Offsets vs. RECs: What’s the Difference and How Should Each Be Used?

Originally aired May 24, 2012. Matt Clouse, Director, Renewable Energy Policies & Programs, U.S. Environmental Protection Agency (EPA); and Mary Sotos, GHG Protocol Initiative, World Resources Institute (WRI), will join CRS in presenting a webinar providing answers to questions about the difference between Renewable Energy Certificates (RECs) and carbon offsets, how the markets for these commodities interact, and the extent to which each can be used to address greenhouse gas (GHG) emissions. The webinar will examine key areas of confusion including REC definitions, additionality, and ownership of reductions from renewable energy.

Transcript

1. Off t REC
   Offsets vs. RECs:
   What’s the difference and how should each be used?
   May 24, 2012
   What s the difference and how should each be used?
   

   View Slide

2. Featured Speakers
   Featured Speakers
   Matt Clouse
   Director
   Renewable Energy Policies & Programs
   Mary Sotos
   GHG Protocol Initiative
   Renewable Energy Policies & Programs
   

   View Slide

3. View Slide

4. • •
   

   View Slide

5. Organization of Presentations
   Organization of Presentations
   Introduction
   Todd Jones
   A Brief Introduction to Offsets
   Matt Clouse
   RECs and Offsets: Highlighting Distinct Roles
   Mary Sotos
   Mary Sotos
   GHG Accounting and the difference between RECs and Offsets
   Todd Jones
   A broad analogy how RECs relate to offsets; honing in on additionality
   Conclusions
   Q&A
   Q&A
   

   View Slide

6. Offsets Basics
   Offsets Basics
   

   View Slide

7. Types of Carbon Markets
   yp
   Compliance Voluntary
   Emissions
   1
   C d t d
   2
   Voluntary Cap‐
   (allowances)
   Cap‐and‐trade
   y p
   and‐trade
   Emissions 3 4
   Reductions
   (offsets)
   Compliance Offsets Offsets
   Types of Renewable Energy Markets
   Compliance Voluntary
   Renewable
   Energy
   Generation
   1
   RPS/RES
   2
   RECs, Green Power
   

   View Slide

8. View Slide

9. +
   + -
   -
   Emissions
   Emissions Reductions
   Reductions
   

   View Slide

10. scopes
    scopes
    p
    p
    1
    1 2
    2 3
    3
    

    View Slide

11. projects
    projects
    

    View Slide

12. Path of Emissions Reductions
    in the Retail Market Quality Criteria
    1. Project
    in the Retail Market
    Additional
    Quality Criteria
    2. Reduction Permanent
    2. Reduction
    3 C dit
    Permanent
    Verified
    Real
    E f bl
    Overall
    Q lit
    3. Credit Enforceable
    PAVER
    Quality =
    A PROVED
    4 . Offset Ownership
    5. End-use Consumer Disclosure
    

    View Slide

13. Featured Speaker
    Matt Clouse
    Director
    Renewable Energy Policies & Programs
    

    View Slide

14. RECs and Offsets:
    RECs and Offsets:
    Highlighting Distinct Roles
    Highlighting Distinct Roles
    Highlighting Distinct Roles
    Highlighting Distinct Roles
    Center for Resource Solutions Webinar
    May 24, 2012
    

    View Slide

15. EPA’s Green Power Partnership
    EPA’s Green Power Partnership
     The Partnership:
    p
    p
    The Partnership:
    • Works to increase organizational demand for renewable electricity
    • Reduces transaction costs and increases the value proposition
    E i i d b i bl l i i
    • Engages organizations and business sectors to use renewable electricity or
    expand their usage
     1,400 Partners are using 23 Million MWh of green power a year
     Partnership offerings:
    • Trusted market information
    Credible purchase requirements
    • Credible purchase requirements
    • EPA recognition
    2
    

    View Slide

16. REC Basics
    REC Basics
     Renewable energy certificates (RECs) are tradable commodities
    gy f ( )
    produced by renewable electricity facilities
    • One REC = one megawatt hour (MWh) of renewable energy generation
    Attributes include the energy resource type generation technology
    • Attributes include the energy resource type, generation technology,
    generator age and location, time of generation, emissions, and eligibility
    to meet various program requirements
    REC i t l t ll bl ti d th b i
     RECs are integral to all renewable generation and are the basis
    for claims about renewable energy
    • Can be formally recognized by bilateral contracts or an issuing body
    (tracking system)
    • Can be sold with the electricity (bundled), sold separately from the
    electricity (unbundled), or sold with commodity electricity (bundled)
    3
    

