In this episode, I dig into the debate over reforming renewable energy certificates (RECs), the instruments that allow companies to claim they're "100% renewable." I'm joined by Michael Leggett of Ever.green and Peggy Kellen of the Center for Resource Solutions to discuss the push for a "24/7" system that matches RECs to the exact time and place of consumption. We explore whether this seemingly intuitive change is the best path forward or if going too far, too fast could drive buyers from the market and slow decarbonization.
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David Roberts
Hello everyone, this is Volts for September 10th, 2025, "The debate over renewable energy certificates (RECs)." I'm your host, David Roberts. What does it mean when a company says that it is "run on 100% renewable energy"? Most people, at least most people listening to this podcast, understand by now that the claim is not literally true — not everyone can build their own renewable energy generators. Rather, the companies in question have purchased renewable energy certificates, or RECs, equal to their electricity use.
Each megawatt hour of renewable energy that is generated produces with it one REC, which can be purchased alongside the electricity (i.e., "bundled") or separate from it ("unbundled"). Those RECs enter a national market so that, theoretically, a company with operations in Pennsylvania consuming electricity generated in-state, at night, could offset it by buying RECs from a solar field producing electricity during the day in California.
The International Greenhouse Gas Protocol that governs this system is in the midst of its first major renovation in a decade. Several criticisms have dogged the REC system for years, and the updates seek to address some of them.
Some of the key criticisms have to do with granularity — how specific RECs should be in time and place. Right now, according to the rules, any time and place is as good as any other, but many people share the intuition that to get bragging rights, companies ought to be buying RECs produced when and where they are actually using electricity. At what you might call the most severe end of that spectrum is the 24/7 coalition (including Google and Microsoft), which believes that all RECs should be precisely matched by hour and grid area to the consumption of the purchaser. (package of stories on the 24/7 idea on Volts back in 2021 — it still holds up, you should go back and check it out.)
The Greenhouse Gas Protocol working groups seem to have taken the 24/7 idea seriously in the latest draft rules, which has led many other voices to raise cautions against going this far, this fast. Among those counseling caution are my guests today: Michael Leggett of Ever.green, a marketplace for high-impact RECs, and Peggy Kellen of the Center for Resource Solutions, who has worked on greenhouse gas accounting policies for many years.
We are going to discuss the contours of this debate: who's advocating for what, and what's at stake. This is a somewhat technical topic, as you could probably tell from the intro, but it is important, and this might not be the last time we cover it on Volts, so buckle up.
All right then, with no further ado, Michael Leggett, Peggy Kellen, welcome to Volts. Thank you so much for coming.
Peggy Kellen
Thank you for having us.
Michael Leggett
Thanks for having us. Longtime listener, excited to join.
David Roberts
I want to start with some very basic background stuff here because I feel like in the public's mind — and even in the mind, I think, of some engaged energy people — people get confused with all the different carbon credits, certificates, things floating around. So maybe, Peggy, we could start with you and you could just distinguish the voluntary REC market that we are talking about from, on the one side, compliance markets, and on the other side, carbon offsets, which I think people frequently mix up with RECs. Maybe you could just sort of tell us what we're talking about here.
Peggy Kellen
So I'll start with running down the differences between the voluntary and the compliance REC market focused on the US. One of the beauties of the way that RECs have been structured and the market has been developed over the last 30 years is that a REC, this tracking unit that we use, as you described in the intro, to represent a unit of generated electricity, is used in both systems. The market is different in that a compliance market will be based on a regulatory policy, for example, a state renewable portfolio standard, which requires that utilities, for example, supply a certain amount of renewable energy to all of their customers and to be in compliance with the regulation. And they use RECs to do that, to document that they're doing that. Voluntary markets are buyers that go above and beyond some of these basic required electricity resources and try to make bigger targets faster.
David Roberts
And briefly, just really briefly, just tell us some of the reasons companies do this. I mean, we're going to come back to this, but companies don't have to do this in the voluntary REC markets. They're buying RECs, offsetting their energy use. What are the main reasons why they do that? Is it just for bragging rights? Just for reputational benefit?
Peggy Kellen
So this transition has been growing over time, but it's really escalated in the last several years. And companies have been taking responsibility for their impact on the environment, including their impact on carbon emissions. One of the largest sources of carbon emissions that companies are responsible for influencing is energy emissions. And so that's been more common for companies to disclose what they're reporting through standards like the Greenhouse Gas Protocol. And then once you start disclosing, it becomes more important to start to address and mitigate those emissions. And that's been a big driving force, along with leadership programs like the SBTi or RE100 that have really pushed corporates forward.
David Roberts
And so just to make this crystal clear, in a compliance market: I'm a renewable energy generator. I generate a megawatt, I generate a REC alongside it. But in a compliance market, the REC just goes to the utility. I just give the REC to the utility and they submit it to the state to show that they're complying.
Peggy Kellen
They'll retire it on behalf of their customers in a tracking system, typically. Yeah.
David Roberts
This is one thing I wanted to get clear on. So when we are talking about a voluntary REC market, we're only talking about renewable energy generators in non-compliance states, right? Because otherwise, their RECs would just be going to compliance, is that correct?
Peggy Kellen
Actually, in many states, most states, there are opportunities for the voluntary market to layer on top of compliance programs. Compliance targets, some states have 100% compliance targets, but we're not at the deadline for those targets yet. So there's room for the voluntary market to fill in the gaps and go above and beyond those requirements.
David Roberts
Oh, so you could have more, maybe more RECs in a state like that than is required for compliance, and you can take the extras and put them in the voluntary market?
Peggy Kellen
Absolutely.
David Roberts
Okay. And then on the other side, there's carbon offsets, which just to be clear, are a totally different thing because —
Peggy Kellen
Completely different.
David Roberts
I feel like every, everybody makes this mistake, but like those are a separate system and actually the RECs are specifically for electricity — I think that's the key thing here. It's to offset your electricity use. Specifically, offsets are just a generic ton of carbon to offset and they're maintained by different regulatory bodies, et cetera, et cetera. Totally separate thing from what we're talking about. I just wanted to get that clear. So what we're talking about here is the voluntary REC market, which is companies buying these Renewable Energy Certificates out of, you know, the goodness of their heart, basically, or pressure from shareholders, whatever you want to call it.
So second background question then is — I mentioned this in the intro briefly — but maybe just lay out for us quickly what the process is here: The Greenhouse Gas Protocol has formed some working groups, they're talking, they're debating, where does all that stand, and how is it going to resolve?
Peggy Kellen
Well, I'm happy to tell you where it stands. How it's going to resolve is yet to be determined, of course.
David Roberts
I guess so.
Peggy Kellen
No promises. So the Greenhouse Gas Protocol has been in practice for many, many years, including specific guidance around accounting for electricity, which is called Scope 2. And that's what's been in place for about 10 years, and it was published in 2015. Rigorous debate took four years to develop that standard — for context. And now we're updating it as part of an overhaul of the entire Greenhouse Gas Protocol corporate standard, looking at all emission sources. So this is why there are a number of technical working groups taking off different pieces of that. And there's one focused on Scope 2.
