Now you can add green tags to the asset side of your renewable electricity business plan spreadsheet.
For many renewable energy developers, "green tags" will provide a necessary financial assurance that may mean the difference between proposal acceptance or rejection by investors. Under the green tag scenario, renewable electricity generated from a biomass waste-to-energy facility, wind farm, geothermal, hydroelectric plant, or solar array will earn valuable Renewable Energy Credits (RECs) that can be sold in the open market as an additional source of income. It also provides state legislatures that don't already sponsor a green tag program a way of supporting the financing and deployment of these facilities.
For electricity producers, green tags are a counterpart to carbon credits - which is a program that allow countries that have accrued credits for sequestering carbon to sell their credits on the open market to countries that produce too much carbon under the Kyoto Treaty. Many major electric utilities have begun buying the electricity from renewable producers to reduce their deficit in credits or to otherwise comply with their state's environmental and energy programs.
According to Wikipedia:
Green tags, also known as Renewable Energy Credits (RECs) or Tradable Renewable Certificates (TRCs), are a market mechanism that represent the environmental benefits associated with generating electricity from renewable energy sources. Rather than functioning as a tax on pollution-causing electricity generators, as traditional carbon emissions trading programs do, green tags function as a non-governmental subsidy on pollution-free electricity generators.
In states which have a green tag program, a green energy provider (such as a wind farm) is credited with one green tag for every 1000kWh of electricity it produces. A certifying agency gives each green tag a unique identification number to make sure it doesn't get double-counted. The green energy is then fed into the electrical grid (by mandate), and the accompanying green tag can then be sold on the open market.
How do you participate in a green tag program? The American Council on Renewable Energy (ACORE) has collaborated with the ABA and the Environmental Markets Association (EMA) to develop a flexible, technology neutral certificate that will be easy to implement throughout every U.S. jurisdiction. Here is part of their latest press release:
ACORE Announces Publication of New Master Renewable Energy Certificate Purchase and Sale Agreement
Washington, D.C. - The American Council On Renewable Energy (ACORE), the Renewable Energy Resources Committee and Special Committee on Energy and Environmental Finance of the American Bar Association Section of Environment, Energy and Resources, and the Environmental Markets Association (EMA) announced the release of the long-anticipated standard form contract for national trading of Renewable Energy Certificates (RECs) also known as "green tags". The Renewable Energy Certificate Purchase and Sale Agreement is now available for online viewing.
Individuals and companies can use renewable resources to improve the environment by minimizing their own "carbon footprint." Even if people are far from the renewable resource, through this agreement, they can acquire the renewable attributes of such energy no matter where they are located in the national energy grid without incurring transmission costs.
Michael Eckhart, President of ACORE, stated, "This is an important step in creating a national system for REC trading, which will be essential to monetizing the environmental benefits of renewable energy and building those values into the long-term financing of the projects."
Active RECs markets maximize cost-effective resource allocation and allow states to implement aggressive renewable portfolio standard targets while minimizing increases in costs for electricity to consumers and businesses.
"This contract is intended as infrastructure, or a paved road, to help buyers and sellers transact, foster market mechanisms to promote renewable resource development and, perhaps most importantly, stave off potential balkanization of U.S. RECs markets. The contract is technology neutral, usable in both the voluntary and compliance markets, and legally robust regardless of American jurisdiction. This is release 1.0, and we look forward to monitoring legal and market developments to keep the contract current," said Jeremy Weinstein, Co-Chair of the working group.
The Renewable Energy Certificate Purchase and Sale Agreement can be viewed on ACORE's website.
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