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December 05, 2006


Sarah Krasley, CRS Communications Director

We appreciate your coverage of this timely and important topic.

For the past six months, Center for Resource Solutions (CRS runs the Green-e program) has been engaged with an advisory group of 15 leading experts from key environmental organizations, government agencies, businesses, and advocacy organizations who work on climate change issues to develop a draft standard that will ensure that retail GHG reduction products sold to consumers provide real, verified and additional GHG reductions. CRS uses transparent, stakeholder driven processes in the development its consumer protection standards. The draft Green-e Retail GHG Reduction Product standard will be distributed for broad stakeholder review later this month. Any parties interested in participating in this process should contact CRS to be added to the stakeholder list.

As presented in your blog, the argument against using RECs as a GHG reduction is that REC markets do not create additional renewables. This is not the case. The renewable energy and REC markets are complex. RECs are used for varying purposes
(for example, regulatory mandates such as renewable portfolio standards, as accounting mechanisms for state run consumer disclosure programs, and also to support voluntary purchases of new renewable energy) and are of varying quality. From its inception almost 10 years ago, Green-e has assured that Green-e certified renewable energy purchases are supporting new renewable developments and delivering environmental benefits to customers.

Specifically, Green-e requires that Green-e certified RECs must be from renewable generation serving voluntary markets for environmental attributes (which include GHG reduction benefits created by renewable energy) and from facilities put online after 1997. Further, mandated renewables do not qualify for Green-e.

In fact, leading GHG registries and accounting protocols (including EPA Climate Leaders, World Resources Institute’s GHG Protocols, and the California Climate Action Registry) recognize Green-e certified RECs as a way for entities to reduce their GHG footprints. As you pointed out in your previous post about RECs, Green-e certification is an essential component for consumers to look for when purchasing RECs.

The Green-e Program is developing the Retail GHG Reduction Certification standard to provide quality assurance, consumer protection and market support to the emerging retail greenhouse gas reduction market and the growing number of consumers who choose to decrease their own contribution to global warming by purchasing greenhouse gas reductions.

We agree with you, and Mark Trexler, and Adam Markham that the time for a broadly supported, meaningful, GHG reduction standard is now. We expect our standard to serve this function, and it will be available for public comment later this month.


I love the bottom line. It pays to read to the end.


Environmental Defense undertook a related project earlier this year. Our team of experts came up with a list of criteria for credible offsets and reviewed a handful of proposals. The companies that met our criteria are listed on our site.

Adam Stein

Hi Joel,

Thanks for digging into this important topic. At TerraPass, we're still digesting the report, and we'll certainly be posting our full thoughts soon on our blog. In the meantime, a couple of comments:

1) The study does do an admirable job of clearly laying out many (maybe even most) of the key issues in the voluntary carbon offset industry. These are complicated topics, and it's nice to see them laid out clearly. There's a lot in there to chew over.

2) Unfortunately, the attempt to overlay a numeric ranking system on top of these complex issues goes so far awry as to render the report's conclusions largely meaningless. You quote the study's author as saying: "It all comes down to additionality -- it's almost impossible to write an objective, easily interpreted way to address additionality."

The author intends this to be a criticism of the open standards process now underway in the voluntary carbon offset industry, but why shouldn't this comment apply to the CACP study itself, which after all makes additionality its pre-eminent concern?

Indeed, why is the participatory standards process -- which embodies the pooled knowledge of dozens of environmental organizations with deep expertise in the field -- trumped by a single marketing survey conducted by an outside consultancy?

As I read the CACP study, I found myself repeatedly frustrated by the experience of agreeing wholeheartedly with this or that qualitative statement, and then being utterly baffled by the way those statements were turned into pseudo-quantitative evaluative criteria.

3) The voluntary carbon industry has actually been doing an excellent job of aggressively and cooperatively pursuing quality standards, contrary to what is suggested in your post. You state that the voluntary carbon industry is part of a $22 billion worldwide market, implying that it is long overdue for scrutiny. But of course this figure vastly overstates the size of the voluntary market, which is a tiny fraction of the overall pie. For such a young industry, the rapid evolution of quality standards has been remarkable.

