October 20, 2010 - renewable energy certificates

Wednesday, October 20, 2010

Busy harbor in Norfolk, VA, with ships old and new.
I'm back from the TAPPI PEERS conference in Norfolk, Virginia.  TAPPI put on a great show, and the participants were very enthusiastic about the technical aspects of the pulp and paper industry.  I offered a presentation about renewable energy certificates (also known as renewable energy credits in some states - either way, RECs). A REC is a non-tangible trad\able commodity representing a set of the environmental, social and other non-power attributes of renewable electricity generation.
In the United States, federal and state policies favor renewable energy production by providing incentives for the development of renewable power resources. One primary state-level mechanism for rewarding renewable generators is the Renewable Energy Certificate (REC) market. In many states, laws and regulations require utilities to source a specified portion of their power from qualified renewable resources. Utilities satisfy this compliance obligation by purchasing or otherwise obtaining RECs to cover this load. In addition, a variety of voluntary markets exist for RECs.

Pulp and paper mills are well-positioned to participate in the REC market as sellers. As shaped by the forces of history and economics, today's mills often operate renewable generation such as a hydroelectric generation station or a biomass-fired steam turbine generator. For each megawatt-hour of qualified renewable power generated at a mill, a certified resource's owner will receive one REC. Owners can then sell these RECs in voluntary or compliance markets. The opportunity to sell RECs can enhance the economics of a mill and its renewable generation.

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