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Environmental Claims

Environmental Claims

Accurate renewable energy and carbon reduction claims are critical to meeting any institution’s sustainability standards – but determining what claims can be made publicly commonly leads to confusion, even with the most sophisticated buyers.

How can businesses, institutions, non-profits and government agencies ensure these claims are accurate and credible?

Here is how to disentangle the threads of renewable energy claims in the U.S.

REC Claims

What is a REC?

Renewable Energy Certificates, or RECs, are tradable commodities that represent the environmental and social benefits associated with the generation of 1 Megawatt-hour (MWh) of renewable energy. In the U.S., an organization must own and retire RECs to make a public claim of using renewable energy.

These benefits include emissions-free electricity (encompassing zero-emission electrics as well as avoided emissions from displaced fossil fuel generation), reduced pollution (e.g. particulate matter, volatile organic compounds, mercury and other pollutants), local job creation, and other “soft” attributes such as diversifying the fuel mix and contributing to a more resilient grid.

However, a REC is not associated with a pre-defined amount of CO2 reductions. There are two key reasons.

  1. There is no carbon cap regulation or trading market in the U.S. that assigns wind or solar projects property rights to any carbon reductions, and

  2. The U.S. electricity grid works as an interconnected network where grid operators dispatch fossil, nuclear and renewable power generation assets simultaneously to meet electricity demand. This makes it difficult to identify the specific carbon-emitting energy resource displaced – and the specific quantity of CO2-equivelent (CO2e) reduced.

Hence, a REC does not represent an exact “offset” of emissions.

We do know, however, that as more renewable energy is placed on the grid it makes the overall electricity generating fuel mix cleaner. So instead of CO2 reduction claims, organizations the use RECs they own and retire to reduce their MWhs of carbon-emitting purchased electricity, accounted for as Scope 2 emissions in their carbon disclosure reports. The GHG Protocol provides specific Scope 2 guidance on how corporations measure these emissions.

To claim that your REC-supported renewable energy purchase also avoided emissions by displacing dirtier electricity production requires a nuanced look at the emissions factor at the renewable project location. Green-e certified RECs require standards to ensure minimum quality levels such as to avoid double-counting, and hence allow an organization to make robust claims.

Carbon Allowances & Offsets

Carbon offsets are a quantity of GHG reductions, measured in metric tons of CO2e, that result from a discrete project and compensate for (or “offset”) the emissions produced elsewhere. They are “real, verified and permanent GHG emissions reductions” from current projects that can be accurately measured, reported and verified by qualified third parties such as Green-e Climate.

A carbon allowance is a quantity of GHG emissions one is permitted to emit – a “right to pollute” inside a compliance market (e.g. Cap-and-Trade), where there is a cap on the amount CO2 that can be emitted. Examples in include the European Union carbon cap, which covers all sectors economy-wide, and the Regional Greenhouse Gas Initiative in the northeastern U.S., which applies only to the power sector.

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