Renewable energy credits (RECs) are probably one of the most misunderstood forms of emissions reduction. They allow a green and very high minded company like New Belgium brewery (the makers of Fat Tire Ale) to brew in Colorado – one of the most coal dependent states – and yet claim a reduced carbon footprint, by purchasing wind power from other areas of the country. The wind power isn’t actually piped into their brewing facility, however…they’re buying the “rights” to the green claims of that wind power, which is then used as generic power by a utility elsewhere. Colorado isn’t ideal for either wind or solar, and building transmission lines to move the power isn’t feasible (yet). New Belgium basically pays the wind premium, so that a customer somewhere else doesn’t have to. To ensure that this works, the process is usually certified by a third party NGO such as Green-e or the Gold Standard. ClimatePath offers a Green-e wind project in North Dakota as well as a Gold Standard one in Turkey that allow individuals to tax deductibly donate towards greening their energy and travel using the same principles.
So it was interesting to see this week that Austin’s green energy program has become somewhat of a trainwreck. The Austin statesman reported: “It now costs almost three times more than the standard electricity rate.” Generally, wind credits should cost no more than a penny or so extra per kilowatt-hour, so the rapid escalation is alarming. Austin’s energy sin? They’re trying to produce and consume the actual green energy, creating problems with energy transmission as well as a big challenge in matching supply and demand. At the same time, the wind energy is all part of the grid anyway, so the green buyers get the same electricity as everyone else.
The idea of cap and trade is to avoid these issues by encouraging the production of renewable energy where it is most efficient, and also encouraging conservation-based reduction where it is best done. Already in California, Pacific Gas and Electric will sell you electricity that is 47% natural gas and coal, but offer you “greener energy” by supporting Redwood forests. And in the Northeast, power companies bid for the right to emit at an auction, with the proceeds funding efforts to reduce emissions.
Is cap and trade solving a global problem in the smartest way possible? Or letting ‘problem emitters’ off the hook? It may be a little of both, but while I love Austin’s intentions, I am not sure it matters if the windmills are built in West Texas or North Dakota. What matters is a cleaner overall energy mix, with the true cost of electricity built in.
Photo copyright JMonkeyQ at flickr.com