Thank you David for this debate, I really enjoyed it.
Especially the part that just one percent of people know about granularity and all of them are worked up and angry! same here in Europe!
In Europe, we’re already testing granular certificates in practice. Ireland and Denmark have run pilots with hourly Guarantees of Origin, and Switzerland will be next in January next year. Although we already have the monthly matching in France. (which has a lot of advocates instead of hourly matching)
But instead of making hourly matching the only standard, the focus has been on gradual, opt-in rollout. That way you preserve compatibility with the wider European GO market while testing how granularity works in reality. We’ve seen that optionality matters (granular and annual certificates can coexist), and premiums already emerge for more granular products. The challenge we’re dealing with is not just disclosure, but how to make sure these incentives don’t create distortions in the grid ( like oversupply on sunny afternoons).
What I see is that, there is a pragmatical approach to it here to proceed in phases, and always link it back to system needs. Otherwise, you risk market fragmentation and unintended consequences.
Just one point, how I see EACs, they don't clean your local grid today, but they are valid mechanisms to create demand, channel capital, and standardise reporting.
The system isn’t perfect, if you or anyone knows a better way, please speak up, but until then, it’s better than nothing. Plus, it’s moving toward more integrity with 24/7 matching, locational claims, and additionality requirements.
One piece that never seems to get mentioned is what happens to the communities that lose their RECs? An Alaska state agency is currently trying to sell the RECs from Juneau's hydroelectric dam. Ignoring the fact that RECs from a 1970s hydro project are clearly just terrible greenwashing, if it goes through, where does this leave Juneau? It's an isolated and nearly entirely hydro-powered grid. They have a number of projects that rely on the renewable-ness of their grid, including heat pump programs.
The entire city would now be forced to say their electricity comes from nowhere? Mysteriously appearing in their outlets with an unknown carbon footprint, making it impossible for the city, residents, or local industry (a mine filed to challenge the REC sale), to know whether electrifying is a climate positive or negative? And therefore making it impossible to continue with any sort of electrification grants or electrification programs? It just seems so ridiculous.
Flooding the voluntary REC market with RECs from old hydro or nuclear projects hurts just about everyone. If they are sold, the residual emissions factor for the grid would be more based on diesel or any other generation Juneau uses.
That said, some of these older projects may need to make more money to stay operational and/or make needed upgrades. I'm not familiar with hydro in Juneau but generally speaking, if there is a real need, you could close the gap via (A) tax dollars → government funding, (B) charge rate-payers more for electricity, or (C) try to monetize the RECs. There are a lot of variables but generally speaking, I doubt monetizing the RECs will do much to close the gap which is why I say selling RECs off of these projects hurts just about everyone.
But for new solar and wind, RECs bundled with power or unbundled CAN be very material to enabling more projects when sold via long-term forward contracts that de-risk the project for investors, owners, and lenders. It makes more sense to me to maintain focus here where the voluntary market can do more to accelerate the transition to renewable energy where the aim is to make electricity clean, abundant, and reliable.
Juneau doesn't particularly need the money to run its hydro project, nor will it likely get it. It's a state entity trying to make the sale, based on the state's participation in the original bonds. This is one of three separate "sell old hydro" REC plans I know of in Alaska, all running through a company called Greenlight energy, all of which popped up in the last yer. And they're even trying to sell years back to 2019. I can see that the company sold RECs to the government in 2024. Two of the plans are tied up in contract disputes (because there were no RECs decades ago, so it's not agreed who owns them), while in the third case the utility just kind of saw it as free money so why not. I suspect even if they're sold, actual humans and businesses in the communities will illegally say that their power comes from hydro, because almost no one will realize that fact can be or has been sold, it's confusing, and unenforceable. I find it hard to see how the potential good of RECs for new projects can be preserved without leading to the proliferation of this kind of useless money shuffling.
That certainly sounds problematic to say the least. Any RECs that are Green-e certified must match a 21-month vintage window (from the same year, 6 months before, or 3 months after). Greenhouse Gas Protocol and programs like SBTi are looking at tightening matching requirements in space and time further. Required or not, greater transparency about the source of each RECs (both the project and the original method of purchase) and their impact could go a long way to better inform buyers and the market at large.
Thank you David for this debate, I really enjoyed it.
