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RECs Get Real

Green credits are maturing to become real, tradeable assets.

Fortnightly Magazine - November 2007

Energy Generation Information System (WREGIS) to issue, register, and track RECs for the territory covered by the Western Interconnection. Other similar regional tracking organizations include the PJM Generation Attribute Tracking System (GATS), the Midwest Renewable Energy Tracking System (M-RETS), and the New England Power Pool Generation Information System (NEPOOL GIS). Each of these organizations issues certificates with unique serial numbers that represent the attributes of the generation for each megawatt-hour produced by qualified generators. States that are parties to the organization may use and exchange certificates within each tracking system.

Although the federal government has not developed a national RPS or REC trading program, private groups are developing tools that can be used nationally. In February 2007, The American Council On Renewable Energy (ACORE), two American Bar Association committees, and the Environmental Markets Association (EMA) announced the release of a standard form contract for national trading of RECs. 6 The contract is technology-neutral and is usable in both the voluntary and compliance markets, regardless of domestic jurisdiction. Finally, the Center for Resource Solutions has released for peer review its GHG Protocol for Emissions Reductions from Renewable Energy. This effort seeks to enhance credibility for GHG reductions or offsets from renewable projects and develop the voluntary market for renewable energy.

The consequences of existing RPS requirements will drive REC markets upward in the near-term due to short supplies from eligible sources. This upward pressure on REC prices likely will enhance RPS programs’ intended effect on renewable energy development, while improving transparency and liquidity. In addition, rising REC prices in compliance markets should exert pressure on both compliance and voluntary markets to standardize REC programs beyond utility system and state geographic boundaries.

State efforts suggest the creation of a national marketplace likely will become a reality in the near future. Creating a nationwide, perhaps global, fungible REC commodity also could facilitate a national RPS, although significant obstacles remain. Nevertheless, REC advancements also serve as a foundation for national carbon trading. For companies actively engaged today, the desirable benefits of standard contracting, verification, and revenue stability will foster opportunities in regional and global carbon trading markets in the future.



1. Patrick Leahy and Alden Hathaway, Renewable Energy Certificates and Air Emissions Benefits: Developing an Appropriate Definition for a REC, Environmental Resources Trust, p. 2 (April 2004).

2. North American Association of Issuing Bodies Conceptual Model.

3. American Ref-Fuel Co., 105 FERC 61,004 (2003).

4. Customer Credit Account Research and Analysis Supporting the California Energy Commission's Renewable Energy Program Preparation of the Customer Credit Account Report for the Legislature , California Energy Commission, p. 15 (Jan. 23, 2003).

5. Peter Fusaro, Policy-makers Must Create Uniform Green Trading Rules, FUSARO FOCUS, Feb. 1, 2005, at 1.

6. ACORE Announces Publication of New Master Renewable Energy Certificate Purchase and Sale Agreement, Feb. 9, 2007, Press Release .