Recs vs. Carbon Offsets: Demystifying Green Credit Purchases

As global warming and the consequences of climate change push our planet closer to serious issues, corresponding to rising sea levels, unpredictable weather phenomena, and potential long-term health and issues of safety, many individuals and organizations are scrambling to search out ways to cut back their greenhouse gas emissions. While we will all directly reduce our carbon footprints and help slow the damage we’ve already done, attending to true zero emissions has proven difficult. 

Fortunately, other creative avenues may help individuals and organizations reach their net-zero emissions goals while still producing some currently unavoidable greenhouse gas emissions. Two ways you may do that are by purchasing renewable energy certificates (RECs) and carbon offsets. 

While these two purchasable offset methods are similar, they’ve distinct differences that make them two wholly different items. Which is the best option for you? We review RECs vs. carbon offsets below to spotlight their individual uses, advantages, and downsides so you may make an informed decision regarding which is the best choice. 

What Is the Purpose of Carbon Offsets?

Carbon offsets, that are also known as carbon offset credits, offset credits, and even carbon reduction credits, allow individuals and organizations to offset their carbon footprint by buying into or investing in projects which are carbon reducing or carbon sequestering (which involves capturing and storing carbon). 

For instance, in the event you took a plane ride in an airliner with 150 seats that produced 20 metric tons of carbon dioxide (CO2), your carbon footprint for that flight is 0.133 metric tons of CO2 (20 tons divided by 150 seats equals 0.133). To offset that carbon footprint, you may put money into a project that reduces or absorbs greenhouse gas emissions (GHG emissions) by the identical 0.133 metric tons. 

These offset projects vary greatly and may include: 

• Renewable energy source installation 
• Reforestation 
• Deforestation prevention 
• GHG emission reduction 
• Low-energy equipment installation 
• Tree planting on a company campus 
• Methane recapturing at landfills 

Are Carbon Credits the Same as Offsets?

While commonly used interchangeably, carbon offsets and carbon credits usually are not the identical things — though they’re very similar. 

A carbon offset is the removal of GHG emissions from the atmosphere. These offsets are produced by independent organizations, verified by a 3rd party, and sold to GHG-emitting organizations or individuals on the voluntary carbon market. 

A carbon credit is a government-created item awarded to a company. It represents the quantity of GHG emissions a company can create. If the organization reduces its GHG emissions and has excess credits, it could sell those credits to other organizations that exceed their GHG allowance via the carbon compliance market. 

What Is the Purpose of RECs?

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Renewable energy certificates (RECs) are also generally known as renewable energy credits, and so they help a person or business reach their renewable energy generation goals without having to put in the infrastructure.  

In line with the Environmental Protection Agency (EPA), when a company installs a renewable energy source — corresponding to wind, water, or solar — they receive one REC per megawatt-hour (MWh) that the source creates. 

The organization can select to maintain that credit for themselves to satisfy governmental regulations or sell it to a different individual or organization. If someone or an entity purchases a REC, this is applicable to any governmental regulations they need to meet.  

For instance, if an organization must get at the least 10% of its electricity from a renewable source and doesn’t want the expense of putting in solar panels, many state and native governments will allow it to buy enough RECs to make up that 10%. 

Organizations may also use RECs to assist them substantiate carbon-reduction claims. For instance, an organization claiming to be a net-zero GHG emissions producer can use RECs to cut back any leftover emissions they can not reduce themselves. 

You might hear that your power company has a solar panel or wind farm and assume that may allow you to satisfy your renewable energy goals. Unfortunately, there’s no option to determine how much of your energy comes from these sources, so RECs may also step in here to assist with accounting and tracking your energy sources. 

How Are RECs Different From Carbon Credits?

OK, so carbon credits and RECs each help improve the environment and aim to slow climate change, but how do they differ? Just a few key differences exist between the 2. 

First, RECs are measured by MWh of electricity produced by a green power source, corresponding to solar panels, a hydroelectric plant, or a wind turbine. Carbon offsets are measured in metric tons of CO2 emissions which were avoided through policy changes, upgraded equipment, or absorption by plants. 

Second, RECs are solely generated by non-fossil-fuel clean energy sources — and nothing else. Carbon offsets can come from various green programs, including renewable energy installation, GHG reduction technology, reforestation, stopping deforestation, and more. 

