What’s the difference between Carbon Offsets and Renewable Energy Credits, Anyway?

scales992.jpgYou think you understand renewable energy credits (Renewable Energy Credits 101). You’re sure you understand Carbon Offsets (Carbon Offsets, Why No Two are Created Equal). You are fuzzy on the details about how they differ and when the purchase of one or the other might be appropriate. Never fear! If you can tackle those two monstrosities, this one will be a cakewalk. If you don’t understand those other monstrosities, go skim those articles and come back to me.
The first difference is the way that offsets and Renewable Energy Credits (RECs) are measured. Carbon offsets are measured in metric tons of C02 or C02 Equivalent. Renewable Energy Credits are measured in kilowatt hours, which are a standard electricity measurement metric. A kilowatt hour is the amount of work that can be performed by one kilowatt of energy in one hour. Picture a lonely, dim lightbulb hanging from the ceiling that turns on for one hour each day by which you feverishly darn socks in a carbon constrained world – that’s a watt, and for the privilege of its use, you’ll be charged for 1/1000 kwh of electricity each day. These days, you probably use a several kwh per day.

The second difference between carbon offsets and renewable energy credits is that renewable energy credits only come from renewable energy projects (solar, wind geothermal, biofuels, etc.) while carbon offsets can come from all different kinds of projects – including renewable energy generation – that reduce the level of greenhouse gasses that are entering the atmosphere. To put it another way, RECs are primarily concerned with promoting the generation of clean energy, while carbon offsets are primarily concerned with preventing the emissions that enter the atmosphere. They are both systems that have developed to deal with global warming systematically, but they have different approaches. RECs are forward looking – focused on building a clean energy economy and providing an extra incentive for the creation of renewable energy, while carbon offsets are oriented in the present – dealing with preventing greenhouse gasses from entering the atmosphere right now.
Because of these different measurement systems and the different foci (foci!) of the two programs, RECs and carbon offsets have different precision rates when it comes to carbon. Carbon offsets are all about exactitude, and many of the discussions about the efficacy of offsets center around the degree of certainty a buyer has that the exact amount of carbon s/he has paid for is actually being prevented or captured. RECs, on the other hand, are measured in kilowatt hours, and the carbon content of that ‘saved’ kwh differs depending on the location of the project and the quality of the local electricity. The dirtier the local electricity, the more carbon an REC ‘saves.’ Different utilities around the country use different mixes of energy sources, from coal to natural gas to renewables, to create electricity. These sources vary widely in their carbon content. To make matters even more confusing, a utility might even change the mix it uses depending on the time of day- when peak load sets in they might have to rely on dirtier power sources than they would otherwise. So, it’s impossible to say exactly how much carbon a clean kwh of renewable energy ‘offsets.’ The closest we can get is to use the ’emissions factor’ for energy from the local utility, which is the average emissions for the mix of sources that the utility uses to create power, and multiply it by the number of kilowatt hours to produce an estimate of the carbon saved per kilowatt. But it will always be an estimate.
This is not to say that RECs are no good. They are an extremely effective way to promote clean energy because they give the providers and extra incentive to keep creating clean energy and we need all the incentives we can get to move toward a clean energy economy. RECs just aren’t the most accurate way to offset carbon. I highly recommend using RECs to offset electricity use, because your electric bills will have a record of the exact number of kwh you used, and you can buy RECs to account for all the dirty emissions your plugged-in Macbook caused. Then, you can buy carbon offsets to cover all your driving and flying.
‘But what about renewable carbon offsets?’, you say. ‘Those seem like the best of both worlds!’ I’m getting there. Those are good to, and if you really value the promotion of clean energy despite some of the accuracy issues, you can buy renewable energy offsets. Many times offsets will actually come from the exact same projects as the RECs, but the nice thing about buying the offset version instead of buying RECs and doing the calculations yourself is that someone else – hopefully a third party verifier – is determining how much carbon each kwh of clean energy replaced. So you don’t have to! Rest easy, and lay off the carbon guilt.
ED NOTE – edited to reflect comments below. Thanks for catching that!

Jen Boynton

Jen Boynton is editor in chief of TriplePundit and editorial director at 3BL Media. With over 6 million annual readers, TriplePundit is the leading publication on sustainable business and the Triple Bottom Line. Prior to TriplePundit, Jen received an MBA in Sustainable Management from the Presidio Graduate School. In her work with TriplePundit she's helped clients from SAP to PwC to Fair Trade USA with their sustainability communications messaging. When she's not at work, she volunteers as a CASA -- court appointed special advocate for children in the foster care system. She enjoys losing fights with toddlers and eating toast scraps. She lives with her family in sunny San Diego.

5 responses

  1. “A kilowatt hour is the amount of work that can be performed by one kilowatt of *energy* in one hour.”
    Power! Kilowatts measure power!
    “Picture a lonely, dim lightbulb hanging from the ceiling that turns on for one hour each day by which you feverishly darn socks in a carbon constrained world – that’s a kilowatt”
    Those blinding work-lights are only 500 watts. The most I’ve ever seen for regular sockets is 200 watts. And you’re saying a “lone, dim bulb” is 1000 watts? Sorry, wrong.
    “These days, you probably use hundreds if not thousands of kwh per day.”
    Average in the USA is 264 kWh/day, but that’s *ALL* sectors, not just residential. I used 300 kWh for all of last MONTH in electricity.

  2. Generally a really good post, but ditto Nate on the glaring inaccuracy above the fold.
    One 100-watt bulb left on for 1 hour = 100 watt-hours.
    Ten 100-watt bulbs left on for 1 hour (or one left on for ten hours) = 1000 watt-hours = 1 kilowatt-hour (1 kWh).
    However, despite this big problem (please edit to fix it), I learned a lot from this post. Thanks.

  3. Great analogies! There is a lot of confusion around carbon offsets so it’s time that someone clearly and slowly explain the technicalities behind them. We at TheGreenOffice.com sell both RECs and carbon offsets to businesses going green. The first step to purchase offsets from us involve using our carbon calculator to estimate office emissions. We use RECs to offset electricity use and then carbon offsets to offset everything else. Considering the lack of regulation around offsets, it took us quite a while to find acceptable offset projects of the highest standards. We are very satisfied with our Green Office Offsets that meet international Kyoto Protocol standards and are third party certified. Make sure to scope out our offsets on our site http://www.thegreenoffice.com!

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