Beyond RECs – The Next Step Toward Zero-Carbon Energy
In recent years, as many companies and organizations have taken steps to reduce their greenhouse gas emissions and offset their carbon impacts, Renewable Energy Credits (RECs) have played a key role. A REC represents the environmental attributes of 1 Megawatt-hour (MWh) of electricity produced by a renewable energy generator. Anyone who wishes to offset the carbon (and other pollutants) emitted by the electricity they use from the grid can purchase a quantity of RECs equivalent to their electric usage for a given period of time. In doing so, the buyer receives the right to consider (and claim) the electricity they used and offset with RECs as being from renewable sources. Whether purchasing RECs directly or indirectly via a utility green tariff or other retail product, the process is simple and relatively inexpensive, particularly compared with the costs and risks of installing a renewable energy system for one’s own use. Those factors have helped to make significant progress by increasing awareness among companies and organizations concerned about their carbon footprints and giving them a relatively simple way to mitigate it.
But RECs have their limitations. They don’t really change anything happening on the grid in real-time. The carbon content of the electricity a customer uses at any given time only depends on the generators actually producing the electricity on the grid at that point in time. Buying a REC that may have been produced 6 months earlier on a different grid doesn’t have any direct effect on the carbon content of the electricity being used by a customer today.
The challenge is to allow companies and organizations concerned about their emissions impact ways to measure that impact in near real-time and participate in programs or systems that can allow them to mitigate them as close as possible to where and when they are occurring. As it relates to an entity’s electricity usage, the goal should be to use electricity that is 100% renewable, 100% of the time and that is generated by sources that are 100% regional. We call it “100-Cubed” (1003).
Four elements are needed to achieve 1003:
- Measurement and tracking of the CO2-intensity of units of energy based on when and where they are injected into the transmission or distribution system
- Measurement and tracking of the CO2-intensity of units of energy based on when and where they are taken off the distribution system by the company or organization
- Calculation of the net carbon impact of the organization’s carbon account which is debited or credited for a near real-time assessment of its carbon position
- Forecasting of future carbon positions so real-time behavior can be modified or available Distributed Energy Resources (DER) dispatched to achieve the carbon goals
The first step to getting to 1003 is to measure the energy usage in near real-time in as granular a way as possible (1, 5 or 15 minute intervals depending on the reporting available) and then matching that usage to the carbon-intensity of the electricity actually being put on the grid during each of those periods. Conversely, if the entity owns or has rights to the electricity generated by a renewable energy generator, the energy produced by that generator can be temporally matched to the usage, creating credits during periods when renewable production exceeds usage and net debits when usage exceeds renewable production.
This matching process yields a net carbon debt for that moment in time that reflects the actual impact for which the entity is responsible. Calculated through an automated process and tokenized on a scale of Metric Tons of carbon-dioxide equivalent (MTCO2e) these debits or credits are then time-stamped, enriched with location and other meaningful data and recorded in a distributed ledger.
By transitioning to a carbon-focused metric and debit-credit system rather than a REC-based solution, several other advantages emerge. The same approach can apply across all of an organization’s energy use, essentially creating a single “currency” applicable to company-wide climate-impacting activities. The carbon impact of gasoline or diesel fuels in transport and the use of natural gas in heating and industrial processes can be measured and a total carbon debt for all of these activities can be recorded as a debit to the carbon account as it occurs. Similarly, activities or assets which reduce carbon in the organization’s operations can be measured and recorded as credits on the ledger.
For example, a company that chooses to purchase electric vehicles (EVs) for their fleet would produce carbon credits – in near real-time – as each electricity-powered mile is driven and gasoline is displaced. These credits could offset carbon debits produced by burning natural gas at the same time and in the same geography. Since these carbon credits can be earned across all the energy domains – electricity, gaseous fuels or liquid fuels - this unified approach allows more flexibility to plan a mitigation strategy at the local area where the impacts were created.
The production of the carbon credits also allows an organization the potential to sell or trade them for credits that match to their temporal and locational debits as an offset to move toward their 1003 goal. While voluntary carbon markets are nascent and will take time to mature and scale, they will always depend on the veracity of robust and auditable measurement and tracking of carbon mitigation as described above.
RECs have helped green the grid over the last decade, but more granular and higher frequency systems are required to reduce a company’s energy-specific CO2 emissions. A company’s energy greenhouse gas emissions are a function of not just electricity but also gaseous fuels and liquid fuels and a common currency for assessing and dynamically managing CO2 emissions across all energy types is needed. For these reasons, the vanguard of the sustainability movement is seeking more precise and more comprehensive emissions tracking and mitigation tools and looking to go beyond RECs as their next step toward zero-carbon energy.
About the Author –
Fred Ugast has 25 years of experience managing technology-related businesses and heads operations for TimberRock. Fred is the founder of U.S. Photovoltaics (USPV), one of the first and largest Solar Renewable Energy Credit aggregators, and has provided testimony on PV and REC matters for Public Service Commissions and legislators.
About TimberRock -
For over a decade, TimberRock has delivered systems and services that help energy consumers and energy providers achieve their clean energy goals. TimberRock’s Emissions-IQ platform provides near real time CO2 tracking and mitigation and DER dispatch capabilities.