Wednesday, August 6, 2008

Energy Efficient Tags; Green (REC) vs White (EEC)- Understand the difference.

In response to some recent conversations I thought a brief tutorial on energy rebate/certificate options would be of some interest and value.

There are two types of energy certificate that are being promoted Green Tags or REC's (renewable energy certificates) or White Tags , EEC's (energy efficiency certificates). There is a third approach available mainly on the west coast which is simply rebates from utility companies such as the programs from PG&E and Austin Energy. This note will be restricted to REC's and EEC's.

Green Tags (REC): This was the original approach which is tied to the creation and delivery of renewable energy. However they do not drive energy conservation.efficiency but, at least in my opinion, simply provide a "band-aid" that covers poor or excessive energy practices. It is in effect a carbon tax that delivers an economic solution to a more fundamental problem. As with any tax expect any operation cost to be reflected in the price of goods. The monies raised by these REC's are targeted at energy programs such as wind farms, energy production from waste etc. They do provide benefit as a funding source for these programs the question being how much of the $1 spent on a REC actually reaches project.

Green tags are purchased by individuals or enterprises to offset the energy they use. They do not necessarily drive any changes in behaviour nor drive conservation practices. They are feel good pills!

White Tags (EEC): White Tags or energy efficiency certificates represent actual energy saved through specific conservation acts or practices. These certificates are earned with each certificate representing 1 MWhr. The energy saved is tangible and measurable. White tags are gaining traction with Connecticut, Nevada and Pennsylvania having regulations on their books however, it is not necessary to reside in these states to get the benefits of white tags. They also have an international reach with at least the UK, France, Australia and Italy with programs.

White and Green tags are traded in the open market in a similar fashion and I fully expect this practice to commodities in the coming years.

Let me know if this topic is of interest and more will follow .. it may anyway!!!

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