Robust Growth Momentum Seen in the Renewable Energy Certificate (REC) Market
Robust Growth Momentum Seen in the Renewable Energy Certificate (REC) Market
Blog Article
The global Renewable Energy Certificate (REC) market is experiencing dynamic growth as governments, corporations, and consumers push toward a carbon-neutral future. With increasing awareness about climate change and the urgency to decarbonize, RECs have emerged as a powerful mechanism to promote clean energy generation and demonstrate environmental responsibility. As renewable energy capacity expands globally, so does the market for certificates that validate the use or support of that energy.
A Renewable Energy Certificate (REC) is a market-based instrument that certifies the bearer owns one megawatt-hour (MWh) of electricity generated from a renewable energy resource. RECs serve as proof that clean energy has been produced and injected into the power grid, even if the electricity itself is indistinguishable from conventional sources once it enters transmission systems.
Market Overview
Global Renewable Energy Certificates (REC) Market size and share is currently valued at USD 25.64 billion in 2024 and is anticipated to generate an estimated revenue of USD 66.74 billion by 2034, according to the latest study by Polaris Market Research. Besides, the report notes that the market exhibits a robust 10.1% Compound Annual Growth Rate (CAGR) over the forecasted timeframe, 2025 – 2034
Key Market Growth Drivers
1. Corporate Sustainability and ESG Commitments
Corporations around the world are under pressure to meet Environmental, Social, and Governance (ESG) criteria and reduce their carbon footprints. Purchasing RECs enables businesses to report on their Scope 2 emissions (indirect emissions from electricity use) and claim renewable energy use, even if they are not directly connected to a renewable energy generator.
The rise of science-based targets, carbon disclosure frameworks like CDP, and green building certifications such as LEED have all made REC procurement an essential tool for sustainability strategies.
2. Government Mandates and Renewable Portfolio Standards (RPS)
Many countries and subnational jurisdictions have implemented Renewable Portfolio Standards, mandating utilities to source a specific percentage of their electricity from renewable sources. These regulatory frameworks drive demand for compliance-grade RECs, as energy providers purchase them to meet legal obligations without necessarily owning the renewable generation assets.
Regions such as the U.S., parts of Europe, and Asia-Pacific have seen an uptick in REC trading volumes as a result of these policies.
3. Expansion of Renewable Energy Capacity
The global push for clean energy is leading to rapid increases in solar, wind, hydro, and biomass energy installations, thereby creating more RECs in the system. As each megawatt-hour of green electricity produces one REC, the proliferation of clean energy projects directly feeds the market.
Countries investing heavily in utility-scale solar farms, offshore wind projects, and distributed renewable systems are contributing to a booming REC supply, while buyers increase demand to claim environmental benefits.
4. Emergence of Renewable Energy Marketplaces
Digital platforms and trading exchanges have simplified REC transactions, improving market liquidity and accessibility. These marketplaces facilitate both bilateral and spot trading of RECs, allowing participants to manage their renewable energy obligations or sustainability claims more efficiently.
Blockchain and smart contracts are also being explored to enhance transparency, prevent double counting, and verify REC authenticity, further boosting confidence in the system.
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https://www.polarismarketresearch.com/industry-analysis/renewable-energy-certificates-market
Market Challenges
1. Lack of Standardization and Market Fragmentation
One of the primary challenges in the global REC market is the lack of harmonization across different regions and schemes. Each jurisdiction may have its own certification system, compliance requirements, and tracking platforms. This fragmentation complicates international REC trading and raises concerns about comparability and legitimacy.
For instance, RECs in North America are different from Guarantees of Origin (GOs) in Europe or International Renewable Energy Certificates (I-RECs) used in developing countries.
2. Double Counting and Greenwashing Risks
Concerns over double counting—when multiple parties claim the same environmental attribute—threaten the credibility of REC systems. Inadequate tracking and insufficient auditing can lead to "greenwashing," where organizations misrepresent their environmental performance.
Robust registries and verification protocols are essential to maintain market integrity and ensure that RECs genuinely reflect environmental benefits.
3. Price Volatility and Market Oversupply
REC prices can be highly volatile due to fluctuations in renewable energy generation, changes in regulatory policies, and evolving demand-supply dynamics. In some markets, oversupply of RECs has driven prices down, potentially discouraging new renewable energy investments.
Voluntary REC markets, in particular, can be sensitive to macroeconomic trends and consumer sentiment, influencing demand unpredictably.
4. Limited Awareness and Technical Knowledge
In several emerging economies, low awareness and technical understanding of RECs hinder market participation. Many businesses, especially small and medium enterprises (SMEs), are unaware of the benefits of REC procurement or lack the expertise to navigate trading platforms and regulatory requirements.
Capacity building, education campaigns, and streamlined access to marketplaces are needed to improve participation in underdeveloped REC markets.
Regional Analysis
North America
North America is a well-established and mature REC market, particularly in the United States. The U.S. operates both voluntary and compliance-based REC markets under state-level Renewable Portfolio Standards. Regional transmission organizations like PJM and registries like M-RETS facilitate REC tracking and trading.
Corporate procurement of renewable energy via RECs and power purchase agreements (PPAs) is a significant trend, with many Fortune 500 companies sourcing green power to meet sustainability targets.
Europe
Europe's equivalent to RECs is the Guarantee of Origin (GO), which functions similarly and is mandated under the EU Renewable Energy Directive. The region boasts a robust tracking infrastructure and high demand due to legally binding climate targets.
Northern and Western European countries are the most active markets, driven by aggressive decarbonization goals and growing public awareness. However, GO prices tend to be lower due to abundant renewable capacity, which has created a need for differentiation through premium RECs or added certifications like EKOenergy.
Asia-Pacific
The Asia-Pacific REC market is expanding rapidly, with countries like India, China, Japan, and Australia implementing frameworks to support clean energy certification. International Renewable Energy Certificates (I-RECs) have gained traction in countries where domestic certification systems are lacking.
Corporate sustainability initiatives and increasing renewable energy installations are driving growth. However, challenges such as market maturity, regulatory clarity, and verification infrastructure remain in some regions.
Latin America and Middle East & Africa
These regions are in the early stages of REC market development but show strong potential. The proliferation of solar and wind projects, especially in Brazil, Chile, UAE, and South Africa, offers opportunities for REC issuance. International frameworks like I-RECs are helping bridge certification gaps and encourage global participation.
Local policy support and improved institutional capacity will be essential to unlock full market potential in these regions.
Key Companies in the REC Market
Amazon.com, Inc.
Apple Inc.
copyright Corporation
Ford Motor Company
General Motors Company
Google LLC
IKEA Group
Intel Corporation
Meta Platforms, Inc.
Microsoft Corporation
Procter & Gamble Company
Samsung Electronics Co., Ltd.
Starbucks Corporation
Conclusion
The Renewable Energy Certificate market is playing an indispensable role in the global transition to a low-carbon economy. By providing a flexible and verifiable mechanism to support renewable energy generation, RECs empower businesses, utilities, and consumers to participate in climate action even when direct access to clean electricity is not possible.
Despite challenges around standardization, transparency, and price volatility, ongoing policy support, digital innovation, and rising sustainability commitments will continue to drive growth in the coming years. As awareness spreads and market mechanisms mature, the REC market will remain a critical pillar in achieving global decarbonization goals.
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