When to Use Carbon Offsets and Renewable Energy Credits

I recently saw another research firm quoted as saying some firms are “buying” green credentials by purchasing renewable energy credits and offsets. The implication was that there is something dishonest about this practice.

That’s unfair. Most of the companies we work with are very thoughtful about their use of offsets and credits. The better ones recognize that their first order of business is to improve their own environmental performance as far as economically possible.

Many companies now have goals to reduce greenhouse gas emissions and to use renewable energy. But companies sometimes find achieving those goals through operational changes challenging. As they work on tuning their operations, closing the gap by purchasing credits and offsets is a completely defensible alternative–as long as it doesn’t become an execuse for inaction.

From: Annual Sustainability Executive Survey, 2012

Green Research recently conducted a major survey of senior sustainability executives at large companies in North America and Europe. According to the study, about half of the respondents’ companies will be purchasing RECs in 2012 and about as many will purchase green power. Thirty percent will purchase carbon offsets. Despite all this, the buyers are troubled about those products:

  • More than a third said it was very or extremely important that they have greater confidence in the quality of the credits or offsets they buy
  • 25 percent felt strongly that they needed to communicate better about why they use them
  • 27 percent said they need to reduce their reliance on them.

Because of these concerns, in recent years, some companies have backed away from offsets and RECs. In 2011, for instance, computer maker Dell announced that it had ended its purchases of RECs for the purpose of classifying its operations as carbon neutral. Nike and PepsiCo stopped buying RECs and carbon offsets in 2010. The reason: to focus on direct investments that will accelerate their use of alternative energy sources. That’s great, if a company is savvy enough to know how to carry out such direct investments. Until that point, supporting the transition to a low-carbon economy via offsets and credits is a fine alternative.

What do you think?

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