Renewable Energy Certificates

EPA’s Green Power Partnership

U.S. Environmental Protection Agency

1200 Pennsylvania Ave, NW (Mail Code 6202J)

Washington, DC 20460

www.epa.gov/greenpower

Last updated: July 2008
Many people and organizations are willing to pay for electricity that is produced on their behalf using cleaner, renewable sources of generation. These 

buyers often find renewable electricity attractive for its environmental and 

greenhouse gas reduction benefits when compared to conventional fossil 

fuel-based electricity generation. 

Both individual and organizational buyers have several green power product 

options available. These include buying renewable energy certificates (RECs) 

by themselves, buying RECs along with physical electricity from their utility 

service provider, or developing onsite renewable projects that produce both 

electricity and RECs together. RECs in particular have become an important 

choice for buyers of green power nationwide and serve as the “currency” for 

renewable energy markets. 

This document provides a review of RECs: what they are, how they work, 

and why they are an important option for individual and organizational buyers in renewable electricity and green power markets.
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What Are RECs?

RECs represent the environmental and other non-power attributes of renewable electricity generation and are a component 

of all renewable electricity products. RECs are measured in 

single megawatt-hour increments and are created at the point 

of electric generation. Buyers can select RECs based on the 

generation resource (e.g., wind, solar, geothermal), when the 

generation occurred, as well as the location of the renewable 

generator. 

RECs provide key information about the generation of renewable electricity delivered to the utility grid. Since RECs 

represent only the environmental or non-power attributes of 

renewable electricity generation, they are not subject to electricity delivery constraints. The information conveyed by a REC 

allows buyers to make specific environmental claims about how 

their electricity is produced. RECs usually include the following primary attributes and information:

•	 The type of renewable resource producing the electricity

•	 The vintage of the REC (i.e., the date when it was created)

•	 The vintage of the renewable generator, or the date when 

the generator was built

•	 The renewable generator’s location 

•	 The RECs eligibility for certification or renewable portfolio compliance 

•	 The renewable generation’s associated greenhouse gas 

emissions (if any)

RECs are increasingly seen as the “currency” of renewable electricity and green power markets. They can be bought and sold 

between multiple parties, and they allow their owners to claim 

that renewable electricity was produced to meet the electricity 

demand they create. 

Increasingly, federal, state and local governments are also using RECs as a credible means to meet environmental goals for 

renewable energy generation. For example, most states allow 

utilities to use RECs to meet mandated state renewable portfolio standards. State renewable portfolio standards require that 

a percentage of a utility’s electricity generation comes from renewable resources. Increasingly, individuals and organizations 

are also buying RECs to satisfy a number of other environmental and non-environmental goals:

•	 Avoid the carbon dioxide (CO2) emissions associated 

with conventional electricity use

•	 Reduce some types of air pollution 

•	 Hedge against future electricity price increases for onsite 

and some utility products 

•	 Serve as a brand differentiator 

•	 Generate customer, investor, or stakeholder loyalty and 

employee pride 

•	 Create positive publicity and enhance public image 

•	 Demonstrate civic leadership 

How Do RECs Work?

To understand how RECs work, it is helpful to understand how 

electricity is delivered across the utility grid, as well as what 

makes renewable electricity generation attractive to individuals 

and organizational buyers.

Within the United States, electricity demand is met by various types of generation technologies and fuel resources. These 

electricity generators feed electrons onto the utility grid for 

delivery to consumers through a complex network of wires and 

distribution infrastructure. Because the electrons produced 

from the different technologies and fuel resources are physically 

the same, it is impossible for individuals or organizations to 

know what type of generation technology or resource produced 

the electricity that reaches their particular facility. 

Renewable Energy Certificates

EPA’s Green Power Partnership

A REC represents and conveys the 

environmental and other non-power 

attributes of one megawatt-hour of 

renewable electricity generation.
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EPA’s Green Power Partnership: Renewable Energy Certificates

RECs help address the issue that the electricity or electrons a 

consumer receives from their utility does not identify how the 

electricity was generated. RECs were created to help convey the 

attributes of electricity generated from renewable resources to 

buyers. Analogous to the utility delivering the physical electricity through wires, RECs serve as the means to deliver the 

environmental and non-power attributes of renewable electricity generation to buyers – separate from the physical electricity. (See Figure 1.) All renewable electricity generation can be 

viewed as having two separate parts:

1. The commodity electricity or electrons

2. The environmental and other non-power attributes of generation represented by a REC

Because RECs are monitored and verified, individuals and 

organizational buyers can buy RECs and be confident that 

electricity generated on their behalf was done so with renewable 

energy resources. 

Figure 1
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EPA’s Green Power Partnership: Renewable Energy Certificates

Why Are RECs an Important Option for 

Consumers?

