June 9, 2023

Are RECs Offsets?

Mark Trexler

In all the discussion of carbon offsets, Renewable Energy Certificates (RECs) (representing the stripping and selling of the environmental attributes of renewable energy) have mostly gotten a free pass when it comes to their use in "reducing" companies' Scope 2 emissions. Huge numbers of RECs have been bought for very low prices (e.g. $1/ton equivalent) and sold for much higher prices (e.g. $10/ton equivalent). It's been a profitable business model.

An upcoming webinar – The Legal Basis for Renewable Energy Certificates – is based on a recent iteration of a report that has been out for a decade. The webinar plans to tackle the "legal basis" for RECs. It's ironic that this webinar is occurring soon after the Our Children's Trust lawsuit in Montana will have wrapped up; I’m wondering whether anyone in the webinar will be speaking for the children and the climate. The legal basis of RECs is irrelevant (at best) if RECs are not resulting in a climate benefit, and the literature is overwhelming in demonstrating they're not.

Even though RECs don't have an additionality requirement and therefore can't actually qualify as offsets, that is how they are being used when it comes to "reducing" Scope 2 emissions. Additionality has been the Achilles heell of carbon offsets; simply buying and selling the environmental attributes of renewable energy (RECs) accomplishes nothing if the REC market is not driving the generation of more renewable energy than would have otherwise occurred (additionality). And there has never been any convincing evidence of that -- quite the contrary, in fact.

To dig deeper into this topic and to access some of the most relevant literature, check out "Are RECs Offsets?", one of hundreds of topical insights pages in the Climate Web.

Featured image by Thomas G. from Pixabay.



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Mark Trexler


Mark has more than 30 years of regulatory and energy policy experience. He has advised clients around the world on climate change risk and risk management. He is widely published on business risk management topics surrounding climate change, including in the design and deployment of carbon markets. Mark has served as a lead author for the IPCC and holds advanced degrees from the University of California at Berkeley.

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