Third, a person or organization can use carbon offsets to counter their scope 1, 2, or 3 emissions as needed. Nonetheless, RECs can only offset scope 2 emissions, that are the emissions produced by the energy it consumes. 

Fourth, a company can use RECs to say they use green energy from a low- or zero-emissions source. Carbon offsets only allow them to say that they reduced or avoided emissions outside their operation. 

Finally, carbon credits require a test of additionality, meaning the reduction project you’re buying into should be outside the conventional business operations of the organization involved within the project. RECs don’t require a test of additionality. 

RECs vs. Carbon Offsets: Which Is Higher?

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Now for the billion-dollar query — which is healthier, RECs or carbon offsets? Truthfully, one is not any higher than one other. All of it is determined by what your goal is. Let’s dive deeper into this below. 

Why Are Renewable Energy Certificates Higher Than Carbon Offsets?

Purchasing RECs is superior to offsets in that they permit the purchaser to make the claim they use green energy from a low- or zero-emissions source. This generally is a powerful marketing tool and, in some states, may allow a company to fulfill renewable energy use requirements. 

Also RECs don’t have any additionality requirements, so that they are theoretically simpler to search out and buy than offsets, and there’s no probability of them later being deemed invalid. 

Why Are Carbon Offsets Higher Than RECs?

Carbon offsets even have a number of benefits in comparison with renewable energy certificates. The largest is the big selection of projects you may put money into. This big selection of options allows a person or organization to speculate in sustainability programs with which it most closely aligns.  

For instance, if a person is anxious with the long run environmental impact of the waste from solar electricity generation, they’ll select a carbon offset program focused on forestry issues and revel in similar environmental advantages. 

Also, carbon offsets reduce your carbon footprint as a complete, meaning they’ll apply to all three scopes of emissions and indirect emissions. However, RECs only impact scope 2 emissions by claiming the organization purchases renewable power. 

Which Is Best for Me?

The reply to which is best really is determined by what your goals are. In the event you’re trying to offset scope 1 or scope 3 emissions, the choice is straightforward: Offsets are higher for you. It’s because you may’t offset these emissions with RECs — only scope 2 emissions. 

Nonetheless, if it’s essential reduce scope 2 emissions, it’s more about analyzing the associated fee, availability, and your overall goals. If you should meet governmental minimums on renewable energy sources and live in an area that lets you use RECs to fulfill this requirement, then RECs are the very best bet. 

In the event you’re not trying to meet this governmental requirement and carbon offsets are easier to accumulate and a more economical option to limit your overall carbon footprint — scope 1, 2, or 3 — then this will be the very best option. 

Can RECs Offset Carbon Emissions?

Today’s greenhouse gas emissions accounting standards permit organizations to make use of RECs to reduce reported scope 2 emissions. This counts toward the organization’s path to meeting its science-based GHG emission targets. These laws can change, so that is subject to the most recent regulations. 

Can You Use RECs to Offset Scope 1 Emissions?

The reply to this query is an emphatic no. Organizations cannot use RECs to offset scope 1 or scope 3 emissions. They’re only accepted for scope 2 emission reductions. Scope 1 emissions are emissions produced directly through a company’s operations and are of their direct control. They include: 

• Company-owned delivery vehicles’ emissions 
• Machinery emissions 
• Unintentional chemical releases (corresponding to oil spills, refrigerant leaks, etc.) 
• Factory emissions from product manufacturing 

Scope 3 emissions are those created not directly through your value chain. Some examples of common scope 3 emissions include but aren’t limited to: 

• Home delivery 
• Worker commutes to work 
• Warehousing 
• Disposal of broken or worn-out products 
• Business travel 
• Leased assets 
• Investments 

RECs vs. Carbon Offsets: Each Can Be Useful

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Debating RECS vs. carbon offsets isn’t necessarily a test of which is best. It’s more of a test of which is best fitted to you. In lots of cases, the reply could also be a combination of each. It’s all about your carbon footprint reduction goals and determining the very best fit to your reduction plans. 

If carbon offsets are the very best fit to your goals, Terrapass may help with its big selection of carbon reduction options for individuals and businesses.  

Start with the best one for you! Whether you’re trying to offset the carbon emissions from a flight for a business trip or offset the carbon footprint of a wedding, Terrapass has options for you. And, in the event you feel RECs are more in step with your needs, Terrapass offers those as well. 

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