Renewable Energy Certificates (RECs) have emerged as critical market-based policy instruments to promote renewable energy development worldwide. This comprehensive review examines the theoretical foundations, market mechanisms, policy effectiveness, and challenges of global REC systems based on extensive international experiences spanning over two decades. RECs function by separating the environmental attributes of renewable electricity from its physical energy, creating flexible trading mechanisms that effectively channel private investment toward renewable energy projects while providing compliance tools for renewable portfolio standards. Our analysis reveals significant variations in design and implementation across major markets, including the United States, European Union, China, India, Australia, and emerging economies. Despite their widespread adoption with over 50 countries implementing various forms of REC mechanisms, these markets face persistent challenges including price volatility, limited liquidity, regulatory inconsistencies, and ongoing debates about their environmental additionality. Recent technological developments, particularly blockchain-enabled tracking systems and digital platforms, are reshaping REC markets by enhancing transparency, reducing transaction costs, and enabling smaller-scale participation. This review proposes corresponding recommendations from the dimensions of optimizing market design, promoting digital transformation and product diversification, and establishing international coordination mechanisms.
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