David Roberts
Right. So the Greenhouse Gas Protocol governs a lot more than the REC system. The REC system is one of the things it covers.
Peggy Kellen
It covers the accounting rules for emissions associated with RECs in inventories in conformance with their voluntary standard.
David Roberts
Right. And they've issued a draft. What does that mean? Like, is there going to be one draft and then a final? Are there going to be multiple drafts? I know they have at least a set of draft rules out. Is that still early in the process? Like, how long is this road?
Peggy Kellen
It's a little bit longer. We are working towards having an actual public comment draft. The timeline for that is expected to be around the October framework timeline, and then we'll hopefully get comments in by the end of 2025, working towards a finalization of a first set of issues, of which the one we are talking about today is one, in early to mid-2026. But then ongoing work will be necessary to work out some of the details leading all the way up to the end of 2027.
David Roberts
Got it. So just on the RECs, we're in the middle of a process that's probably going to end up something close to finalized early next year. And I should have done this earlier, Peggy, but maybe just explain, like, what's your interaction with all this? What is the Center for Resource Solutions' role in this whole system?
Peggy Kellen
Well, Center for Resource Solutions — thank you — we're a nonprofit. We're focused on creating policy and market solutions to advance sustainable energy. We've been a longtime stakeholder in all of the Greenhouse Gas Protocol standards related to electricity and energy. And so, at the moment, I, in my individual capacity, sit on the technical working group Scope 2 and contribute to the process that way.
David Roberts
So you're in one of these working groups hashing these things out as we speak. Michael, let's talk a little bit about how big is this market? Let's try to get our heads around the US Voluntary REC market, which again is like all the RECs that aren't committed to compliance markets, all those other RECs. How big is that market? Give us some sense, and maybe some sense of the trajectory of it, because my understanding of it is that it's really blown up and taken off and become a kind of a significant piece of the puzzle.
Michael Leggett
Absolutely. No, it's very big. And I think there's different ways of slicing it, but I think that it's over 300,000 companies in the US buy RECs, and I think the volume is over 300 million. And the latest data that's out is for 2023, and more data should come out for 2024 in the next week or two. So there's always kind of a lag in kind of counting all the things and dotting the I's and crossing the T's. But it's big, and it's definitely been growing, I would say on the order of looking at some of the past data, usually 15 to 30% year over year for the last 10 years or so.
David Roberts
I saw some number somewhere that said that corporate procurement of renewable energy is something like a third in the US of all the renewable energy that's getting procured and built. So it's not an insignificant piece of the puzzle in terms of what gets built in the US.
Michael Leggett
It's absolutely not. I've seen estimates as high as half. I mean, it is a large amount. And we've talked to developers, very large developers, who I think five, ten years ago, really their emphasis was kind of power purchase agreements with utilities. And increasingly it has been more power purchase agreements with corporates as companies have played a bigger and bigger role in that.
David Roberts
And walk us through something you told me that I think is really interesting. So there's kind of two different ways — if I'm a company, I want to buy RECs — there's two different ways I can go about it. I can buy them on what's called the spot market, or I can structure them into a PPA. Explain the difference between those two.
Michael Leggett
Absolutely. So I think one of the biggest things a company can do in this market is de-risk these projects — new solar farms, wind farms, battery, geothermal, et cetera.
David Roberts
And when we say — let me just explain what that means — when we say de-risk, we just mean a company is saying to a developer, "If you build this, we'll buy the power." Therefore there's no risk, there's less risk in building it. That's what we mean by de-risk.
Michael Leggett
Absolutely. You've got a 25, 30-year asset, a lot of upfront costs, and the people that are either lending or investing to build that project are very concerned about what are the returns on that investment, is there going to be a return? So when they're making that decision to do it, there is a financial decision to be made. And there are other considerations, you know, permitting, interconnection, et cetera. But that is a big consideration. So, you know, oversimplifying a bit, but there's really two ways to buy RECs. You can buy RECs annually as a spot purchase.
"Hey, I need 10,000 RECs." There are a number of ways to do that. You can go to either projects or third parties who happen to have, you know, inventories of RECs.
David Roberts
And those are unbundled. If you get them through the spot market, they're unbundled. Or is that too categorical?
Michael Leggett
So there's different kinds of power purchase agreements, and I would say like a virtual power purchase agreement is also unbundled. So unbundled, I think, is not a great term to delineate the different types of the market. But really, it's this kind of one-time spot purchase, "I need 10,000 this one time versus" saying, "Hey developer, I will buy this over the next 10, 15, 20 years at an agreed-upon price or agreed-upon kind of terms if you'll go build the project." So kind of this long-term forward commitment. And I think a lot of the criticism over the last 10 years of the accounting standards has been a lack of kind of consequential impact on building more projects.
And a lot of companies have responded to that by voluntarily going beyond these spot purchases to actually make these long-term commitments, forward commitments to projects that have been very material and consequential. You know, I think estimates I've seen are as high as 200 gigawatts of new solar and wind have been connected to these long-term commitments across the world and 100 gigawatts in the US.
David Roberts
Just to clarify that a little bit. So spot purchases are like: I build a renewable energy generator, say I sell the electricity to some party, and then I throw the RECs into this big national market, and all these other generators are doing it. And so you got this national market that's just a big bucket of RECs that have been detached from their source that you can buy in specific numbers. That's what unbundled is. Basically, you're just like buying from the big pool. Whereas a PPA, you're saying to a potential developer, "Build this and I will buy the results from you." Theoretically inducing them or making it easier for them to build a project.
So again, these are all — this is such a complicated topic that these are all in somewhat, you know, there are caveats to literally everything we're saying. But by and large, if you're buying on the spot market, you're not doing much to spur additional construction of renewable energy projects, mostly those are just RECs from already built projects or whatever. If you want to induce something to get built, generally you go to a PPA. And what you told me that's striking, Michael — give me the percentages of who's buying spot market RECs versus who's buying PPAs.
Michael Leggett
Yeah. Again, some of the data out of NREL suggests that about half a percent of the buyers — so those 300,000 companies in the US, about 800 are doing so through these long-term forward commitments. So not many as a percentage, but those are very large buyers. They make up about half of the volume of the voluntary market through these long-term contracts.
David Roberts
So that's wild. I really want to emphasize this. So this is a relatively tiny percentage of companies buying PPAs rather than on the spot market. But those few companies that are doing it are having fully half the impact of the entire market.
Michael Leggett
Yeah, I mean, half the volume and the majority of the impact, you know, depending on how much impact you ascribe to the spot purchases. But yes.
David Roberts
Right. So the PPAs are sort of like the big hitters in terms of the impact of this market.
Michael Leggett
Yes.