    View Slide

17. How RECs Help
    How RECs Help
    p
    p
     RECs monetize the value of renewable electricity’s attributes
    y
    separately from commodity electricity
     RECs help address several barriers to renewable electricity
    d l t b
    development by:
    • Providing an additional revenue stream
    • Bypassing problems of intermittency and load matching
     Remove geographic boundaries and avoid the costs of “wheeling” power
    • Lowering transaction costs; offering flexibility; and, providing liquidity
    • Creating a national voluntary market
    Creating a national voluntary market
     Facilitating customer choice
     Lowering green power premiums
    4
    

    View Slide

18. REC Pathway and Prices
    REC Pathway and Prices
    y
    y
     RECs pathways are often
    p y
    distinct from contractual
    pathways for electricity
    P i b d
     Prices are based more on
    supply and demand than on
    the difference between
    project costs and other
    revenue components
     REC value is based on
     REC value is based on
    exclusive ownership
    Note: The graphic does not present a comprehensive view of all the possible
    ways a REC can be traded and used
    

    View Slide

19. REC Demand and Tracking
    REC Demand and Tracking
    REC Demand and Tracking
    REC Demand and Tracking
    REC Markets Tracking Systems
     Two market types
    • State compliance (29 states
    plus D C and Puerto Rico)
    g y
    plus D.C. and Puerto Rico)
    • Voluntary (Nation‐wide)
     Tracking simplifies
    verification
     Third‐party certification
    helps establish the value
    helps establish the value
    and builds confidence Note: Nevada uses both WREGIS and NVTREC
    Source: Heeter and Bird (NREL), 2011 updated from ETNNA
    6
    

    View Slide

20. Voluntary Market
    Voluntary Market
    y
    y
     Organizations and individuals choosing to support
    g g pp
    environmentally‐differentiated electricity
    • Additional to state RPS mandates
    Products must offer real significant value and be credible verifiable
    • Products must offer real, significant value and be credible, verifiable
     More significant than most people realize
    • Supported 35 billion kWh of new renewables in 2010
    • Equal to nearly 1% of total U.S. electricity sales
    • Estimated market value of between $168 million and $285 million (green
    power premiums) in 2010
    p p )
     Growing at avg. annual rate of 31%, 2006‐2010
    • Green Power Partnership is a significant reason for that growth
    7
    

    View Slide

21. RECs and Offsets
    RECs and Offsets
    RECs might be
    confused with
    ff t b t
    RECs
    are not
    Their differences
    prevent them
    from being used
    offsets but …
    offsets
    from being used
    interchangeably
    8
    

    View Slide

22. Basic Comparison
    Basic Comparison
    Basic Comparison
    Basic Comparison
    RECs Offsets
     Denominated in MWh  Denominated in MT of CO2e
    Both are useful in achieving an organization’s net GHG reduction goals
     Denominated in MWh
     RECs can be used to reduce
    i i i 2 f
     Denominated in MT of CO2e
     Offsets are typically used to
    ff t i i i 1 2
    emissions in scope 2 from
    purchased electricity
    GHG l i t i t
    offset emissions in scope 1, 2,
    or 3
    GHG l i t i t GHG
     GHG claims pertain to
    purchased electricity only
     GHG claims pertain to GHG
    reductions achieved by the
    offset project
    9
    

