By Nick Sibilla
News Corporation claims it’s greener than Starbucks.
That’s one of many surprising insights gleaned from the first-ever global Corporate Renewable Energy Index (CREX). According to CREX, published by Bloomberg New Energy Finance and Vestas Wind Systems, News Corporation (the parent company of FOX News and The Wall Street Journal) procures 67% of its electricity from renewable energy (RE). That makes News Corp. the 8th highest corporate consumer of renewable energy. Meanwhile, Starbucks ranks below at 14th, with 58% of its energy purchased from green sources. Despite the current recession, among those surveyed, corporate purchases of RE increased by more than 50% over the past year.
Yet many of the corporations on CREX did not actually buy renewable energy. Instead, they purchased a fabricated commodity, known as renewable energy credits (RECs), or “green tags.” A REC represents the alleged “environmental amenities” associated with certain forms of electrical power production such as wind or solar. For those in the trade, one REC is created every time one megawatt-hour (MWh) of renewable energy is generated. (For comparison, the average American household uses just under one MWh every month.)
In other words, two distinct commodities are associated with renewable energy: the electric output itself and the intangible environmental benefits. RECs represent the latter and are sold separately from the power generated by a “green” facility. But by purchasing RECs, corporations can still claim they are using green power. In fact, according to CREX, RECs accounted for over 70% of all corporate green power purchases in 2010.
However, buying RECs is troubling for two reasons. First, the price of RECs is far too low to induce investment in clean energy. As CREX notes, the average price is a little under $1 per REC. But according to exposés published by Bloomberg News and BusinessWeek, the actual cost of generating one new MWh of green power can range anywhere from $40 to over $90 per MWh. In fact, in a study published by the National Renewable Energy Laboratory, the cost of solar power can reach as high as $680 per MWh.
Second, RECs are often a marketing gimmick for corporations to prove they care about the environment. For example, back in 2008, Nike was the 24th-largest corporate buyer of RECs. But that same year, it emitted 1.6 million tons of carbon, one of its highest years in the past decade. One year later, Nike slashed its RECs purchases by almost 70%. Now Newsweek ranks Nike as the 10th Greenest Company in America, as determined by over 700 different metrics. Yet Nike is conspicuously absent on CREX. Meanwhile, News Corp. plummets from #8 on CREX to 107th on Newsweek’s list. Clearly, going green takes much more effort than buying RECs.
Furthermore, for those concerned about global warming, RECs do not reduce total carbon emissions. According to the EPA:
If you are buying renewable electricity or RECs, you are reducing your indirect emissions…An organization buying green power can claim to be reducing its carbon footprint, but cannot claim to be reducing its total emissions to the atmosphere. (Emphasis added.)
Not using fossil fuels may be admirable. But by providing negligible investment for renewable energy, RECs are little more than a waste of other people’s money. As a fabricated commodity, RECs are the ultimate greenwash.
Nick Sibilla is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.
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You fail to distinguish clearly between claims that are justified and those that are not, such that you incorrectly conclude that RECs are ungood. In fact, RECs are coupled with REPs – renewable energy portfolio standards – which is the most important fact about RECs. When you understand that then you see that false claims of greenwashing are an insignificant wart because RECs are one of the most powerful tools changing the world today.
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http://www.ecochange.org/2007/10/renewable-energy-creditsrecs-are.html
Don’t believe the hype surrounding the available Renewable Energy Credit(REC) system to offset your CO2…
“We’ve offset 100% of our energy consumption by purchasing renewable energy credits!”
Ha! that’s total bullshit. Carbon credits are not reducing pollution. Those who suggest otherwise are ignorant.
The economics of REC’s are flawed and the math is fuzzy. Purchasing a carbon credit of 2$ a megawatt hour is not spurring the development of more renewable energy or reducing emissions. REC trade is nothing more than the buying and selling of bragging rights. We might as well be trading pine cones!
Businesses need to employ more direct methods. like investing in substantial appropriate clean energy capacity themselves. REC’s are a conjured up farse that let huge corporations brag about how “green” they now are…
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http://redmaryland.blogspot.com/2011/05/dirty-truth-about-marylands-renewable.html
The 2010 and 2011 PSC reports (data years 2008 and 2009) found that “electricity suppliers used substantial amounts of qualifying biomass (e.g., waste wood and the mill residue known as black liquor).” In 2008, waste wood and black liquor composed nearly 70 percent of the RECs submitted for Tier 1 compliance, and nearly 60 percent in 2009.
Paper companies have used black liquor to power their plants for decades. More recently they’ve added diesel fuel to burning black liquor take advantage of billions in federal subsidies from a 2005 transportation bill. According to the Environmental Protection Agency a gallon of diesel fuel emits more carbon dioxide than a gallon of gasoline. Verle Sutton, a paper industry analyst was quoted in Bloomberg News saying, “It’s an absolute government boondoggle,” Sutton said. “These companies were not using fossil fuels. They only started because they needed it for the tax credit to work. So there’s a negative to the environment, not a positive.”