David Roberts
All right, so that's the existing system. It's pretty big. It gets a lot of renewable energy built. There's a lot of ongoing critiques about whether it's having the effect the markets are having, the effect it should have. So maybe let's just talk before we get to the proposed reforms to the main critiques of the market as it exists now. And again, you could do an entire pod on these critiques. They get very complicated. But I think we can mainly put them in two buckets. The first bucket is just that it's not accurate. So, explain what that means.
Let me just ask this, Michael, so when I, when we say it's not accurate: I'm using coal in the middle of the night in Pennsylvania and then I'm buying daytime solar RECs in California and I'm claiming to have offset my energy use. Now, literally in terms of accounting, I did offset my energy use. I bought the number of RECs, right. But I think when we say inaccurate, what we mean is that when I say "I offset my electricity consumption," what I'm implying is that I offset the greenhouse gas impact of my electricity consumption.
And that is not true because I'm not offsetting as many emissions by buying solar RECs as I am creating greenhouse gases by consuming coal in the middle of the night. Is that what people mean when they say that this form of accounting is inaccurate?
Michael Leggett
I think different people mean different things by it. I think that there is some group that goes into just the usage claim. Are you claiming to match? Are you claiming to use? And there's a slippery slope there, which slides quickly into the theoretical possibility of claiming usage — which is really not possible.
David Roberts
I want to pause on this. If they mean it's inaccurate, like "You didn't literally consume the electricity from California," well, then the whole market is inaccurate. I mean, the whole premise of the market is — I mean, you can't claim to have consumed the exact energy you procured. That's physically impossible. All the electrons just get dumped on the grid and mixed in with all the other electrons. So if the idea is it's only accurate if you're literally physically consuming the energy that you're buying through RECs, then you could not have an accurate market, right? Like the whole—there is no such claim, basically, I guess there is no such usage claim.
So it doesn't really make sense to say "It's inaccurate." I think what you could say—sorry I'm talking so much, but I've just have all this stuffed in my head and I'm worked up about it. But what you could say is that even though you're not saying "This is the energy I used, I literally consumed this renewable energy," maybe you could say there's some implication, though, that you're like buying renewable energy that is at least material to the markets in which you're operating. Do you know what I mean? So maybe you're not claiming to directly use the energy, but I think a lot of people have the feeling — that's what I mean about the intuition I referred to in the introduction — that there's something iffy about saying you're offsetting your energy use when you're buying energy that's very far away in time and space from the energy you used.
People sense something wrong about that. But it's important to say it's not inaccurate in that way. It's not inaccurate in the usage claim way because there is no such usage claim. You couldn't, you couldn't ever make such a usage claim. So that I think is just a — I think that's just a mistake people make about what the market is or what it's claiming. Peggy, you look like you want to jump in here.
Peggy Kellen
That's right. It's intuitive to think about electricity as physically delivered to an end-use customer. And associating that charge, it's not even really an electron that you're purchasing, but it's a service, and associating a particular service with choices you have in the market. In reality, you don't have choices about the generation that's physically supporting your load at any time.
David Roberts
Right.
Peggy Kellen
There's no physical chain that can be proven, and that is the reason that the certificate markets were invented — to have a unique, exclusive claim and enable this procurement either on behalf of customers under compliance or by customers in these voluntary markets.
David Roberts
Yeah, it seems like if you could build the physical chain, you would just buy that energy and use it and you wouldn't be bothering with RECs in the first place. If you could, like, physically access renewable energy, what point would there be in RECs at all? The whole point of RECs is that a lot of people can't physically access — I will say, just as a footnote, there is one way you could build a physical chain and guarantee renewable energy, which is operating off-grid and building all your own renewable energy on site. That is the only way that you could say, physically, "I'm consuming renewable energy."
But the whole point of the REC market is that you can't say that. So anyway, this is a long-winded, Michael. So that's not really an inaccuracy. That's more like a mistake people make about the market. But is it inaccurate in material ways, in ways that do matter? Do you know what I mean?
Michael Leggett
Yeah, absolutely. So I think you said something that I think really kind of gets to the core of this, which is this is the Greenhouse Gas Protocol, this is emissions, right? We should be caring about decarbonizing our world. And I think that is what we all care about, everyone involved in this. And so any amount of debate around accuracy should be about the accuracy of the emissions, decarbonization. And so, like, yeah, if you're on a relatively dirty grid, if you are sitting right next to a coal plant and, you know, you have really high emissions, and then you're buying, you know, a REC off of a project on a relatively clean grid.
The impact of that megawatt hour may not equal the negative impact of the megawatt hour near you. But it could go the other way too, right? You could be on a relatively — like, let's say you're in California — and actually there are more buyers based in California than there are in other places. So saying you have to go local and support what is local inhibits you from saying, "Well, actually the grid next door, you know, in the state next door, you know, is dirtier," or I'm in a state where there is an aggressive program, an RPS saying that we need to decarbonize my utility.
And my state is working on that, but the state next door isn't doing anything. So companies really have, I think, elected to try to maximize the impact they're having in two different ways. I think there is what you buy and how you buy it. And so what you buy can be about, you know, "I really want to support 24/7 and I want to support storage. And so I'm going to support geothermal." Or "I'm going to make sure the batteries are on the project," or "I'm going to make sure I have consequential impact on these projects. I'm going to sign a PPA."
None of this is required. Companies are voluntarily doing these things to go above and beyond because they want it to be defensible to themselves, to their employees, to the public, to their investors. They want to help decarbonize the world.
David Roberts
Like legally, all you'd have to do to say you offset all your energy is just go to the spot market and buy cheap RECs. And that's relatively cheap. And you can, like, almost anyone can do that. And then you can say, legally, "I've offset 100% renewably."
So any company that goes above and beyond that so that their claims are more defensible and more rigorous, I just want to emphasize this, is doing so voluntarily. Voluntarily because they want to have impact. But we should say this too: you could say it's inaccurate in that it doesn't necessarily reflect greenhouse gas impact. But again, like the way it's set up, there is no official measure of greenhouse gas impact in there. So you're not doing anything against — it's not claiming anything it's not doing, you know what I mean? It's not claiming to adequately reflect greenhouse gas impact.
Peggy Kellen
Yeah, it's a direct emissions accounting tool that is the only thing that the Greenhouse Gas Protocol to date has really focused on in their corporate standard. And so that direct emissions rate, you know, typically zero, is what is matched with the buyer's consumption in the inventory reporting. But RECs contain all attributes of generation. And so that can be the direct emissions rate, avoided emissions where they exist. It can be social policies that the generator has in place. It's an all-inclusive instrument. The challenge is that there have not been blessed accounting measures for how you count the impact piece and how that fits into an inventory.
David Roberts
Right. So part of the discussion here that we're going to get to in a little bit is how to reform this, is whether to add some sort of measure of greenhouse gas impact into the fold here so that people could act on this. But just to say that, like, people's gut sense that it's inaccurate, I think is less anything wrong with the system, but just people want the system to be doing more than it's doing, basically. People want the system to be accomplishing things that it's not currently set up to accomplish. The system is not claiming to be doing any of these things that it's not doing.
