Net-Zero Emissions With Renewable Energy Certificates: A Public Policy for a Massachusetts Municipal Light Plant

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.