Buying Green Power, Certificates and Carbon Credits

As a consumer, you can influence the way power is created through your purchasing dollars. You can buy green power or you can buy the green attributes of the power production. You may also offset greenhouse gas emissions by purchasing credits for projects that counter carbon production.

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Frequently_Asked_Questions

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How it works

Green Power. Standard arrangement between a customer and their power utility is that the customer purchases and receives their electricity from the utility. The customer receives power that is created from whatever power generation source (coal, natural gas, hydro, nuclear, etc.) the utility owns, operates or purchases. In deregulated area, such as the states of Texas, Pennsylvania and New York, and the province of Ontario and Alberta, Canada customers can purchase power from other companies beyond their local utility. These companies move power made from green power sources into the local power grid. Most local utilities also compete in deregulated markets using non-regulated affiliates, many of whom offer a range of green products (electricity generated from renewable sources, such as solar, wind, biomass and hydro). When you purchase green power, the retailer provider you use moves power into the utility's grid on your behalf. The green power mixes with utility power. You receive power from the utility distribution company same as any other customer with no difference in reliability. If there is an outage by the utility, you're as affected as your neighbor. Buying green power displaces the "dirtier" power that would have been supplied by the utility.

Certificates. Tradable Renewable Certificates (or "tags") allows users anywhere to buy the green attributes of green power production anywhere in the world. A certificate is equal to the "green" attribute of power created from 1 kWh of electricity produced. For example, a wind generator with a power production capability of 5 kilowatt (kW) generates 5 kilowatt-hours (kWh) when it produces power steadily for one hour. That power can be mixed with the utility's other power from other generation sources. If that power is not sold as green power, it creates 5 green certificates, one for each kWh produced. Those certificates can be sold separate from the power. The benefit is that the certificates provides additional economic incentive to build renewable power generation over convention generation since the power can be sold competitively when the certificate value is figured in.

Carbon Credits. Carbon credits are funding of projects that reduce or absorb carbon dioxide emission. This could be anything from planting trees (which absorb CO2) to solar energy projects (which offset utility greenhouse gas from conventional power production). They are typically sold by the ton of CO2 mitigated.

Click here to calculate your 'Carbon Footprint'

Frequently Asked Questions

How does the green energy get to my house?
Are green certificates the same as carbon credits?
What can I expect to pay?
How can I be sure that I am really paying for green power? Is the industry regulated?
How do I distinguish the difference in products?

How does the green energy get to my house?
As electrons solely follow the path of least resistance, the transaction is a macro-economic one. The green power that you are purchasing is displacing the power that the utility would have had to supply to you. Therefore the overall benefit depends on what you are displacing. If you live in an area where the electric utility's power comes primarily from coal or other dirty power production methods, you will have a greater global impact than if you are displacing power from a utility that uses a good deal of hydro or other lesser impacting production methods.

Are green certificates the same as carbon credits?
No. Green certificates are the "green" attribute of renewable energy production. While green power does reduce carbon emissions, green power certificates are tied to green power production and have the effect of helping to make green power economically competitive to convention power production. When you purchase carbon credits you are offsetting carbon emissions.

What can I expect to pay?
A consumer will typically pay a premium for green power unless there is some subsidy allowing for a reduced green rate. This sometimes occurs with utility districts and municipal power systems. Often the utility green program requires the customer to purchase green power in blocks of 100 kWh. The price for 100% green power often carries a premium from $.015 to $.03 per kWh. A similar premium is involved for purchasing green certificates. If the power is sold by the kWh then you should multiply your average use per month by the green premium to know what you can expect to pay. If the power is sold in blocks, of say 100 kWh, then buy as many block as you use. For example, if you average 625 kWh per month, purchase 6 blocks.
For carbon credits the cost can be anywhere from $5 to $15 per ton of CO2 mitigated, dependent upon the method of mitigation.

How can I be sure that I am really paying for green power? Is the industry regulated?
Green power generators are regulated to an extent depending upon where they are and where they sell their power. Many states in the U.S. provide some incentive credits for green power and therefore require reporting and verification. There are also independent verification services that producers and retailers can subscribe to. However, green power retailers can "bundle" green power certificates with power that is not green and sell it as green, since the green certificates were created using a green power source. Confused? Green power and certificates are abstract. When purchasing you need to see the big picture: You're offsetting dirty power production by encouraging cleaner power production.

Less regulation exists in the sales of green power certificates as the certificates are severed from the power production. However, again, there are independent, voluntary verification services.
Regarding carbon credits; there is little regulation. The Federal Trade Commission is beginning to examine if the industry needs scrutiny. For the most part, it is a matter of trust. Many of the carbon credits are sold by non-profit organizations. Deal with a group that you know and are endorsed by www.cleanair-coolplanet.org.

How do I distinguish the difference in products?
When purchasing green power, the generation source can be wind, solar, biomass or hydro (typically small dam power). Often it is a combination and most retailers provide a number of products. If you have a particular leaning to one source over the other, than inquire about the power production percentages of each source and select the product you're most comfortable with. If the product is not 100% green power, that should be disclosed.
Many utilities offer a green power product that you can sign up for. You should be told of the specific new renewable energy generation projects that you are supporting.

When purchasing Green Tags (or Certificates) the same holds true. You should know what the green power source is and even, if possible, where it is.

When buying carbon credits, inquire what the carbon mitigating project is. Is it tree planting in Canada? Is it energy conservation in Ghana?

How to Buy

Green power can be bought from companies that are registered and licensed to sell power in your state, province or country if you live in a state or country that deregulated its electric industry. Visit your local state Public Utilities Commission or Public Service Commission for a contact list of retailers.

If you live in a non-deregulated state, then your local utility may offer a green product.

For carbon credits, several non-profit environmental organizations provide them, such as Carbon Fund and Live Neutral.