Michael Leggett
I think it's true that the Greenhouse Gas Protocol is not claiming that, but I think that impact has long been sold. I mean, I think this is a robust market with many, many buyers and sellers and marketers. And there's a lot of people I think from early on said, "Our collective action will have an impact and do more and have more projects built."
David Roberts
There are a lot of fuzzy impact implicit claims flying around. So I think you could fairly say, "If people are going to be out there bragging about impact, we ought to measure impact somehow," so that they could make accurate claims. So, okay, the first critique of the existing system is these inaccuracies, which, as we say, are less sort of like inaccuracies than just the system not doing other stuff people want to do. And then the second critique is about additionality, which I think really gets at the key here. So the critique is: what we want corporate procurement to be doing is getting more renewable energy built.
And if you're just buying spot RECs on the spot market, for all you know they could be produced by some already built solar farm that was built 20 years ago that's just still generating RECs. You're not going to get anything new built. Additionality is the critique here. So again, Peggy, maybe I'll start with you here. Like, is this another one of those things where you think, "Well, like it's not built for that. So of course it doesn't do that." Like that it wasn't designed to do that, so of course it doesn't do that. Like is this another one of those sort of cases?
Peggy Kellen
Well, first I'd like to start by adding a little context about choice within RECs, regardless of how they're procured. So that information about the facility, new date, when was the facility built, where the facility is, those are all connected to the REC. Depending on who you are, how sophisticated of a purchaser you are, you may have more or less visibility into that. But if you want to procure only from new generation, but you're going to use a spot market, it's completely possible. Companies still have those options. It's just not a feature of the system to require it.
But there are programs like one that our organization runs called Green-e, which have some of those limitations that say, "Okay, these types of things meet our criteria for helping drive new generation. And so that's what you should procure. And you can see which RECs or products that are based on RECs meet those criteria."
David Roberts
Right. So just to say, if you want additionality, you can get it. You can buy RECs that have more or less of it, basically.
Peggy Kellen
If you want new, you can get it. Additionality is a very complicated, heavy word coming out of that space.
David Roberts
I hate that word so much. But if you want to spur something new to get built, you can design your REC purchase to do so. But it's not a default feature of a REC purchase, I guess would be the way to put it. Okay. There's lots of talk about how to reform these things. There's working groups, there's white papers flying all over the place and counter white papers, podcasts every which way you look. This is one of those things where like 99% of the population doesn't even know it exists or is happening at all.
And 1% is extremely worked up and angry about it. So let's talk first then about 24/7. So there is a faction of people — Google, I think, is sort of the big leader. Google was who I sort of interviewed when I did those stories on 24/7 a while ago. Google is coming to this, I think, you know, from a good place. They're looking around and they're noticing that, you know, we have facilities in all these different kinds of grids. And it's not necessarily like when we buy RECs, it's not clear to us that we're actually improving the grids, that we're not actually like cleaning the grids we're on.
And we feel a responsibility to clean the grids we're on. So they are, I think, voluntarily shifting their REC purchases to what's called 24/7, which means: If I'm a renewable energy generator and I generate a REC, it's not just a generic REC that goes in a pool of other generic RECs. It is marked of a particular hour, of a particular grid area. And so when you buy 24/7-matching RECs, meaning you are buying RECs from the time and the grid where you actually consumed power, you're matching the REC to your power. Google is doing this voluntarily as far as I can tell, because they got a bunch of nerds there who are genuinely, you know, obsessed with, by and committed to squeezing out greenhouse gases.
And they've figured out that like internally this is what they have to do. But then there's the larger question of should that be made mandatory for all voluntary RECs, which I guess is Google's position here. That's sort of what they're advocating for. So I want to start by steelmanning, doing a little bit of steelmanning of the 24/7 thing — why does it appeal to people? Sort of the advantages of it. One is, and you know, I'd love to hear you guys' reactions to all of these, but one is just that, that sense people have that the existing system is inaccurate.
This addresses that, like it addresses that intuition. It would be more accurate and thereby have more integrity if you are matching RECs to the time and place of your consumption. That's the main argument. So, Peggy, do you buy that, because that's sort of the fundamental — I mean, the question of whether we want to move in the direction of greater granularity, basically greater temporal and geographic granularity, is the big overriding question here. And I guess I would just put that to you. Like, do you buy that premise that this is more accurate in some way than the existing system?
Peggy Kellen
We definitely support moving towards more specific data, always. More specific data is important. It is something that is not widely available. And working to build the infrastructure to allow it to be more widely available is something that we strongly advocate for in regulatory spaces. The way RECs are issued right now is often either on a quarterly or a monthly basis, and then those will be timestamped with that unit of time. And so there are opportunities to either provide more information about what hours that covers so that perhaps those could be disaggregated, or to work with tracking systems to move towards issuance of tradable hourly minted REC certificates that are minted more frequently.
And that makes the market more fluid and dynamic and useful. But I would go back to our earlier conversation about the accuracy of the claims being that it's sort of an exercise in leaning into this misunderstanding of how electricity is delivered. And I don't think that's why Google really posited this to begin with. Google had huge targets that they had been meeting for years, and they started to look at, "Well, we're still having an impact even though we're 100%. And so how do we address that? And how do we use the market to try to encourage others to use collective demand to address that?" And it's an innovative approach.
David Roberts
But you don't think that it should be mandatory? You don't think that it should be the baseline that all RECs should be matched to time and place?
Peggy Kellen
At this time in the market's infrastructure and development, I think it might have an unintended consequence of pushing a lot of those important voluntary buyers out of the market, and it does make certain types of procurement much more challenging.
David Roberts
Yes, but these are — I just want to keep these critiques distinct — you know, it might be more difficult for people, might drive people out of the market. But those are separate questions. My question is just: If we did it, do you think it's fair to say that the end result would be more accurate or do you sort of reject the idea that that's how you measure accuracy in the first place? Michael, I'm interested in your take on this too. Like the intuition that geographic and temporal granularity is more accurate somehow, in a sense, Peggy's right. Like, that's just leaning into the misunderstanding that you're talking about physical claims here, which I get.
But on the other hand, I also feel the intuition that there's like something preferable about it. Like there's something to that.
Michael Leggett
There's like a scale and an optics angle to all this. Like, one of the ways I tried to simplify it in a question I asked at a conference was: "We all agree that one plus one does not equal 100." And so let's say that this gets us "To one plus one equals 90." That may be more accurate, or it may look a little bit more accurate, but it's still far, far— it's, you know, I don't know if the scale is like more like one plus one equals a million. You're still not using the power you're claiming to use, even if it is in these narrower markets and it's matched hourly.
