A misleading report on RECs

Kevin Jones has a bug up his butt about one aspect of Vermont’s renewable energy program. The latest emission from the Vermont Law School professor’s policy shop is a report slamming the sale of Renewable Energy Credits. It deliberately overlooks the purpose and endgame of RECs, focusing largely on one immediate consequence:

“Vermont gets virtually none of its grid power from wind or solar sources, according to a report Vermont Law School students presented recently to the Senate Natural Resources and Energy Committee.

Developers and utilities sell Vermont’s wind and solar power to other New England states, using what are known as renewable energy credits, or RECs. As a result, although Vermonters subsidize these forms of energy, utilities in other states actually benefit from them, the report found.

The topline there — “Vermont gets virtually none of its power from wind or solar” — is technically accurate but fundamentally misleading.

It’s true that Vermont doesn’t immediately get “credit” for our renewables. But in reality, we are producing significant amounts of carbon-neutral energy. That’s a good thing, even in the short run when the “credit” goes elsewhere; and in the long run, the RECs will retire and we will get the “credit” for cheap energy that helps combat global warming.

Jones’ influence on reports like this soil the reputation of VLS, and honestly, I don’t know why they let him get away with it. He is having a malign influence on our energy debate under the VLS imprimatur, and teaching his students some bad policy lessons.

“We’re putting a lot of money and resources into subsidizing renewable energy for Massachusetts and Connecticut, and it makes no sense from a public policy standpoint,” Jones said.

Again, technically true but missing the point.

Vermont allows the sale of RECs in order to enable renewable development while keeping down electricity costs. This gets around the twin economic problem of renewables: first, the build-out costs are high, but once it’s up and running the power is very cheap. Second, it’s relatively new technology, and costs are only just beginning to come down. (Plus, renewables compete in a marketplace that’s artificially tilted toward fossil fuels, which get all sorts of subsidies and tax breaks that artificially lower the cost of coal, oil and gas.)

Selling RECs is a way around those market forces. Jones ignores all of that. He also overlooks one salient fact: sooner or later, the RECs will be retired and the “credit” will come home. State law establishes Renewable Portfolio Standards (RPS); when those take effect, utilities will have a strong incentive to retire RECs and “bring the power home.” (Under a bill that became law in 2015, utilities will be required to produce 75% of their energy via renewables by the year 2032. That will practically eliminate the sale of RECs.)

The report also found that Vermont has doubled its greenhouse gas emissions from electricity production over the last 10 years. About a quarter of that can be attributed to the sale of renewable credits out of state, the report estimated.

Again, missing the point. It’s true, in the artificial construct of “energy credits.” But every renewable kilowatt counts where it matters most: combating global warming. For now, the “credit” goes out of state, but the way this report puts it, you’d think the renewable energy simply disappears. It doesn’t. It has a real-world impact.

The report mischaracterizes the electric-power system, falsely positing Vermont as an island unto its own. We are part of a seamless regional grid. Power is produced in various ways, distributed through the system, and instantly consumed. The grid is no respecter of borders.

One of the anti-renewable canards, currently in favor with skeptical policymakers and emphasized in this report, is that developers are misleading consumers by telling them that they will directly use the energy produced by a renewable installation. That is, in fact, never true unless you’re off the grid. Otherwise, the power is produced and it goes off into the grid to be used God knows where, and nothing can change that fact.

The report calls for a ban on RECs. That would hamstring the development of renewables. The report alleges that RECs cause us to increase our consumption of dirty energy. That’s true only if you see Vermont as an energy island. It’s not.

Too bad the students who wrote this report, under Jones’ guidance, aren’t getting the real picture about RECs and the energy market. Plus, Jones is lending aid and comfort to opponents of renewable energy and, indirectly, the fossil fuel industry itself. Is that what VLS really wants?

34 thoughts on “A misleading report on RECs

  1. H. Brooke Paige

    The REC Scam – Only the “Foreign Investors” and the Construction Contractors Win !

    The chickens ill come home to roost on the REC sales (and the transfer of the responsibility for the pollution) when the Federal Government starts to penalize states that rely heavily on fossil fuels for their electricity,- and that will be us even though we have scalped our mountaintops and covered over our pastures with fields of those black billboards.