    View Slide

23. Corporate GHG Accounting
    Corporate GHG Accounting
    RECs and Offsets
    RECs and Offsets
    RECs and Offsets
    RECs and Offsets
    Applicabilit
    Scope Description
    Applicability
    Claims
    RECs Offsets
    Scope 1
    (Direct Emissions)
    Emissions from sources that the organization
    owns or controls, such as industrial processes,
    natural gas consumption in buildings owned
    No Yes
    Offsets: GHG emission
    reductions; offset of
    (Direct Emissions) natural gas consumption in buildings, owned
    vehicles, and owned energy generators
    entity’s direct emissions
    Scope 2
    Emissions associated with the generation of
    electricity, steam, or heat—from sources that
    Only
    emissions
    from Yes
    RECs: Indirect
    emissions reductions
    Offsets: GHG emission
    (Indirect Emissions) the organization does not own—that is
    purchased and consumed by the organization
    from
    purchased
    electricity
    Yes Offsets: GHG emission
    reductions; offset of
    entity’s indirect
    emissions
    S 3
    Emissions from other sources the organization
    does not own or control; examples include
    Offsets: GHG emission
    d ti ff t f
    Scope 3
    (Indirect Emissions)
    does not own or control; examples include
    waste disposal, lease/outsourced activities,
    business travel, and employee commuting
    No Yes
    reductions; offset of
    entity’s indirect
    emissions
    10
    

    View Slide

24. Role of RECs in GHG Accounting
    Role of RECs in GHG Accounting
    g
    g
     New renewable electricity generation affects power sector
    y g p
    operating and build margins, which lowers GHG emissions
    • Renewable electricity‐related GHG reductions for fossil‐fueled
    generators are the fossil‐fueled generators’ scope 1 reductions
    generators are the fossil fueled generators scope 1 reductions
     In reducing an organization’s net GHGs, RECs are limited to
    reducing scope 2 GHG emissions from purchased electricity
    • Claiming scope 1 reductions based on a REC purchase is not appropriate
    and would be double‐counting
    11
    

    View Slide

25. Internal and External Projects
    Internal and External Projects
    j
    j
    Internal projects—within organizational or operational boundaries—are an important
    p j g p p
    means to achieving cost‐effective GHG reductions
    • Note: on‐site renewable electricity generation typically reduces demand for electricity from the
    grid and the associated GHG emissions in scope 2 when the RECs are kept and retired
    External projects are an option too
    • Offsets are used by some organizations to offset GHG emissions in scope 1, 2, or 3
    REC b dl d i h l i i b dl d f l d
    • RECs, bundled with electricity or unbundled from an external source, are a way to reduce scope
    2 GHG emissions associated with purchased electricity
    External projects can be more cost‐effective
    • Offsets can be less costly near‐term than employing internal projects to reduce GHG emissions
    • RECs can be less costly due to the economies of scale that come with larger, utility‐scale projects
    and the ability to site projects in locations with higher quality renewable energy resources
    12
    

    View Slide

26. Take Away Messages
    Take Away Messages
    y g
    y g
    RECs and Offsets …
    RECs and Offsets …
     Useful in GHG inventories and achieving net GHG goals
     Different instruments with different purposes
    • Offsets typically used to offset GHG emissions in scope 1, 2, or 3
    • RECs purchased from off‐site projects reduce scope 2 emissions from
    purchased electricity
    purchased electricity
    • On‐site renewable electricity projects reduce demand for electricity from
    the grid and scope 2 emissions when the RECs are kept and retired
     Marketing claims are distinct because:
     Marketing claims are distinct because:
    • Offsets represent 1 metric ton of reduced or avoided CO2e emissions
    • RECs represent 1 MWh of renewable electricity generated
    13
    

    View Slide

27. Contact Information
    Contact Information
    Matt Clouse
    Director, Renewable Energy Policies & Programs
    Climate Protection Partnership Division
    U S Environmental Protection Agency
    U.S. Environmental Protection Agency
    email: clouse.matt@epa.gov
    phone: + 1 (202) 343 9004
    phone: + 1 (202) 343-9004
    web site: www.epa.gov/greenpower
    14
    

    View Slide

28. Featured Speaker
    Mary Sotos
    GHG Protocol Initiative
    

    View Slide

29. Overview of the GHG Protocol:
    accounting distinctions between RECs and offsets
    M S t
    Mary Sotos
    CRS webinar
    May 24 2012
    www.ghgprotocol.org
    May 24, 2012
    

    View Slide

30. 1. Intro to GHG Protocol
    Outline
    2. Current GHG Protocol accounting procedures for renewable energy and
    offsets
    3. Conceptual/accounting confusion between energy purchases and offsets
    4 Development of GHG Protocol Guidelines
    4. Development of GHG Protocol Guidelines
    5. Conclusion
    www.ghgprotocol.org
    