Power doesn't flow this way. Like, it just — it's not something you can trace. So are the more absurd examples eliminated and not allowed? Sure, but does that make it accurate? I don't buy it. I don't think it does. I don't think the Greenhouse Gas Protocol is meant to stand up and support usage claims around the accuracy of what power you're using. I think it is meant to bring transparency to the emissions impact of companies across all of their different kinds of scopes so that we can have better transparency, understanding, and do something about it.
David Roberts
What about the other claim people make on behalf of 24/7, which is: as long as it's just cheap to buy solar — solar is always the cheapest, you can always find cheap solar somewhere — and there are certain grids where solar is not going to do it, where you're going to need other stuff. You're going to need firm power. You know, the much-discussed firm power. And the idea is if you are forced to confine your REC purchases to that grid, you are going to spur the development of that firm power. Basically that, like, it's not good that all the money's just chasing the easiest, cheapest stuff.
We want some of that money directed toward the more difficult future technologies that we don't have worked out yet. We need to channel some of that money toward your advanced geothermals and your small nuclears and your whatever else. You know, all things being equal, it'll generally all go to solar. So confining it to a particular grid is a way of directing investment at these more difficult sources. Do you buy that?
Michael Leggett
I understand why it seems like that would be the case, but I think the problem is while it may say, "Hey, these hours are more important, there's more demand for these hours all of a sudden," that demand may not show up in a way that's consequential to building those projects. All the modeling and research around this generally assumes or requires additionality, assumes that like those transactions are enabling these projects. And I don't see, at least in what's being publicly disclosed, any tests for additionality in the 24/7 matching. I think there's a huge risk to move away from this long-term forward contracting that helps stand up and de-risk projects to more spot purchases, which has a much harder time doing that, if at all.
So, no, I think that on paper it seems like it should. Right now, I'm focused on I want to cover 24/7, I want to cover all hours of the day. So I've got to get some storage, I've got to get geothermal, I'm going to have to go to those technologies.
David Roberts
Right. If I'm covering nighttime power, I can't do it with solar.
Michael Leggett
Those projects, to get them built, need long-term kind of certainty. And I think it's going to make it much harder for companies to give that long-term certainty to those kinds of projects. And so, I think that the impact will not actually show up.
David Roberts
Okay. And a related claim from the 24/7 people is that if you have to buy RECs from the grid you're operating on, the cleaner that grid is, the fewer RECs you need to buy, basically. So you're going to all of a sudden be very invested in the larger grid getting clean because that relieves your burden, meaning it's going to pull you into policy advocacy. This is one of the things they say: "If these people are forced to buy RECs from their local areas, they're going to get invested in local policy to try to clean up those local areas."
And that is one of the things we badly need. I think one of the critiques maybe of the larger REC system is that it's very easy just to buy RECs and check this off your list. And what we really need is companies engaging in policy advocacy. And the idea is that this would push them in that direction. Do you buy that?
Peggy Kellen
Maybe I can jump in on that one. So one of the tangential issues that are also ongoing in the Greenhouse Gas Protocol update is more clarity around something we're talking about as standard supply service, which is those compliance programs are delivering that load, often building new generation, building new projects to do so, making available customers in that state. And the Greenhouse Gas Protocol is moving towards being more explicit about those companies being able to claim that in their accounting. So that is built into the matching that is allowed in the new proposal. So there are many pathways to encourage engagement in policy, advocating for more generation through compliance programs, opportunities for voluntary, and the accounting mechanism that you use isn't necessarily going to make it more or less likely as long as companies are able to get credit for that generation that they're paying into through their electricity bills with their utility, and that will be able to be reflected as a portion of their load matched with RECs.
David Roberts
Michael, do you see companies — I mean you interact with a lot of these companies that are involved in these markets very directly. So, what's your sense of their appetite for policy advocacy, and do you think this shift would push them in that direction?
Michael Leggett
You know, I think Google has certainly taken that mantle, but I don't think Google is emblematic of what other companies can or will do. So no, I don't think it will push that. Similarly, I think Google — like I have a lot of respect for what Google has done. They've done the 24/7 on top of these long-term contracts because they have massive amounts of load in very central places. So they'll have a data center, they'll do a wind PPA, a solar PPA, maybe add some storage. They're able to do that. And that is not representative of much of the market.
And so there are things that they have done. I think they also — I've heard they'll do like tolls on batteries. And you did a great pod with Emma and Jacob from Tierra Climate and talked about there are ways to add storage to the grid that actually increase emissions and there are ways to do it where it decreases emissions. And if you're incentivizing this around kind of corporate matching to load, it has the risk of increasing emissions instead of actually decreasing emissions. If we're actually doing this around the emissions, which is this should be emissions accounting. So many rabbit holes. Sorry.
David Roberts
All the modeling nerds have modeled this, and they claim that shifting to 24/7 would lower system-level emissions. That's what the models crank out. Do you think the models are missing something?
Michael Leggett
I think they're making a bunch of assumptions that are not being carried over into the policy. So I think they're assuming things like additionality, they're assuming high levels of participation of like 30% C&I participation. And so they're making assumptions — and like you've got to lock down some variables, right. It's hard to kind of get into this. But I think that the assumptions don't really match necessarily how the market works or how the market will react to this. And I'm absolutely — like a lot of our buyers, our whole company is trying to make, you know, long-term contracting more accessible because there are companies — like some of our customers are $50 billion companies that are not big enough to do PPAs.
That is why there are not more companies doing them.
David Roberts
So yeah, actually wait, let me, let me just pause here and frame this. So let's pivot from the benefits of 24/7 to the big critiques because this is what you're getting into. So one of the big critiques, let's just hit this first, is what you're saying, which is this: you know, say I'm a company and I've got loads, you know, all over the place, a couple, several different grids. If I'm trying to piece together RECs to match my disparate, dispersed load, that is going to make it more difficult to package them into a PPA.
So this is going to shift more buying to the spot market, which has less impact than PPAs. You're saying this is going to make it more difficult to do PPAs? Maybe just explain briefly why.
Michael Leggett
I think to understand that you have to understand why aren't more people using PPAs? Why are they difficult?
David Roberts
Why is it only a small percentage, especially when they have such visibly outsized impact relative to spot?
Michael Leggett
The three big impediments to doing PPAs are the contracts are very large, they're very long, and they can be quite risky. So companies aren't necessarily — don't have enough electricity to be able to do a contract. And some companies like us and others will try to fractionalize: "Okay, we'll pull together ten different off-takers." Developers don't tend to like doing like 10 different contracts. They want to go find — they'd rather do one contract with Google and they want that company to have a high, you know, investor-grade credit rating. And like there's a whole bunch of different kind of things that go in behind that.
David Roberts
So you can't act as the counterparty, sort of like aggregate those 10, and then you just sort of play the role of Google as the main. Is that kind of what you do?
Michael Leggett
That's a lot of what we do. You know, sometimes that has credit obligations and it gets hairy. I mean, so, yes, that is our business of trying to do that. But it also is, you know, in the length of the contract, you know, is often, you know, 12 to 20 years. A lot of companies say, "I just can't, I'm not willing or able to do that." Or the risk is, you know, a lot of companies, a lot of these are actually virtual power purchase agreements where the price you pay floats inversely with the wholesale price for energy.
