Renewable Energy Certificates (Green Tags)

This page provides information about tradable renewable energy certificates, also called green tags.

Electricity produced from renewable energy can be used by the producer or sold as a commodity to others. Unlike fossil-based generation, which can emit large amounts of air pollution — such as carbon dioxide, sulfur oxides, nitrous oxides, heavy metals, and other toxic substances — renewable-based generation is largely pollution free. Today, these environmental benefits are increasingly being quantified and marketed.

When electricity from a renewable energy producer is used or sold into the power markets as simply electricity, without taking any environmental credit for the source of that power, the environmental attributes of that renewable energy can be sold or traded separately as a commodity, called green tags. Green tags (also known as green energy certificates and tradable renewable certificates) provide an additional revenue stream to the project and can be sold to companies and consumers anywhere in the country. In this way, companies and consumers can choose green power even if their local utility does not offer a renewable-based power product.

The revenue generated by selling green tags can significantly benefit the finances of a renewable energy project. For example, the large 750-kilowatt wind turbine built on the Rosebud Sioux reservation was partly paid for with a major green tags purchase by Native Energy, one of the leading U.S. marketers of green tags. A unique aspect of the Native Energy program is their ability and willingness to purchase the long-term green tags generation for the economic life of a project, instead of on a year-by-year basis. For the Rosebud Sioux, this meant a check worth $200,000 in return for the purchase of green tags generation from the turbine for years 5 through 20. (Years 1 through 5 had already been sold to Ellsworth Air Force Base.)

In another example from late 2003, a green tag marketer called Mainstay Energy was offering a one-time payment of $100 per kilowatt of solar energy capacity or $50 per kilowatt of wind power capacity for recent projects installed in New England. That offer was mainly aimed at smaller projects installed by consumers or businesses. Developers of larger projects will typically sign a contract with a green tag marketer to generate a constant income based on the actual amount of power produced. Although green tag marketers rarely disclose the amount of money they are paying for the green tags, they are currently selling them for as low as 1.5 cents per kilowatt-hour or as much as 4 cents per kilowatt-hour.

However, green tags have one drawback: the buyer of the green tag must trust the seller's promise that the green tag represents actual renewable energy generation. Green tags could easily be abused. For instance, a renewable power provider could sell the electricity to local consumers as green power and then also sell green tags for the same power — essentially selling the renewable attributes twice. To build trust in green tags and other green power products and to prevent their abuse, the non-profit Center for Resource Solutions has established Green-e, a voluntary certification and verification program for green power products. The Green-e Web site on Renewable Energy Certificates explains, in practical terms, how they are measured, verified, and traded. For a more detailed and thorough explanation, see their Tradable Renewable Energy Certificate Handbook for energy regulators.

For more information about green power, including options such as green tags, see the Environmental Protection Agency's Web site "What is Green Power?". In addition, the Department of Energy's Green Power Network Web site provides current information on green power, green pricing, green marketing, green certificates, and state policies. The section on Renewable Energy Certificates gives updated information on all of the providers and marketers of green certificates in the United States.