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Redefining RECs--Part 1: Untangling attributes and offsets


  • Gillenwater, Michael


Renewable energy and greenhouse gas emissions markets are currently in a state of confusion regarding the treatment of Renewable Energy Certificates (RECs). Should consumers buy RECs or emission offsets? After examining this question, the author concludes that RECs are not equivalent to emission offset credits, and as currently defined, the retiring of a REC may have no impact on emissions from electric power generation. Consumers who purchase RECs in voluntary green power markets are providing financial assistance to renewable generators in the form of a production subsidy. Generators that sell RECs are not transferring emission reductions, since they are unlikely to have ownership or the ability to quantify reductions using a commonly accepted standard. More importantly, RECs currently sold in voluntary markets do not pass credible additionality tests and can, at best, be expected to have a market demand effect, which will be less than the supply of RECs on the market. REC definitions that use the term "environmental attributes" or "environmental benefits" are almost universally ambiguous, providing the mistaken impression that consumers are purchasing a good instead of subsidizing a public good.

Suggested Citation

  • Gillenwater, Michael, 2008. "Redefining RECs--Part 1: Untangling attributes and offsets," Energy Policy, Elsevier, vol. 36(6), pages 2109-2119, June.
  • Handle: RePEc:eee:enepol:v:36:y:2008:i:6:p:2109-2119

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    References listed on IDEAS

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    2. Agnolucci, Paolo, 2007. "The effect of financial constraints, technological progress and long-term contracts on tradable green certificates," Energy Policy, Elsevier, vol. 35(6), pages 3347-3359, June.
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    Cited by:

    1. Raadal, Hanne Lerche & Dotzauer, Erik & Hanssen, Ole Jørgen & Kildal, Hans Petter, 2012. "The interaction between Electricity Disclosure and Tradable Green Certificates," Energy Policy, Elsevier, vol. 42(C), pages 419-428.
    2. Portman, Michelle E. & Duff, John A. & Köppel, Johann & Reisert, Jessica & Higgins, Megan E., 2009. "Offshore wind energy development in the exclusive economic zone: Legal and policy supports and impediments in Germany and the US," Energy Policy, Elsevier, vol. 37(9), pages 3596-3607, September.
    3. van Haaren, Rob & Fthenakis, Vasilis, 2011. "GIS-based wind farm site selection using spatial multi-criteria analysis (SMCA): Evaluating the case for New York State," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(7), pages 3332-3340, September.
    4. Christoph Heinzel & Thomas Winkler, 2011. "Economic functioning and politically pragmatic justification of tradable green certificates in Poland," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 13(2), pages 157-175, June.
    5. Hanne Lerche Raadal & Cecilia Askham Nyland & Ole Jørgen Hanssen, 2009. "Calculation of Residual Electricity Mixes when Accounting for the EECS (European Electricity Certificate System) — the Need for a Harmonised System," Energies, MDPI, Open Access Journal, vol. 2(3), pages 1-13, July.
    6. Gillenwater, Michael, 2013. "Probabilistic decision model of wind power investment and influence of green power market," Energy Policy, Elsevier, vol. 63(C), pages 1111-1125.
    7. Gaul, Chip & Carley, Sanya, 2012. "Solar set asides and renewable electricity certificates: Early lessons from North Carolina's experience with its renewable portfolio standard," Energy Policy, Elsevier, vol. 48(C), pages 460-469.
    8. Levin, Todd & Thomas, Valerie M. & Lee, Audrey J., 2011. "State-scale evaluation of renewable electricity policy: The role of renewable electricity credits and carbon taxes," Energy Policy, Elsevier, vol. 39(2), pages 950-960, February.
    9. Mostafaeipour, Ali, 2010. "Feasibility study of offshore wind turbine installation in Iran compared with the world," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(7), pages 1722-1743, September.
    10. York, Jeffrey G. & Venkataraman, S., 2010. "The entrepreneur-environment nexus: Uncertainty, innovation, and allocation," Journal of Business Venturing, Elsevier, vol. 25(5), pages 449-463, September.
    11. Gillenwater, Michael & Lu, Xi & Fischlein, Miriam, 2014. "Additionality of wind energy investments in the U.S. voluntary green power market," Renewable Energy, Elsevier, vol. 63(C), pages 452-457.
    12. Tsao, C.-C. & Campbell, J.E. & Chen, Yihsu, 2011. "When renewable portfolio standards meet cap-and-trade regulations in the electricity sector: Market interactions, profits implications, and policy redundancy," Energy Policy, Elsevier, vol. 39(7), pages 3966-3974, July.
    13. Tanaka, Makoto & Chen, Yihsu, 2013. "Market power in renewable portfolio standards," Energy Economics, Elsevier, vol. 39(C), pages 187-196.

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