The study's author also complains that "this whole process has been insane. Instead of focusing on how to improve the market, we're all just focusing on what does it mean for us, which is frustrating."

This sounds very high-minded, but in fact most of us in the voluntary carbon industry have long known that consumer trust is our most important asset and have therefore focused a huge amount of energy on quality and transparency. Perhaps the author's frustration reflects the lack of confidence that industry participants had in the study's methodology. As the study briefly notes, more than half of the ranked organizations declined to be surveyed, out of concerns over how the research was being conducted.


So I find myself with mixed emotions. I'm glad that important issues in the industry are being aired, and I commend the study's author for laying out those issues with clarity and expertise. Had the study stuck with a qualitative analysis, perhaps backed up with individual case studies, it would indeed have been a valuable resource for consumers and practitioners. Certainly I have taken away some insights that I will be applying to my own business.

But the study makes such a hash of its forced ranking system that I fear it only muddies further what it hoped to clarify.

Fortunately, I don't share the author's pessimism regarding the standards process now underway. In fact, such standards processes have been enormously successful in the renewable energy market, and there's every reason to expect their success to be duplicated in the voluntary carbon market. In a few months, the picture for consumers will get a lot clearer.

randy Udall

here's my two bits on RECs

The Claim Game: The Selling of RECs and the Fleecing of the Public

What’s the difference
Between a TerraPass and
Eco trespass? Nil.

I’m in a foul mood about RECs. I was there at the beginning, a decade ago, when we invented this idea, and I’m beginning to think we should have strangled it in the crib. I haven’t been paying attention, so I don’t know how things went so bad, but as it nears adolescence, this cherub has taken a turn for the worse. The cute baby is now dressed in Goth black, copping an attitude, eluding the probation officer. Rudd Mayer, who helped launch the first green pricing program here in Colorado, and who was one of the first to muse over whether RECs could enable renewable energy to cross state lines…she must be spinning in her grave.

RECs—their deceptive marketing, their certification by Green-e, the lavish, inflated claims made by their marketers and the gullible corporate flacks who are buying them, the absurd press releases trumpeting their purchase, this “carbon neutrality” shuck-and-jive by which the Dave Mathews band and Al Gore and Whole Foods receive penance—the whole thing increasingly reeks of a scam.

Are there any investigative reporters left in America? How much longer before the Wall Street Journal investigates the REC claim game, the fleecing of the green? Reporters in Colorado are currently preoccupied with an evangelical minister who copped to gay sex and a meth habit, but sooner or later they’ll come a slow news day and then all hell could break loose. Actually, it probably won’t because it would be easier for a reporter to hack open a coconut with a nail file than make sense of the tortured language, the arcane exoskeleton of braggadocio that has accreted over “renewable energy credit” during the past ten years. Let’s hope nobody catches on, because if anyone ever turns a spotlight on this green scheme, where claims of environmental virtue are certified and then sold up river, we are going to look absolutely absurd, as dumb as sheep, as blank as a cow’s stare.

So far, the reporters seem clueless. From a recent article in the New York Times, the nation’s paper of record: “Vail Resorts, the big Colorado ski and recreation company, said Tuesday that it would make a huge investment in wind power, buying enough credits to offset all the power needed for its resorts, retail stores and office buildings. The announcement makes Vail the second-largest corporate buyer of wind energy...”

This is absolute hogwash. Vail has not made a “huge investment in wind power.” Vail has invested nothing in wind power! And Vail is not “the second-largest corporate buyer of wind energy.” That’s total bullshit. Vail does participate in a green pricing program run by its local electric cooperative, but to the best of my knowledge there’s not a single renewable energy system on any of Vail’s mountains. Yesterday they cranked up 10 Megawatts of coal-fired snowmaking compressors, which each day will produce about 200 tons of carbon dioxide. What Vail is good at is turning coal into snow, cannibalizing the climate on which all skiing depends.