    It is sad that we could be 90% renewable in a couple of years if we had required the new cable being placed under the lake and across southern Vermont to be increased by a third (cable) with that additional power being dedicated to the Vermont grid – this would have more than covered all the power lost from the closure of VT Yankee.

    Lot of cheap renewable power without those killer wind turbines or “picturesque” solar billboards – that threaten our way of life and the tourism industry in the Green Mountain state.


    1. newzjunqie

      Foreign investors? Already been done, sort of, think Saudi Arabia & oil cartel subjugation imposed seemingly forever. Profiteering construction contractors are no different than those necessary to facilitate any type of energy production.

      GMP & others had wind & solar renewables in portfolios purchased from other states before building them. Doesn’t make sense for VT to purchase out-of-state renewables, paying *their* associated developers & contractors but not build here. Blatant hypocricy of antirenewable lobby and nimby VTers to to use power and fuels which are damaging to environment & quality of life elsewhere with results far worse than the small-by-comparison wind towers perched upon mountaintops. Think offshore oil rigs. And Fukushima.

      Since time began *everything* on earth surface is being scalped so that we humans can build homes, roads, businesses, crops-this will continue as long as humans exist. Unless we revert to caves and treehouses, heating with open fire, fishing, picking berries and slaughtering wildlife, options are limited.

      Even if the purists reverted, nimbys and greenies would still be opposed. Oh the complaints. Life cycle and health of trees are compromised by tree-house dwellers. Smoke signal communication annoying and damaging to wildlife & where signaling operations are located while damaging the mountaintop vistas. Fire-light flickering is keeping everyone up at night -cracking noise sickening children. And causing newly-discovered phenomena of Crackling Noise Syndrome. And producing too much smoke, harming the environment. Berries and nuts disappearing, game-fowl and wild animals slaughtered for food face extinction. Hikers contact Sierra Club who form lobby to combat claims of noisy gunshots disturbing the peace and tranquility of forests, bow & arrows used for hunting are making hikers feel unsafe and noise decibel monitors prove gun-noise pollution an existential threat. Damaged caves the new blight and displaced bat population the new posterchild. Dealing with the drop in worm and insect population due to rivers being over-fished the cause clebre.

      We just can’t win!

  2. bobzeliff

    +1 on Walter’s comments.

    Technically…ie physics…the electrical power (electrons) produced locally are used locally! Just because some paper is signed(credits) they do NOT travel 1000 miles north to hydro quebec only to turn around and go to some southern new england state. You would hope a Vermont Law school professor would understand this. His students are being grossly missed.

    We, Vermont, are doing the right thing.

    The whole point of selling/buy energy credits is to encourage polluters (buyers of credits) to buy(i.e. subsidize ) generators of renewable energy.

    How this professor twist these facts disgraces his intellectual integrity.

  3. Annette Smith

    Thanks for the entertainment. Nice to know that a political pundit knows more about energy markets than the people at Vermont Law School’s Energy Institute, where the professor worked for years in the utility industry and actually knows something about how markets work. Keep up the good work. I need more humor in my life.

    1. newzjungie

      Mirror mirror rides again. My my, how you do go on and on.

      Do tell??? Take your own advice Annette Smith, grand-poobess of antirenewable front group VCE. Suggestion breathtakingly brazen in light of own high crimes and misdemeanors. As one who now pockets $50 grand of tax-free per year (on paper that is) in part by exploiting victims of the system who don’t know where to turn, while pocketing “donations” under the pretense of offering lawyerly representation to the downtrodden–NWIYCGI.

      Launched tax-free well-paying career VCE, while claiming to be pro-renewable, a “nonprofit” with dark money from VT Fuel Dealers Association (was this reported as income at the time). Unless I missed something, you didn’t offer any of your interviewers, even for in-depth stories this pertinent information, instead choosing to supply an oversized nude of yourself while claiming to be a former “blonde beach bunny”-reach high Ms Smith. Curiously excluding details germane to the story(s)-such as the more important info of how VCE got its start.

      Loud-mouthed strident campaign based upon misleading and false info drowns out the meaningful debate we should be having about ending or curtailing badly placed siting and better alternatives. But this is all about you teaching the religion of obstructionism to your followers. It is in your interest to fan the flames that keep you in business and most importantly in the spotlight starring in the self-made reality show in which your array drones play bit parts as they are launched like flying-monkeys to do your bidding and most of all-protecting your throne.

