Talk:Renewable Energy Certificate (United States)

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Backwards summary?[edit]

2013-06-28 the summary includes:

Therefore REC purchase does not affect how much renewable energy was actually generated - only how it was distributed.


But is this backwards? The REC surely does not affect how it was distributed, but it does, ultimately, ensure that there is as much generation as there are RECs purchased. Might we change this line to:

Therefore REC purchase does not affect how the renewable energy is distributed - only that it was actually generated.


Given how much people like to argue about this, it seemed better to get another opinion. — Preceding unsigned comment added by Kipb9 (talk • contribs) 23:53, 28 June 2013 (UTC)[reply]

My opinion is that RECs are about distributed energy, not generated. If you generate a lot of energy, but use all of it, nothing is fed into the grid. You do not earn RECs, because no one else can withdraw your green energy from the grid. On the other hand, if you inject all your generated energy, consumers can claim to have withdrawn it by purchasing RECs.

In any case there is an inconsistency between the first sentence:

[...] represent proof that 1 megawatt-hour (MWh) of electricity was generated [...]

and the last:

[...] does not affect how much renewable energy was actually generated [...]

--Psyantyst (talk) 15:54, 29 January 2014 (UTC)[reply]

Proof of displaced pollution[edit]

Hey, Kerberos... can we talk about what you just deleted? Here are the paragraphs:

Kerberos deleted: "Here is a simple explanation of how a green tag works. An electricity provider like a wind farm is credited with green tags for every 1000kWhs of electricity it produces. (A pure coal power plant would produce roughly 1 tonne of CO2 while creating a comparable amount of energy.) A certifying agency gives each green tag an ID number and makes sure it doesn't get double-counted. Then the wind farm sells the green tag on the open market."

I would like to add this back in. What is the problem with this paragraph? Scott Teresi 05:24, 20 July 2006 (UTC)[reply]
That paragraph's fine, but it repeats from the preceding paragraph. --Kerberos 16:26, 21 July 2006 (UTC)[reply]

Kerberos deleted: "In this example, since the CO2 pollution produced by the coal power plant is not directly taxed, how does buying a green tag reduce CO2? The 1000kWhs of power that the renewable plant produced is mandated to be bought by the coal plant (or whatever power company serves the area) at the market price. In effect, the coal plant has to then cut its output by a corresponding 1000kWhs. By buying a green tag, you've just financed a reduction of 1000kWhs in polluting energy and shifted the demand for energy from a traditional power plant to a green power plant."

A majority of electricity is propduced buy pollution-causing generators. What's wrong with this example? It states that we're comparing to a 100% coal mix. We could add that this is not typical, but that's shown in the next paragraph Scott Teresi 05:24, 20 July 2006 (UTC)[reply]
It's confusing and inaccurate. Coal plants (for example) don't by renewable power, nor do they necessarily reduce their output because renewable power is fed into the grid. (Particularly coal plants, since they provide steady base load power; the most likely displaced fossil fuel is peak load providing natural gas; if there's hydro on the system, that's the most likely to be displaced.) Mainly, however, green tags are only a token of the renewable energy. If the energy goes into the grid, it's because it goes into the grid, not because the green tags are sold later. --Kerberos 16:26, 21 July 2006 (UTC)[reply]
Thank you for your feedback, Kerberos. I'll see if I can improve the article, with the point in mind that green energy has a much smaller chance of replacing coal energy than hydro energy, for instance (I'm going to check some sources for some feedback on that). However, I think your following point is too extreme: "If the energy goes into the grid, it's because it goes into the grid, not because the green tags are sold later." Where does the money go when a green generator sells green tags? It no doubt increases the owner's salary, but it probably also goes into further investment into the plant for future expansion or for loan guarantees. Green tag income would also be counted on in the business plans of other people who want to start up a green energy plant. From a macro perspective, how can you not say that income from green tags does not increase the viability of green energy production? -- Scott Teresi 06:09, 22 July 2006 (UTC)[reply]
I agree that is true. Green tags increase the economic viability of green energy production. Conveniently for producers of less valuable green energy, such as wind power, green tags are not tied to actual displacement of other sources or actual reduction of their emissions.

