Renewable Energy Certificates & Carbon Offsets

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What It Is

Renewable energy certificates or credits (RECs) are a way to purchase property rights to environmental, social, and other non-power qualities of renewable electricity generation, which can be sold separately from the actual physical electricity generated by the source. This is distinct from renewable energy tax credits, which may be available to businesses in your state that install energy-producing or energy-saving devices. Purchasing RECs is a way to voluntarily shift power generation to renewable sources.

Carbon offsets are a way to neutralize carbon dioxide emissions from activities associated with daily business. Generally sold by the ton, there are a variety of projects that absorb carbon that carbon offset companies undertake. Projects can include planting trees, producing wind or solar energy, and capturing gases from landfills and farm emissions to generate power.


Why It Matters

Humanly causes carbon dioxide emissions are a leading source of greenhouse gases and consequently a leading cause of climate change. While the United States does not currently have federal regulations around carbon emissions, many other countries do. Doing business with other countries often requires a strong understanding and accounting of carbon emissions.

Beyond federal regulation, several states and large corporations have begun their own initiatives to encourage carbon mitigation, by creating a market for carbon or by asking suppliers to report or reduce their emissions. For example, in February 2010, Walmart announced a target to cut 20 million tons of carbon from its supply chain.

Being smart about carbon use helps an organization stay ahead of the trends, mitigate risks, and be well positioned for business as regulations change around carbon emissions. Moreover, since carbon is a proxy for energy use, reducing carbon emissions often has the effect of reducing energy use, reducing costs.


Getting Started

Consider purchasing carbon offsets or RECs to lower your organization’s carbon footprint. You can start small, offsetting emissions for an event or plane travel. If you offset emissions for an event, you can communicate your efforts by billing the event as “carbon neutral,” indicating that all emissions contributing to the event have been neutralized by an investment in carbon reducing projects. Often the cost to offset an event is very affordable. Some organizations go further and offset the impact of annual employee commutes.


Going Further

Conduct a carbon footprint for your organization. Carbon footprinting is an accounting exercise that adds up the carbon emissions contributed by all operations of an organization. Carbon footprints can be tallied for specific products and organizations as a whole. Once total emissions are known, it becomes easier to understand the primary drivers of carbon emissions and how they can be reduced.

A good way to get started with carbon footprinting is to review the tool on the EPA Climate Leaders tools. Another alternative is to connect with local universities to inquire whether a student may be willing to take on performing a carbon footprint for a class project.


Advanced Steps

Once you know your organization’s carbon footprint, strategize about ways to reduce it. With real numbers, you can compare different approaches that reduce your carbon output. You can also consider becoming carbon neutral as an organization, which typically involves a combination of energy efficiency measures, renewable energy, and carbon offsets. Carbon neutrality can be a point of pride for employees and a signal to customers about an organization’s commitment to the environment.


Resources for More Information

For Carbon Offsets:

For RECs:



Being informed, smart, and proactive about carbon emissions has the business benefits of mitigating risk, differentiating your organization, and winning business with customers that have prioritized carbon use as a condition of doing business.



Carbon Dioxide (CO2): A chemical compound composed of a carbon atom bonded to two oxygen atoms. CO2 is a byproduct of many common business activities, from commuting to energy consumption. Although CO2 is a naturally occurring compound in the atmosphere, high concentrations have been linked to changing climate conditions.

Carbon Offset: A credit of carbon reduction that can be used to reduce emissions made elsewhere.

Renewable Energy Certificates or Credits (RECs): Tradable, non-tangible energy commodities in the United States that represent proof that 1 megawatt-hour (MWh) of electricity was generated from an eligible renewable energy resource.[1] 


[1] “Renew Energy Certificates (United States),” Wikipedia,, accessed 26 July 2013.


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