Understanding Carbon Offsets

Renewable Energy

Compliance regulated and voluntary Renewable Energy Certificate (REC) markets exist in the United States, Europe, and Australia. Compliance markets target electric distribution utilities and voluntary markets mainly target large corporations to make voluntary sustainability claims. Some electric power utilities also offer green power pricing programs to customers through a premium on their bill.

RECs were originally developed to track renewable energy production for regulatory compliance with Renewable Portfolio Standards (RPSs). These standards require utilities to install and generate certain portions of their total electricity using renewable sources.

The U.S. and some other governments also subsidize renewable energy investment and generation, which can sometimes result in a surplus of RECs in some regions (although this is not the only factor that causes a REC market surplus to occur). Some of these surplus RECs are sold to organizations and individuals, who are told they are reducing emissions and buying green power.

Related pages:

Renewable energy certificates (RECs)
Power Purchase Agreements (PPAs)
Renewable Energy Direct Investment
Green Power FAQ