Recently, renewable energy certificates ( RECs ) have been highlighted for their place in sustainability. With this newfound spotlight on the topic has come a slew of myths and misconceptions, some of which exist far from the truth. So, what are the most common myths about RECs, and what's the reality?
1. Misconception: RECs are greenwashing
Reality: When properly sourced and certified, RECs play a legitimate role in supporting renewable energy projects and can be a valuable tool for businesses to demonstrate their commitment to sustainability. It is important to verify the authenticity and certification to maintain trust and validity in sustainability finance and to encourage proper investment in net-zero objectives.
2. Misconception: There is no way to verify RECs
Reality: Transparent, auditable tracking systems play a pivotal role, guaranteeing accurate representation and accountability throughout the REC lifecycle. There are established mechanisms and standards in place to validate and ensure the authenticity of Renewable Energy Certificates (RECs). Third-party validation adds credibility, with programs like Green-e certification setting environmental and consumer protection benchmarks in North America. In areas governed by Renewable Portfolio Standards (RPS) or similar regulations, government oversight ensures REC issuance, tracking, and trading compliance. Essential to this validation process is comprehensive documentation, encompassing generation details, ownership records, and retirement documentation. This stringent validation framework not only upholds environmental market integrity, but also instills buyer confidence in the REC market's reliability.
3. Misconception: RECs do not provide additionality
Reality: Renewable energy credits are an incentive for investing into renewably generated electricity that would not have been possible without the investment. Though the purchaser does not receive the physical electricity as part of the transaction, the financial support stimulates the growth of current renewable energy projects and the development of new ones.
Beyond just that transaction, purchasing RECs signals to the market that there is demand for renewable energy projects and empowers developers to continue to build and grow. These commitments can often drive policy changes and encourage further investment in renewable energy infrastructure at both local and global levels.
WHITE PAPER: Recent trends in the renewable electricity markets
DOWNLOAD NOW4. Misconception: RECs replace on-site renewable electricity generation
Reality: RECs can complement on-site renewable energy projects, but they do not replace the physical on-site generation. Instead, savvy organizations often adopt a dual approach, leveraging both on-site generation and purchased RECs to attain their renewable energy targets effectively. By combining on-site renewable energy projects with the procurement of RECs, companies achieve a diversified strategy in case of service disruption. This approach not only enables companies to directly contribute to clean energy production on their premises but also allows for the support and investment in additional renewable energy generation beyond their immediate reach.
5. Misconception: All RECs are the same
Reality: Renewable Energy Certicates can have different characteristics: technology (wind, solar, hydro…), vintage (year of generation), and certification standards. Ensure the quality and specifications that match your sustainability goals by diving into these characteristics when procuring. All REC providers will have these characteristics available for your review when procuring electricity. Moreover, RECs are a type of Energy Attribute Certificate applicable for North America. Depending on the location, EACs have different names: Guarantees of Origin (GOs) in Europe, Certificados de Energías Limpias (CELs) in Mexico, or Large-scale Generation Certificates (LGCs) in Australia. Nonetheless, all EACs are typically one megawatt hour (MWh) of electricity produced from a renewable source.
6. Misconception: RECs are expensive and only for large corporations
Reality: The price of RECs varies, and there are options for businesses of all sizes. Many programs and initiatives make it accessible for smaller businesses and individuals to support renewable energy investment through RECs. Optimizing procurement with HedgeZero solutions offers companies of all sizes the ability to optimize costs and time the market with guidance from market experts.
7. Misconception: RECs are the same as Carbon Credits
Reality: It is a common misconception to equate Renewable Energy Certificates with carbon credits, but they represent distinct mechanisms within the realm of environmental sustainability. Carbon credits focus on compensating carbon emissions, while RECs certify the generation of renewable energy and aid in reducing emissions. RECs specifically track and validate the production of clean energy from renewable sources, such as wind or solar, ensuring that a certain amount of electricity is generated sustainably. Conversely, carbon credits invest in projects that either capture, remove or avoid emissions elsewhere. Understanding this difference is crucial, as confusing the two can lead to a misunderstanding of how these mechanisms contribute uniquely to environmental stewardship, with RECs emphasizing clean energy generation and carbon credits addressing carbon emissions.
These tools are complements to each other. After an organization measures their carbon footprint, they would first tackle emissions reductions with tools such as RECs or renewable natural gas (RNG) and then utilize carbon credits for any unavoidable emissions left over. Having a comprehensive renewable energy procurement strategy is paramount in tackling corporate emissions reductions.
Addressing these misconceptions is crucial for a clear understanding of the role RECs play in promoting renewable electricity adoption and supporting sustainable practices. To contribute effectively to the renewable energy transition, consumers, businesses, and policymakers should inform themselves about the nuances of RECs.
Start your climate conversation with one of our experts and find out if RECs are a good option to add into your renewable energy mix.
