boundary. This is different from voluntary offsets which represent global emissions reductions and can be produced and consumed all over the world.

3. The REC system accelerates the addition of renewable generation capacity to the grid.

This the hardest statement to prove. In some markets the price of RECs is so low that regardless how many companies buy up, they don’t really provide incentives for generators and grid operators to add new renewable capacity.


RECs from a credible supplier are the first and simplest step to meeting a renewable energy goal, but many companies want to go beyond and be sure they are directly, positively impacting their local grid in addition to the electricity system at large. Additionally, the falling cost of renewable energy projects means contracting the energy from a project, in addition to the RECs, brings more value to the businesses’ bottom line.

Critics like Daniel Press, chairman of the environmental studies department at the University of California, Santa Cruz, deride renewable certificates as “at best … a token subsidy for renewable energy,” whose “sales don’t do much beyond paying the salaries—of people selling certificates.” Proponents like Tawney and Braslawsky vehemently defend the REC system as the only way, in a world where electricity from many different generation resources flows across a common grid to end users, to ensure that you are paying for power from green sources. Unfortunately, they’re probably right: as Churchill said about democracy, RECs are the worst possible way to shift the power sector toward clean energy, except for all of the others.  

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