    View Slide

31. 1. Intro to GHG Protocol
    Outline
    2. Current GHG Protocol accounting procedures for renewable energy and
    offsets
    3. Conceptual/accounting confusion between energy purchases and offsets
    4 Development of GHG Protocol Guidelines
    4. Development of GHG Protocol Guidelines
    5. Conclusion
    www.ghgprotocol.org
    

    View Slide

32. The journey so far
    www.ghgprotocol.org
    

    View Slide

33. Widespread adoption of Corporate Standard
    The Canadian GHG
    The Canadian GHG
    Challenge Registry
    Th Cli t R i t
    European Union GHG
    Emission Trading
    System (EU ETS)
    The Climate Registry
    US EPA Climate
    Leaders
    Japan’s Voluntary
    Emissions Trading
    China iCET Climate and
    Energy Registry
    Leaders
    Scheme (JVETS)
    Israel GHG
    Program
    South Korea’s GHG
    Emission Information
    System (GEIS)
    Australia GHG
    Challenge Plus
    Program
    New Zealand CarboN
    www.ghgprotocol.org
    New Zealand CarboN
    Zero Programme
    

    View Slide

34. 1. Intro to GHG Protocol
    Outline
    2. Current GHG Protocol accounting procedures for renewable energy and
    offsets
    3. Conceptual/accounting confusion between energy purchases and offsets
    4 Development of GHG Protocol Guidelines
    4. Development of GHG Protocol Guidelines
    5. Conclusion
    www.ghgprotocol.org
    

    View Slide

35. www.ghgprotocol.org
    

    View Slide

36. Scope 2 Total = Consumption X Generation-Only Emission Factor of
    Consumed or Purchased Electricity
    Efficiency Factor may change due to no
    personal efforts of consumers
    Purchase and
    Conservation
    Install Onsite RE to
    d id h
    personal efforts of consumers
    Change the GHG-intensity
    of the product you’re
    apply an
    offset credit
    to reduce any
    scope’s
    reduce grid purchase
    (any emissions from
    owned/operated
    become scope 1)
    consuming
    p
    emissions
    www.ghgprotocol.org
    

    View Slide

37. Renewable Energy Purchases
    Renewable Energy Purchases
    A means to switch source of energy and scope 2 emission factor
    “To quantify scope 2 emissions, the GHG Protocol Corporate Standard recommends that
    companies obtain source/supplier specific emission factors for the electricity purchased If
    companies obtain source/supplier specific emission factors for the electricity purchased. If
    these are not available, regional or grid emission factors should be used.” (Appendix A,
    Accounting for Indirect Emissions from Purchased Electricity, p. 86)
    “Additionally, emerging green power markets provide opportunities for some companies to
    switch to less GHG intensive sources of electricity” (Chapter 4, Setting Operational
    Boundaries, p. 27)
    “IBM succeeded in reducing its GHG emissions at its facility in Austin, Texas, even as energy
    use stayed relatively constant, through a contract for renewable electricity with the local utility
    company, Austin Energy. Starting in 2001, this five-year contract is for 5.25 million kWhs of
    wind-power per year This zero emission power lowered the facility’s inventory by more than
    wind power per year. This zero emission power lowered the facility s inventory by more than
    4,100 tonnes of CO2
    compared to the previous year and represents nearly 5% of the facility’s
    total electricity consumption. (Chapter 2, Business Goals and Inventory Design, p. 12)
    www.ghgprotocol.org
    

    View Slide

38. Renewable Energy Purchases
    Renewable Energy Purchases
    A means to switch source of energy and scope 2 emission factor
    “REC hi h t th i t l b fit f bl b dl d f th
    “RECs, which represent the environmental benefits of renewable energy unbundled from the
    actual flow of electrons, are an innovative method of providing renewable energy to
    individual customers. RECs represent the unbundled environmental benefits, such as avoided
    CO2 emissions, generated by producing electricity from renewable rather than fossil
    Al b h i REC i l t t 100% f th l t i it d ll t
    sources… Aloca began purchasing RECs equivalent to 100% of the electricity used annually at
    four corporate offices” (Alcoa side bar case study of US RECs in Chapter 8, Accounting for
    GHG Reductions, p. 61)
    • Ambiguous use of language (“offset” as a more generic verb, not in reference to
    the noun)
    • Calculation treatment should maintain consistency with other green power
    y g p
    instruments referenced, and avoided emissions were noted as information
    items, but not quantitative reductions actually reported in the inventory
    www.ghgprotocol.org
    

