Renewable Energy Credits (RECs) are tradable instruments that represent proof that one megawatt-hour (MWh) of electricity was generated from a renewable energy source. RECs can be bought and sold to help finance the development of renewable energy projects and to encourage the use of clean energy.

Usually when electricity is generated from a renewable energy source, it is fed into the grid and mixed with electricity from other sources. This can make it difficult to trace the exact source of the electricity that is consumed by a particular user. RECs provide a way to track and verify the renewable energy content of the electricity that is consumed.

RECs are typically issued by a government agency or an independent third party. They can be bought and sold separately from the electricity itself, allowing companies and individuals to offset their carbon emissions by purchasing RECs. Some states have mandatory renewable energy standards that require utilities to generate a certain percentage of their electricity from renewable sources. In these cases, utilities may meet these standards by purchasing RECs in addition to generating their own renewable energy.

There are several different types of RECs, each of which represents a specific type of renewable energy. For example, there are solar RECs, wind RECs, and hydro RECs. The value of a REC depends on the type of renewable energy it represents and the demand for that type of energy in the market.

Renewable Energy Credits (RECs) and carbon credits are similar in that they are both used to offset greenhouse gas emissions. However, there are some key differences between the two.

RECs represent proof that a certain amount of electricity was generated from a renewable energy source. They can be bought and sold to help finance the development of renewable energy projects and to encourage the use of clean energy.

Carbon credits, on the other hand, represent a reduction in greenhouse gas emissions. They are often used in emissions trading schemes, where companies that exceed their emissions limits can purchase credits from companies that have reduced their emissions below their limits. Carbon credits can also be bought and sold by individuals and organizations as a way to offset their own emissions.

In summary, RECs represent the production of renewable energy, while carbon credits represent the reduction of greenhouse gas emissions. Both can be bought and sold to encourage the use of clean energy and reduce emissions, but they represent different things and are used in different ways.