The original idea was that RECs would accelerate renewable energy development. Some RECs do, but most don’t. Indeed, in some cases, RECs are now retarding what they claim to accelerate. In Vail’s case, the company had spent years analyzing a proposal to install wind turbines on its main mountain, but decided to buy RECs instead. Why? Because Aspen Skiing Company (and then Steamboat and Crested Butte and Sugar Bowl and Grand Targhee) and because RECs “were cheaper.”
Wind Power. No Turbine Needed. We hope you'll spend a few minutes on our website to learn more about how it works and how you can become a part of the solution, instead of part of the pollution!
At its worst, today’s REC advertising makes one long for earlier scams. The emperor may not have had any clothes, but at least there was an emperor. Here, we’ve got vaporware, the ultimate invisible product, a carney’s dream, the perfect shuck and jive, a wraith of avarice disguised by the fog of good intentions.

What the hell is getting hawked and flogged and pimped and touted? What the hell is being certified and sold? When did the “claim inflation” hit warp speed? “Carbon neutrality,” “100% wind powered,” all that misleading, disingenuous, and ultimately dishonest stuff.

Does anyone on the Green-e board honestly think that if the REC market and REC marketers were vaporized by a meteor, that the pace of renewable energy installation would slow? If we are going to continue with the same loosey-goosey definition of RECs under which we have been operating, fine. But in that case somebody should do us a favor, take the logical next step, and invent a multi-level selling scheme. If we are going to be carneys, and sheer the gullible green flocks, let’s get rich doing it.

RECs represent the triumph of the virtual over the real, the bastardization of a great idea. Most of today’s REC marketers are in the penance fulfillment business. They could as easily be selling scarification tools or cactus lashes. Self-flagellation has never been easier.

“My corporation is concerned about our greenhouse gas emissions.”

“Don’t worry, I’ll sell you a REC. Bend over, I have it in a suppository.”

Among the cognoscenti, the justification and explication of RECs has gone from arcane to torturous. Here’s a classic example:

“Indirect emission reductions may be used to offset indirect emissions i.e., a company may use indirect emission reductions to offset its indirect emissions associated with its electricity usage. However, a company may not offset its direct emissions with indirect emission reductions. For example, indirect emissions reductions may not be used to offset the direct emissions of a company’s vehicle fleet. When direct and indirect emission reductions are used interchangeably, double counting occurs because indirect emission reductions always point to some other entity’s direct emission reductions.”

A circuit breaker just fused in my skull. If in simplicity lies truth, how can anything this convoluted be good?

So what’s really going on here? Each November, this year’s REC vintage begins to depreciate like Paraguay’s currency. REC marketers swoop in and buy the lot for a buck a Megawatt-hour and then begin to flog it on the Internet. Corporate gulls, searching desperately to show that their company is doing something about climate change, knowing little about the nation’s energy system or what it really takes to finance a new wind farm, swoop down to feed.

The temptation to buy RECs is understandable. Actually reducing greenhouse gas emissions is difficult, demanding, time consuming, painstaking and sometimes expensive. In contrast, you can buy enough RECs to green your company while getting your nails done or jogging on the company treadmill. RECs are a cop-out. Let’s use Whole Foods, for example. This claims to be one of the leading, most progressive, most aware companies in the country. And the best it can do to reduce its emissions is to buy RECs? How pathetic! What a colossal failure of imagination.

RECs are for the lazy, for those who want to achieve the exalted state of “carbon neutrality” without doing anything but writing a check, people who want to make inflated claims about their company’s efforts to become climate friendly or procure guilt-free SUV driving. This is greenwashing, hype. And it’s hype of the worst sort, because it implies that the monumental energy transformation we need to undertake in this country can be done on the cheap, by raiding the ad budget, with the stroke of a pen.

The way things currently stand, a sufficiently large REC purchase can enable Whole Foods or Vail Resorts to claim “carbon neutrality.” Oh, please. A claim that Whole Foods or Vail Resorts or Aspen Skiing Company is carbon neutral, or that their electricity production is carbon neutral, is just bogus. The Whole Foods parking lots is full of cars; the Alaskan king crabs are iced on aisle 8, near the exotic olive buffet.