Especially the part that just one percent of people know about granularity and all of them are worked up and angry! same here in Europe!
In Europe, we’re already testing granular certificates in practice. Ireland and Denmark have run pilots with hourly Guarantees of Origin, and Switzerland will be next in January next year. Although we already have the monthly matching in France. (which has a lot of advocates instead of hourly matching)
But instead of making hourly matching the only standard, the focus has been on gradual, opt-in rollout. That way you preserve compatibility with the wider European GO market while testing how granularity works in reality. We’ve seen that optionality matters (granular and annual certificates can coexist), and premiums already emerge for more granular products. The challenge we’re dealing with is not just disclosure, but how to make sure these incentives don’t create distortions in the grid ( like oversupply on sunny afternoons).
What I see is that, there is a pragmatical approach to it here to proceed in phases, and always link it back to system needs. Otherwise, you risk market fragmentation and unintended consequences.
Just one point, how I see EACs, they don't clean your local grid today, but they are valid mechanisms to create demand, channel capital, and standardise reporting.
The system isn’t perfect, if you or anyone knows a better way, please speak up, but until then, it’s better than nothing. Plus, it’s moving toward more integrity with 24/7 matching, locational claims, and additionality requirements.
One piece that never seems to get mentioned is what happens to the communities that lose their RECs? An Alaska state agency is currently trying to sell the RECs from Juneau's hydroelectric dam. Ignoring the fact that RECs from a 1970s hydro project are clearly just terrible greenwashing, if it goes through, where does this leave Juneau? It's an isolated and nearly entirely hydro-powered grid. They have a number of projects that rely on the renewable-ness of their grid, including heat pump programs.
The entire city would now be forced to say their electricity comes from nowhere? Mysteriously appearing in their outlets with an unknown carbon footprint, making it impossible for the city, residents, or local industry (a mine filed to challenge the REC sale), to know whether electrifying is a climate positive or negative? And therefore making it impossible to continue with any sort of electrification grants or electrification programs? It just seems so ridiculous.
Flooding the voluntary REC market with RECs from old hydro or nuclear projects hurts just about everyone. If they are sold, the residual emissions factor for the grid would be more based on diesel or any other generation Juneau uses.
That said, some of these older projects may need to make more money to stay operational and/or make needed upgrades. I'm not familiar with hydro in Juneau but generally speaking, if there is a real need, you could close the gap via (A) tax dollars → government funding, (B) charge rate-payers more for electricity, or (C) try to monetize the RECs. There are a lot of variables but generally speaking, I doubt monetizing the RECs will do much to close the gap which is why I say selling RECs off of these projects hurts just about everyone.
But for new solar and wind, RECs bundled with power or unbundled CAN be very material to enabling more projects when sold via long-term forward contracts that de-risk the project for investors, owners, and lenders. It makes more sense to me to maintain focus here where the voluntary market can do more to accelerate the transition to renewable energy where the aim is to make electricity clean, abundant, and reliable.
Juneau doesn't particularly need the money to run its hydro project, nor will it likely get it. It's a state entity trying to make the sale, based on the state's participation in the original bonds. This is one of three separate "sell old hydro" REC plans I know of in Alaska, all running through a company called Greenlight energy, all of which popped up in the last yer. And they're even trying to sell years back to 2019. I can see that the company sold RECs to the government in 2024. Two of the plans are tied up in contract disputes (because there were no RECs decades ago, so it's not agreed who owns them), while in the third case the utility just kind of saw it as free money so why not. I suspect even if they're sold, actual humans and businesses in the communities will illegally say that their power comes from hydro, because almost no one will realize that fact can be or has been sold, it's confusing, and unenforceable. I find it hard to see how the potential good of RECs for new projects can be preserved without leading to the proliferation of this kind of useless money shuffling.
That certainly sounds problematic to say the least. Any RECs that are Green-e certified must match a 21-month vintage window (from the same year, 6 months before, or 3 months after). Greenhouse Gas Protocol and programs like SBTi are looking at tightening matching requirements in space and time further. Required or not, greater transparency about the source of each RECs (both the project and the original method of purchase) and their impact could go a long way to better inform buyers and the market at large.
It's a nice concept, but not realistic with the trump administration taking huge amounts of fossil fuel money.