      Happen to agree that there are prohibitive and negative issues surrounding what is taking place–it’s the dishonesty and sophism employed, along with the masterful manipulation tactics, plus gaming the system AND your followers that I find disturbing–it’s commonly known as hypocricy. Not a true believer in global warming or the plan to deal with it, but you should be honest about what you’re doing, who is sponsoring and where your funding comes from rather than deceiving VTers including the press.

      Would suggest clarifying the VCE mission statement: “Bringing environmental justice and corporate accountability to Vermont communities…” adding “by championing the carbon and nuclear industries–killing renewables one solar array and wind tower at a time”! Also changing name to better reflect the true mission to ‘VNE’ Vermonters for a NIMBY Environment.

  4. climateplan

    John, Vermont’s policies regarding RECs — both in the recent past and at the present time — are incredibly out of step with the Northeast trading region. Our policies were so out of step, Connecticut banned Vermont RECs because of double-counting. The reason Vermont got out of that pickle is because our Renewable Portofolio Standard doesn’t kick in until 2017.

    Your report here is completely uninformed. The utility industry is very opaque, so it’s understandable why people — including legislators — make false assumptions.

    To say “Vermont is doing the right thing” is a testament of Vermont “experts” and pundits being stuck in the Vermont bubble. I’m completely flabbergasted how self-congratulatory and simultaneously uniformed Vermonters can be on the issues regarding utilities.

    My comment here may come across as a slam — I really don’t intend that. But, hey, you’re report is a flat out personal attack against one of the most informed leaders in the state. You don’t shine here.

    1. John S. Walters Post author

      As I commented elsewhere, I consulted with knowledgeable people before writing that piece, and I’ve heard from well-informed people after the fact, saying I got it right. I’ll stand my ground, thanks.

      1. climateplan

        Names and quotes, please, as any good reporter would provide.

        Seriously, talk to the folks at RAP — or anyone outside of the Vermont bubble.

      2. climateplan

        For the record, I fully support RECs and my company is registered with NEPOOL. I believe RECs should be traded across state boundaries and to limit REC trading to Vermont would be a huge mistake.

        My concern is about your report’s personal attack. VLC is not the only critic of Vermont energy policies. Utilities are adopting a Behind the Meter (BTM), retail business model — one of the least innovative in the country.

        This model entrenches monopolies and significantly dampens innovation.

        The current draft for Net Metering pricing (under Act 99) provides little consumer protection. It is also likely to get Vermont RECs banned in the Northeast marketplace.

        But the main concern I have with your report: you’ve down little more than slap an expert for daring to challenge the Vermont Way.

        Look, if you don’t want to post my comment, feel free to contact me. I can connect you with national and international experts familiar with Vermont policies — and who don’t speak out.

  5. Kevin B. Jones

    John, since you are so well informed please explain to me how the RECs eventually get retired under Vermont state policy, including Act 56? You seem to agree that Vermont is currently 0% Solar and 0% wind (at least technically) but you don’t seem to touch the fact that Vermont’s electric sector greenhouse gas emissions have doubled over the last decade — I presume that is also technically correct, if not troubling to you. Before we get to 2017 and beyond lets acknowledge that this (technically) is a pretty poor showing for Vermont and your friends in the Shumlin administration. All this money and effort and 0% solar and wind and rising GHG emissions don’t trouble you?

    Have you read Act 56, probably not that would take time and effort, better to rely on those “experts” who stake their careers on it. An honest analysis of Act 56 does not change the picture dramatically 15 years later in 2032. In 2032 unless we fix Vermont’s seriously broken policies we will still have 0% wind and only 10% solar — the remainder of the goal (the remaining 65%) will be covered by having the utilities buy up cheap RECs that none of the other New England states count toward their goals — that is why they will be so cheap. This is supported by the fact that the total goal in the RES is backed up by a 1 cent/kWh penalty while all the existing SPEED and net metered RECs can be sold down country for 5 cents/kWh. Even you John should be able to handle that math. Worsening this situation with the current draft of the PSB net metering rules everyone will be driven toward turning their net metered RECs over to GMP which will put in place an effective 10% cap on solar through 2032 since selling RECs to the utility or out of state will be all that is financially feasible. In 2032, 0% wind, 10% solar and the rest HQ and near worthless RECs that no one else allows to count. A heck of a plan to get Vermont to 90% renewable! But good public policy is difficult while as has been proven on this page — ignorance is bliss. Cheers.

