	Introduction

The National Defense Authorization Act for Fiscal Year 2012 (NDAA; P.L. 112-81 , §2824) directs the Secretary of Defense "to establish a policy to maximize savings for the bulk purchase of replacement renewable energy certificates (RECs) in connection with the development of facility energy projects using renewable energy sources." The provision requires that each service acquire replacement RECs through either a centralized purchasing authority within the respective department, or the Defense Logistics Agency (DLA). The 1978 National Energy Conservation Policy Act (NECPA, P.L. 109-58 , EPAct), in Section 203, established renewable energy goals for federal government agencies. The Department of Energy's Federal Energy Management Program (FEMP) has advised, "Because it defines renewable energy broadly, many different REC types can count towards an agency's renewable energy consumption requirement under EPAct 2005." Section 203 of EPAct 2005 specifies that renewable energy must be consumed to be credited toward the renewable energy goal (42 U.S.C. 15852(a)). However, Congress has not provided federal agencies explicit statutory authority to purchase RECs for meeting EPAct goals. RECs became an attractive option for some federal facilities intent on meeting renewable energy mandates, particularly where renewable power was not readily available. Early on, federal agencies purchased RECs without purchasing the associated electricity in order to meet the building energy-intensity reduction goals of NECPA. Presently, 29 states and the District of Columbia have adopted binding RPS policies; 8 states have adopted nonbinding (voluntary) standards. However, the marketplace that evolved reflects the balkanized approach that states have individually taken in creating their own renewable portfolio standards. Essentially, there are two markets for renewable energy—voluntary and compliance. The voluntary market for renewable energy consists of businesses and individuals purchasing renewable energy beyond the amounts present in standard utility service or provided through government requirements. Compliance markets are those where state renewable portfolio standards or other legal mandates require utilities and electricity providers to provide or purchase renewable energy as part of the portfolio offered to their regular customers. The REC Market

RECs, also known as "Green Tags" or "Green Certificates," certify that a renewable power generator has produced a certain amount of power according to set requirements and standards. As an example, the Master Renewable Energy Certificate Purchase and Sale Agreement , which has its basis in state laws of California and New York, defines three REC products: 
A standard REC includes all environmental attributes arising from the generation of electricity associated with the REC, whether or not the environmental attributes have been verified or certified and whether or not creditable under any existing applicable program; A basic REC consists solely of a certification of the generation of electricity by a renewable energy source, without any additional environmental attributes; A specified REC includes specified environmental attributes in addition to the generation of electricity by a renewable resource. They can advertise their credits on a tracking system bulletin board, use an aggregator or broker to either purchase the RECs directly or to assist the generator in finding a buyer, or use an auction or exchange platform to sell RECs. Currently, 10 regional REC tracking systems operate across the United State and Canada. In meeting past goals for using renewable-generated electricity, federal agencies were able to purchase RECs without purchasing the associated power. In 2008, GAO reported that federal agencies continued to rely on RECs rather than site-generated renewable energy to meet EPAct goals. However, RECs are not energy, and if DoD purchases them, they are an expenditure that does not contribute to energy security posture.
The Energy Policy Act (EPAct) of 2005 established renewable energy goals for federal government agencies. The National Defense Authorization Act for Fiscal Year 2012 directs the Secretary of Defense "to establish a policy to maximize savings for the bulk purchase of replacement renewable energy certificates in connection with the development of facility energy projects using renewable energy sources." This requires that each service purchase replacement renewable energy certificates (RECs) through either a centralized purchasing authority within the respective department, or the Defense Logistics Agency (DLA). A REC certifies that a renewable power generator has produced a certain amount of power according to set requirements and standards. In meeting past goals for using renewable-generated electricity, federal agencies purchased RECs without purchasing the associated power. In 2008, GAO reported that federal agencies continued to rely on RECs rather than site-generated renewable energy to meet EPAct goals.
Though no statute has specifically authorized federal agencies to purchase RECs, they have become an attractive option for some federal facilities in meeting renewable energy mandates, particularly where renewable power was not readily available. Early on, federal agencies purchased RECs without purchasing the associated electricity in order to meet the building energy-intensity reduction goals of the National Energy Conservation Policy Act.
The Department of Energy's Federal Energy Management Program (FEMP) has advised, "Because it defines renewable energy broadly, many different REC types can count towards an agency's renewable energy consumption requirement under EPAct 2005." Section 203 of EPAct 2005 specifies that renewable energy must be consumed to be credited toward the renewable energy goal (42 U.S.C. 15852(a)). However, Congress has not provided federal agencies explicit statutory authority to purchase RECs for meeting EPAct goals.
Presently, 29 states and the District of Columbia have adopted Renewable Portfolio Standards (RPS), while nine states and three power authorities have adopted nonbinding (voluntary) standards. There are two markets for RECs: voluntary and compliance. The voluntary market consists of businesses and individuals (and federal agencies) purchasing renewable energy beyond the amounts present in standard utility service contracts. Compliance markets are those where state renewable portfolio standards or other legal mandates require utilities and electricity providers to provide or purchase renewable energy as part of the portfolio offered to their regular customers. Renewable energy generators can sell RECs by advertising on a tracking system bulletin board, using a broker to assist in finding a buyer, or using an auction or exchange platform to sell RECs.
The REC marketplace that continues to evolve reflects a balkanized approach that states have individually taken in creating their own RPS. Ten regional REC tracking systems now operate across the United States and Canada. Purchasing RECs is not the same as purchasing energy, however. In states with an RPS, purchased power already includes a percentage of renewable-generated power that is included in the consumer's utility bill. Purchasing RECs in those states would represent additional costs without the associated power. DOD views such REC purchases as an expenditure that does not contribute to its energy security posture.