So all that to say how much you're paying for each REC changes. It could be $0, it could be negative. You could actually be making money, or it could be $100 or $200. So there's a lot of risk that companies aren't excited about signing up for. So when you are shifting, a lot of ways that companies kind of make it so that they can use these things is, one of the things they'll do is they'll aggregate load across regions, right? You've got a big nationwide retailer who's got stores in every state. They will say, "Well, collectively, this is 100,000 megawatt-hours a year."
Boom. Now they're big enough to do a PPA. If you're saying, "No, no, no, no. You can't just do one contract. And these contracts have fixed costs and complexities. You need to do one in each region." Well, all of a sudden they're not big enough, and the fixed costs add up. So it gets really hairy. And so instead of doing that — and if you did sign a PPA for all the RECs, all of a sudden not all of them can be even used because, you know, they have to match the hour and time. So I need 30 RECs in this hour, and I got 45 from the project, so I've got 15 extra.
Well, so now I need to go sell those, I guess. And there's probably oversupply in the market in general, so they may not be worth much. It just makes things really messy. So it'd be much easier to say, "You know what, I'll just wait till the end of the year when I know how many RECs I need in each hour in each location, and then I'll go to the spot market and I'll buy what I need. Why do a PPA?"
David Roberts
Right. So one big critique here is this is going to shift buying away from PPAs to the spot market, thereby reducing impact. And second, big critique, which you also touched on here, is just that this is going to raise the cost and complexity of doing this because right now it's just trivially easy basically to any little — like I'm in a single member LLC — well, I shouldn't have said "trivially," I've triggered Peggy. But it's relatively, relatively easy now just for a small business to go on. But if I have to think about, if I have multiple loads in multiple different places and I have to think about matching each one of them just right, there, you're just increasing the bureaucratic load, the cognitive load, the analysis required.
Like one of the things I feel like we all need to keep in mind or like listeners need to keep in mind, as we were discussing this, is the voluntary nature of the voluntary REC market. No one has to do this. It's entirely possible that you could make it a big enough pain in the ass that they just don't. So, is that one of your worries about this?
Peggy Kellen
Not mine, but yeah. So you have to think about how do we leverage and grow the voluntary market? And that's something that we're always thinking about. And one of the ways is to make renewable energy procurement more accessible. And I'll note, in addition to the items that Michael identified, there are different market structures across the United States, and in several, the only option for procurement in that region is an unbundled REC attribute. So not everyone even has the choice to do a PPA where they're located.
And what we want to do is to encourage more consumers to choose to be in this voluntary market, both corporates and residential consumers, to ask their utility to provide these to them. Unbundled RECs are a tool for them. And so the easier we can make it to procure overall, the better it is for overall demand, which in aggregate, as we know, helps to drive supply. The new ideas are always more difficult to implement. I would argue PPAs are still a new idea, really, to have something like a corporation — they're still sorting it out. You hear stories from these folks, it takes six, seven years to get a project signed, right? And they're figuring it out. So it's also new and we should have space to make the procurement of those hard things easier. But it's a process.
David Roberts
One final question before we talk to some alternate reforms. What happens if we're on a 24/7 system and my load is in a compliance market? 24/7 forces me to buy local, but most of the local RECs are going to the compliance market. So I'm in a position where I'm going to be forced to buy all and only surplus RECs from the compliance-targeted generators around me. Is anyone worried about that?
Peggy Kellen
If you want to make claims about being a voluntary procurer, yes. Or doing something new that wouldn't have happened anyways, we talk about that as having regulatory surplus. Yeah, you would have to procure additional. In some markets where you have cap and trade programs, you'd have to procure allowances or get allowances allocated on your behalf as well. That's not a core tenet of the straight 24/7 accounting proposal. You can procure, you can count compliance towards those goals. It's still working out whether or not they have to be matched exactly the same way, because that's not what's being provided in the market at the moment to many folks.
But if you want to make these claims about being more impactful in your individual procurements through this method, yeah, you'd have to over-procure.
David Roberts
Okay. So the worry is just that this is a rather extreme jump from the present system, which would impose new sort of accounting complexities, new physical complexities of finding, new sort of bureaucratic complexities of structuring the deals that make PPAs harder. I think a lot of people, and tell me if you think this is wrong, but it seems like sort of the conventional wisdom that's forming around this is, "Yes, this is the right direction of travel, but maybe we should just go slower and take smaller steps in that direction." That kind of seems like where people are ending up.
So one sort of direction of reform is 24/7. That means making your RECs closer in time and place to your consumption. The sort of other direction of reform I guess you'd call the counter direction. The other team here is what they call "emissionality." And these are people — I think Amazon is in this group. Meta, I think, is in this group. They are saying, "The reform we need is not closer time and place matching. The reform we need is more clarity on impact matching. We need to add some sort of impact measurement so that RECs that displace more greenhouse gases are more valuable than RECs that displace fewer."
So I want to get my head around — like, is this a fundamentally different direction? What is the sort of relationship of the emissionality people and the 24/7 people? Are they just opposed? Are these just opposite ideas? Or is there some way that there's a synthesis possible or sort of—what's your take on emissionality? Peggy, maybe you can start.
Peggy Kellen
Sure. Ultimately, there are many pathways to impact, and so both of these will have different types of outcomes, different strategies, and they're both important and relevant. We have looked at this as kind of a Venn diagram with some overlapping circles. So it's possible to do both, but it's a very small overlap and it depends on where your operations are. I have to be operating in a dirtier grid so that that avoided emissions impact is as high as possible and then also temporally and locationally matched. So there's a narrow slice where that could work. But we have to understand it's so relative to what a company's operations are and where they're located, how any of these ideas are going to work for them.
Really thinking about having more recognition for avoided emissions impact in a consequential "I did this and therefore this was avoided" is an important development that does need to go forward in the Greenhouse Gas Protocol and one that's on the table, although it has had some minor setbacks in being rolled out at the moment.
David Roberts
So you think there's going to be some reforms in the direction of emissionality, regardless of what else happens on the 24/7 stuff, that there's like some indication of the greenhouse gas impact is going to be folded in here going forward?
Michael Leggett
Let me jump in — and I mean, Peggy's on the working group, so she's better positioned to answer this — but I think on the outside in, I think, you know, emissionality, I would kind of zigzag a little bit over to — I think consequential impact is really, and I think inside consequential impact is considering the emissions impact on that. But it's also kind of this, you know, what flavor of additionality or kind of causation or like, did your purchase, do something — I think is another piece of that that wasn't always a given part of emissionality.
David Roberts
This is a good point. Impact could be impact on greenhouse gases, impact on inducing building of a generator, and also impact on, you know, policy or impact of development of firm resources. There's lots of different ways. The impact I was talking about is greenhouse gases. That is the question.