Kerberos deleted: "You can estimate the amount of CO2 saved by buying one green tag by looking at the energy mix in the typical electricity supply. A green tag could offset 1 tonne of CO2 if it were to finance the offset of about 1000kWh from a pure coal power plant. However, nationally, the electrical grid in the U.S. is made up of about 50% coal power plants, 17% natural gas, 19% nuclear, and the rest hydroelectric. As a rough calculation, it would take 1648 kWh of grid electricity to create 1 tonne CO2, so you would have to buy roughly 1.648 green tags to offset one tonne of CO2 in the U.S.[1] If, however, you are paying for green tags which offset coal plants more directly than other forms of energy, your effect would be greater."

I think you've gone overboard here! Scott Teresi 05:24, 20 July 2006 (UTC)[reply]
Again, coal (or nuclear) is the least likely to be displaced and hydro the most. Further, it's sloppy language to say "a green tag could offset ...," since, again, it is just a token. --Kerberos 16:26, 21 July 2006 (UTC)[reply]

Kerberos added: "Critics point out, however, the flaw in this system in that it does not require any proof of displaced polluting power."

I don't understand this criticism exactly... yes, a green tag doesn't mean that any exact amount of CO2 is displaced. All it means is that 1MWh of green electricity has been produced. Why does this mean the following paragraphs must be removed? If you produce 1MWh of clean energy, where is it going to go?? Scott Teresi 05:24, 20 July 2006 (UTC)[reply]
The point is what is displaced, not what is produced, was mentioned in the next sentence. --Kerberos 16:26, 21 July 2006 (UTC)[reply]

Kerberos added: "But since some renewable energy sources, most notable wind power, are intermittent and variable, their production does not displace an equivalent amount of other sources, diminishing the effective value of the green tags."

Are you saying that 1MWh of wind energy does not displace 1MWh of traditional energy? Why not? Where does the 1MWh go then? Can't coal power plants be turned down when the wind energy is being generated? Scott Teresi 05:24, 20 July 2006 (UTC)[reply]
No, coal plants can not be turned down. They take many hours to get going. Only fast-reacting peak load providers would change their output to balance the fluctuations of wind power. But, like the difference between driving stop-and-go in the city and driving steadily on the highway, that frequent ramping and especially turning on and off is less efficient (burns more fuel) and cancels some, if not all, of the benefit. Nobody has ever shown a reduction of other fuel use because of wind power on the grid. Thus green tags for wind power at least do not translate to less pollution or carbon emissions. --Kerberos 16:26, 21 July 2006 (UTC)[reply]
That's equivalent to claiming that turning off your lights at random does not reduce fuel use on the grid. You're repeating an un-sourced Internet meme that has cropped up from people who oppose wind power for other reasons (usually aesthetic). See for example the UKERC Intermittency Report which says "CO2 emission reductions from renewable energy are not significantly affected by its intermittency." When the grid penetration of wind power exceeds 20% then there are additional costs for load balancing, but these do not affect the carbon dioxide reduction. Also note that on large power grids there are many separate generators, and grid operators have always had to adjust production for constantly varying load. If there are many generators, a few can be individually shut down or restarted as necessary, to allow the rest to maintain steady production and thus no loss of efficiency. In particular, grids that have some dispatchable hydroelectric generators can use them to balance their uncontrollably variable renewable generators such as wind and solar. Hydroelectric plants can vary their output anywhere between zero to maximum in a few minutes with very little loss of efficiency. Smart grids provide an additional mechanism for shifting demand peaks to follow peaks in supply, further reducing the need to fire up expensive backup generators (e.g., gas turbine plant). See: U.S. Electrical Grid Undergoes Massive Transition to Connect to Renewables. And researchers at the University of Kassel were able to follow the actual demand curve in Germany (scaled down by a large factor for the pilot test) around the clock with a combined power plant consisting of wind farms, solar arrays, pumped hydro storage, and turbines burning biogas. A power grid supplied with 100% renewable energy will certainly burn less (i.e. zero) coal. --Teratornis (talk) 20:59, 19 September 2010 (UTC)[reply]

Costs[edit]