Individuals and organizations may find that buying RECs 

separately from their electricity service is a useful way to tap into 

green power markets. More than half of U.S. electricity customers have an option to purchase some type of green power product from a retail electricity provider, but the rest do not have 

that choice. RECs provide buyers the option to select renewable 

resources to meet their electricity demand.

For example, in states that have restructured electricity markets, 

consumers can often buy green power products by switching 

electric service providers if their current provider does not offer 

a green power product. If consumers do not wish to switch 

electric service providers they also have the option to buy RECs 

separately from their existing electricity service. This approach 

allows buyers to avoid the environmental impacts of their electricity, since the REC represents a specific amount of avoided 

greenhouse gas emissions. 

RECs can also be purchased in situations where a utility green 

power product is available, but this utility product does not 

have the desired environmental characteristics, resource base, or 

price. RECs provide more choices and more competitive prices 

because they are not constrained by where they are created or by 

transmission bottlenecks.

Who Owns a REC?

A REC can be bought and sold between buyers and sellers from 

its generation to its final point of application or use at a facility. 

Typically, regional tracking systems register RECs in order to 

keep track of how much renewable electricity was produced.1

Tracking systems assign each REC a unique number, which 

matches the REC to its current owner. Alternatively, buyers can 

use third-party audits to confirm the contractual chain of ownership between multiple parties. REC contracts typically include 

a statement, or attestation, from the seller that the RECs have 

not been sold to, and cannot be claimed by, another party. 

RECs are a credible and easy way to keep track of who can 

claim the environmental attributes of renewable electricity generation through electronic tracking systems. Because RECs are 

carefully counted, tracked and associated with an owner, no two 

buyers can legally claim the same environmental benefits of the 

renewable electricity generation.

Once a buyer makes an environmental claim based on a REC, 

the buyer can no longer sell the REC and the REC is considered 

permanently “retired.” Buyers can also have their RECs retired 

in their name by their supplier to ensure that no other entity can 

lay claim to the same environmental benefits.

What Is the Difference between 

Renewable Electricity and Green Power?

Renewable electricity is produced from resources that do 

not deplete when their energy is harnessed, such as sunlight, wind, waves, water flow, biological processes such 

as anaerobic digestion (e.g., landfill gas), and geothermal 

energy. Renewable electricity resources are distinct from 

fossil and nuclear fuels, which are also used to generate 

electricity.

EPA defines green power as a subset of renewable electricity and represents those renewable resources and technologies that provide the highest environmental benefit. 

Green power is renewable electricity produced from solar, 

wind, geothermal, biogas, biomass, and low-impact small 

hydroelectric resources. Definitions for renewable energy 

can vary and may include resources that are acknowledged or perceived to have environmental impacts, such 

as land use and fisheries impacts of large hydro dams.

1 Regional tracking systems have been put in place to monitor electricity generation across the United States. A REC is produced for every megawatt-hour of electricity 

generated from a renewable resource and is assigned a tracking number within the system. The tracking number stays with the REC and is transferred between buyers and 

sellers until a final owner makes a claim, at which time the REC is considered “retired” in the system.
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EPA’s Green Power Partnership: Renewable Energy Certificates

Consumers or organizations with onsite renewable electricity 

systems should be clear about who owns the RECs produced by 

the onsite system. If the onsite system owner wants to make an 

environmental claim about the use of renewable electricity from 

the onsite system, they should ensure that they have and retain 

ownership of the RECs produced by the onsite renewable electricity system. If the onsite system owner uses the system-produced 

electricity, but sells the RECs to another party, they are no longer 

using green power and cannot make a claim to be doing so. 

Are There Standards for RECs?

There are a number of third-party organizations in the market 

that certify RECs. As a best practice, EPA recommends that 

buyers seek out certified products as a form of buyer protection. Certified RECs should meet national standards for 

resource content and environmental impact. Certification answers the question “Does this product meet accepted standards 

for quality?” 

Who Sells RECs?

RECs and the attributes they represent are an ingredient of all 

green power products. REC providers—including utilities, REC 

marketers, and other third-party entities—may sell RECs alone 

or sell them bundled with electricity. As of 2007, more than 50 

percent of utility customers have access to green power bundled 

products, whereas all customers have access to buying renewable 

energy certificates.

Buyers can identify green power suppliers using EPA’s 

Green Power Locator tool: www.epa.gov/greenpower/

pubs/gplocator.htm

Green Power Product 

Provider/Source Geographic Availability

Renewable 

Energy 

Certificate

Physical 

Electricity

REC Marketers Nationally Available 3

Utility Green Pricing Programs Unrestructured Electricity Markets 3 3

Utility Green Marketing Programs Restructured Electricity Markets 3 3

Onsite Renewable Electricity Systems Any Grid-Connected Point of Use 3 3