Certificates provide a tool for trading and meeting renewable energy obligations among consumers and/or producers, and also a means for voluntary green power purchases. They operate by offering 'green certificates' for every kWh or MWh generated by a renewable producer. The value of these certificates, which can be traded on a market, is added to the basic payment for the renewably generated electricity.

RECs is functioning in 20 countries at national level, among which are: Australia, India, Japan, Russia, Norway and most of the EU member countries. A detailed list of countries can be found here.

Success Story

Prior to the Kyoto negotiations of 1997 Australia announced a program designed to stimulate the growth of the domestic renewables sector.  By implementing a Mandatory Renewable Energy Target (MRET), for generation by 2010) and pledging an initial A$180 million to reach this target the government strongly committed itself regardless of how the impending negotiations proceeded.  A major portion of this initial commitment to renewables was the creation of a tradable renewable energy certificate program, which has been expanded and is still in use to this day.  Under the program Renewable Energy Certificates (RECs) can be created only by accredited power generators who are then able to sell their certificates only after the power has been generated.  The original guidelines were again reformed under the Renewable Energy (Electricity) Amendment Bill 2010 which sets targets to be achieved through the sale of RECs for 2020.

Source: Australian Government-Office of the Renewable Energy Regulator
RET - The Basics
REC System

Further Reading

Developing a Framework for Tradable Renewable Certificates 

Emerging Markets for Renewable Energy Certificates: Opportunities and Challenges

The Experience of State Clean Energy Funds and Tradable Renewable Certificates