3.9 Environmental Regulatory Issues

3.9.1 Renewable Energy Credits (RECs)

In some states, Renewable Energy Credits (RECs), a type of financial product associated with renewable energy production, can be bought, sold and traded (1 REC=1 MWh) separately from the energy to enable utilities to satisfy their obligations under their State’s RPS. These certificates can be sold and traded or bartered. The owner of the REC can thus claim to have purchased renewable energy.

The energy associated with a REC is sold separately and is used by another party, so RECs simply incentivize carbon-neutral renewable energy by providing a production subsidy to electricity generated from renewable sources. The consumer of a REC receives only a certificate.