The facts are that wind now provides less than 1% of U.S. electricity; 10 kilowatt-hours out of every 1,000 sold, while coal is 550. We have a long way to go. Who really gives a damn if Whole Foods is carbon neutral?

More to the point, touting your carbon neutrality is a sign that you don’t get it. Climate change isn’t about you, it’s not about marketing, it’s not a friggin’ bragfest, particularly when you don’t have much to brag on. In a way, and this is the ultimate heresy, it’s not even about reducing your emissions. Whole Foods won’t be carbon neutral until WalMart and the rest of the nation’s big boxes are; that is, it won’t be carbon neutral until we have radically transformed the entire energy infrastructure on which we depend. This is the work of the next few decades, maybe the next few generations. It’s not a marketing stratagem, a contest, a parlor game, a cheap trick.

We can contrast Whole Foods with New Belgium Brewery, the makers of Fat Tire and other microbrews. New Belgium has wind turbines on their labels. The difference is that they actually helped the local utility buy a wind turbine by signing a 10 year power purchase contract. New Belgium has also retrofitted their plant, installed cogeneration equipment that runs on biogas produced from their processing plant. They are for real. Oh, and their utility, Ft. Collins Light and Power, here’s an interesting aside. FCLP is a partial owner of one of the finest wind sites in North America, where it built one of the first municipally owned wind farms in the West. But now they’ve stopped expanding their wind farm, because buying RECs is cheaper! Well, sure, a simulation is always cheaper than the real thing. You can buy a Rolex in Switzerland, but they are cheaper in Juarez.

In addition, whether the reductions are double counted by fossil generators, or not, is wholly independent of what the purchaser applies them to as an offset. Taking the position that the fossil generators will double count the reductions if you apply them to your direct footprint but not if you apply them to your indirect footprint assumes that the fossil generators somehow have knowledge of which aspect of your footprint you are applying the reductions to, that they care, and that as a result they change their behavior to begin double counting the reductions when they wouldn’t have had you applied them to your indirect footprint

How can Greens be so goddamn naïve!? Why are we so preoccupied with parsing absurdities? The fossil generators don’t give a damn about double counting. They just want to build as many new coal plants as they can, before climate policy is enacted. Then, they’ll strongarm the Feds for emission allowances based on their baseline. If they can sell RECs from a wind farm that some clean energy activist forced them to build, they’ll use that income to pay off their lobbyists.

US carbon emissions were 7.1 million Metric tons in 2005. On our current course, keeping a billion tons of carbon out of the air by 2050 requires expanding global wind fifty-fold by 2050, or global solar by 700x. There’s a lot of work to do, and for this reason every possible dollar we have needs to go to something real, not to the creation of an artificial market built on bullshit and inflated claims of corporate virtue.

The claims being made by many marketers and purchasers of RECs are simple not credible. I’m obviously painting with a very broad brush here, so let me acknowledge that BEF and Community Energy and Native Energy have leveraged REC sales into renewable energy developments. But in the last few years, the REC market has been in a race to the bottom.

What’s wrong with RECs? We need straight talk. We need short sentences. We need concrete examples.

The key to financing a new wind farm is a long-term power purchase agreement with a utility. Developers need to be assured of $50 to $70 a Megawatt-hour for twenty years. Selling a REC for $4/Mwh from a wind farm built five years ago, doesn’t move the needle. We can pretend it does, but it doesn’t. If wind developers need $50 to $70 a MWh, let’s stop pretending that buying RECs for a buck or two is sending them a signal. Somebody may buy that, but I won’t. At today’s REC prices, we are pushing on a rope.

Selling Mr. Inconvenient Truth a REC to offset his jet travel does not offset his emissions, no matter what you say.

A 2,000 watt solar electric system, bought at a steep discount due to lavish state subsidies, will cost $9,000 installed. It will avoid or offset one ton of co2 emissions a year. Buying a REC for $5 or $10 bucks would allow you to make a similar claim. The mind boggles: why would anyone actually buy solar gear?

