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REC Question and Answer Document

Tracking Systems

There are two primary methods for verifying renewable energy generation ownership: through contract-path auditing and through tracking systems. Tracking systems are becoming the preferable method because they can be highly automated, contain specific information about each MWh generated, and are accessible to market participants through the internet. Tracking systems are databases, typically electronic, with basic information about each MWh of renewable power generated in the region covered by the tracking system. The accounting tool used by the tracking systems is a renewable energy certificate (REC). A REC with a unique serial number is issued for each MWh that has been generated according to direct electronic data supplied by the control area in which the renewable generator is located.

Tracking System
Renewable Energy Tracking Systems (updated May 5, 2015). Click on the map for a larger version, or download the PDF.

Electronic tracking systems allow RECs to be transferred among account holders much as in online banking. Any market participant can open an account through which RECs can be transferred. The database associated with each REC includes specific static information including facility location, generation technology, facility owner, fuel type, nameplate capacity, the year in which the facility began operation, and the month/year the MWh was generated. Since each MWh has a unique identification number and can only be in one account at any time, this reduces ownership disputes and opportunities for double counting.

A tracking system can be used by regulators as a registry of generating facilities, as a means of verifying compliance with a Renewable Portfolio Standard (RPS), for aiding in the creation of disclosure labels, and for other purposes such as verifying wholesale supply for green power products. Tracking systems are not substitutes for certification and verification, as tracking systems only monitor wholesale transactions—individual retail green power customers do not generally hold accounts in tracking systems unless they make very large purchases. That is one reason why certification from a credible third party is important for voluntary purchasers.

The tracking systems emerged regionally in response to state Renewable Portfolio Standards and needs in the voluntary market. There are several regional tracking systems in operation in the U.S., and more under development. Fully operational tracking systems include the New England Generation Information System (NEGIS), ERCOT's Texas Renewables, WECC's Western Renewable Energy Generation Information System (WREGIS), the Midwest Renewable Energy Tracking System (M-RETS) and Pennsylvania New Jersey Maryland's Generation Attribute Tracking System (PJM-GATS). New England and PJM’s systems track all generation (not only renewables), while the other systems only track renewable certificates. New York state is in the process of developing its own tracking system and there is also a default tracking system launched by the APX company in October 2008 that will issue and track certificates for renewable energy projects located in areas not currently covered by another tracking system. With the exception of the APX default system, most of the others are quasi-governmental, creations of the governmental regulators from the participating states/provinces within their jurisdiction.

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Emissions Registries

Emissions registries track emissions allowances and carbon offsets. These are called verified emissions reductions (VERs). There are several emissions registries operating in North America, including the California Climate Action Reserve, the Chicago Climate Exchange, the Canadian Standard Association’s Clean Projects, the Environmental Resources Trust’s GHG Registry, the Gold Standard Registry and the Voluntary Carbon Standard registries.

Most registries are automated, contain specific information about each VER, and are accessible to market participants over the internet. Like tracking systems, emissions registries are databases, typically electronic, with basic information about each VER tonne (tonne of CO2 equivalent). Electronic emissions registries for carbon offsets allow the offsets to be transferred among account holders much as in online banking. Most registries assign a unique identification number for each tonne of emissions reductions. The database tracks static information for each VER tonne, including project location, project type, project developer, the year the project began, and the vintage (date) of the emissions reduction. Since each tonne has a unique identification number and can only be in one account at any time, this reduces ownership disputes.

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Renewable Energy

A resource is called renewable if it is flow limited (i.e. limited in the amount of energy available in a unit of time) but can be naturally replenished. Renewable sources of electricity include solar electric, wind, geothermal, biomass, hydroelectric and tidal power. In general, renewables have lower negative environmental impacts than non-renewables. “Flow limited” resources are contrasted to “stock limited” or non-renewable resources. Non-renewable resources refer to fuels of which the Earth is endowed with fixed stocks; once the stocks are depleted no more will be available on any practical timescale. The primary examples of non-renewable resources include fossil fuels (e.g. coal, petroleum, natural gas, tar sands and oil shales) and nuclear fuels.

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Renewable Energy Certificates (RECs)

When a renewable energy facility operates, it creates electricity that is delivered into a vast network of transmission wires, often referred to as “the grid.” The grid is segmented into regional power networks called pools. To help facilitate the sale of renewable electricity nationally, a system was established that separates renewable electricity generation into two parts: the electricity or electrical energy produced by a renewable generator and the renewable “attributes” of that generation. (These attributes include the tonnes of greenhouse gas that were avoided by generating electricity from renewable resources instead of conventional fuels, such as coal, nuclear, oil, or gas.) These renewable (“green”) attributes are sold separately as renewable energy certificates (RECs). One REC is issued for each megawatt-hour (MWh) unit of renewable electricity produced. The electricity that was split from the REC is no longer considered "renewable" and is cannot be counted as renewable or zero-emissions by whoever buys it.

Each REC has a data set with it that contains specific information about the renewable energy generated, including where, when, at what facility, and with what type of generation. Purchasers of RECs are buying the renewable attributes of those specific units of renewable energy, which helps offset conventional electricity generation in the region where the renewable generator is located. RECs that are certified by a credible third party helps ensure that they are not sold more than once or claimed by more than one party, and if they are sold in the voluntary market, they cannot count towards a state’s renewable-energy mandate.

Renewable Energy

Buying RECs helps build a market for renewable electricity. It also has other local and global social, economic and environmental benefits including reducing greenhouse gas emissions and air pollution; stabilizing energy costs by reducing price volatility in the energy markets; strengthening America's energy independence and energy diversity; creating jobs; and promoting sources of unlimited, emissions-free domestic energy.

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Carbon Offsets

A greenhouse gas emission reduction (offset) represents the reduction of a specific quantity of greenhouse gases. When you purchase an offset, you have obtained the rights to all associated claims about the environmental benefits it embodies. Purchasing offsets that have been certified by a credible third-party ensures that the offsets are sourced from verified projects. The purchase of a certified offset stimulates market demand for emission reduction projects, leading to more projects that can help mitigate the effect of climate change.

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Renewable Portfolio Standards

A Renewable Portfolio Standard (RPS) is a state or federal level policy that requires that a minimum amount (usually a percentage) of electricity supply provided by each supply company is to come from renewable energy. There are currently 26 states plus the District of Columbia with an RPS. Three additional states have voluntary renewable goals instead of portfolio standards with binding targets. The U.S. does not have a federal RPS at this time though such legislation has been proposed in Congress. The primary purpose for an RPS is to build a market for renewable energy and thus reaping the environmental, economic and social benefits provided by these technologies.

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