Investing in Renewable Energy Certificates
The investment market is changing. Investors are now looking for ways to make a profit whilst helping the environment, which has led to the development of Renewable Energy Certificates, or RECs.
The European Debt Crisis, the US Debt Ceiling negotiations and poor GDP growth across developed countries has meant that standard investment markets such as shares continue to experience extremely high volatility. This has meant that many investors are staying away, and looking for other places to find opportunities to profit.
Alongside this, many investors are now recognising that they can get more than just a return on their investment, they can also use their investment ethically, and profit whilst helping the environment. This has led to the development of environmental and ethical commodities. These include biofuelsand much more.
Each of these are growing fast. In fact, the carbon credit market, compliance and voluntary, is now worth almost $184 billion a year. The carbon market is fast becoming one of the worlds largest markets, second only to the foreign exchange market.
Another environmental commodity to have reached public attention recently is Renewable Energy Certificates, or RECs.
Sometimes known as 'Green Tags' or 'Renewable Energy Credits', the concept behind RECS is that they represent a contractual right of the holder of the REC to claim any benefit that is associated with energy created from renewable sources.
Each REC is certifies that a single megawatt-hour (mwh) of electricity was generated from renewable sources, such as wind turbines and solar cells. Possession of a Renewable Energy Credit means the buyer can show they have purchased renewable energy. This has had a great effect on businesses, who are in a race to see who can be the most environmentally friendly.
As these certificates are classed as a commodity, they can be traded, bought, and sold. As countries and companies set limits on their greenhouse gas emissions, companies whose emissions are over a set limit can purchase RECs from companies who are below the limit. RECS are therefore considered by some commodity brokers as an innovative way to further stimulate the use and production of renewable energy.
The certificates are a flexible way of allowing organisations to support renewable energy development and protect the environment. They are also a flexible way for investors to potentially profit whilst helping the environment.