A version of this article first appeared in WFAE’s Climate Newsletter. Sign up here to receive weekly climate news straight to your inbox.
The Southern Environmental Law Center plans to bring an upcoming Duke Energy program before the North Carolina Court of Appeals. The program, called Clean Energy Impact, is supposed to allow companies and individuals to buy energy credits to support North Carolina’s clean energy transition.
A version of the program is currently available in Florida, where Duke advertises that customers can “offset [their] energy use with clean solar energy” generated in the state. State regulators approved the program’s expansion into North Carolina earlier this year, where it would launch sometime in 2026, replacing Go Renewable.
The SELC filed a Notice of Appeal on behalf of the Southern Alliance for Clean Energy last Thursday. The appeal claims that the commission does not require the credits to come from projects beyond what the company is already required to build by law.
“If you’re subscribing to a program, and nothing in Duke’s behavior is changing, there’s no additional solar being procured, you’re not offsetting anything,” said Nick Jimenez, senior attorney at SELC.
But what does that mean? And what even are these energy credits?
What is Duke Energy selling?
Duke Energy is selling a renewable energy credit plus the value of the carbon emissions it avoided when it produced the credit. A renewable energy credit, or REC, is equal to one megawatt hour of renewable energy. If you’re a business, you might buy some of these to meet your company's sustainability goals. They’re not offsets, but a company might buy them and say something like, “We’re powered by 100% green energy.”
But what counts as renewable energy? In North Carolina, the term “renewable energy” casts a wide net. It includes:
- Solar and wind energy
- Burning the methane gas trapped from hog or human waste
- Burning wood pellets
It also includes some surprising additions, such as burning rubber tires (see pg. 24). When we’re talking about Clean Energy Impact, Duke plans to start with RECs that come from solar projects, then broaden the program to include some of the methods mentioned above
In 2023, state legislators expanded RECs to include nuclear energy. The state’s new “Clean Energy Portfolio Standard” included renewables as well, although that category still includes generation techniques that release carbon dioxide and other air pollutants as byproducts, such as biogas and, well, tires.
In other states, such as California, RECs included “avoided carbon emissions.” This refers to the carbon emissions the utility didn’t release when it chose renewable energy over burning fossil fuels. This is measured in metric tons of carbon dioxide.
When North Carolina legislators created RECs in 2007, they excluded “avoided carbon” from the definition, writing that “a 'renewable energy certificate' does not include the related emission reductions, including, but not limited to, reductions of sulfur dioxide, oxides of nitrogen, mercury, or carbon dioxide.”
What Duke sells is a little different than what North Carolina calls a “REC.” Clean Energy Environmental Attributes, or CEEAs, are Duke’s energy credits that include one megawatt-hour of renewable energy, plus additional characteristics such as the emissions the utility avoided when it generated that unit of energy. In that way, they’re more similar to the RECs that other states offer, though Duke’s new credits aren’t going to be certified by Green-e® Energy, a third-party organization that verifies that a credit hasn’t already been used for something else, like regulatory compliance.
The RECs that Duke sells under its existing program, Go Renewable, are certified, but they don’t come with the guarantee that the utility generated them in-state.
Duke plans to sell these CEEAs in 250-kilowatt-hour “blocks,” so folks can purchase fractions of a total credit.
Making an appeal based on simple addition
So, why is SACE appealing state regulators’ decision to approve Clean Energy Impact? At the crux of their argument is an idea called “regulatory surplus.”
When state legislators set North Carolina’s 2050 carbon neutrality goal, they also directed state regulators to develop a voluntary program with Duke Energy that allows residential, commercial and industrial customers to buy RECS “to offset their energy consumption.”
“The word offset has to mean something,” Jimenez said.
Every couple of years, Duke Energy proposes a new resource plan, which the Utilities Commission considers and votes on. The plan states Duke Energy will build or procure a certain amount of clean energy. For example, the 2023 resource plan ordered the utility to add 3,460 megawatts of new solar to the grid by 2031. The question that SACE is asking is: If I buy a REC, does that money go toward those megawatts? Or does it go toward the procurement of clean energy in addition to those 3,460 MW?
Imagine a pie. This pie is the cost of building 3,460 megawatts of solar energy. Normally, ratepayers within a given customer class (residential, commercial or industrial) would eat an identical slice of that payment pie. But with Clean Energy Impact, you could choose to eat more of that pie. Either way, the pie’s gonna get eaten, but you could say you ate more of that pie and even get a certificate that says you did.
It’s a problem of “additionality” — does the program create additional renewable energy resources, or would Duke Energy have built or procured these resources anyway? Duke responded to a WFAE inquiry that “the program was not designed to offer additionality.” State regulators noted that “CEEAs from the [Clean Energy Impact] Program will be applied by Duke towards Duke’s compliance with the Carbon Plan and will not constitute procurements over-and-above Duke’s compliance obligations under the Carbon Plan.” Duke’s resource plan is also called its “Carbon Plan.”
The Southern Alliance for Clean Energy wrote in an earlier filing that “the CEI Program has the potential to mislead customers into believing that the CEEAs they purchase are surplus to regulation.”
“Duke’s new customer program undermines the trust of North Carolinians seeking to protect their families and future generations from the consequences of climate-warming carbon pollution,” said Stacey Washington, clean energy and equity director with SACE, in a written statement.
SACE isn’t alone. The North Carolina Public Staff, the state agency that represents ratepayers, said “participants could mistakenly believe that their participation in the Program would support additional development of renewable energy in the State.”
Then-commissioner Jeffrey A. Hughes wrote in his dissenting opinion that the CEEAs have “not been shown to provide a meaningful public or private benefit to customers.”
“It appears to be nothing more than an accounting exercise that will require implementation resources and funds that could be better spent in other ways to have a more impactful reduction on carbon emissions,” Hughes wrote.
But it didn’t have to be this way, as Hughes goes on to point out. Duke and the commission could have designed credits that accelerated the buildout of renewable resources, even if those resources would have been built eventually anyway. Alternatively, the program could have funded new behind-the-meter resources, like rooftop solar. In either example, buying the credits would have reduced carbon emissions.
During its resource planning, Duke Energy chooses resources based on the “least cost” pathway to reliable energy and regulatory compliance. When asked if the utility included the sale of RECs or CEEAs when forecasting the cost of renewable energy resources such as solar and wind, the company responded that it did not.
