Renewable Energy Certificates and Renewable Electricity Use Claims

Posted on by Jeff Swenerton

Renewable energy certificates (RECs) are long-established and widely used instruments in U.S. electricity markets that enable electricity to be bought or sold as renewable. RECs are issued and tracked through regional tracking systems that collect electricity production data. RECs are recognized by the federal government and by states for use in renewable portfolio standard (RPS) and power source disclosure programs, and are also used by the private sector in voluntary-market transactions. For nearly 30 years, parties have bought and sold RECs. The voluntary market for RECs alone serves around 10 million customers, and represents about 8% of all U.S. retail electricity sales (O’Shaughnessy, Jena, & Salyer, 2025). Despite decades of experience with these instruments, their role and function can still be misunderstood, as highlighted in a September 24, 2025 letter from 16 state attorneys general to four leading technology companies. The information below explains what RECs are and why they are critical to free and functioning retail energy markets, emissions accounting, effective state regulatory programs, and consumer choice and protection.

 

RECs enable renewable electricity use claims on our shared grid
RECs are legally recognized contractual instruments and property rights that are the basis for renewable electricity use claims on the grid (Center for Resource Solutions, 2023a; Harvard Law Review, 2024). Because electricity on a shared transmission system carries no information about its origin or how it was generated, proving physical delivery of renewable power to specific customers is impossible. RECs are needed to substantiate claims to renewable generation (National Association of Attorneys General, 1999). RECs alone ensure transparency and prevent double counting of renewable generation and use claims. They are required in all (currently, 29) state compliance programs, as well as in voluntary markets and all renewable power purchase agreements (PPAs, Center for Resource Solutions, 2023a).

 

RECs enable credible emissions claims about electricity use
RECs carry the emissions characteristics of renewable generation, making them essential for credible claims about the greenhouse gas emissions associated with electricity that is delivered, sold, or consumed (Greenhouse Gas Protocol, 2015). They convey both the direct emissions of renewable generation and the avoided emissions on the grid, ensuring these benefits are accurately assigned to consumers and electricity suppliers. Without RECs, renewable generation and its emissions benefits could be assigned to different customers, undermining both compliance and voluntary programs that account for electricity use. Credible and verifiable claims about reducing the emissions associated with renewable electricity used or delivered—whether by companies, consumers, or utilities—require RECs.

 

Bundled and unbundled RECs provide equivalent renewable electricity and emissions claims
Electricity on the transmission grid cannot be physically tracked by generation source, so its renewable characteristics are always separate from the electricity itself (U.S. Department of Energy, 2023). RECs representing those characteristics are issued at the time renewable power is generated and delivered to the grid. Because all electricity on the grid is inherently “unbundled” from its generation source, selling RECs with or without electricity is simply a contractual choice that does not affect the validity or credibility of the claim. The claim to renewable electricity use is itself contractual, reflecting ownership of the REC. Unbundling allows consumers to express renewable electricity preferences even though the physical power they receive comes from the grid mix. The REC’s nature and value remain the same, and sourcing electricity and RECs separately within the same market is functionally equivalent to sourcing both from a single renewable facility.

 

Unbundled RECs expand markets, lower costs, and enable broad participation and innovation
The ability to buy and sell RECs separately from electricity lowers barriers and expands access, making renewable energy markets more affordable and inclusive for customers of all sizes (O’Shaughnessy, 2024a). RECs increase liquidity, facilitate cross-regional trading, and allow renewables to be developed where it is most cost-effective (O’Shaughnessy, 2025b). By enabling the characteristics of renewable generation, including its emissions, to be transacted separately from electricity, unbundled RECs allow participation even when direct procurement—such as long-term PPAs or onsite projects—is not feasible (e.g., due to cost, scale, location). They have also enabled innovations like virtual power purchase agreements, expanding renewable adoption nationwide.

 

REC demand drives renewable deployment
Demand for RECs, motivated by consumer choice and preference, sends market signals that drive new renewable development (O’Shaughnessy, 2025b). Not only do REC purchases directly support renewable deployment by influencing investment and project financing, collective consumer demand for RECs and the transparent communication of leading buyers has driven the expansion of supply over time (O’Shaughnessy, 2025a). RECs, therefore, are a central driver of the clean energy transition.

 

All RECs provide critical revenues that support new project development
Revenues from REC sales flow into renewable project economics, often providing the margin needed for new projects to move forward (O’Shaughnessy, 2025b). Revenues from contracted RECs directly support project financing. Short-term REC purchases from existing projects create revenue that can be reinvested into new capacity, often contributing to the equity needed for future projects. This revenue stream improves project viability, attracts new entrants, and builds long-term market confidence. RECs are therefore not just trading instruments but a vital source of support for renewable deployment.

 

Conclusion
RECs are the legal foundation of credible renewable electricity and emissions claims, ensuring that renewable generation and its benefits are accurately assigned to electricity use. Long utilized in both compliance and voluntary markets, RECs create the demand signals that drive renewable deployment and grid decarbonization. RECs create access, enable market efficiencies, and provide critical revenues that support new projects, making participation possible for a wide range of consumers and suppliers. They are an indispensable tool for scaling renewable energy and achieving the demand-side changes needed for the clean energy transition.

 

Resources

RECs and Renewable Energy Claims

RECs and Emissions Claims

Impact and Benefits of RECs

 

For more information about this release, contact Jeff Swenerton, Communications Director, at +1-415-561-2119 or jeff.swenerton@resource-solutions.org.