    1. John S. Walters Post author

      Thanks for calling me ignorant. I appreciate it. Your view strikes me as beyond-worst-case. You’re ignoring the larger truths about what’s going on, fixating on one aspect of our renewables plan, and blowing it all out of proportion. That’s not a helpful contribution to our public policy debate, no matter how many times you’ve read Act 56.

      1. Kevin Jones

        John not worse case but results as designed. Act 56 was designed by Shumlin administration and utilities to perpetuate out of state sale of SPEED RECs (all existing wind) in perpetuity. Other than 10% distributed tier it will largely be met with HQ and cheap RECs no one else counts. That is the result by design. If you are not willing to read the law and think about it and just rely on the vested interests point of view that is (fill in the blank yourself). Did SPEED turn out as I predicted — 0% solar, 0% wind and doubling GHG emissions?

      2. climateplan

        John, you’re way out of your depth on this issue. Seriously, the more you write, the easier it is to see you have little grasp on the very important technical issues which translate into either less or more of a climate impact problem. Instead, it sounds like you’re standing on platitudes.

        My suggestion: why not take a little time to look at New York’s REV policy. NY has one of the best policies in the nation.

        Vermont, on the other hand, not only has the worst policies in the New England Power Pool — our policies are going from bad to worst.

        You can slam Jones all you want — it doesn’t change reality.

      1. climateplan

        This is flat out lazy and unethical, given the intensity of your attack and lack of knowledge.

        You know, 10 years ago we GMDers held each other accountable to facts and sources, despite the fact none of us were reporters. Some of us also held ourselves to a standard of decency.

        Pretty sad to see you go down this path.

  6. katrinkavt

    The next time you speak with your buddies, would you ask them how they envision Vermont will meet its renewable energy goals, since the renewables that have been built here up until now — and those built in the foreseeable future — will for the most part not qualify toward that goal? Thanks to the powers that be, Vermont has been left at a severe disadvantage, while other states will be happily checking off their goals thanks to our ineptitude.

    1. John S. Walters Post author

      The RECs are not sold in perpetuity. They’ll expire and be repatriated in order to help VT utilities meet RPS requirements. But hey, you don’t believe me anyway, so what’s the point.

      1. climateplan

        “Repatriated?” [facepalm]. John, there’s no such thing. Where are you getting this information?

        At some point, a writer needs to face himself and acknowledge he may not know the subject as much as he thinks he does. We’re at this point.

        But it makes sense –the utility industry is opaque and access to knowledge occurs primarily via being a member of the industry or legal expert. There’s a huge learning curve.

      2. John S. Walters Post author

        Oh, I lack your secret special knowledge, eh?

        This is the problem with the anti-renewables crowd, Kevin Jones included: anyone who disagrees with them is a tool or an idiot or both. Sign me up for “both”, please.

  7. katrinkavt

    Wind turbines and solar panels generally have a roughly 20-25 year lifespan and most RECs last 17 years, so if that’s the plan you endorse, it is one that shortchanges Vermont’s renewable goals tremendously.

  8. Kevin Jones

    John sorry to point this out again but you are wrong. You might want to stop relying on those unnamed sources at some point. First the aproximately 90 MW of solar net metered solar constructed before 6/30/15 does not qualify for distributed tier of RES. None of the SPEED resources qualify for the distributed tier. The penalty for the total goal is 1 cent / kWh and these resources are being sold out of state for 5 cents. That is 5 times the highest rate the utilities would be willing to pay. Basic economic suggests all these resources will be sold into perpetuity out of state. I know your unnamed friends say it isn’t so……

    1. Thump McDougal

      Perfesser Jones,
      Walters has access to a team of geniuses much smarter than you. They are the secretive “little people” that have driven Walters’ mentor George Harvey insane.

      First they took George. Now they are taking Walters. You could be next, Perfesser.


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