Ronnie Greene at iWatch News reported (hat tip Tim Carney) that there are serious doubts about whether wood waste is in fact a green source of energy. Greene’s article raises questions about carbon neutrality of wood waste energy, and reports on two wood burning California plants that “emitted nitrogen dioxide, sulfur dioxide, carbon monoxide, ammonia and particulate matter in levels exceeding permit requirements many times.”
Renewable portfolio standards are not beneficial for ratepayers, turns out they might not be that beneficial for the environment either.
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REC’s and REP’s (renewable energy portfolio standards) are both ways for our government, the electric companies, and big corporations to lie to the masses. They provide the wealthy and powerful with a way to purchase fake “environmentalism”.
If you need a comparison take a look back for a moment to Enron. “Enron was a huge company that faked their record keeping ( AKA “Books”) to make it look like they were growing and hugely profitable therefore attracting a lot of investors. By the time they were found out they were broke and people who had invested in their stock practically lost everything.” – 1.
The justification of this claim comes from truly doing some down and dirty research into how REP’s are being enforced (as law students sometimes do when trying to get their degree’s). “One of the most aggressive RPS requirements is in California, which requires 20% of the state’s energy to be generated from renewable resources by 20I0 and 33% by 2020.” – 2. The state of California did NOT meet its RPS requirement for 2010 because of the “decentralized administration of its RPS program, the lack of strong enforcement provisions, and California’s extensive reliance on utility information instead of an independent analysis.” – 2.
To break this down, just because power companies say they buy REC’s and big companies say they get their power from REC’s doesn’t mean that these REC’s were real. Why should we trust the States that say they are “green” because they have an RPS program? They have to have strong enforcement of these REC’s and not trust utility records (AKA “Books”) to be honest. They need independent analysis and who will they hire to independently analyze these REC’s? Who’s to say these independent analysis companies will tell the truth about their findings if they are being paid by a state that wants to look “Green” and keep paying them year after year?
Basically trusting in REC’s or REP’s to change the energy market and save our planet is like trusting a politician or a corporation to tell you the truth. You only realize the scam after its too late.
1. Ricardo Torreador
- http://answers.yahoo.com/question/index?qid=20100124151956AApEx5b
2. Deborah Behles (B.A., Purdue University; I.D., University of Minnesota Law School) is an associate professor and staff attorney at the Environmental Law and Justice Clinic, Golden Gate University School of Law.
- http://digitalcommons.law.ggu.edu/cgi/viewcontent.cgi?article=1431&context=pubs&sei-redir=1#search=%22who%20enforces%20RPS%20standards%3F%22
REC’s and REP’s (renewable energy portfolio standards) are both ways for our government, the electric companies, and big corporations to lie to the masses. They provide the wealthy and powerful with a way to purchase fake “environmentalism”.
If you need a comparison take a look back for a moment to Enron. “Enron was a huge company that faked their record keeping ( AKA “Books”) to make it look like they were growing and hugely profitable therefore attracting a lot of investors. By the time they were found out they were broke and people who had invested in their stock practically lost everything.” – 1.
The justification of this claim comes from truly doing some down and dirty research into how REP’s are being enforced (as law students sometimes do when trying to get their degree’s). “One of the most aggressive RPS requirements is in California, which requires 20% of the state’s energy to be generated from renewable resources by 20I0 and 33% by 2020.” – 2. The state of California did NOT meet its RPS requirement for 2010 because of the “decentralized administration of its RPS program, the lack of strong enforcement provisions, and California’s extensive reliance on utility information instead of an independent analysis.” – 2.
To break this down, just because power companies say they buy REC’s and big companies say they get their power from REC’s doesn’t mean that these REC’s were real. Why should we trust the States that say they are “green” because they have an RPS program? They have to have strong enforcement of these REC’s and not trust utility records (AKA “Books”) to be honest. They need independent analysis and who will they hire to independently analyze these REC’s? Who’s to say these independent analysis companies will tell the truth about their findings if they are being paid by a state that wants to look “Green” and keep paying them year after year?
Basically trusting in REC’s or REP’s to change the energy market and save our planet is like trusting a politician or a corporation to tell you the truth. You only realize the scam after its too late.
1. Ricardo Torreador
- http://answers.yahoo.com/question/index?qid=20100124151956AApEx5b
2. Deborah Behles (B.A., Purdue University; I.D., University of Minnesota Law School) is an associate professor and staff attorney at the Environmental Law and Justice Clinic, Golden Gate University School of Law.
- http://digitalcommons.law.ggu.edu/cgi/viewcontent.cgi?article=1431&context=pubs&sei-redir=1#search=%22who%20enforces%20RPS%20standards%3F%22