A typical American family produces about 45,000 pounds of carbon dioxide each year, enough to fill two Goodyear blimps. Half that comes from driving, half from heating, cooling, and operating the family’s house. Call it twenty tons.

As things stand, a marketer could sell that family 20 RECs, for, say, $200. Presto, the Does are “climate neutral,” and for less than three months of cable! Wow, what a steal. Let’s drive the minivan to Grandmas!

Two years ago, we took a stab at building a “zero energy” home here in Colorado. We spent about $35,000 extra on solar photovoltaics and solar hot water and superinsulated walls, and sealed, conditioned crawl spaces and a condensing boiler. We got the utility bill down to about two bucks a day, grid power consumption down to about 1,000 kwh/year. Electric and natural gas emissions fell to about 6,000 pounds a year.

According to REC marketers, we could have bought the same environmental benefit for say forty bucks a year. “Ditch the solar, Jenny, I’ve purchased a century’s worth of eco penance for four grand.”

It may not be too late to stabilize Baghdad, but it’s getting pretty late to reform the definition of a REC. I would encourage the Green-e board of directors to do a gut check and dramatically strengthen the certification standards. Let’s go back to basic principles. The goal of certification was not to create a market or to protect marketers, but to accelerate the deployment of renewable energy.

The way things are going, Green-E is slowly devolving into a certification agency for renewable energy fakery. This can’t be particularly lucrative, so maybe it would make sense to expand the imprimatur to cover faux Picasso or phony Inca pottery. GM claims to be environmentally concerned, “be green, drive yellow.” Maybe they’d pay us to certify them.

With respect to green electricity, because the product is invisible, credibility was always job one. We are failing that test bigtime right now. Most REC sales aren’t changing the world; in the lexicon, they have no causality. No causality, no credibility.

Radically changing the certification standards for a REC could only be a good thing. Sure, it might throw the market into turmoil for awhile, but let’s not fret over the fate of REC marketers. They are a talented bunch. Anyone who has successfully sold RECs could sell freezers to the Eskimo. But first, in the spirit of penance, I would recommend that they spend a year working at something eminently practical, say draining oil at Jiffy Lube. Afterwards, they can test soy-based eyeliner on rabbits or return to selling whole life insurance, negative-amortization mortgages, or annuities in nursing homes.

As for the corporate buyers of RECs, these people need to turn the computer off and get real. Retrofit some lights, install some insulation, pump up the tires on the bike, caulk a window, have a fire sale to dispose of the Nissan Armadas the marketing department bought.

It’s time for a change.


Green consumers and businesses who want to neutralise their carbon emissions face being ripped off by unscrupulous operators who exploit the growing market in carbon offset schemes, a Guardian investigation has revealed.
The surge in interest in such schemes, which invest millions of pounds in forestry and clean energy projects in the developing world, has created a lucrative market in carbon, which is unregulated and subject to little scrutiny. Campaigners and analysts say independent standards are urgently needed to protect consumers and to ensure the promised carbon savings are delivered. Francis Sullivan, a carbon offset expert who led attempts by banking group HSBC to neutralise its emissions, said: "There will be individuals and companies out there who think they're doing the right thing but they're not. I am sure that people are buying offsets in this unregulated market that are not credible. I am sure there are people buying nothing more than hot air."

Tom Stoddard

Randy raises some serious issues. If a project does really need REC revenues to get financed and built, it needs them committed on a long-term basis. Unfortunately, very, very few REC purchasers are making long-term purchase commitments. That's why we at NativeEnergy developed a business model that accommodates short-term purchasing while providing the projects the financial equivalent of a long-term higher priced REC contract – through the up-front purchase of its long-term REC/offset output, and the retirement of those RECs up front. Thanks Randy for pointing out that it has driven new project construction - 12 wind turbines, 4 farm methane projects, a municipal biogas generator and New Hampshire's largest solar array.

