Renewable Energy Certificates vs Carbon Offset Credits (2021 Updates)

By Natalia Mello | Updated on September 13, 2021

Different mechanisms ensure that individuals and institutions can reduce their carbon footprints and environmental impacts, like Renewable Energy Certificates (RECs) and carbon offset tree planting credits.

Although these mechanisms might sound like pretty much the same thing, what are renewable energy credits vs carbon offset credits?

In a nutshell, RECs allow for the purchase of green electricity, but do not offer any guarantee that carbon emissions are avoided. Carbon offsets, on the other hand, represent carbon emissions reduction or removals via different projects.

But how exactly do these mechanisms aid those interested in adopting a more environmentally-friendly lifestyle?

A 8 Billion Tree graphic showing the differences of Renewable Energy Credits and Carbon Offset Credits, with how a REC purchase works.

RECs: It’s All About Renewable Energy

The use of renewable energy – that is, sources that are continually replenishing and do not release fossil fuel-based greenhouse gases (GHG) emissions – is rapidly increasing in the United States.1 More and more people and organizations are interested in powering their homes and businesses with, for example, solar and wind energy.

However, consumers in the United States do not have the means to know whether the electricity they consume comes from renewable sources: once green electricity enters the grid, it blends up with electricity generated by fossil fuels.2

To find out your current carbon emissions, use an ecological footprint calculator today.

RECs come as an answer to this issue, allowing for the purchase of green electricity.

One REC is issued when a renewable energy source – solar, wind, biogas, landfill gas, hydropower, or geothermal – generates and sends one megawatt-hour (MWh) to the grid. Each REC can be sold to consumers willing (or needing) to make sure their operations are powered, at least in part, by renewable sources.3

If one wants green electricity to power 100 percent of their home or business, they should buy an amount of RECs that matches the total electricity they consume. For example, if a consumer uses 10 MWh per year, they should purchase 10 RECs to ensure all of the electricity they use comes from renewable sources.

So, RECs buoy up the production of renewable energy, but do not offer any guarantee that carbon emissions are avoided.

RECs are traded both in compliance and voluntary markets. Compliance markets exist because some states in the United States have set obligations in terms of renewable energy use (see the Renewable Portfolio Standards – or RPS – program). The policies under the RPS require that electrical utilities supply consumers with a minimum amount of green electricity, providing RECs as proof of that.4

The compliance market sets high standards, such as the obligation for certain RECs to be associated with a specific technology. Requirements in the voluntary market, on the other hand, are not so restrictive (although the program Green-e does set some standards and certifies RECs). That makes it easier – and cheaper – for consumers to obtain voluntary RECs.2

Each REC is individually numbered and cannot be sold more than once. Regional organizations register and track the trading of all RECs and ensure these have been taken out of circulation when purchased for the first time.5

Carbon Offsets: Reducing Your Carbon Footprints

Contrary to RECs, carbon offsets do offer guarantees that CO2 emissions have been avoided or removed from the atmosphere – that means offsets are verified emissions reductions.6

One carbon offset represents one metric ton of CO2-equivalent (CO2e) that is either removed from or not released into the atmosphere.7

A view of the redwood tree forest with a big tree on top of a hill at the Sequoia National Park with an 8 Billion Tree watermark.

A company or individual willing to compensate for their GHG emissions and lower their carbon footprint can buy carbon offsets. Offsets are generated in any project that reduces, avoids, or removes GHG emissions – these include reforestation, afforestation, forest conservation, green building, and renewable energy.

Carbon offsets are also traded in non-voluntary and voluntary markets. There have been recent concerns that the voluntary carbon marketplace (VCM) may not have trustworthy carbon credit providers, since there is no central regulatory authority. However, each carbon offset must comply with a set of requirements for certification: offsets must be real, independently verified, permanent, measurable, unique, and additional.8

Testing and verifying the additionality of carbon offsetting projects is required. That is needed so it is possible to ensure these projects generate results that go beyond what would take place in business-as-usual scenarios. This procedure guarantees carbon offsets do represent emissions reductions or removals.

Renewable Energy Credits vs Carbon Offset Credits: The Main Differences Summarized

Both programs ensure benefits when it comes to combating climate change and the disturbances it causes, but do so via different routes.

The table below summarizes the characteristics that set RECs and carbon offsets apart:

An 8 Billion Trees graphic illustrating the differences between renewable energy credits and carbon offset credits, including their repurpose, source, environmental claims, additionally requirements, and unit of measurement.
Which of These is Better for the Planet?

There is no correct answer to whether renewable energy credits vs carbon offset credits are better for the planet, as both mechanisms result in several environmental and social benefits – many of which are difficult to quantify.

Instead of thinking about which one is best for individuals or companies, all should aim at supporting both RECs and carbon offset programs, which are by no means interchangeable. The result of doing so would be ensuring that more people benefit from sustainable development alternatives, and that carbon footprints dwindle across the world.

Read More About Carbon Offsets:


References

1Abouelnaga, M. (2017, October 21). Renewable Energy | Center for Climate and Energy Solutions. Retrieved August 18, 2021, from https://www.c2es.org/content/renewable-energy/

2Roberts, D. (2015, November 9). RECs, which put the “green” in green electricity, explained. Retrieved August 18, 2021, from https://www.vox.com/2015/11/9/9696820/renewable-energy-certificates

3Renewable Energy Certificates (RECs) | US EPA. (2016, February 5). Retrieved August 18, 2021, from https://www.epa.gov/greenpower/renewable-energy-certificates-recs

4Renewable energy explained – portfolio standards – U.S. Energy Information Administration (EIA). (2021, August 12). Retrieved August 18, 2021, from https://www.eia.gov/energyexplained/renewable-sources/portfolio-standards.php

5Renewable Energy Credits (RECs): What You Need To Know | EnergySage. (2020, December 23). Retrieved August 18, 2021, from https://www.energysage.com/other-clean-options/renewable-energy-credits-recs/

6Offsets and RECs: What’s the Difference? | US EPA. (2018, March 7). Retrieved August 18, 2021, from https://www.epa.gov/greenpower/offsets-and-recs-whats-difference

7What is a Carbon Offset? – Carbon Offset Guide. (n.d.). Retrieved August 18, 2021, from https://www.offsetguide.org/understanding-carbon-offsets/what-is-a-carbon-offset/

8Katz, J. (n.d.). How the voluntary carbon market can help address climate change. Retrieved August 18, 2021, from https://www.mckinsey.com/business-functions/sustainability/our-insights/how-the-voluntary-carbon-market-can-help-address-climate-change