Business Brains

Carbon offsets vs. renewable energy certificates: Are both just a copout?

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As I work myself through the flood of sustainability reports and pitches I receive on a regular basis, I've noticed a recurring theme: More and more c...

As I work myself through the flood of sustainability reports and pitches I receive on a regular basis, I've noticed a recurring theme: More and more companies are talking less about their purchases of carbon offsets and more about their investments in renewable energy certificates (RECs).

Indeed, if you check out the criteria that the U.S. Environmental Protection Agency uses to compile its list of biggest green power users in the United States, you'll see that there are three ways you can accrue points for the list: invest in on-site generation of renewable energy, buy utility green power products or purchase renewable energy certificates. (The definition of RECs is provided on the link above.) Carbon offsets don't count. At least not on this ranking.

Let's stop for a moment and ponder the intention of a carbon offset.

To me, buying a carbon offset sort of is the equivalent of stating the following: "I realize I am having an impact on the environment from some of my lifestyle habits <insert production or operational here if you're talking about your company> but I am unable to reverse that right now." This is a rather altruistic motive, at least until you reflect a little more deeply. That's because you can buy offsets with either short-term or long-term intentions. Short term if you EVENTUALLY intend to reverse the impact but just can't right at this moment or long term if you want to make yourself feel better but aren't going to do something about it because it would probably cost too much.

When I've asked business executives why they are increasingly interested in RECs, it usually comes down to something pretty simple: They want to use more renewable energy, but don't have access to supply at some facility or another. This is something that seems less in their immediate control. By buying a certified or verified REC (one that represents new generation capacity has been created), a company is theoretically funding a solution to the problem. Of course, I guess the same could be said of offsets, which usually represent some sort of activity designed to take carbon emissions out of the atmosphere.

Lorie Wigle, general manager of the Eco-Technology office for Intel, which happens to be the No. 1 company on the EPA's Top 50 national Green Power list, says neither offsets nor RECs are really a substitute for the impact of an absolute reduction in power consumption by either a business or individual. This, Wigle says, is her company's top concern looking into 2010 and beyond.

But increasingly Intel is eager to use renewable energy sources wherever possible. The realities of geography and weather notwithstanding, Wigle says renewable resources are still finite. So, Intel is trying to stimulate the production of renewable energy wherever possible.

"The supply has to be there for you to purchase it," she says.

Uh, yup.

Expect more companies to talk up RECs in the next cycle of sustainability and green operational reports, and get ready to balance your own portfolio.

Heather Clancy

Section Editor

Heather Clancy has written for United Press International, ZDNet, Entrepreneur, Fortune Small Business, the International Herald Tribune and the New York Times. She holds a degree from McGill University. She is based in New Jersey. Follow her on Twitter. Disclosure