The Difference

Comparison - Renewable Energy Certificates vs. Carbon Offsets

Before we move on, it is important to understand the concept of 'additionality'. Additionality means that the project would not have occurred otherwise; it is in addition to business as usual. This applies to both Renewable Energy Certificates and carbon offsets. Now you can understand why it is so important for us to work with companies like Green-e to verify that the projects are worthwhile.

Renewable Energy Certificates are sometimes treated as carbon offsets, but the concepts are distinct. Carbon offsets represent a reduction in greenhouse gas emissions while Renewable Energy Certificates represents a clean energy produced from renewable sources. To convert Renewable Energy Certificates into an offset, the clean energy must be translated into carbon reductions by assuming the displacement of an equivalent amount of conventionally produced electricity. Renewable Energy Certificates, then, can be best defined as indirect offsets.

Renewable Energy Certificates and carbon offsets are two distinct commodities. It is helpful, then, to first understand the three different 'scopes' of emissions that exist in a company's carbon footprint so we can determine which commodity to use and when:

• Scope 1: on-site, direct fuel use (ex. boiler or a generator)
• Scope 2: indirect energy use (ex. purchased electricity)
• Scope 3: all other types of indirect emissions (ex. corporate travel, employee commuting, paper use, etc.)

Carbon offsets represent the reduction of greenhouse gas emissions in one place "offsetting" an emission taking place somewhere else. They represent direct emission reductions so they should be used to 'offset' direct emissions found in Scope 1 of your company's footprint.

On the other hand, Renewable Energy Certificates, represent energy generated from a clean, renewable source which generate little to no carbon as they produce energy. They represent an indirect emission reduction, whereby clean energy 'offsets' the demand for more conventional dirty fossil-fueled energy. Emission reductions that are made occur at the utility, thus, Renewable Energy Certificates are used to neutralize Scope 2 emissions.

To be clear, neither carbon offsets nor Renewable Energy Certificates are better than one another. They are different players in a similar game, both of which help mitigate climate change and reduce our reliance on fossil fuels.