Offsetting your Carbon Emitting Life: What are REC’s and How to Buy Them?
Posted by DavidM in Buying green | 20 November 2006
Courtesy of Jessica Drummond of The Green Adventure
The whole idea of Renewable Energy Credits, or REC’s can be very confusing. It’s important not to invest in something that you don’t understand. So, today I’m going to offer you a simple and concise explanation in order to get each of you started on the road towards offsetting your own carbon footprint most effectively.
Basically REC’s are the credits given by the government to renewable energy producers to encourage investment in this sector, and hopefully to encourage transition to the use of clean rather than polluting energy. If I were to build a wind farm (a source of energy that is “clean” meaning that it doesn’t emit too much CO2 into our atmosphere), I would be issued a number of credits that I could sell on the open market (sort of like the stock market) to someone who needed to offset the emission of too much CO2, such as from a coal plant.
This is already being done on a large scale for other pollutants on wholesale and retail trading floors all over the world. Usually these markets come into existence because the government passes a law requiring a limit on how much of a given pollutant (such as SO2) a given entity can emit into our atmosphere without being penalized financially. So, for example, if a coal plant emits more than the legal limit of SO2, the company owning that plant will be required to pay a hefty fine, or will need to buy an equivalent number of credits on the open market from a plant that emits less SO2 than the legal limit (such as from a wind farm.)
Many years ago markets were created in anticipation of the regulation of carbon emissions by governments once it became known that they were contributing to global climate change (The Kyoto Treaty was created, etc.). So, for years, large energy companies such as Duke Energy, Exxon, AEP, and Shell, utilities such as Austin Energy, and even small companies with just a few employees have been trading carbon credits.
Credits are even traded on well known exchanges like The Chicago Mercantile Exchange. But, for a while now this wholesale market for carbon credits has been saturated. Thus, there is now little expectation of significant pricing increases on these wholesale markets, thus limiting the amount of money one can gain this way, by building a wind farm and selling the credits.
So, about 6 years ago, The Bonneville Environmental Foundation (BEF) helped to start a retail market for REC’s (also known as green tags). Now it is possible for retail customers, like you and I, to purchase REC’s. As this retail market grows, the value of the credits will increase on the open market in turn making the building of large scale renewable energy projects such as wind farms and solar plants more financially viable. Plus, it is hoped for and expected that the federal government will soon pass legislation similar to that passed by California that will put limits on the amount of CO2 a plant can legally emit.
Actually, it will be best if the governments of all nations agree on appropriate limits as this is a global problem, not just a national problem. In that case, the legal limits on carbon emissions will be the basis for the creation of an involuntary cap and trade system for carbon emissions (such as is the case for SO2 emissions in the above example) to replace the voluntary one that is currently in place.
In the meantime, each one of us can contribute to the growth of the retail market by participating in the voluntary cap and trade system that exists for individuals. So, how should you go about participating? Let me detail the steps right now…
First of all, figure out the carbon emissions amount of your daily life by completing an online carbon calculator such as the one available on the BEF website. Once you know how much carbon your lifestyle emits, you can choose to offset 100% of that emission or any portion of it. Alternatively, you can aim to lower your emission level, say to 70% of what it is now, and offset that amount.
Whether the process spurs you toward 100% offsetting, or if it encourages you to conserve (or buy a wind turbine for your yard or some solar panels for your roof) as you offset, it is a step in the right direction. And, we all know that each of us must take at least some small steps in order to halt the global climate crisis.
The other tricky part of this process is determining who to buy the REC’s from. BEF is a wonderful source. It is a non-profit organization that is dedicated to expanding renewable energy and watershed restoration. However, there are limits to what a non-profit organization can do.
You are a “first adapter”. That means you’re getting in on this whole REC trend in its infancy, therefore you have an even greater opportunity. You’re contribution can be not only to offset your own lifestyle, but to be involved in the marketing effort to encourage others to do the same. This market will be most effective for actually spurring the increase in the development of renewable energy farms or plants if it grows strongly and steadily.
So, when you jump on the “offsetting train” bring some people with you. You can bring others along by telling people about it, and/or by buying from for-profit companies that are currently ramping up their marketing campaigns to grow the retail REC market fast and furiously.
TerraPass is one company that is marketing through partnerships with well known brands such as Expedia and Ford. You can buy your offsets along with your Expedia flight purchase, or buy your offsets based on how much terrain you cover in your Explorer.
Similarly, Renewable Choice Energy has partnered with Whole Foods Market who not only buys offsets for their stores’ power, but right on Whole Food’s shelves are cards that look like phone cards, but they are representative of the purchase of offsets bought through Renewable Choice Energy. That may be a little confusing since you still have to pay your own electric bill even though you’ve purchased some amount of wind energy, but really what you’ve done is simply purchased a wind energy REC and gotten a certificate of sorts that you can carry around with you to show off your brand new “greenness.”
So, check out Ecobusinesslinks.com for more companies that sell REC’s on the retail market.
In general, all of these companies have the altruistic motive of growing the REC market in order to spur the development of new sources of renewable energy. Some are more motivated by spreading the word through brand recognition and by making money (would be a good motivator for me!). Others are motivated to use the funds as directly as possible for building smaller scale, more local projects.
In my opinion, purchasing REC’s from either type of company will help to grow the market. But, to be sure that you’re getting high quality REC’s that have been independently verified (meaning they haven’t been sold more than once, are not excessively old, etc.), purchase only green-e certified REC’s. Alternatively some of the companies listed on Ecobusinesslinks.com sell credits that support reforestation (planting trees). Supporting tree planting is fine too, but the limitation is that the trees could burn or be cut down, there is no third party verification, and you will not be contributing to the growth of the REC retail market in the same way.
So, get going… determine your carbon emissions (and those of your business, if you’re a business owner), offset your carbon emissions by buying green-e certified REC’s, look for ways to lower your carbon emissions through conservation, and then spread the word! If the government is moving too slowly to set limits on us, we now have the opportunity to set limits on ourselves. As always, we’re bearing some costs today to preserve a home for our children tomorrow.
Comments
We're happy for anything that promotes clean energy and educates folks about how to be good environmental stewards, but we have a hierarchy for carbon credits we provide at ACES. Our preferred credits are based on waste-to-energy projects like methane from agricultural waste used to create electricity.In that way we move a problem (ag waste) into the solution column and create no new difficulties (like folks fighting against windfarms in their areas).It's a simple thing but a better approach, we think, because it is immediately effective on so many levels and it avoids making enemies or wasting time on political battles. Some programs are better known than ours(we just began in July) but none are better researched, more fully-faceted, or offer more useful(and fun!) information about making the green life the good life.Look at our website www.acesprogram.com and take an extra minute to click on to our newsletter,too Do consider that programs which solve more than one problem at a time are worthy of your serious consideration! And yes -- we support wind energy,too, but it's #5 on our list!
