10 Steps to Becoming a Carbon Neutral Business

Page 24 STEP 07: SWITCH TO RENEWABLE ENERGY / Option 1: Renewable Energy Certificates Renewable Energy Certificates may also be called Guarantees of Origin or Green Certificates, depending on the location. They are certificates that prove that the electricity you buy is generated from a renewable source. While RECs prove that your electricity is green, you are only purchasing the certificate that validates the source of your electricity, not the actual electricity itself. RECs can be generated by several types of renewable sources: wind, solar, hydro, geothermal or biomass. When one MWh of renewable energy is generated by one of these sources, one REC is issued that proves the MWh generated is green. The electricity is then fed into the grid, where grey and green electricity are indistinguishable from each other. The renewable energy just fed into the grid may realistically be used by any consumer that is connected to that grid. However, it is a generally accepted practice to claim that the electricity you consume is sourced from the project from which the RECs are issued. Contrary to carbon credits discussed in Step 8 “Balance your remaining emissions”, it is not common practice to track down RECs to the specific wind or solar farm they were produced by. While usually RECs only indicate the type of renewable energy and the country of origin, it is however possible to trace the specific project that generated your certificates. The benefit of RECs is that they allow maximum flexibility in greening your electricity supply. They can be purchased retrospectively to cover past electricity consumption if there is still enough supply available in the market. As RECs expire 12 months after they are issued, prices may be higher when supply decreases. Much like purchasing RECs to cover past consumption, contracts for RECs can be negotiated for forward delivery. This means that you could reserve RECs for some years into the future. The process of acquiring RECs is relatively straightforward in most countries, usually happening within a few months. Your consultants should be able to assist you without much more than consumption data broken down by location. RECs are also attractive if your company has a running energy contract. By buying RECs, you are only buying a certificate that proves your energy is green. You will not have to modify existing contracts in this scenario. The downside of RECs, however, is that they do not deliver cost savings. Even though there are little financial uncertainties associated with RECs, you will have to buy RECs on top of your regular energy bill. It is therefore an additional cost rather than a saving. Furthermore, RECs are only valid for one year and therefore you will have to acquire them annually in addition to the electricity from the grid. While the cost of RECs may be acceptable for one year, the cost of buying RECs repeatedly amounts to quite an investment over many years. In addition to the financial cost, RECs tell the least compelling story about your commitment to renewable energy compared to the other two options.