Marc Lefkowitz | 12/16/07 @ 10:59am
Ohio's investor-owned utilities including First Energy are pushing a new program for customers who volunteer to pay extra for green power produced in the United States, but these so-called Renewable Energy Credits are not the most effective tool in creating a renewable energy market in the states where they appear, a local energy analyst warns.
The Illuminating Co. mailed a postcard about its parent company's "RECs" program in this month's bill, noting that customers can support the purchase of green power by adding a minimum of $1 to their bill each month, which covers two credits. Each credit represent one kilowatt of power produced by either wind, solar photovoltaic, biomass co-firing of agricultural crops and all energy crops, hydro (as certified by the Low Impact Hydro Institute), incremental improvements in large scale hydro, waste coal, coal mine methane, landfill gas, biogas digesters, biomass co-firing of all woody waste, including mill residue but excluding painted or treated lumber.
So long as the credits aren't being double counted or already used by another utility or state for its green power purchasing requirement, then FirstEnergy's RECs are a legitimate program, says Richard Stuebi, BP Fellow for Energy and Environmental Advancement at the Cleveland Foundation.
First Energy's web site does not mention if their RECs are certified (other than the hydro power) by an independent company such as Green-e. Another oversight option is through a state agency. Such is the case in the twenty four states that have Renewable Portfolio Standards (RPS). Ohio legislators are currently working on an RPS that would require utilities doing business in the state to produce twelve percent of their power from alternative sources, including wind and solar, by 2025. Oversight and benchmarks are one of the key remaining sticking points.
Auditing where the green power comes from is a concern, says Stuebi, but the real issue with RECs is "polls say people are willing to pay more, but they don't tend to."
Colorado's Windsource program was considered a success with a six percent buy-in from across the state, he says.
In Pennsylvania, the state government purchases 16 percent of its energy from wind through a RECs program with private firm Community Energy. Each state agency contributes to the cost based on the relative amount of energy they use, and the agency budgets come out of the state's general fund, says Charlie Young, a spokesman at PA Department of Environmental Protection. No extra tax or legislation was required, but the state expects to pay a premium rate of 20 cents per kilowatt hour this year.
The idea behind RECs and Pennsylvania's purchase of renewable energy is "to develop the market and show leadership on this issue," Young adds. Despite the state's purchase and the utilities offering them to customers, the RECs market "hasn't really developed that much at this point, with the possible exception of Native Energy which offers RECs and gets a huge boost from Al Gore on climatecrisis.net."
RECs are practically ineffective in states without an RPS, Stuebi adds.
"Some people say (RECs) hurt the renewable industry; that voluntary green pricing creates expectations that renewable energy is more expensive," Stuebi says. "A lot of these are band aids on the real problem that the true cost of our energy doesn't reflect the economic consequences of the environmental damage. If that was paid by customers, then I believe we would have better market conditions for renewables. But, that's not apparent to customers."
That said, Stuebi won't steer the region's big energy customers, like the Cleveland Clinic, CWRU and Mittal Steel, away from purchasing RECS (again with the caveat that no double counting is going on). "They could do their part to promote renewable energy production, probably somewhere in the upper Mid Atlantic region. If they get value for that extra payment, that's great. They should weigh the value of that and go for it."