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Green Fees: Carbon Offsets and Renewable Energy Credits
By Sandy Graham, from Smart Energy Living magazine

Do you want to make the world a greener place through offsets or RECs? Here are terms you will need to know.
Carbon footprint
What your lifestyle generates in total greenhouse gases – via driving a vehicle; heating, cooling and lighting a home; flying in planes; etc. Calculators abound, including on the Web sites of Xcel Energy and the U.S. Environmental Protection Agency.
Carbon offset
An investment in a company or project that reduces overall carbon dioxide or other GHGs that would have been released into the atmosphere. Measured in tons of carbondioxide- equivalent gases reduced.
Gold Standard
Under the Kyoto Protocol, an international agreement to reduce GHGs, this certification is offered to small-scale energy efficiency and renewable energy projects that meet rigorous standards.
Renewable Energy Credits
Also known as green tags or tradable renewable certificates. Support electrical generation projects such as wind farms or solar electric installations. Measured in kilowatt-hours of energy.

Until the past couple of years, carbon offsets and a related tool called Renewable Energy Credits or Certificates were the business of big business. In programs referred to as “cap-and-trade,” a cap on GHG emissions is set as either a voluntary or mandatory upper limit. Companies that don’t cut their GHG emissions to desired levels are allowed to buy “surplus” emission credits from businesses with GHGs that fall below targets. Or they buy RECs to balance fossil fuel use.

Today, however, the average person can strive to go “carbon neutral” by buying RECs or offsets from what seems to be an evergrowing number of retail companies. However, there is no oversight in the consumer market, which concerns some proponents who don’t want offsets and RECs to develop a reputation of being nothing but smoke and mirrors.

Legislation that would establish a national cap-and-trade system in the U.S. is expected to come before Congress this summer. The best offset and REC sellers also use third-party verification. Still, consumers should take time to research their purchases. Experts suggest following these steps:

  1. Reduce your carbon footprint. Where possible, reduce travel and improve energy efficiency in your home and vehicles. Only then should you look at ways to make up for the emissions you can’t avoid.
  2. Decide what type of project you want to support. RECs are aimed strictly at renewable energy sources such as wind and solar, and your purchases help boost this young industry. Offsets can cover a variety of green projects that include planting trees; trapping methane from landfills to make electricity; or controlling methane from livestock manure and using the biogas as a green energy source. Some offset sellers allow consumers to choose to support a specific project or type of project; others put consumers’ money into a portfolio of projects.
  3. Make sure your REC or offset supports a project that wouldn’t happen otherwise. The term “additionality” is often used to describe this value. The project also should be sustainable, meaning it will be in business for the long term.
  4. Look for third-party verification of the REC or offset you are purchasing – the equivalent of the Good Housekeeping Seal. Sources include:
  5. In addition to the certifications a seller offers, consumers should deal with a company that is willing to answer questions one-on-one. How transparent is the company? Transparency gives you a better chance of buying a good quality offset.
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