What makes nuclear and fossil fuel cheaper than solar and wind power? —The preceding unsigned comment was added by 69.113.104.47 (talk • contribs) 11:24, 1 September 2005 (UTC)

The fossil fuel industry is entrenched and has a lot of susidies I believe (at least petroleum does). Nuclear power also receives a lot of subsidies. Also, their full cost isn't figured into their price. The cost of using an energy source which pollutes the atmosphere is cheap now, but must be paid for later. Should this be made clearer in the opening paragraphs of the article? -- Scott Teresi 16:59, 17 July 2006 (UTC)[reply]
They are also tremendously concentrated sources of fuel whose generation of electricity can be pretty well relied upon, although Scott's answer is also quite correct. Kerberos 01:42, 20 July 2006 (UTC)[reply]

details please[edit]

Could you explain the process better? When you pay a green tag does the person you pay it to pay your non-renewable energy bill and then put some green energy on their grid? When you audit your energy usage and buy green tags do you add transmission costs to it? I know the actual electrons are unlikely to make it to your location, but if you are paying a wind farm somewhere in Kansas it may be that it's output has to travel far to reach it's destination and maybe those losses should be understood and added to the green tags needed. Everytime I read about green tags all I see is flowery language without the hard questions answered. Even when I've looked at a green tag producer's page I could not find the details. It resembled dot com maarketing hype. Don't misinterpret my attitude. I'm all for it but I want be able to answer the critics if take up the cause. BillK --leavingthegrid.blogspot.com

Sometimes the green tags are bundled with the energy, and the utility buys both, usually to fulfill its renewable portfolio obligations. They can not be resold. But when individuals and companies buy green tags, it is separate from the energy, which would have been sold "alone" -- that is, unless you're directly paying your utility for green energy, you're still buying the same amount of nongreen energy along with your green tags. The sale of green tags spearate from the energy certainly helps the income stream of the green energy producer (not to mention the green tag brokers that are popping up like fungi), and thus may have some effect of helping to enable the production of green energy, but it doesn't affect the actual production of that energy or its contribution to the grid at all. A pretty clear description can be found at http://www.nativeenergy.com/comparison.html, showing that with or without green tags the green energy entering the grid and the nongreen energy used by the purchaser is the same. You are quite right to be skeptical, especially as company after company announces they've "gone green" by just buying those tags. --Kerberos 22:10, 22 April 2006 (UTC):[reply]
This is as I feared. I was a memeber of something like this for roughly 2 years. It is called http://www.ncgreenpower.org I didn't know this was green tags.

I contributed money for 3 blocks of green energy at $4 per block per month. When I met them at their booth at a local enviro festival I learned from one of their booth workers that they did not actually have the renewable inputs yet, but that my "donations" (rougly $288 ) went into an escrow. I am even more dubious about this scheme. Needless to say I quit buying green power blocks. Bill Knighton - leavingthegrid.blogspot.com


Link to critical page[edit]

The page in the links section "the wooly world of green tags" attempts to show that Green Tags are a charade, whose only benefit is to enrich the organization selling them. I think it's healthy to have views from both sides, and wouldn't advocate removing this link, but it would nice if the aricle more clearly responded to this line of (flawed) argument. The criticism in this link in entirely baseless, because it ignores the fact that being able to sell Green Tags is what makes the renewable energy production possible. If it costs you $1 to produce a unit of energy renewably, and the market price for that energy is 50c, then the only way to ensure that energy gets produced is to sell 50c worth of Green Tags (or similar). Buyers of those Green Tags are not some suckers who's been tricked into handing over money for nothing, they are collectively ensuring that the renewable energy will be produced. Their 50c has the net effect that 1 unit of non-renewable energy is replaced by 1 unit of renewables. Arguing (as this critic does) that the wind turbine would still be spinning regardless of whether you bought a Green Tag is like arguing that your local McDonald's would still be making Cheeseburgers even if you didn't buy them -- true in a narrow sense, but misleading in its implications. If nobody buys Cheeseburgers, they will eventually stop being produced. If no-one buys Green Tags, or otherwise subsidizes renewable energy production, it will also stop being produced, because the market price is not sufficient to cover the costs of production. --spiralhighway 19:30, 26 June 2006 (UTC)[reply]

