¦POLICY CONTRIBUTION
Renewable Energy Certificates and Renewable Portfolio Standards To participate in the Renewable Energy Certificate market, one must be able to navigate differing state standards and to adjust to still-evolving state, regional and federal initiatives. BY JONATHAN DETTMANN, ANDREW RITTEN AND ANGELA SNAVELY
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n recent years, Renewable Energy Certificates have surfaced as one of the more viable of several environmental entitlements supporting a shift to cleaner energy. This is due at least in part to the fact that the regulatory mechanisms supporting these certificates—most notably, renewable portfolio standards (RPSs)—have emerged more quickly than mechanisms supporting other types of entitlements such as cap-and-trade systems giving rise to markets for carbon credits or offsets. In this article we will describe
the regulatory landscape for RECs and what opportunities and challenges they afford. An REC, sometimes called a Renewable Energy Credit or a Green Tag, is a tradable commodity that represents the right to the environmental, social and other nonpower qualities of renewable energy generation. One REC can be created for every 1 megawatt hour of renewable energy generated. The REC can either be sold bundled with or unbundled from the renewable energy itself. If sold
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74 BIOMASS POWER & THERMAL | MAY 2011
separately, however, the energy itself is no longer considered renewable because that attribute is now bound up in the REC. RECs were created as tools for measuring and monitoring a utility’s compliance with any applicable RPS, which is a regulatory mechanism for incentivizing the development of renewable energy. Today, RECs continue to be used to satisfy these compliance requirements, but they also can be used for voluntary renewable energy targets that certain organizations might have. Once the REC is used for