Bottom Line on Renewable Energy Certificates

The document defines Renewable Energy Certificates (RECs) as tradable instruments representing one megawatt hour (MWh) of renewable electricity generation. It distinguishes between compliance markets, driven by state policies like Renewable Portfolio Standards, and voluntary markets driven by consumer preference. The text highlights the importance of third-party certification, such as Green-e®, to ensure credibility and outlines how factors like technology type and local demand influence pricing. It further clarifies that RECs differ from carbon offsets and explains the distinction between bundled green electricity and unbundled REC purchases.

• A Renewable Energy Certificate (REC) is a tradable instrument representing the generation of one megawatt hour (MWh) of electricity from an eligible renewable source, including details on the source, location, and year of generation.
• REC markets are divided into compliance markets, created by mandatory policies such as state Renewable Electricity Standards (RES) and Renewable Portfolio Standards (RPS), and voluntary markets, which are driven by energy user preferences for green electricity.
• To ensure credibility and prevent double-counting, RECs should be certified by an independent third party; the Green-e® standard certifies resources including solar electric, wind, biomass, low-impact hydropower, geothermal, and fuel cells using renewable fuels.
• RECs differ from carbon offsets in that offsets represent one ton of avoided carbon dioxide (CO2) emissions to reduce GHG liability, whereas RECs are measured by electricity production to support renewable energy goals.
• REC pricing is influenced by technology preferences, local supply and demand, and regulatory requirements; for example, New Jersey's "solar carveout" in its RES makes solar RECs there significantly more expensive than those in the voluntary market.
• There is a distinction between bundled green electricity, where the provider sources renewable power and passes the RECs to the customer within the same grid, and unbundled REC purchases, where the customer buys regular electricity and RECs separately from a vendor regardless of grid location.

APA

World Resources Institute (n.d.). Bottom Line on Renewable Energy Certificates. https://www.wri.org/research/bottom-line-renewable-energy-certificates

Chicago

World Resources Institute. Bottom Line on Renewable Energy Certificates. n.d. https://www.wri.org/research/bottom-line-renewable-energy-certificates.

Wikipedia

{{cite report |author=World Resources Institute |title=Bottom Line on Renewable Energy Certificates |url=https://www.wri.org/research/bottom-line-renewable-energy-certificates |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitutendbottom, author = {{World Resources Institute}}, title = {{Bottom Line on Renewable Energy Certificates}}, institution = {World Resources Institute}, url = {https://www.wri.org/research/bottom-line-renewable-energy-certificates}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }