An REC (a renewable energy certificate, sometimes called a green tag) is a commodity that represents the environmental benefits of renewable electricity, but can be handled independently of the energy generated from a renewable facility.

An REC (a renewable energy certificate, sometimes called a green tag) is a commodity that represents the environmental benefits of renewable electricity, but can be handled independently of the energy generated from a renewable facility. Confused? Let’s think through a concrete example.

Consider Wally. Wally owns and operates his own wind farm. For every megawatt hour (MWh) of electricity produced by Wally’s facility, one REC will be issued.

Typically, Wally will sell his unused electricity to a utility. If Wally owns his own shop—let’s call it Wally’s Waffle Shack—he might choose to retire his RECs (keep them without selling), to show customers his concern for the environment. Those RECs could convince his environmentally conscious patrons to buy more waffles. If the Waffle Shack falls on hard times and closes (no surprise in this slumping economy), Wally might still choose to retire his RECs to support renewable energy.

Or, maybe Wally needs extra cash to buy those animal-shaped waffle makers he’s been eyeing, so he decides to sell his RECs. In certain states where RECs can be used to meet renewable energy requirements, utilities might buy RECs for compliance purposes. Or, they might buy RECs to make available to green customers like you who want to pay a premium for renewable power.

Even if you don’t buy your own electricity, or you live far from a renewable energy facility, you can still buy RECs. That’s the beauty of them. You can choose to buy through a utility program (if you have one), or you can use a REC marketer—a guy or gal who buys Wally’s RECs, and then sells them to you.

Buyer beware: not all RECs are created equal, so your best bet is to purchase RECs that are independently certified. Even certified RECs have come under increasing scrutiny lately, but many leading environmental groups and government organizations still adamantly support RECs as an easy, effective way to promote renewable energy development. So get behind out man Wally and take a few minutes to buy into green power.