    View Slide

39. Offsets
    Definition: Discrete GHG reductions used to compensate for (i.e., offset) GHG emissions
    l h f l t t l t d t GHG t t
    elsewhere, for example to meet a voluntary or mandatory GHG target or cap.
    How calculated? Offsets are calculated relative to a baseline that represents a hypothetical
    i f h t i i ld h b i th b f th j t
    scenario for what emissions would have been in the absence of the project.
    What is required?
    Cl l ti f b li i d i i
    - Clear selection of a baseline scenario and emissions
    - Demonstration of additionality
    - Identification and quantification of relevant secondary effects
    - Consideration of reversibility
    A id f d bl ti
    - Avoidance of double counting
    www.ghgprotocol.org
    

    View Slide

40. What is additionality and why important?
    - Project should be different from its baseline, but many ways
    to try to prove this
    to try to prove this
    - Critical to the success and integrity of GHG programs that
    recognize project-based GHG reductions
    - If the project were going to happen anyway, global emissions
    will be higher by the number of reduction units issued to the
    project
    - Additionality tests inherent in quantification of baseline, but
    should be accompanied by explicit demonstration of additionality
    using various “tests”
    • Legal, Regulatory, or Institutional test
    • Technology test
    • Investment test
    • Common Practice test
    www.ghgprotocol.org
    Common Practice test
    • Timing test
    

    View Slide

41. Use of Offsets in Corporate Inventories
    The GHG Protocol Corporate Standard does not:
    - Make any requirement about setting reduction targets, or types of targets
    - Require the use of offsets
    - Establish definitions or requirements for “carbon neutrality”
    R d ti l b l f i t l d ti ff t h i t hi
    - Recommend a particular balance of internal reductions vs. offset purchasing to achieve
    reduction goals
    It does require:
    - Report all inventory emissions independently of any offset purchases or sales
    - Any offsets used meet quality criteria established by the Project Protocol
    - That offsets are verified/certified and/or approved by an external GHG program
    T t ti t f j t hi / i ti l i i d h
    - Transparent reporting on type of project, geographic/organizational origin, and how
    quantified
    - Provide information on reductions at sources inside the inventory boundary that have been
    sold/transferred as offsets to a 3rd party
    www.ghgprotocol.org
    

    View Slide

42. 1. Intro to GHG Protocol
    Outline
    2. Current GHG Protocol accounting procedures for renewable energy and
    offsets
    3. Conceptual/accounting confusion between energy purchases and offsets
    4 Development of GHG Protocol Guidelines
    4. Development of GHG Protocol Guidelines
    5. Conclusion
    www.ghgprotocol.org
    

    View Slide

43. Inventory Accounting Mitigation Action Accounting
    Inventory Accounting Mitigation Action Accounting
    www.ghgprotocol.org
    

    View Slide

44. • Cause- Effect assumptions not as tenable with indirect sources
    • If using grid average scope 2 can change due to no action by the company
    “Reductions” in scope 2
    • If using grid average, scope 2 can change due to no action by the company
    • Conversely, reducing energy use on-site may not have a total change in generators’
    scope 1 emissions (i.e., other users’ behavior impacts this)
    • Historic changes in scope 2 -
    • If RECs or energy purchasing instruments used as an emission factor in calculating
    scope 2, then companies’ scope 2 totals may decrease after the switch of emission
    factors. These changes do not correspond to immediate atmospheric reductions,
    factors. These changes do not correspond to immediate atmospheric reductions,
    but rather represent changes in emissions claims on the grid
    • Growth of RE over time
    bl l h d d l d h d f h
    • Renewable energy currently operating on the grid displaced the need for other
    energy sources to run (typically fossil)
    • More renewable energy purchasing and demand can increase overall growth of RE
    development over time, lowering emissions-intensity of electricity supplied
    www.ghgprotocol.org
    

    View Slide

45. 1. Intro to GHG Protocol
    Outline
    2. Current GHG Protocol accounting procedures for renewable energy and
    offsets
    3. Conceptual/accounting confusion between energy purchases and offsets
    4 Development of GHG Protocol Guidelines
    4. Development of GHG Protocol Guidelines
    5. Conclusion
    www.ghgprotocol.org
    

