Buying green tags means purchasing renewable energy certificates, which represent the environmental benefits of electricity generated from renewable sources.
Understanding Green Tags
According to the provided information, a Green Tag is also known as a renewable energy certificate (REC). These certificates are crucial in the renewable energy market because they:
- Represent the intangible environmental attributes associated with producing one (1) megawatt hour (MWh) of electricity.
- Are generated from renewable resources, such as:
- Wind
- Solar
- Biomass
Essentially, when renewable energy is produced, two things are created: the physical electricity itself and the "green tag" or REC representing the environmental value of that clean generation.
Why People Buy Green Tags
Individuals, businesses, and organizations buy green tags primarily to support renewable energy and claim the environmental benefits of clean power generation. This allows them to:
- Offset their electricity consumption: By purchasing RECs equivalent to their usage, they can claim that their power consumption is matched by renewable generation, even if the physical electricity they receive comes from the traditional grid mix.
- Meet sustainability goals: Buying green tags helps fulfill corporate responsibility targets and demonstrates a commitment to reducing carbon footprint.
- Support renewable energy projects: The revenue from selling RECs helps finance the development and operation of renewable power plants.
- Make environmental claims: Entities can market their products or operations as being powered by or matched with renewable energy.
How it Works
Buying green tags involves purchasing these certificates separately from the physical electricity delivered to your location.
- Generation: A renewable energy facility (like a wind farm) produces electricity.
- Creation of REC: For every MWh generated, a REC (Green Tag) is created, representing the environmental attributes.
- Separation: The physical electricity might enter the grid and flow to consumers based on grid conditions. The REC is tracked and can be sold independently.
- Purchase: Buyers purchase these RECs, often through brokers or online marketplaces.
- Retirement: Once purchased by an end-user wanting to claim the environmental benefit, the REC is "retired" in a tracking system to prevent double-counting.
This market mechanism allows companies and individuals who may not have direct access to renewable electricity (e.g., renters, businesses in urban areas) to participate in and support the clean energy transition.
