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Blowing our cash? Experts say renewable energy money too difficult to follow  

The rapid growth of Renewable Energy Credit sales across the nation, including at CSU and in the City of Fort Collins, may be hitting its stride as City officials are looking to replace REC purchases with more efficient alternatives that more directly benefit REC consumers.

A REC is a unit of energy generated by using infinite natural resources that can be powered by infrastructure such as wind turbines or solar panels.

The Environmental Protection Agency dictates that money going to RECs is used to benefit the renewable energy market and expand projects. But local experts and researchers say the national REC market is broken because the money is difficult to trace, and the credits are nearly impossible to follow.

“It’s very difficult to quantify the green attribute with the purchase of renewably energy credits,” said David Roy, Fort Collins City Council member who has followed the issue since community members started expressing concern about a year ago.

Roy said renewable energy efforts should become local instead of national.

“I think the money we spend in RECs outside of (Platte River Power Authority) are a bad investment for taxpayers and ratepayers in the City of Fort Collins,” he said. “We can also create renewable energy sources like solar panels that the people of Fort Collins can use directly.”

REC sales in the U.S. grew about 144 percent from 2003 to 2005, according to a 2007 study by Princeton University.

And CSU reflects the national trend.

Student participation in the university’s Green Power Program grew 200 percent since its establishment in 2004. This year, more than 300 students purchased renewable energy.

The credits, which provide power for nine months, cost $17 for dorm residents and $52 for students living in apartments on campus, according to Housing and Dining Services.

Tonie Miyamoto, the director for CSU’s renewable energy programs, said until the renewable energy industry in Fort Collins grows, CSU will have to show its support of renewable energy production by buying RECs, which federal monitoring verifies as certifiable beneficial.

But the EPA admits that tracking the attributes needs to be more closely monitored to prevent fraud in the REC market.

City officials say Fort Collins is pushing for a new way to offer renewable energy and make energy more efficient.

Roy said money could be better spent locally on energy saving methods like better maintenance and construction of houses and City buildings.

Fort Collins Mayor Doug Hutchinson said the city is working to promote renewable energy initiatives. Fort Collins residents spend $380,000 on RECs currently, but that number will be dwarfed by the over $20 million in renewable energy investments planned under Platte River Power Authority, Hutchinson said.

“The trend is to have the generation capabilities in wind power instead of RECs,” he said.

Hutchinson said the City is trying to move from reliance on REC purchases that leave Colorado’s economy to increased renewable energy generation. But, he said, RECs will still be part of Fort Collins until renewable energy production grows in Colorado.

Hutchinson refuted claims that RECs are not accurately quantifiable. He said the confusion of RECs has led to a lot of false information.

RECs contribute in different ways to renewable energy generation, and experts say the public is unaware of where their money is going and how it is making a difference.

A REC and its benefits are not the same in all markets, and those inconsistencies put the credibility of certified renewable energy at stake.

Eric Sutherland, a Fort Collins resident and outspoken critic of what he calls “greenwashing,” sees REC retailers as far from convincing when they say RECs contribute to renewable energy production and sustainability. He said the public is misinformed and REC money needs to be used in the community to better the renewable energy market and economy.

Under the Production Tax Credit, the federal government subsidizes $19 per megawatt hour of a renewable energy facility’s operation while it’s in the first 10 years of production, according to the Princeton study.

Sutherland said government tax subsidies are vital to renewable energy generation, and the subsidies coming from taxpayers keep the renewable energy market alive.

“Don’t stop REC purchases,” Sutherland said. “Just accurately value the outcomes. People insist on overvaluing renewable energy credit purchases.”

Sutherland said no one he spoke with from the city of Fort Collins knew where REC revenues were going and how the value of a REC was quantified.

But Patty Bigner, Customer Connections manager for the City, refuted criticisms that RECs’ economic benefits cannot be proven. She used Vestas, a wind turbine manufacturer in Windsor, as an example of a positive outcome of the REC market.

“Our dollars that have gone into our program have added to the market,” Bigner said. “That’s what I call market transformation.”

While Bigner emphasized the correlation between increased wind farm production in Colorado and the market’s benefit as a whole from RECs, she didn’t specify attributes and benefits directly resulting from REC revenue.

Bigner was also uncertain of how the price of RECs is determined.

“I’m not sure that I know exactly how they came about it,” Bigner said. “When you buy renewable energy, you pay a premium to have renewable attributes that are associated with wind.”

Most REC market consumers are under the assumption that the revenue from REC sales is attributable to a reduction in carbon emissions or the added production of renewable energy.

The assumption that a REC’s attributes can be quantified is an ambiguous claim and varies from state to state, critics say. Experts say the tracking system of RECs from creation to sale is a concern.

Sutherland said that, although there is a small percentage of renewable energy facilities that would not have been built without REC sales, the majority of facilities would still exist and produce renewable energy regardless of REC sales.

“Like 90 percent of RECs are (bought from) facilities that didn’t expect to sell RECs,” he said. “The value of the environmental attributes is not determined at the time of sale, so it is up to the purchaser to decide what those benefits are.”

One exception, though, is in Wray where investors bought wind energy from the turbine before it was built.

The investment was made with a presumption that the wind energy could later be sold as certifiable RECs. In the case of Wray, a REC purchase had verifiable benefits because without the projected REC sales, the turbine could never have been built.

“We have to reduce the amount of energy we use to combat climate change,” Sutherland said. “These conversations are starting to happen more.”

Sutherland said taxing carbon emissions, rather than adding to the incentives for wind energy, is how wind energy production will escalate effectively.

“It simply does not take much of a tax on carbon … to incentivize green energy,” he said. “Once the price of energy goes up, people start to use less. … A small tax could make wind turbines the best energy available.”

By: Kaeli West

The Rocky Mountain Collegian

5 May 2008

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

The copyright of this article resides with the author or publisher indicated. As part of its noncommercial effort to present the environmental, social, scientific, and economic issues of large-scale wind power development to a global audience seeking such information, National Wind Watch endeavors to observe “fair use” as provided for in section 107 of U.S. Copyright Law and similar “fair dealing” provisions of the copyright laws of other nations. Send requests to excerpt, general inquiries, and comments via e-mail.

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