For that, we thank our customers, who had the courage to take the counterintuitive position that offsetting their current-year footprint with a forward stream of RECs or offsets – RECs and offsets to be generated over time, and in a conservatively estimated quantity – is the way to go when doing so helps finance construction of specific new projects now. We thank them for agreeing that the cost of delayed generation and some variability in quantity is outweighed by the benefit of getting the project up and running in the first place, and generating clean energy at all.

Providing critical up-front financing to a renewable energy project that is dependent on those additional revenues to succeed, either through a long-term purchase commitment, or the equally-good-for-the-project substitute that our forward purchase model provides, is a perfectly legitimate way to offset your energy use impacts. It’s really not different in substance from putting up a wind turbine in your back yard, or solar on your roof. The principal difference is efficiency. You don’t need to pay the whole cost, just the premium cost, and you can get together with the team NativeEnergy is assembling for the project and put a much larger project somewhere windier or sunnier than your back yard. And you can do it while doing all you can to reduce the amount of energy you use, as the overwhelming majority of our customers are actively doing.

Here’s an example of the results, in the words of Pat Spears, President of the Intertribal Council On Utility Policy:

"NativeEnergy's funding was approximately 25% of the cost of the Rosebud turbine. NativeEnergy’s promise of additional revenue for the green tags, to be paid up front to the project once it achieved commercial operation, was a valuable component of the overall project financing and helped make it possible for the Rosebud Sioux Tribe to make the final decision to move ahead. As the project approached completion, it became clear that the payment from NativeEnergy was critical to both the coverage of costs associated with this first turbine and the work that the Tribe began for the expansion of wind development on the Rosebud Reservation."

Finally, on Mr. Gore and his jet travel. Would we have him not make the movie that is almost singlehandedly changing America’s view of global warming? Making a movie makes carbon dioxide, after all. Would we have him not travel to promote it, if that seriously reduced the number of people who heard his message? We wouldn’t. So then the question becomes what to do about the resulting carbon dioxide? Nothing? Help bring into existence and operations a machine that keeps fossil fuels from being burned?

We look forward to engaging more REC and offset purchasers in putting their purchases to work directly financing the construction of new clean energy sources.

Michael Gillenwater

For what it is worth, I am researching this specific topic and working on a journal article that if does not clarify these issues, will at least systematically analyze the relationships between RECs, GHG offsets, and other environmental commodities. And then propose some rational definitions and solutions.

Given the speed at which academic publishing goes, don't expect something quick. But if you are interested in seeing the discussion paper version, when it is ready, feel free to contact me.

I can't promise "short sentences" in all cases, but hopefully it will provide the "straight talk" that is clearly called for.

Anne Libby

Thanks, Joel, for spending the hours to read and digest the report. And CACP for making this great beginning.

As a consumer, my conclusion? This is like an investment. Until I understand the cash flows of the securities described in the prospectus, I'm out of the game.

So providers: transparency and results are the name of the game.


I appreciate all the thoughtful commentary on this thread, but resent the suggestions of some that REC marketers are unscrupulous hawkers of "vaporware". I know many people engaged in selling RECs, and all of them are abolutely committed to environmental sustainability and integrity in their work. I don't think we do ourselves a service by fighting over who is grooviest and personally insulting those who are working on other parts of the solution. As cool as we think we sound when bashing each other, such nastiness tends to just turn off the average person.


The bottom line is just look at the price of RECs (in voluntary markets), too much slack in the market. The quickest way to fix the situation is to have a higher standard, which really falls on green-e. If I buy some wind that was installed in 1998 and buy the RECs from this year, am I adding new renewables to the market? Is that additionality? Not sure, just curious. Green-e's credibility should be in its standard, not based on who endorses it, or whether there is anything else to use as a benchmark, so I don't like their arguments listed above. Also, just cause you are an NGO, doesn't make you objective. What is interesting to me is that Green-E (CRS)'s response gives the impression that the market is fine and transparent; all you have to do is buy green-e. Well if that is the case, why all the confusion? Why the lack of clarity? Why this blog posting? I had a conference call with our facilities folks on RECs, offsets and buying green power in the context of our EPA Climate Leaders goal...the answer and conclusion I got directly from them was: "Why is this so complicated?”. enough said.


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