Q: What are Renewable Energy Credits (RECs)?
A: Recent media stories have generated lots of buzz around Renewable Energy Credits (RECs). Understanding RECs can be challenging, so we've prepared some general information that may help demystify this topic.
The energy used in our homes and businesses is generated from a number of sources including coal, natural gas, wind, and solar. Once electricity is produced, it is then fed into the electrical grid where it is delivered to our homes and businesses. Unfortunately, electricity generated from coal and natural gas, the sources of the vast majority of our energy, increases air pollution and greenhouse gas emissions.
Electricity produced from renewable energy sources such as wind or solar, has positive environmental benefits as it does not generate pollution or emissions. At this time, however, renewable energy often costs more to produce than energy from coal or natural gas, which explains the dominant use of these non-renewable, fossil-fuel sources.
To help encourage development of the renewable energy market, renewable energy providers (such as wind farms) sell the electricity generated to utilities and sell the RECs on the open market, often to businesses and individual consumers. These RECs represent the environmental benefits (hence the term "credit") of the renewable energy that is produced. A renewable energy provider is credited with one REC for every 1,000 kWh of electricity it produces (for reference, an average residential customer consumes about 650 kWh per month). Generating and adding renewable energy to the grid decreases the need for coal or natural gas.
RECs can be bought, sold and traded, and REC owners can legally claim to have purchased renewable energy. A certifying agency (Green-e) gives each REC a unique identification number to make sure it isn't double-counted. The buying and trading of RECs can help incent renewable energy providers to continue to provide renewable energy to the electricity grid.
Q: What are carbon offsets?
A: Carbon offsets are used to mitigate, or "offset" greenhouse gas emissions. In our everyday lives, we generate greenhouse gas emissions through energy use in our homes and offices or through our travel by car or airplane. Many of these emissions are unavoidable, and individuals and businesses are seeking new ways to reduce their carbon footprint. Carbon offsets offer a way to "neutralize" our emissions by investing in activities that avoid the need for generating an equal amount of carbon elsewhere.
While most people can reduce their energy use by improving the efficiency of their homes and driving cars that get better gas mileage, reducing energy needs to zero through individual actions is nearly impossible. Carbon offsets offer another way to reduce the remainder of one's carbon footprint.
The four main types of offsets available are derived from energy conservation, methane capture, renewable energy projects, and reforestation. Offsets are purchased by individuals and businesses through a number of organizations and formal trading systems have developed as individuals, businesses, and countries have sought ways to reduce greenhouse gas emissions. Funds collected by offset organizations are used to promote and implement emissions-reducing projects in the areas mentioned above. An offset certification is under development.
This bi-monthly column is courtesy of the city of Boulder's Office of Environmental Affairs, who administers the city's Climate Action Plan (CAP) through the ClimateSmart campaign. Please e-mail your questions about household or commercial energy use and sustainable transportation to email@example.com.