Renewable Energy Credits: Greenwashing Scam or Sustainable Savior?

There is an argument brewing among renewable energy advocates that question whether Renewable Energy Credits (RECs) are a greenwashing scam or a sustainable savior. At first, many believe the argument is political, showing yet another divide among left and right wing beliefs, however that is not necessarily the case. In fact, recent criticism has come from all fronts, especially after a 2012 investigation that found fraud within the EPA’s program, perpetuated by lax rules in the program and three cunning companies selling bogus RECs. The decision is really yours, so let’s explore further and see where the facts take you?

Renewable Energy Credits: Scam or legit? It depends.Understanding the basics of Renewable Energy Credits

The premise behind RECs is sound, as it provides flexibility for organizations to support the development of renewable energy and protect the environment when green energy isn’t available locally. This means the credits are purchased separately from physical electricity associated to the renewable energy.  The EPA argues that RECs provide the needed accounting for attributes of renewable-based energy production. Thus, one renewable energy credit is created for per 1 megawatt-hour of electricity produced by renewable energy and placed on the grid.

Renewable energy generation provides a positive impact on the environment from reduced carbon footprints and reduces fossil-fuel usage.  The thought is that companies purchasing the credits are helping provide renewable energy into the overall grid, while not necessarily using that particular energy themselves. This continued investment, ultimately leads to greater usage as a whole.

The potential for a greenwashing scam

The EPA even clearly states that, “since RECs can be sold separately from the underlying electricity, the possibility for fraud can exist unless the RECs are tracked from their point of creation to their final point of use.”  This has proven difficult and in some cases has been taken advantage of. There is a case where a Texas man sold over $42 million in counterfeit credits, ultimately buying a private jet and Bentley with that money. I guess the fraud is bad enough, but at least he could have purchased economical cars like a hybrid.

Joking aside, the New York Times reported that over $100 million in fraudulent credits have been identified since 2009 specifically in the refining industry. That accounts for nearly 5 percent of the total production from that industry alone.

Outside of fraud, the other concerns from those questioning the viability of these credits cite that the energy would have been produced regardless of the credits. Thus, buying these credits are not incentivizing the build out of greater capacity, instead it is removing the consumer demand from the local market. Increased demand is what typically drives the U.S. markets, thus opponents argue we should invest in building capacity where demand exists, rather than purchasing credits that allow continued usage of dirty energy.

You decide: friend or foe?

Renewable energy credits are meant to help improve the adoption of renewable energy in America or at least help improve the energy efficiency of our current grid. However, opponents have valid points that the actual implementation may be throwing money out the window that could be producing greater production strength. So this leaves the decision to you…. Are renewable energy credits a friend or foe to the green energy movement?

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