So if McDonald's sells "cheeseburger credits," can someone who buys one of those credits say they bought a cheeseburger? It's one thing to say you support cheeseburgers by buying the credits, but quite wrong to say that you consume cheeseburgers when you don't. The "woolly world" writer also has a parody: "grocers greens tags". Kerberos 22:11, 29 June 2006 (UTC)[reply]

I believe a better way to think of Green Tags is to say that by buying one I am willing to pay a higher price for that unit of renewable energy (because I am effectively subsidising the renewable energy company). And by making non-renewable energy companies purchase them, it is effectively making them pay closer to the true cost of producing that unit of energy. 203.117.184.66 15:41, 7 November 2006 (UTC) Jamie A.[reply]

I agree with Kerberos that it is wrong to say you consume cheeseburgers when you don't. But it you had a federal law behind you that says you can legally claim credit for buying cheeseburgers because you purchased this credit from another diner, it would not be wrong at all. Buying RECs has the backing of federal law, so by the way today I bought a million watthours of wind energy. Also by the way, I have to think of the unsigned blog you referenced as an unsourced statement and I am about to attach a template to this effect. Marc W. Abel 20:57, 16 April 2007 (UTC)[reply]

The test of RECs is what happens if everybody tries to buy them. Since a properly regulated REC market can only supply RECs by generating renewable electricity, and RECs cannot be double-sold, then a massive increase in demand for RECs would exceed their (currently limited) supply, driving up their price, thus making renewable electricity more profitable for companies supplying it. Utilities would respond by building more renewable plant to supply the demand for RECs. If everybody continued to demand RECs to cover all their electricity use, ultimately the result would be that no more non-renewable electricity would be generated - that would be the only way to provide enough RECs to go around. Thus RECs are far less "woolly" than some of the carbon offset schemes one reads about, which may or many not result in real tonnes of emission reduction. Also note that de-regulated utilities routinely allow individual suppliers of electricity and natural gas to compete for customers, even though every customer physically consumes the same mix of grid electricity or the mix from the gas distribution network. Individual suppliers are able to compete directly for customers even when distribution is physically shared as long as a reliable method exists to account for the production of each supplier and the stated desires of individual consumers to purchase from particular suppliers. --Teratornis (talk) 21:11, 19 September 2010 (UTC)[reply]
  • I came here after signing up to pay Arcadia Power for certificates and then researching and finding this. It seems in the comments the author (critical of RECs) concedes that he's painting too broad a brush, and it would be good for this article to describe the nuance. II | (t - c) 06:52, 10 January 2016 (UTC)[reply]
Yes, "it would be good for this article to describe the nuance." I concur! One frequent question is: does the REC and SREC process result in MORE renewable energy going into the common power grid than RPS requires, or is it all moot? If so, why would anyone pay MORE for renewable electricity? However, in a growing number of markets, the cost fo rrenewable energy is lower than the utilities have been charging customers. Thus, the customers of renewable energy are providing the common power grid with cleaner, greener power AND paying less for it because the renewable energy is actually cheaper than the default 'dirty' electricity from burning fossil fuels, such as oil and coal.MaynardClark (talk) 07:16, 10 January 2016 (UTC)[reply]

Should we make Renewable Energy Certificates the article title?[edit]

I think Renewable Energy Certificates should be the primary title of the article rather than Green Tags. Renewable Energy Certificate is the preferred term used to describe them these days. Green-e, the main certifier calls them RECs, the new California laws use the term RECs, the Department of Energy uses the term RECs, the primary supplier, and the traders use the term RECs as well. —The preceding unsigned comment was added by 67.180.224.183 (talk) 05:59, 14 March 2007 (UTC).[reply]

I agree we should change to this title. Marc W. Abel 20:38, 16 April 2007 (UTC)[reply]

No more discussions since 2007...And this is still tagged for discussion? See: http://greenpower.energy.gov/markets/ and merge Green Tags into the RECs one. —Preceding unsigned comment added by 71.218.109.139 (talk) 22:34, 19 August 2009 (UTC)[reply]

