Energy Policies

Renewable Energy Credits (RECs)

Renewable energy credits are tradable commodities that represent all of the property rights of renewable energy aside from the energy itself and subsidize its production. They are also sometimes called green tags, renewable energy certificates, or tradable renewable certificates (TRCs), and they function similarly to carbon emissions trading programs but, whereas carbon trading merely supports low-carbon technologies—an industry whose main goal is to decrease the emissions that already exist—RECs can incentivize renewable green energy technologies by providing a production subsidy to electricity generated from renewable sources such as solar, biomass, wind, and hydropower.

In states which have a REC program, a green energy provider (such as a wind or fuel crop farm) is credited with one REC for every 1,000 kWh or 1 MWh of electricity it produces (for reference, an average residential customer consumes about 800 kWh in a month). A certifying agency gives each REC a unique identification number to make sure it doesn't get double-counted. The green energy is then fed into the electrical grid by mandate, and the accompanying REC can then be sold on the open market.

A stable, viable renewable energy market has potential to drive research and development in renewable energy production, make green energy more affordable, support local economies through new sources of income and tax revenue while reducing the harmful environmental impacts of energy production from conventional sources.

Distributors and cooperatives can support green power through purchase of renewable energy credits locally or from anywhere in the country, not only benefiting the environment at a national level but also reducing our dependence on foreign oil.

Other Subsections of This Issue

• Cap and Trade
• Carbon Fees
• Decoupling

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Green Choice Virginia