Why People Buy RECs – And Why You Should, Too

Basically, there are three reasons why people buy RECs:

• They want to do what’s right.
• RECs make them look good.
• They have to.

If you are an individual, you’re probably buying them for the first reason. If you are a business, you’re probably buying them for the second reason…though if it’s the first reason, we strongly support your decision! If you are a utility, you’re probably buying them for the third reason.

Community Green Energy has made a conscious effort, in presenting the facts behind RECs and global climate change, to give a view that is balanced and objective. But for a moment, let’s be blunt: America has dropped the ball on global warming, and has dropped the ball on green energy. As a country, we have spent the past decade actively working against efforts to reduce greenhouse gas emissions. And despite being the technological leader of the world, we lag behind virtually every other developed nation in green energy. It’s time for this to change, and RECs will help this happen.

The reality of greenhouse gases is that the world continues to emit more, not less, every year, and America leads the way. China may one day rival us (neither country has ratified the Kyoto Protocol), but we are still far out in front. The Kyoto Protocol aimed simply to stop this advance. It will take considerably more work, and considerably more sacrifice, to undo the damage we have already done. Every passing year brings more evidence that climate change is already happening; the effects may not fully come to pass within our lifetimes, but there is little doubt that they will happen within our children’s lifetimes, and very little doubt that they will happen within our grandchildren’s lifetimes.

When you buy a REC, you are not just giving financial support to green energy. You are also taking a stand and setting an example. There are many who doubt that this country is ready to make the sacrifices that will be necessary to make green energy a reality. With your REC purchase, you are saying: I get it. I’m willing to spend my money voluntarily to do what I believe is right.

This sends a powerful message both to the government and to business and industry, because you’re backing up your beliefs with your dollars. Buying RECs makes you part of a voluntary cap and trade system that includes every person in the United States. The government didn’t create it. The people created it.

Here’s how it works.

Consider the electricity you use during an average day. It came from your local electric grid, and was provided by a mix of power plants using coal, oil, gas, nuclear, hydro, and perhaps even some green energy. The mix is different in every state, and even at different times of the day, because your utility uses the least expensive mix of competing power plants to meet demand throughout the day. All of that energy becomes part of a massive “pool” of electricity…there is no way to trace electricity back to its source once it enters the grid…and you dip into that pool and take out a little bit to meet your needs.

How much greenhouse gas was emitted to produce the electricity you used? You can estimate it. Emission figures for every state, and even every region, are kept by The Environmental Protection Agency and the Department of Energy. They take the combined greenhouse gas emissions, divide the total by the total electricity generated, and get an emission rate for a “typical” kilowatt hour. They also have figures for typical household electric use. Do a bit more math, and you can estimate the greenhouse gases that resulted from your personal use. Under our voluntary cap and trade system, your responsibility is to “green it up.”

Enter the REC.

Somewhere in America….maybe in your electric grid, maybe in a completely different state…a green energy provider has generated the same amount of electricity as you have used (and a lot more, not doubt!). They have the right to sell RECs equal to that much electricity. These RECs can be sold to anyone, and whoever owns the REC can claim the “greenhouse gas-free” status of that electricity. So you buy the RECs, maybe even enough to equal all the electricity that you use in a year. Under our cap and trade system, you can now claim that your electric use didn’t contribute to global climate change.

This is a key feature of RECs: they are transportable. They make it possible for anyone, anywhere in the country, to have access to the environmental benefit of green energy. This is true whether or not their electric grid is supplied by green energy sources. The greenhouse gas-free status travels with the REC, and whoever owns the REC can claim it. This is also an advantage to the green energy provider, because they can sell their REC anywhere in America. The sale of the REC is completely separate from the sale of their electricity.

Remember the free market thinking? The more people buy RECs, the more they will be produced. If there aren’t enough RECs to meet demand, there is a strong incentive to build more green energy.

And remember, green energy isn’t just about greenhouse gases. It’s about clean air, clean water, less drilling, less mining, new jobs, new opportunities and an energy source produced right here in the United States.

The business community, despite their public statements, is also getting it when it comes to global climate change. How do we know? The evidence is everywhere: in magazines, on billboards, on the radio and TV. Everyone is marketing “green.”

Businesses know that, to succeed in the market, they must stay one step ahead of popular opinion. They can see that the tide is turning in America towards global climate change and environmental responsibility, and they don’t want to end up on the wrong side. Some are making the move because they recognize their corporate responsibility; others because they recognize the economic necessity. Whatever the motivation, the hottest trend in advertising and marketing is “green.” Everyone wants to promote their environmental responsibility, and particularly their concern over global climate change.

For a lot of businesses, however, this is easier said than done, because reducing their environmental impact may require facilities upgrades or changes in corporate practices. These changes may be so expensive that they can’t afford them…particularly in the current economy. And there is already a growing backlash against “greenwashing,” or making exaggerated marketing claims about commitment to green.

Enter the REC.

Any businesses can purchase enough RECs to match their electric use. For a big business, that’s a lot of RECs! The RECs give them the right to claim that their electric use doesn’t contribute to global climate change. This is a real, positive step, and gives them a way to get on the green marketing bandwagon. Because RECs directly support green energy, and are certified and verified, they are a legitimate way to go green.

This is another key feature of RECs: they make it easy to take a real step in a green direction. All you have to do is sign a check and buy some RECs. And the marketing advantage is a considerable bonus. With RECs, doing the right thing is good business.

Utilities buy RECs to meet standards set by their state government. Twenty seven states and the District of Columbia have already established a Renewable Portfolio Standard (RPS), which we discussed in What The HEC Is a REC? An RPS requires that utilities buy a certain percentage of their electricity from green power sources. The utilities prove they’ve met the RPS by buying RECs from their local green energy sources. Over time, legislators will set higher and higher standards for the green energy in their RPS, and lower their emissions by bringing more clean, green energy into the mix.

This is a third key feature of RECs: they give government new ways to legislate in favor of green energy. The free market thinkers and the regulation supporters can work together to create systems that everyone can endorse.

It’s no surprise, given their size, that utilities and businesses are responsible for most REC purchases. But your individual purchase is important, too, especially if you encourage others to follow your example.