Navigating Zero-Emissions Energy Credit Programs

Pardon Our Dust

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In recent years, state emissions credit programs and policy have sought to incentivize only renewable electricity generation, leaving out other sources of zero-emissions generation. But that legislative and regulatory landscape is changing rapidly.

Over the past few decades, several states have set up renewable energy credit (REC) programs. In the most basic sense, RECs incentivize renewable electricity generation by allowing consumers to buy credits from renewable electricity generators. By purchasing credits from these generators, consumers — generally utility companies looking to comply with state energy standards, or organizations and individuals seeking to reduce their carbon footprint — can then offset the purchase of electricity elsewhere from nonrenewable generators.

One significant element of RECs is, as the name implies, that they are limited to only zero-emissions renewable sources — wind, solar, biomass, geothermal, hydro, etc. Therefore, they do not allow other nonrenewable zero-emissions sources of electricity generation — notably, nuclear — to participate. This specifically puts nonrenewable zero-emissions electricity generators and consumers at a disadvantage, as they cannot claim the same benefits that renewable electricity generators and consumers can through REC programs.

Several states recently began establishing zero-emissions credit (ZEC) programs. The premise of ZEC programs is mainly the same as that of REC programs: To incentivize nonrenewable zero-emissions electricity generation, consumers buy credits from nonrenewable zero-emissions electricity generators.

Below is a quick primer on where ZEC programs stand in the handful of states that have authorized them:

	New York In 2016, the state adopted a clean energy standard that included establishment of a zero-emissions credit program.
	Illinois In 2016, the state enacted changes to its Renewable Portfolio Standard, including establishment of a zero-emissions credit program.
	New Jersey In 2018, the state enacted legislation to establish a zero-emissions credit program.
	Connecticut In 2017, the state enacted legislation directing the state’s Department of Energy and Environmental Protection to establish a zero-emissions credit program by 2022.

This article is part of a series of reports on our experience in the energy sector. Read other articles in the series:

Navigating Zero-Emissions Energy Credit Programs

September 12, 2018

Pardon Our Dust