REC (Renewable Energy Certificate)

A Renewable Energy Certificate (REC) is a tradable instrument representing the environmental attributes of one megawatt-hour of electricity generated from a renewable source, letting a buyer claim renewable-energy use even though the physical electrons on a shared grid are indistinguishable from fossil generation. Data center operators buy RECs, or contract for them directly through a PPA with a wind or solar project, to back sustainability claims and offset Scope 2 emissions reporting. A US congressional report in January 2026 found data centers already account for about 4.4% of national electricity use, projected to triple by 2028, intensifying scrutiny of whether REC purchases represent genuinely additional clean generation or just reshuffle existing certificates. Unbundled RECs, bought separately from the underlying power, are the most common and most criticized form, versus bundled RECs tied to a specific PPA.