Explaining the Difference between Carbon Offsets and Renewable Energy Credits

You think you understand renewable energy credits. You're sure you understand Carbon Offsets. You are fuzzy on the details about how they differ and when the purchase of one or the other might be appropriate. Never fear! This article explains the key differences, and similarities, between the two.
The first difference is the way that offsets and Renewable Energy Credits (RECs) are measured. Carbon offsets are measured in metric tons of C02 or C02 Equivalent. Renewable Energy Credits are measured in kilowatt hours, which are a standard electricity measurement metric. A kilowatt hour is the amount of work that can be performed by one kilowatt of energy in one hour.

Picture a lonely, dim lightbulb hanging from the ceiling that turns on for one hour each day by which you feverishly darn socks in a carbon constrained world; that's a watt, and for the privilege of its use, you'll be charged for 1/1000 kwh of electricity each day. These days, you probably use a several kwh per day.

The second difference between carbon offsets and renewable energy credits is that renewable energy credits only come from renewable energy projects (solar, wind geothermal, biofuels, etc.) while carbon offsets can come from all different kinds of projects, including renewable energy generation, that reduce the level of greenhouse gases that are entering the atmosphere.

To put it another way, RECs are primarily concerned with promoting the generation of clean energy, while carbon offsets are primarily concerned with preventing the emissions that enter the atmosphere.

They are both systems that have developed to deal with global warming systematically, but they have different approaches. RECs are forward looking, focused on building a clean energy economy and providing an extra incentive for the creation of renewable energy, while carbon offsets are oriented in the present, dealing with preventing greenhouse gases from entering the atmosphere right now.

Because of these different measurement systems and the different foci of the two programs, RECs and carbon offsets have different precision rates when it comes to carbon. Carbon offsets are all about exactitude, and many of the discussions about the efficacy of offsets center around the degree of certainty a buyer has that the exact amount of carbon s/he has paid for is actually being prevented or captured. RECs, on the other hand, are measured in kilowatt hours, and the carbon content of that 'saved' kwh differs depending on the location of the project and the quality of the local electricity.

The dirtier the local electricity, the more carbon an REC 'saves.' Different utilities around the country use different mixes of energy sources, from coal to natural gas to renewables, to create electricity. These sources vary widely in their carbon content. To make matters even more confusing, a utility might even change the mix it uses depending on the time of day- when peak load sets in they might have to rely on dirtier power sources than they would otherwise.

So, it's impossible to say exactly how much carbon a clean kwh of renewable energy 'offsets.' The closest we can get is to use the 'emissions factor' for energy from the local utility, which is the average emissions for the mix of sources that the utility uses to create power, and multiply it by the number of kilowatt hours to produce an estimate of the carbon saved per kilowatt. But it will always be an estimate.

This is not to say that RECs are no good. They are an extremely effective way to promote clean energy because they give the providers and extra incentive to keep creating clean energy and we need all the incentives we can get to move toward a clean energy economy. RECs just aren't the most accurate way to offset carbon. I highly recommend using RECs to offset electricity use, because your electric bills will have a record of the exact number of kwh you used, and you can buy RECs to account for all the dirty emissions your plugged-in Macbook caused. Then, you can buy carbon offsets to cover all your driving and flying.

'But what about renewable carbon offsets?', you say. 'Those seem like the best of both worlds!' I'm getting there. Those are good to, and if you really value the promotion of clean energy despite some of the accuracy issues, you can buy renewable energy offsets. Many times offsets will actually come from the exact same projects as the RECs, but the nice thing about buying the offset version instead of buying RECs and doing the calculations yourself is that someone else, hopefully a third party verifier, is determining how much carbon each kwh of clean energy replaced. So you don't have to! Rest easy, and lay off the carbon guilt.

About the Author:

James Nash is a climate scientist with Greatest Planet (www.greatestplanet.org). Greatest Planet is a non-profit environmental organization specialising in carbon offset investments. James Nash is solely responsible for the contents of this article.

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