What is a green tag, or renewable energy certificate (REC)?
Renewable portfolio standards usually include a provision to allow buying “green tags,” also called renewable energy certificates or credits (or renewables obligation certificates, ROCs, in the UK), instead of actual “green energy.” The theory is that if there is not a local source of renewable energy, a utility can thus support renewable sources elsewhere. The weakness of such a system is that the renewable generator sells its energy twice, once as real energy and again as a green tag (or credit). The buyer of the green tag is therefore not in fact reducing the use of “nongreen” energy. It may not surprise the reader to learn that green tags was a scheme invented by Enron.
Renewable portfolio standards usually include a provision to allow buying “green tags,” also called renewable energy certificates or credits (or renewables obligation certificates, ROCs, in the UK), instead of actual “green energy.” The theory is that if there is not a local source of renewable energy, a utility can thus support renewable sources elsewhere. The weakness of such a system is that the renewable generator sells its energy twice, once as real energy and again as a green tag (or credit). The buyer of the green tag is therefore not in fact reducing the use of “nongreen” energy. It may not surprise the reader to learn that green tags was a scheme invented by Enron.
