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Renewable Energy Certificates (RECs), also known as Green tags, Renewable Energy Credits, Renewable Electricity Certificates, or Tradable Renewable Certificates (TRCs), are 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 (renewable electricity) and was fed into the shared system of power lines which transport energy. Solar renewable energy certificates (SRECs) are RECs that are specifically generated by solar energy. Renewable Energy Certificates provide a mechanism for the purchase of renewable energy that is added to and pulled from the electrical grid. The updated Greenhouse Gas Protocol Scope 2 Guidance guarantees of origin, RECs and I-RECs as mainstream instruments for documenting and tracking electricity consumed from renewable sources.
These certificates can be sold and traded or bartered, and the owner of the REC can claim to have purchased renewable energy. According to the U.S. Department of Energy's Green Power Network, RECs represent the environmental attributes of the power produced from renewable energy projects and are sold separately from commodity electricity. While conventional carbon emissions trading programs use penalties and incentives to achieve established emissions targets, RECs simply incentivize carbon-neutral renewable energy by providing a production subsidy to electricity generated from renewable sources.
A green energy provider (such as a wind farm) is credited with one REC for every 1,000 kWh or 1 MWh of electricity it produces (for reference, an average residential customer consumes about 800 kWh in a month). A certifying agency gives each REC a unique identification number to make sure it doesn't get double-counted. The green energy is then fed into the electrical grid (by mandate), and the accompanying REC can then be sold on the open market. "Retirement occurs when a Renewable Energy Certificate (REC) is used by the owner of the REC. Use of the REC may include, but is not limited to, (1) use of the REC by an end-use customer, marketer, generator, or utility to comply with a statutory or regulatory requirement, (2) a public claim associated with a purchase of RECs by an end-use customer, or (3) the sale of any component attributes of a REC for any purpose. Once a REC is retired, it may not be sold, donated, or transferred to any other party. No party other than the owner may make claims associated with retired RECs."Energy from any grid-tied source is bought and sold with contracts specifying the generator and purchaser. In the trade of renewable energy, RECs specify that a unit of renewable energy was generated. Because once electricity is placed on the electrical grid it mixes with electricity from multiple sources and becomes indistinguishable, RECs are used to track the ownership of environmental and social benefits of the renewable energy. The majority of RECs are sold separately from the electricity itself. In these cases, the electricity is sold as "null" energy without its environmental and social benefits, as if it were generated by non-renewable resources such as coal or natural gas. When RECs are purchased in combination with non-renewable electricity this constitutes the legal purchase of renewable energy. This is how electrical grid connected renewable energy is traded in the U.S. Grid-connected renewable energy is used by electric utility companies in meeting their regulatory requirements and by individuals and businesses wishing to lessen their environmental impact. RECs allow for purchasers to support renewable energy generation and allow the economic forces of supply and demand to spur the further development of renewable energy generation.

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