    View Slide

46. i. Distinction between renewable energy purchases and offset purchases?
    Questions from stakeholders internationally
    ii. What instruments can be used to demonstrate a claim to the use of renewable energy
    and its emission rate?
    iii. Is there double counting with RECs?
    – Explicit double counting prevented through tracking in reliable systems
    – Implicit double counting prevention would require adjustment of numbers from
    suppliers tracking systems other info sources
    suppliers, tracking systems, other info sources
    • Impact in the US calculated to be miniscule at this point
    iv. Differences in eligibility criteria
    — Not all instruments worldwide have Green-e’s criteria
    1. Regulatory surplus?
    2. Public subsidy?
    3 Technology type?
    www.ghgprotocol.org
    3. Technology type?
    

    View Slide

47. ‐ Washington D.C., US ‐ Dec 2010 – US market issues
    ‐ London, U.K. – Jan 2011 – Primarily focused on UK
    i
    issues, some EU
    ‐ Mexico City, Mexico – May 2011 – Overlap of CDM
    offsets/contracts
    Scoping Workshops
    ‐ 3 work streams – Started Aug 2011, hiatus, start
    back in Dec 2011
    Technical Working
    Group Drafts and
    Discussion
    Public comment
    ‐ Summer
    2012
    Public comment
    2012
    Publication ‐ Fall 2012
    www.ghgprotocol.org
    

    View Slide

48. STAKEHOLDERS
    www.ghgprotocol.org
    

    View Slide

49. 1. Intro to GHG Protocol
    Outline
    2. Current GHG Protocol provisions for renewable energy and offset
    accounting
    3. Points of conceptual/accounting confusion between energy
    purchases and offsets
    4. Need for international harmonization
    5 Development of GHG Protocol Guidelines
    5. Development of GHG Protocol Guidelines
    6. Conclusion
    www.ghgprotocol.org
    

    View Slide

50. Materials to date and summaries of scoping workshops available
    on project website
    p j
    http://www.ghgprotocol.org/feature/ghg‐protocol‐power‐
    accounting‐guidelines
    accounting‐guidelines
    Contact: Mary Sotos
    @ i
    mary.sotos@wri.org
    202‐729 7627
    www.ghgprotocol.org
    

    View Slide

51. Fair Trade
    Fair Trade
    Coffee:
    Coffee:
    A Broad
    Analogy to
    Explain RECs
    Explain RECs
    

    View Slide

52. View Slide

53. View Slide

54. View Slide

55. View Slide

56. View Slide

57. Coffee Store
    

    View Slide

58. 15%
    Renewable
    85%
    Non renewable
    Non-renewable
    Your Utility
    

    View Slide

59. 15%
    15%
    Fair trade
    85%
    N f i t d
    Non-fair trade
    Coffee Utility
    

    View Slide

60. 100%
    Fair trade
    

    View Slide

61. 100%
    Renewable
    

    View Slide

62. View Slide

63. View Slide

64. Fair trade
    Not fair trade
    

    View Slide

65. Fair Trade Coffee Plantation
    1 LB
    FAIR
    TRADE
    TRADE
    1 lb coffee 1 certificate
    

    View Slide

66. General Mix
    

    View Slide

67. Coffee Store
    1 LB
    FAIR
    TRADE
    TRADE
    1 lb general mix 1 certificate
    

    View Slide

68. + 1 LB
    FAIR
    TRADE
    =
    1 lb general mix 1 certificate 1 lb fair trade
    coffee
    

    View Slide

69. Renewable Energy Generator
    REC
    1 MWh l t i it 1 REC
    1 MWh electricity 1 REC
    

    View Slide

70. The Grid
    

    View Slide

71. Electricity Market
    REC
    1 MWh l t i it 1 REC
    1 MWh electricity 1 REC
    

    View Slide

72. + REC =
    1 REC 1 MWh renewable
    electricity
    1 MWh system
    mix electricity
    IF YOU BUY ELECTRICITY ALREADY, THEN BUYING RECS EQUALS BUYING
    RENEWABLE ELECTRICITY.
    