Michael Leggett
So I think that is the other piece. And I think to Peggy's point, consequential impact, there's a whole subgroup on that and they've got public kind of recommendations, and if you look at the votes on the working group, there was, I think, 73% of the working group voted to move forward and having the consequential impact path be part of the public comment period, as opposed to 14% opposed. That got more support than the hourly matching, which was 63% in favor and 37% opposed. But the current path, or the current, you know, writing on the wall, the ISB voted to not take that consequential impact forward.
So right now the current plan is that the hourly matching will be part of the public draft that goes out for public comment and that the consequential impact whole piece of this will not. And I think that is an enormous mistake.
David Roberts
Because I would feel like if you just sort of like polled the public, what they want out of this is reducing greenhouse gases. And it seems like even if you're not going to make any particular level of consequential impact mandatory or whatever, it seems like making that information visible to market participants is just like a total no-brainer. Is it difficult to do that? Like administratively, Peggy, like, is it difficult, is it straightforward to measure the impact on greenhouse gases? Like, do we have accepted ways of doing that? Or is that fuzzy and difficult too?
Peggy Kellen
I'd say we have some concepts that are generally agreed upon about looking at marginal emission rates to inform how you calculate what avoided emissions might be. So I think there's enough directionality in the methodology to move forward to having more disclosure. Historically, the issue has been that there has been advocacy within the Greenhouse Gas Protocol structure in these scopes. Scope 1, 2, and 3, they are currently attributional accounting based, meaning one for one, it's not offsetting. It is just choosing your supply and assigning the appropriate emission factor to that unit of load. And that's attributional.
It doesn't take into account what the impacts of the project I invested in are, what might have been reduced or avoided. That information is counted outside of the scopes. The problem is that the only place that they've had guidance on what to do in terms of accounting for reductions is very strict rules about offsets, how offsets are applied to inventories. And now we're kind of in this — we're not necessarily arguing that this is a fully additional offset that passes a financial additionality test. We're saying it's still an important impact that we should be able to disclose in a consistent way and that we should be able to build leadership programs off of it and recognize companies for doing this type of activity.
And the Greenhouse Gas Protocol is trying to figure out, well, where does that fit in our corporate inventory system?
David Roberts
Right. Because one thing I wonder about is once you start getting into those kind of second-order effects like: did this cause the developer to make a decision to do this? Then you're sort of getting into counterfactuals, and things get real fuzzy real quick when you get into counterfactuals. As someone who follows political analysis, I can just say that you can do whatever you want to do with counterfactuals and come to whatever conclusion you want to. So I wonder, is it straightforward to measure impact? I guess, are there reforms that you think that are easy at hand that would, you know, sort of unambiguously improve things along those lines?
Michael Leggett
Yes. You know, it may not be as easy as going and buying a single REC from a broker, but like, I think that the core piece of this is there should be options and we should have greater transparency. You know, it's kind of think of as like a nutrition label where we should be able to see, you know, what's your hourly matching, what's your, you know, location, what's your impact. And maybe some companies say, "You know what, we didn't do anything in that bucket and so we get an X." I'm all for greater granularity, greater transparency.
What I don't like is right now the proposals seem like they're choosing a winner. And that winner, while it may seem an accounting standard, also will have implications for choosing procurement methods which will have implications for impact and the rate at which we decarbonize our world. So back to your original question on "Are there ways of measuring or quantifying impact?" Ever.green, because that standard doesn't exist, basically wrote our own standard and published it to try to be really transparent about this. And we look for a material role that the RECs are playing. So we'll look at like kind of a 20-year, you know, the first 20 years of a project.
And I want to know that the revenue coming from my REC contract is a material piece of the investor's return or of the cost of capital or, you know, other things, as well as kind of legal attestations from the developer saying, "We couldn't build this project, like we couldn't have gotten it funded or financed without that material support." Is that perfect? You know, I'm sure there are problems with it. I'm sure there are ways to improve it.
David Roberts
It's one thing for you to do it as a service to buyers, it's another thing for the Greenhouse Gas Protocol to try to do it because then you really need to lock down a reliable method that everybody trusts.
Michael Leggett
Yes. And Peggy should really — I don't think Greenhouse Gas Protocol — there are roles that they are there to play, and I think there's absolutely a limit to what all they want to do.
David Roberts
Well, Peggy, let me frame the question this way. I mean, it seems like one answer that could make a lot of people happy is, like Michael says, make this information available, transparent so that anybody buying a REC can know it's 24/7, like where and when it is, and they can know its impact at least insofar as we're able to measure impact. But that those don't come with any new sort of requirements so that you can have kind of like voluntary tiers. So if I'm a company that wants to go 24/7, I can. If I'm a company that wants to go full emissionality, I can.
So my big question about — it seems like that would make everybody happy. Everybody could do what they want, everybody would have the same information. I guess I wonder if I'm a company that's contemplating whether to go further. At the very least, I'm going to want some sort of gold star, some sort of like bonus or badge or I don't know what it is or like, you know, it's something that can signal to stakeholders and consumers and customers that I did this, that I tried hard, that I went above and beyond.
But then the minute you go from a REC is a REC to gradations of RECs or tiers of RECs, you're increasing complexity. So my question to you, I guess, is, is there an easy way to create these tiers such that a company can get the kudos, get the benefit, get the reputational boost in a clear and public way? Do we have the kind of infrastructure for that?
Peggy Kellen
So the infrastructure of the corporate standard at the moment is that it's a disclosure standard. And it really, going back to the beginning, was revolutionary for being that even disclosure was leadership until very recently. And we think that there's value in maintaining a record of having a place where you have a black and white disclosure standard with broad transparency. And our organization hopes that continues to be the role that the Greenhouse Gas Protocol and the corporate standard play. There's a question internally as the protocol has updated their governance and thought more about what they want to be, and there are impact aspects in that impact is a key decision-making criteria they are trying to apply to the updates.
But traditionally, introducing tiers of impact or benefit of recognition is the role of a program which could be built on top of a disclosure standard, so that could be implemented by the Greenhouse Gas Protocol or a third party.
David Roberts
Or the government. Like the Energy Star, you know, like a version of the Energy Star could be? So in terms of handing out kudos and handling those reputational benefits, you think that's kind of somebody else's job. You need somebody who's structuring a program to do that?
Peggy Kellen
It doesn't even have to be somebody else's job. But we as protectors of market integrity hate to risk losing important data. What happens to the RECs that don't qualify? In being more conservative and assigning fossil emissions rates to unmatched generation, we're overestimating emissions. And that's also not necessarily helpful. You need both.
David Roberts
What would you like to see, Michael? You deal with these companies. What would—Google is sort of going above and beyond because they just seem committed. But I'm too much of a cynic to think that you're going to get a substantial fraction of the US business community committed to going above and beyond because they care. So what kind of incentive would—what kind of badge—or would they do it for a badge? What would they do it for? What would incent these companies to go above and beyond the baseline standard?
