[Washington, DC – June 26, 2023] - The Environmental Markets Association (EMA) recently responded to a one-sided Washington Post article titled "Why buying renewable energy doesn't mean what you think" published on June 21st.
In the letter to the Editor, EMA emphasizes the role of market-based programs in achieving environmental policy goals and endorses principles that emphasize transparent price signals, risk mitigation, innovation incentives, efficient allocation of resources, investor certainty, and ratepayer protection in well-designed markets.
Regarding the concerns about renewable energy credits (RECs) in the article, EMA highlights the potential of tradeable REC products to efficiently allocate capital and reflect the environmental attributes of renewable energy. Market oversight ensures integrity and stability.
The article failed to acknowledge extensive research supporting market-based programs or the environmental benefits and economic efficiency of renewable energy markets.
The full letter to the Editor can be read below. EMA encourages its members to advocate and support market-based solutions and promote the principles that make environmental markets work as a pathway to a sustainable future.
---------
Dear Editor:
On behalf of the Board of Directors and members of the Environmental Markets Association (EMA), we are writing in response to the one-sided nature of your article titled "Why buying renewable energy doesn't mean what you think" published in The Washington Post on June 21, 2023. While we appreciate the insights presented in the article, we believe it did not adequately address the broader context and the role of market-based programs in achieving environmental policy goals.
EMA, an organization that strongly supports the utilization of markets to achieve environmental policy goals, endorses several principles that are pertinent to the discussion at hand. These principles, as laid out by EMA, emphasize the benefits of well-designed markets, including transparent price signals determined through competition, risk mitigation opportunities, incentives for technological innovation, efficient allocation of capital and resources, investor certainty, and ratepayer protection.
One of the key points raised in the article is the concern about the effectiveness of renewable energy credits (RECs) and their ability to truly represent the environmental benefits of renewable energy generation. While it is true that not all RECs are created equal, the market-based approach advocated by EMA provides a framework to address these concerns.
Market-based programs, such as the tradeable REC products mentioned in the article, offer a mechanism for efficient allocation of capital and resources. They enable market participants to evaluate and respond to transparent price signals determined through competition. By fostering transparency, competition, and liquidity, market design can ensure that RECs accurately reflect the environmental attributes of renewable energy generation.
Moreover, market oversight, as endorsed by EMA, is crucial to ensuring the integrity and stability of these market-based programs. By establishing regulatory frameworks that oversee the trading and verification of RECs, market oversight helps address concerns regarding the quality and credibility of these instruments. Such oversight mechanisms play a vital role in maintaining investor certainty and ratepayer protection.
It is important to note that the article primarily highlights the challenges and potential pitfalls associated with renewable energy credits but fails to acknowledge the extensive research and practical experiences that support the efficacy of market-based programs, nor does it present any commercially viable alternative approaches. Several studies, including those conducted by reputable institutions have demonstrated the environmental benefits and economic efficiency of renewable energy markets including:
- The International Energy Agency recently studied the role market-based mechanisms play in decarbonization and help understand what technologies bring the most value to the system.
- A recent Center for Resource Solutions report summarizes the legal basis for RECs in state and federal laws, case laws addressing RECs, and the use of RECs in voluntary clean energy programs.
- A 2018 study shows that a REC system creates a trackable and tradable carbon inventory scheme that rewards corporates willing to invest in the renewable energy market by purchasing RECs
In conclusion, while it is important to critically examine and improve market-based programs, it is equally important not to dismiss their potential in achieving environmental policy goals. By adhering to the principles endorsed by EMA, we can enhance market design, foster transparency, and competition, and ultimately harness the power of markets to drive the transition to a sustainable future.
Thank you for your attention to this matter. I hope you will consider publishing this letter as a balanced perspective on the topic.
Sincerely,
The Environmental Markets Association
About EMA:
The Environmental Markets Association (EMA) promotes market-based programs for achieving environmental policy goals. EMA advocates for transparent price signals, risk mitigation, innovation incentives, efficient resource allocation, investor certainty, and ratepayer protection. Learn more at www.enviromarkets.org.
.png)
.png){kind=small}