    View Slide

73. R CS
    RECS are…
    “a medium of
    a medium of
    exchange”
    exchange
    for…
    

    View Slide

74. “ bl ?”
    “renewableness?”
    •How the electricity was made
    S t d f l t i it t ti
    •Separated from electricity at generation,
    and recombined with electricity at
    consumption
    •All renewable qualities—the fully-
    All renewable qualities the fully
    aggregated suite of renewable attributes
    

    View Slide

75. “ tt ib t ?”
    “attributes?”
    •Physical, environmental, and social
    C b l i d i di id ll d
    •Can be claimed individually, and even
    quantified in certain cases (e.g. carbon), but
    can’t be separated out (no dis-aggregation)
    •Don’t necessarily need to be quantified
    Don t necessarily need to be quantified
    individually in order for RECs to be tradable,
    fungible
    fungible
    

    View Slide

76. bl f i f i t d
    REC renewable
    energy
    fair
    trade
    fair trade
    coffee
    : :: :
    

    View Slide

77. REC renewable
    energy
    fair
    trade
    fair trade
    coffee
    : :: :
    REC energy trade coffee
    “I drink fair trade coffee, which has the
    benefit of reducing poverty along with other
    “I use renewable energy, which has the
    benefit of reducing GHG emissions along with g p y g
    benefits.”
    g g
    other benefits.”
    carbon
    offset
    renewable
    energy
    poverty
    alleviation
    fair trade
    coffee
    : :: :
    “I am alleviating poverty.”
    “I am reducing emissions.”
    

    View Slide

78. carbon renewable poverty fair trade
    : :: :
    carbon
    offset
    renewable
    energy
    poverty
    alleviation
    fair trade
    coffee
    : :: :
    “I am alleviating poverty”
    I am alleviating poverty.
    • something that fair trade does, an action
    • a single benefit
    g
    • something that other activities could also do
    • apart from paying for poverty reductions to reduce poverty, I should first or also stop
    directly contributing to poverty myself, as much as possible
    

    View Slide

79. carbon renewable poverty fair trade
    : :: :
    carbon
    offset
    renewable
    energy
    poverty
    alleviation
    fair trade
    coffee
    : :: :
    “I am reducing emissions ”
    • something that renewable energy does, an action
    • a single benefit
    I am reducing emissions.
    g
    • something that other activities could also do
    • apart from paying for reductions to reduce GHG emissions, I should first or also
    stop directly emitting myself, as much as possible
    

    View Slide

80. carbon renewable poverty fair trade
    : :: :
    carbon
    offset
    renewable
    energy
    poverty
    alleviation
    fair trade
    coffee
    : :: :
    “I am alleviating poverty”
    “I am reducing emissions ” I am alleviating poverty.
    • something that you could only claim if it’s not being done anyway, must represent a change from
    I am reducing emissions.
    something that you could only claim if it s not being done anyway, must represent a change from
    business as usual
    

    View Slide

81. carbon renewable poverty fair trade
    : :: :
    carbon
    offset
    renewable
    energy
    poverty
    alleviation
    fair trade
    coffee
    : :: :
    “I am reducing emissions ” “I am alleviating poverty”
    • requires project additionality
    I am reducing emissions. I am alleviating poverty.
    requires project additionality
    

    View Slide

82. Additionality
    Additionality
    Offsets
    RECs
    

    View Slide

83. HOW DOES BUYING
    RECS AND FAIR
    TRADE COFFEE
    MAKE A
    MAKE A
    DIFFERENCE?
    DIFFERENCE?
    

    View Slide

84. View Slide

85. View Slide

86. RECs Carbon Offsets
    Unit MWh Tonnes CO2
    -e
    Purpose Expand consumer choice,
    address impacts of conventional
    Diminish GHG emissions and
    lower costs of climate mitigation
    electricity generation, support
    renewable energy development
    Scope of the Market USA, parts of Canada and Mexico Global
    Definition/what’s included Full suite of renewable attributes GHG emissions reductions
    End User’s Claim “I buy/use renewable electricity.” “I’ve offset my carbon
    emissions,” or “I’ve reduced my
    emissions ”
    emissions.
    Project Types Renewable Energy Various
    Quality Assurances Resource quality and eligibility,
    ownership and double counting
    A.P.R.O.V.E.D.*
    ownership and double counting,
    other sustainability criteria
    Project additionality
    required
    No Yes
    q
    GHG Accounting Scope 2 All scopes
    

    View Slide

87. A REC IS NOT A TYPE OF OFFSET.
    A REC
    A REC cannot
    be converted
    i to a offs t
    into an offset.
    A REC cannot be
    used as an offset. A REC should not be
    A REC does not include
    marketed as an offset.
    A REC does not include
    an offset.
    