Can you please state at the beginning of the article which country this whole article refers to? Thanks. - Laustro 13:05, 31 October 2007 (UTC)[reply]

I haven't read the whole thing, and I'm not sure but it should be a general article about the concept, and it should be made into a summary-style article so that it gives summaries of Green certificates and Green tags also. —Pengo 09:42, 27 November 2007 (UTC)[reply]

In my experience marketing these products, there is great confusion when RECs are called green credits or green certificates due the primary national certifier of REC being Green-e. Not all RECs may be Green-e certified. Not all RECs are "Green" according to the EPA or DOE. I have traded RECs certified by various jurisdictions (all US-based) that were sourced from MSW combustion, waste coal combustion, and non-low impact hydro. These broader REC categories preclude the more restrictive term of "green" being applied to all such products. —Preceding unsigned comment added by 70.240.86.62 (talk) 19:04, 30 June 2009 (UTC)[reply]

Compliance vs. Voluntary REC markets?[edit]

It would be useful to have an explanation of the two separate sources of demand for RECs-- namely the compliance market created by state Renewable Portfolio Standards and the voluntary purchase of RECs by individuals and businesses wishing to support renewable energy or reduce their carbon footprint. This section could cover the eligibility requirements contained in most RPS policies, which explains why RECs in supply-constrained Massachusetts trade for $55 while they cost only $3 in Texas. DB —Preceding unsigned comment added by 76.26.156.252 (talk) 21:49, 24 November 2007 (UTC)[reply]

Country context needed?[edit]

I suspect that this article is about the United States but there is nothing in the article to suggest this. -- Alan Liefting (talk) - 09:52, 1 May 2008 (UTC)[reply]

Yes, the article refers to the United States. I've added a clarification in the opening paragraph... what else did you find confusing, to warrant the "confusing" tag? --- Scott Teresi (talk) 17:45, 1 May 2008 (UTC)[reply]
I guess it was only the country thing. -- Alan Liefting (talk) - 23:20, 1 May 2008 (UTC)[reply]
Search Wikipedia with Google for: Renewable Energy Certificates finds some other countries having a mechanism with the same name, for example:
There may be more countries using the same mechanism; I didn't look too far in the search results, and Wikipedia may not have articles about all the countries yet. --Teratornis (talk) 21:20, 19 September 2010 (UTC)[reply]

I think, if this article is to use the term "Renewable Energy Certificates" as it's title, it should become a general article about the concept of RECs, not the particular case of the US implementation. As has been pointed out, RECs are used in many other countries and one may become confused and mislead into thinking it was a purely US policy instrument. I think either this article needs to be renamed i.e. "Renewable Energy Certificates (USA)", or developed into a more generalised article. --61.69.26.118 (talk) 02:35, 16 January 2011 (UTC)[reply]

The influence of Federal subsidies on renewable energy[edit]

The entire article omits any mention of the role of Federal tax credits and accelerated depreciation schedules in financing renewable energy (RE) projects. For the garden variety utility scale wind farm, the sale of RECs provides less than one tenth of the additional revenue that a generator gets over and above the sale of the energy. It is very hard to estimate the additional contribution that the REC subsidy provides. The sources listed, particularly Gillenwater, document the finances very clearly. I will add this clarification to the article in a few days if no one responds. 04:08, 6 November 2009 (UTC) —Preceding unsigned comment added by Sutherix (talk • contribs)

Content lifted directly from publication[edit]

At the very least, the section labelled additionality has been copied word-for-word from 'Wave power: High-impact Strategies - What You Need to Know: Definitions ...' By Kevin Roebuck. — Preceding unsigned comment added by 73.55.164.254 (talk) 15:51, 1 April 2015 (UTC)[reply]

Existing industry and Arcadia Power marketing[edit]

The article probably needs a section on industry. Winds of change?: Deconstructing renewable energy certificates seems like a decent overview.

Arcadia Power seems to be doing a lot of national marketing in this area, and raised $3.5m not too long ago. Probably should have an article on the company, but I'm starting this section for notes first. II | (t - c) 00:31, 26 September 2016 (UTC)[reply]

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