Michael Leggett
I mean I think there are like RE100 and other programs that give out awards and stuff, but even those programs usually are on like "How old was the project from which..." They will recommend long-term contracts, but there's not a ton of stars — "Oh, you did this through a PPA, more gold stars." So I would say any recognition from any program would be a good start. And having that as kind of data that we — Greenhouse Gas Protocol has at least set a foundation on which how we disclose that, how we look at it, how we consider it, how we think about it, so that you don't have everybody coming up with their own standard and saying, "Hey, this was triple double platinum impact, when really it wasn't much impact at all."
David Roberts
I mean you can easily imagine multiple programs getting built on top of this with contrasting badges and contrasting systems of awards and more confusion.
Michael Leggett
Yeah, so the use of long-term contracts has been growing. I think it is now, you know, just recently or, you know, crossed such that more RECs are going through PPAs than not in the US, and I think that's with very little incentive. Like I talk to companies and, you know, the sustainability officer will often get it because they want to — like that's the core of what they're trying to do, is decarbonize this world. And they see that that would be more impactful. But then the CFO is saying, "Well why, why bother? Like the spot market RECs count just the same. So what's in it for me? Like, what do we get out of that?"
And so I think that insofar as Greenhouse Gas Protocol wants to incentivize ambitious action, I think having some way to disclose and consider impact and then programs can be built on top of that to recognize that impact, I think is very important. And I think that hourly matching can be a part of that. And I think doing hourly matching and PPAs is triple stars. That's amazing. Or certainly can be insofar as you're doing that in a dirty grid. I think if you're doing it on a really clean grid, then you could get into, "Well, is that better because you're local? Or would it have been better to have done a long-term PPA next door in the state, next door on a dirtier grid?"
And we could have those arguments. But yeah, so I think more disclosure and finding ways to incentivize and recognize. Because like fundamentally, renewable energy, it is the core piece of decarbonizing our world. It is not automatic and it's not moving fast enough. Corporate or the voluntary markets is not the only cog in this machine. It's not the only lever we have, but it is one and it is a big one. And it's one we should be pulling as hard as we can to decarbonize our world.
David Roberts
Separate from going to full 24/7 or implementing some sort of emissionality measure, standard. What are some of more sort of proximate reforms you could make purely in the name of improving additionality? Basically, because additionality is one of the sort of core problems here. And right now, the way the system is built now, you can easily purchase RECs with zero additionality. So what kind of reforms would — I mean, do you want to primarily make that more visible and transparent, or do you actually want, would you prefer actually the protocol to require some minimal level of additionality?
Michael Leggett
That's a tough one. I don't see the protocol requiring. I think they often talk about how we are not trying to pick winners in procurement strategies. And I think additionality is — whether or not that's there or not — really comes from how did you buy what you bought? So I think some base rules on what is impact, how to test for it, how to disclose it would be such a huge step forward. I think tagging every REC with what did this come from? Because a spot purchase could be like Ever.green signed a 20-year PPA and then we turned around and sold those, you know, in spot transactions.
I would say that impact absolutely transfers with the REC, is attached to the REC in the same way that the zero emissions factor is. We don't have standard rules, an agreed way kind of on how to do that across markets and across market participants. So I think kind of more fundamental infrastructure on how should we be tagging these things, considering these things, testing for these things, I think would be a huge step forward. So at least we have greater understanding of what's happening and what's not.
David Roberts
I mean it seems like one thing everybody should agree on or does agree on — whether or not you think various and sundry things should be made mandatory or should be folded into the requirements — everybody seems to support making more information available. Like at the very least, whether or not you're going to do anything with the information you have about the REC, you should be able, when you buy a REC, to know where it comes from, when it was generated, and an estimate of its impact, whether or not you're going to require anyone to do anything. It's like surely everyone agrees, like having that information available is better than not.
Michael Leggett
100%.
David Roberts
Peggy, final question here. We're over time and we've barely scratched the surface, but one sort of way forward here, especially, I think, you know, through the lens of sort of your institutional concerns about just, you know, being a little small-c conservative here, making sure all the data is tracked, making sure that sort of core system is clear, is there on the table or is anybody talking about a sort of phase-in of various things? Because this whole thing of like giant fundamental revisions but only once per decade seems like kind of a weird, kind of a weird way to go about it. Is there any talk of like changes that phase in over time?
Like, you know, like in two years we'll require this and two more years will require this. Is that on the table as a solution here?
Peggy Kellen
So I just want to put a plug in for how difficult it is to get support for developing standards. It's not something a lot of people want to pay for. And so I have a lot of sympathy for the Greenhouse Gas Protocol for not sort of having such a rigorous update process over the past 10, 15 years. In this update, through the criticisms that were raised in 2023 and around that time, they took a big look at their infrastructure, and they're still sorting out how they're going to be structured. I think there is a commitment to more frequent updates and revisions and revisiting.
And I think that's really important because it does allow you to move the goalposts that way, right? So if we get to a point where every tracking system is issuing hourly certificates and customers can literally log into a website and buy something — that is still not how you purchase RECs now — then maybe it's not a feasibility issue and it's a non-issue and we can move towards that level of matching. But to prescribe it is always difficult to say, "In two years we'll do this, in four years we'll do this." It's a little challenging. So I'd encourage a strong commitment to ongoing maintenance and updates of the standards to achieve that same outcome.
Michael Leggett
I mean, I think the other dimension to this is not just time, but also what stage different grids are at. So phasing this in over time doesn't address the issue of we have some grids that are of high variable renewable energy, you know, higher solar and wind, and others that are 1%, 2%. And the solution that those grids need, what is most impactful, is different. And so you've got one global standard trying to set up requirements that work across all these different situations. It's hard. It's a Herculean effort, and we should be careful that we can, you know, in that, move the ball forward.
David Roberts
There's like so many conversations I have on this pod, which is I come to the end of it and think, you know, who would be great at doing this is this giant government that we built over several centuries. We're just all like, kludging our way, trying to build these Rube Goldberg mechanisms to do basic stuff that the government ought to be doing. There's my little rant at the end there.
Michael Leggett
Yep, we should try to do that too. But in the meantime, you know, the lobbying is valuable. In the meantime, I'm going to try to get as much steel in the ground as possible.
David Roberts
Fair enough. All right, Michael and Peggy, thank you so much for coming on. This is enormously illuminating and fascinating. Thanks for coming.
Peggy Kellen
Thank you.
Michael Leggett
Thank you.
David Roberts
Thank you for listening to Volts. It takes a village to make this podcast work. Shout out, especially, to my super producer, Kyle McDonald, who makes me and my guests sound smart every week. And it is all supported entirely by listeners like you. So, if you value conversations like this, please consider joining our community of paid subscribers at volts.wtf. Or, leaving a nice review, or telling a friend about Volts. Or all three. Thanks so much, and I'll see you next time.
