Renewable energy certificates are tradable records showing that a quantity of electricity was generated from a renewable source. In the European Union the equivalent instrument is called a guarantee of origin.
This page explains how the instruments work and how they relate to emissions accounting. It sits under the hub on what is a carbon footprint, and it describes the instruments only, without recommending any supplier or product.
What a certificate represents
The US EPA describes a renewable energy certificate as a market-based instrument that represents the property rights to the environmental, social, and other non-power attributes of renewable electricity generation. Certificates are issued when one megawatt-hour (MWh) of electricity is generated and delivered to the grid from a renewable resource.
The reason the instrument exists is that physical electricity on a shared grid carries no label. According to the same EPA page, certificates are the instrument that electricity consumers must use to substantiate renewable electricity use claims. In practice, the electrons a building receives are the same whether or not it buys certificates; what changes is who can claim the renewable attributes of a given unit of generation.
The EPA notes that the details differ between markets. Its page on energy attribute certificates states that different countries may have different names for them, and that one REC conveys one megawatt-hour of electricity generated from renewable sources.
Guarantees of origin in the European Union
In EU law the instrument is defined in the Renewable Energy Directive. A guarantee of origin means an electronic document which has the sole function of providing evidence to a final customer that a given share or quantity of energy was produced from renewable sources.
The same directive sets out several design rules. A guarantee of origin shall be of the standard size of 1 MWh, and no more than one shall be issued in respect of each unit of energy produced. Guarantees of origin shall be valid for 12 months after the production of the relevant energy unit, and those not cancelled expire at the latest 18 months after production. Cancelling a guarantee is the act of using it, which stops it from being claimed again.
Retirement and double counting
A certificate can support only one claim. The EPA guidance on double counting advises buyers to properly retire RECs before making a claim, and explains that selling or transferring RECs after making environmental claims leads to double counting, as two different parties will claim the same environmental benefits from the green power purchase.
The same page adds that for organizations, double counting can also lead to credible accusations of greenwashing. That is why any public statement about renewable electricity needs a record of which certificates were retired, for which period and for which site or site group.
Records should be kept in a form that an outside reader can follow. A registry statement showing the certificate quantity, the generation period and the date of cancellation is stronger evidence than a general line in a sustainability report, and it makes it far easier to show that the same unit was not claimed twice.
How certificates appear in emissions accounting
For organisations that report a footprint, the main reference is the GHG Protocol Scope 2 Guidance. It standardizes how corporations measure emissions from purchased or acquired electricity, steam, heat and cooling, and it includes new requirements for accounting for emissions from energy contracts and instruments, such as renewable energy credits, in GHG inventories.
The guidance also sets eight Scope 2 Quality Criteria that all contractual instruments must meet in order to be a reliable data source for the scope 2 market-based method. A certificate that fails those criteria is not a sound basis for a lower reported figure, however it is described in marketing material.
Electricity use is only one part of a footprint, and cutting demand is separate from buying certificates. The page on energy efficiency in buildings covers the demand side, which no certificate replaces.
Questions to ask about any certificate
Because the market is a patchwork of national systems, the label on a certificate says less than its record does. A buyer or an auditor reading a claim can work through a short list of questions drawn from the sources above.
- Which period of generation does the certificate cover, and does it match the period of electricity use being reported?
- Which registry issued it, and does that registry show the certificate as cancelled or retired for this buyer?
- Is the certificate unbundled from the electricity itself, or was it sold together with the energy under a supply contract?
- Does the instrument meet the quality criteria of the reporting framework the organisation actually uses?
- Has the same attribute been included in a supplier residual mix or in another party own claim?
None of these questions requires special software. They need a document trail, and a missing answer is a reason to hold back the claim rather than to word it more cautiously.
What certificates can and cannot do
Certificates give a transparent way to assign the renewable attributes of generation to the consumers who pay for them. They are a bookkeeping device for claims, and their value depends on the quality of the registry, the rules on cancellation and the honesty of the wording used afterwards.
They do not, on their own, tell a reader whether new renewable capacity was built because of a purchase, and they do not reduce the electricity a site uses. Organisations that want both a credible report and a lower real footprint generally treat certificates as one component beside efficiency work, on-site generation and direct contracts with generators.
Certificates are not carbon offsets
The two instruments are often confused. The EPA states that offsets represent a metric ton of emissions avoided or reduced, while RECs represent attributes of 1 MWh renewable electricity generation, and the two are fundamentally different instruments with different criteria for qualification and crediting. The EPA explanation is on its REC overview page.
The practical consequence is that a business should describe a certificate purchase as a purchase of renewable electricity attributes, not as a way of removing carbon dioxide from the atmosphere. For events and other one-off activities, the guide to carbon neutral events shows where electricity sits among the other emission sources.
A business that makes public claims about renewable electricity should also check the advertising and consumer rules where it operates, since many jurisdictions treat unclear green claims as a legal risk. This page gives general information and is not legal or financial advice.
Frequently asked questions
Do certificates change the electricity a building receives?
No. The physical supply comes from the shared grid either way; the certificate records who may claim the renewable attributes of the generation.
Is a guarantee of origin the same as a renewable energy certificate?
They serve a similar purpose in different markets. Guarantees of origin are defined in EU law, while the EPA uses the term renewable energy certificate for the US market.
Can the same certificate be claimed twice?
No. Retiring or cancelling it is meant to prevent that, and the EPA identifies double counting as a risk to credibility.
Are certificates the same as carbon offsets?
No. The EPA describes them as different instruments representing different things: electricity attributes in one case and emissions avoided or reduced in the other.
