Abstract
The promotion, desire and need for renewable energy generation and transmission to electric grids to provide clean, non-carbon-based power has increased in recent years with more focus on climate change mitigation in both the public and private sectors. Renewable Energy Certificates, also known as “RECs” are the established public policy mechanism for incentivizing, verifying, tracking and supporting renewable energy. REC markets are created and managed by state governments to allow selling, purchasing and trading of these “green commodities'' to substantiate environmental attribute claims. A new legislation in Massachusetts requires all stakeholders, businesses and sectors to reduce emissions, which means electric utilities, both public and private, must participate in REC markets to green their power supply portfolios that they provide to consumers. This paper explores and analyzes the role of REC markets, monetary policy, trends, stakeholders, participants, and the current public policy debates in this area. A specific public policy making case is explored for this research, the Municipal Light Plant in Shrewsbury, MA, utilizing RECs to achieve a 100% non-carbon power supply or “net-zero” emissions. A financial analysis based on REC market research and debate is conducted to inform a rules-based and judgement-based fiscal Power Supply Policy and Greenhouse Gas Emissions Standard for SELCO (Shrewsbury Electric and Cable Operations), a public electricity utility.
Highlights
Introduction and Background InformationRenewable energy generation and distribution to end users through the electric grid is an essential action to address climate change
As the Environmental Protection Agency explains, “because the physical electricity we receive through the utility grid says nothing of its origin or how it was generated, RECs play an important role in accounting, tracking, and assigning ownership to renewable electricity generation and use.” (n.d.) In many US states, each megawatt hour (MWh) of electricity generated by a certified renewable resource produces a Renewable Energy Certificate (REC) that has a dollar value
Information and insight from green commodity market experts at Massachusetts Municipal Wholesale Electric Company (MMWEC, 2021), a partner of SELCO‟s, an economic analysis was performed on different pathways SELCO can achieve a 100% non-carbon power portfolio
Summary
One of the primary objectives of this research paper is to investigate and describe the role, policies, trends and pros/cons of REC markets and green commodities with the scope of studying various REC markets around the world, but the main focus will be US markets, the New England region Another primary objective is to analyze this information and data to inform a power supply policy for Shrewsbury, Massachusetts‟ municipal light plant SELCO (Shrewsbury Electric and Cable Operations) that utilizes RECs to achieve net-zero carbon emissions. This has not been conducted extensively for a particular case with an academic approach, this study brings new knowledge to the area of “green finance” and the economics of emissions reduction
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