top of page

Renewable energy credits are not the climate solution they're claimed to be



The renewable energy certificates and offset credits that many big companies use to promote themselves as "sustainable" or "climate friendly" are masking massive carbon footprints in these businesses' operations.



There's a multi-billion dollar market for renewable energy certificates which are intended to finance the development of solar energy and wind power in other regions that companies use to balance out their greenhouse gas emissions from directly using fossil fuels.


There's just one problem with this approach.


“All the research has pretty unambiguously shown that [the REC market] does nothing,” according to Michael Gillenwater, a renewable energy credit researcher and the executive director and dean of Greenhouse Gas Management Institute. “It’s basically ineffective in terms of influencing renewable energy investment or generation.”


The renewable energy credits companies are buying aren't worth enough to promote renewable energy development, Gillenwater said.

According to the study from Concordia University, if renewable energy credits are excluded, only 36% of companies are meeting their emissions reduction targets to keep the world from warming by just 1.5 degrees -- the ideal target that should prevent more catastrophic climate change. Under the current measurement system 68% of the 115 companies surveyed meet their emissions reduction targets.


Companies and nations have all signed on to the Paris Agreement, a global compact between 192 countries (including the U.S.) and the European Union that hopes to reduce greenhouse gas emissions and prevent disastrous global warming.


Renewable energy credits (RECs) are used by companies to cancel out a portion of their carbon emissions by funding renewable energy development.


“In my opinion, [RECs are] always misleading, because in a physical sense, they are not using renewable energy,” said Anders Bjørn, a postdoctoral fellow at Concordia University and the lead author on the study.


The problem with this approach is that it doesn't actually reduce the greenhouse gas emissions at company operations. It just ensures that new energy demand is met with solar and wind power. That's a problem because the world needs to reduce total greenhouse gas emissions not keep them at a consistent level.


“The widespread use of RECs raises doubt on companies’ apparent historic Paris-aligned emission reductions, as it allows companies to report emission reductions that are not real,” the researchers said in the study.


The researchers at Concordia are quick to point out that they're not blaming companies for making the claims. Rather they're hoping that the developers of the system of accreditation can refine their approach to align with what current research is revealing.


The idea is to get everyone on the same page to solve the problem.


The Greenhouse Gas Protocol is set to revise their standards later this year. And researchers are advocating for a change to how emissions are reported that includes a more nuanced understanding of RECs.


Shannon Lloyd, one of the researchers, emphasized that the problem is not the companies, but the system itself.


"In my mind, the call for this paper shouldn’t be, 'Let’s point fingers,'"Lloyd, told NBC. “The call should be, ‘Let’s figure this out.'"


bottom of page