Double Counting
Double counting (also known as “double claims”) occurs when two different parties claim the same environmental benefits from the same generated green power.
Double counting can occur when:
- Multiple parties are sold the same REC.
- A utility counts the same renewable megawatt-hours (MWh) or RECs toward meeting its renewable portfolio standards (RPS) requirements and as a sale in its voluntary green pricing program.
- A solar system owner claims to be using renewable electricity, while at the same time, another party is contractually purchasing the RECs associated with the solar system’s output.
- A facility with a power purchase agreement for on-site solar claims to be using renewable electricity, while at the same time, the system owner is selling the RECs to a utility to meet its RPS requirements.
Why Double Counting Matters
The effect of double counting is that the environmental benefits of a certain REC are counted twice—once by the legitimate REC owner and once by the other claimant. Double counting skews the marketplace by falsely depicting a greater number of organizations or people making claims about using renewable resources.
For organizations, double counting can also lead to credible accusations of greenwashing and can severely hurt an organization’s credibility. Both the Federal Trade Commission and the National Association of State Attorney Generals have issued guidances on legal implications of making fraudulent claims.
How to Avoid Double Counting
- Understand RECs.
At the point of generation, RECs include all relevant locational and environmental attribute information on the generation of the 1 MWh, regardless of how large or small the facility is or where it is located relative to the consumer.
For instance, suppose a renewable energy project is not registered with a REC tracking system. Therefore, in this case, no RECs can be formally issued within a tracking system. Regardless, the project creates RECs or energy attributes for every megawatt-hour generated. These RECs or energy attributes may be conveyed to another party, by way of a contract. Generation must still be measured, and generator attributes verified. Without the benefit of a tracking system, verification of ownership would be proven through an independent chain-of-custody contract audit.
- Properly retire RECs before making a claim.
Retire the RECs associated with green power purchases to prevent double claims. Making an environmental claim (e.g., “we use renewable energy”) requires the retirement of the REC. Selling or transferring RECs after making environmental claims leads to double counting, as two different parties will claim the same environmental benefits from the green power purchase. For purchases of RECs that are tracked in tracking systems, the buyer should ensure that the RECs are retired in their name or retired on their behalf by their supplier. The organization can consult with its green power supplier or tracking system representatives on the formal REC retirement options.
- Make sure contracts are clear.
When pursuing a renewable energy contract, the terms and conditions for who will own the RECs must be laid out clearly. A contract that is silent on the ownership of RECs can create confusion about REC ownership, which is detrimental to renewable energy markets and may result in double selling or double counting.
To avoid potential double claims, contracts should be explicit about what environmental attributes are included with the sale of the REC and over what term. Buyers and sellers should also clarify in the contract that the purchase conveys the exclusive rights to the attributes and that the RECs are not also being used for an RPS or any other regulatory requirement.