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A primer on Renewable Energy Certificates

Brian C. Murray, director for economic analysis at Duke's Nicholas Institute for Environmental Policy Solutions, answers your questions about the economic consequences of a changing climate and the costs and benefits of reducing greenhouse gas emissions through public policies.

Q: The sellers of Renewable Energy Certificates claim that you can cause energy that would otherwise be generated using fossil fuels to be generated from renewable energy sources by purchasing their certificates to subsidize the renewable energy generation so that it costs no more than energy generated using fossil fuels. By purchasing such certificates for as much electricity as you use, you can insure that there will be no net increase of carbon dioxide created in the atmosphere as a result of your electricity consumption, even if your electricity is generated locally from fossil fuels.

Organizations such as Green-e certify that the Renewable Energy Certificates sold by such suppliers as NC GreenPower, Sterling Planet, etc. really do cause energy to be created from renewable energy sources that would otherwise be generated from fossil fuels. Can we really believe that certification? Is it not usually nearly impossible to determine whether the energy would have been generated from fossil fuels in the absence of the RECs?

Does each REC purchased change a decision about how energy is to be generated, or were those decisions made previously? If it is the latter, do RECs really offset CO2 production? (I am not hostile to RECs -- I have been using them to offset my electricity usage for 18 months -- but this question still troubles me.)

Ned Kennington

Durham

A: If the certifying organization is reputable and follows rigorous standards to ensure that the emission reductions are additional to what would have occurred without the REC, then the certification claims should be valid. Most REC payments are conditional on delivery of the renewable power to the electrical grid. The fact that the renewable power must be fed into the grid at least ensures that it will substitute for other electricity that would have been generated for the grid.

If the replaced electric power would have been created with fossil fuels, then the substitution of carbon-free electricity will, in fact, reduce emissions. So in that sense, the reductions are real as long as the carbon content of the displaced power can be verified, which these certifying organizations must do. The real critical point, though, is whether the carbon-free energy would have been supplied to the grid without the REC certificate. This is referred to as "additionality."

If the renewable energy would have been sold to the grid without the REC in place, then the emission reductions alluded to above are not really additional.

If this is the case, then your transaction has not really caused an extra decrease in emissions and its use as an offset to your own emissions would be questionable. However, if the REC is used to create new renewable capacity that otherwise would not exist and uses this capacity to deliver carbon-free electricity to the grid that clearly would not have been possible without the REC, this would be deemed additional and lead to a real reduction.

If you want to make sure your emissions offsets are real, you should check to see whether the organization that sold you your REC follows rigorous standards to ensure that the purchased reductions are additional.

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