RECs vs Carbon Offsets, what's the difference?

RECs vs Carbon Offsets --> what's the difference?

‍Carbon Offsets are utilized to negate CO2 emissions for the EPA's scopes 1,2 & 3 to show projects reducing their greenhouse gas emissions.

‍Renewable Energy Certificates track electricity (MWh) added to the grid from renewable sources, and thus buyers of RECs are looking to reduce their scope 2 emissions as defined by the EPA.

‍What are EPA scopes 1,2, & 3?
In short, the EPA defines the type of source renewable energy can come from for a business. Scope 1 being from their core business actions, scope 2 from energy purchased by the business (most notably electricity), and finally scope 3 is the most indirect energy use like emissions from business travel.

‍Lets dive deeper...
Both Carbon Offsets & RECs present very promising opportunity in the tradeable asset market. When comparing scopes 1-3, scope 3 is very removed from a business, a thus very difficult to reduce. With this in mind, only the EPA's scopes 1-2 are realistic for a business to try and reduce. Once a company minimizes the amount of CO2 they produce in their core business for scope 1, it forces them to buy up RECs to then balance out their non-green sourced electricity that falls under scope 2.

At the end of the day, carbon offsets & RECs go hand in hand, but serve very different purposes as companies comply with state & federal regulatory laws. Innovo's mission has always been to standardize & increase the efficiency of the REC asset trading market.