    View Slide

88. An offset
    cannot be
    cannot be
    converted
    into a REC.
    …not even if it comes from a renewable energy project.
    REC
    An offset cannot be
    used as a REC. An offset should not be
    An offset is
    marketed as a REC.
    not part of a
    REC.
    

    View Slide

89. BOTH CAN HELP MINIMIZE YOUR
    CARBON FOOTPRINT (this is all offsets do, but not all RECs do,
    CARBON FOOTPRINT
    Both RECs and offsets can
    ( , ,
    and RECs can only address emissions
    related to electricity consumption)
    Both RECs and offsets can
    come from renewable
    energy (but not from the same generation, MWh, and the renewable energy
    facility must meet different requirements in order to produce each and
    facility must meet different requirements in order to produce each, and
    for facilities that meet criteria for both and produce both, RECs should
    always be retired for generation that’s being credited for offsets.
    

    View Slide

90. Both are tools
    Both are tools
    you can use to
    you can use to
    k
    make a
    difference
    difference.
    

    View Slide

91. New CRS Whitepaper
    Renewable Energy Certificates,
    C Off C
    New CRS Whitepaper
    Carbon Offsets, and Carbon
    Claims:
    Best Practices and Frequently Asked Questions
    This whitepaper explains the difference between RECs
    and carbon offsets, how the markets for these
    commodities interact, and the extent to which each
    G G
    can be used to address GHG emissions. The paper
    examines REC definitions and renewable attributes,
    additionality as it relates to RECs, and ownership of
    reductions from renewable energy. It also answers
    questions about carbon offsets that are derived from
    U.S. renewable energy projects, including questions
    relating to additionality, the quantification of
    reductions, and double-counting.
    www.resource-solutions.org, Under “Recent Publications”
    

    View Slide

92. Capital Hilton Washington D C
    www.renewableenergymarkets.com
    Capital Hilton, Washington D.C.
    September 23–25, 2012
    

    View Slide

93. WEBINAR SERIES
    2012
    When What
    February 23, Noon PT/3pm ET Carbon Offsets 101
    April 26 Noon PT/3pm ET Introduction to Green e Climate
    April 26, Noon PT/3pm ET Introduction to Green-e Climate
    May 10, Noon PT/3pm ET Carbon Claims in Green-e Marketplace: Using the Green-e
    Logo with your Purchase of Certified Offsets - NEW THIS
    YEAR
    May 24, Noon PT/3pm ET Offsets vs. RECs: What’s the difference and how should each
    be used? - NEW THIS YEAR
    June 7, Noon PT/3pm ET Popular Critiques of Carbon Offsets: Real Answers to the Big
    Q ti NEW THIS YEAR
    Questions - NEW THIS YEAR
    June 21, Noon PT/3pm ET GHG Accounting for Voluntary Purchases of Renewable
    Energy in the U.S. - NEW THIS YEAR
    J l 26 N PT/3 ET B t P ti i C i l Off t P h i
    July 26, Noon PT/3pm ET Best Practices in Commercial Offset Purchasing
    August 9, Noon PT/3pm ET Carbon Offsets 101
    October 25, Noon PT/3pm ET Introduction to Green-e Climate
    November 1 Noon PT/3pm ET Green-e in LEED - NEW THIS YEAR
    November 1, Noon PT/3pm ET Green-e in LEED - NEW THIS YEAR
    

    View Slide

94. CONTACT
    Matt Clouse
    Director, Renewable Energy Policies & Programs
    U.S. Environmental Protection Agency
    clouse.matt@epa.gov
    Mary Sotos
    GHG Protocol Initiative
    World Resources Institute
    msotos@wri.org
    Todd Jones
    Green-e Climate Manager
    Center for Resource Solutions
    todd@resource-solutions.org
    Jeff Swenerton
    Communications Director
    Center for Resource Solutions
    jeff@resource-solutions org
    jeff@resource solutions.org
    @greenemarktplc
    @greenemarktplc
    facebook.com/CenterForResourceSolutions
    

    View Slide