Green Power Partnership

Carbon Footprint Reduction Instruments

Many organizations undertake greenhouse gas (GHG) inventories using standardized approaches and principles to account for their GHG emissions and carbon footprint. From these inventories, organizations develop strategies to effectively manage and reduce GHG emissions and mitigate climate risk involved with their business operations. Through this framework, organizations utilize a variety of instruments to track and substantiate emissions reductions. In the U.S. market, the common instruments used are:

Renewable energy certificates (RECs)—used to manage indirect emissions
Offsets—used to reduce direct global emissions

While both RECs and offsets can help an organization lower its emissions footprint, they are different instruments used for different purposes. Think of offsets and RECs as two tools in your sustainability tool box – like a hammer and a saw. They are not interchangeable. Each tool is used in building a house, but each is used to accomplish specific tasks. For more information, see the Offsets and RECs: What's the Difference? guidance document, which explains the differences between RECs and offsets, why and how an organization might use one or both, and common misconceptions. EPA's Green Power Partnership focuses on the usage of REC-based renewable electricity. Use of project offsets is beyond the scope of the Green Power Partnership.

The following table outlines the key differences between RECs and offsets:

Basic Differences	Offsets	RECs
Unit of Measure	Metric tons of CO₂ or CO₂ Equivalent	Megawatt hours (MWh)
Source	Projects that avoid or reduce greenhouse gas (GHG emissions to the atmosphere)	Renewable electricity generators
Purpose	Represent GHG emissions reductions; provide support for emissions reduction activities; and lower costs of GHG emissions mitigation	Convey use of renewable electricity generation; underlie renewable electricity use claims; expand consumers’ electricity service choices; and support renewable electricity development
Corporate GHG Inventories and Reporting	Reduce or “offset” an organization’s scope 1, 2 or 3 emissions, as a net adjustment	Can lower an organization’s gross market-based scope 2 emissions from purchased electricity
Consumer Environmental Claims	Can claim to have reduced or avoided GHG emissions outside their organization’s operations	Can claim to use renewable electricity from a low or zero emissions source
Additionality Test Requirements	Required. Each project is tested for additionality to ensure that it is beyond business as usual. Tests include legal/regulatory, financial, barriers, common practice and performance tests. The combination of tests that is best suited to demonstrate additionality depends on the type of project.	Not required. Project additionality is not required for a renewable energy usage claim or to report use of zero-emissions power.