Offsets and RECs: What's the Difference?
Introduction
In encouraging organizations to choose green power for their electricity,
the Green Power Partnership frequently explains renewable energy
certificates (RECs)—what they are, why they are needed for green
power, and how they are used. Many Green Power Partners and
Partnership stakeholders were familiar, at least conceptually, with offsets
before learning about green power and RECs. It i
s common for RECs to
be compared with offsets, thought of as a type of offset, or described as
“offsetting” emissions. Offset
s and RECs, however, are fundamentally
different instruments.
Organizations working to lower their emissions footprint have a variety of
mitigation options at their disposal, including activities to reduce their
direct emissions, activities to reduce indirect emissions like energy
efficiency measures and switching to green power, and paying for
external reductions. Knowing the differences between instruments like
RECs and offsets is critical to deciding how both may be useful to your
or
ganization.
This document explains what these two widely used instruments are, the differences between them, why and
how an organization might use one or both, and common misconceptions.
To begin, this tables summarizes some of the basic differences between offsets and RECs.
A renewable energy certificate – REC
What is a REC?
(pronounced: rěk) is a tradeable,
market-based instrument that
represents the legal property rights to
the “renewable-ness”—or non-power
(i.e., environmental) attributes—of
renewable electricity generation.
A REC is created for every megawatt-
hour (MWh) of electricity generated
and delivered to the grid from a
renewable energy resource.
Electricity cannot be considered
renewable without a REC to
substantiate its renewable-ness.
Basic Differences Offsets RECs
2
2
Projects that avoid or reduce greenhouse
gas (GHG emissions to the atmosphere
Renewable electricity generators
Represent GHG emissions reductions;
provide support for emissions reduction
activities; and lower costs of GHG emissions
mitigation
Convey use of renewable electricity
generation; underlie renewable electricity
use claims; expand consumers’ electricity
service choices; and support renewable
Corporate GHG Inventories
and Reporting
Reduce or “offset” an organization’s scope
1, 2 or 3 emissions, as a net adjustment
Can lower an organization’s gross market-
based scope 2 emissions from purchased
Claims
Can claim to have reduced or avoided GHG
emissions outside their organization’s
Can claim to use renewable electricity from
a low or zero emissions source
Offsets and RECs: What's the Difference?