Annex 5
                                     Attachment 2




Emerging market for Green
       Certificates
Dr Marianne OS...
CONTENT



    1.   What is a certificate system?
    2.   How certificates system works
    3.   What are the benefits of...
CONTENT



    1.   What is a certificate system?
    2.   How certificates system works
    3.   What are the benefits of...
Certificates provide Information of the added Value of green
Electricity
                                             Mark...
What is a Green certificate?


   • Various types and denominations
           Green Certificate, TREC, TRC, REC
         ...
How does a certificate system work



                    certificate market




                    electricity market
  ...
Rationale of Green Certificates

• The main idea is to separate physical flux of electricity from its
  environmental bene...
Demand must be created through the right regulatory
framework

               Certificate Systems within the right Framewo...
CONTENT



    1.   What is a certificate system?
    2.   How certificatessytem works
    3.   What are the benefits of c...
What information is provided through certificates

• paper form
• electronic form
Tracking the Life cyclus of certificates

               Certification” of the Plant

           Measuring of produced Ele...
Life cycle of a Green Certificates
Central registration of certificates




                                       Price Waterhouse Coopers, 1999
Example: How to issue Issuing certificates
Balance for an account owner
CONTENT



    1.   What is a certificate system?
    2.   How certificate system works
    3.   What are the benefits of ...
How can green certificates be used?
• Monitoring and Statistics:
     -Proof of RE generation
    - Labelling
    - Disclo...
Proof of RE generation/Labelling/ Disclosure

• Some suppliers may wish to target “green” consumers
  by selling them an e...
Benefits of Green Certificate Systems

• Green Certificates can be traded across country boundaries
• Green Certificates o...
Constraints of Green Certificate Systems


• Risk of double counting must be avoided

• Reliable tracking system of the wh...
Conclusions

 • Green Certificates provide information
 • Green Certificate systems can be used with many different RE
   ...
CONTENT



    1.   What is a certificate system?
    2.   How certificate system works
    3.   What are the benefits of ...
In Europe are many incentive systems in place

        National Certificate Systems don´t contribute
        to a liquid E...
Existing Green Certificate Systems


• EU : UK, Italy, Belgium, Sweden, etc. – Renewables Obligations
• Netherlands – Cert...
RECS - the only voluntary reliable certificate system
•   Harmonised European standard for (national) Tradable Renewable
 ...
RECS meets high Quality Standards

    1. Only Plants selected through a precise
         Procedure are eligible for RECS ...
Association of
                                                                    RECS International
     AIB
           ...
Countries RECS members
                         EC likely members
                         Accession - 2004
              ...
Certificate Issued by technology
                               RECS Certificates Issued per Technology
     Ind.& comm.wa...
CONTENT



    1.   What is a certificate system?
    2.   How certificate system works
    3.   What are the benefits of ...
Certificates in the USA
• 14 of 19 RPS states in USA uses Certificates to demonstrate
  compliance
• There is also a stron...
Market size in the USA
Tracking system in the USA
Use of certificates in the USA


• Certificates can be sold
   – Bundled with the electricity to local retailers
   – Unbu...
The future of TREC in the USA

• National registration?
   – State registration currently so a generator can be in several...
Conclusions

 • Green Certificates provide information
 • Green Certificate systems can be used with many different RE
   ...
REEEP - the Renewable Energy and Energy Efficiency
Partnership is an international NGO registered in Austria

1. REEEP cur...
REEEP’s vision is to make energy systems sustainable

1. REEEP aims to reduce market barriers and financial obstacles
   f...
REEEP delivers value via Regional Secretariats



                                                               REEEP Reg...
The 50 REEEP projects encourage local initiatives in
   40 countries



                                                  ...
REEEP International Secretariat
 Vienna International Centre
       Vienna, Austria
       info@reeep.org
      +43 1 2602...
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Emerging market for Green Certificates

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Emerging market for Green Certificates, Dr. Marianne Osterkorn, REEEP

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Emerging market for Green Certificates

  1. 1. Annex 5 Attachment 2 Emerging market for Green Certificates Dr Marianne OSTERKORN, Director of REEEP
  2. 2. CONTENT 1. What is a certificate system? 2. How certificates system works 3. What are the benefits of certificates 4. Case studies – The case of harmonisation in EU (RECS) – The case of the certificates market in the US
  3. 3. CONTENT 1. What is a certificate system? 2. How certificates system works 3. What are the benefits of certificates 4. Case studies – The case of harmonisation in EU (RECS) – The case of the certificates market in the US
  4. 4. Certificates provide Information of the added Value of green Electricity Market for Certificates Environmental Benefit Market for Electricity Certificate MWh Certificate = Guarantee of Origin Electricity Market for green Electricity
  5. 5. What is a Green certificate? • Various types and denominations Green Certificate, TREC, TRC, REC Tradable Renewable (Energy) Certificate/Credits Renewable Energy Credit / Green tags • piece of information • represents the benefits (aside from the physical electricity) associated with electricity generation by renewable sources • It is a commodity which can be traded
  6. 6. How does a certificate system work certificate market electricity market Demand Supply Issuing Registration Redeeming
  7. 7. Rationale of Green Certificates • The main idea is to separate physical flux of electricity from its environmental benefits • create a market where Green certificates can be traded distinct from the market for the supply and demand of electricity • gives flexibility by allowing green producers of electricity to reach easily green consumers • Green certificates could be generated and sold anywhere in the world where there is demand!
  8. 8. Demand must be created through the right regulatory framework Certificate Systems within the right Framework enable Flexibility and Security for Investors + Feed-in Tariffs Certificate System National Framework Market driven Demand is equal to Quota Demand for Electricity total Production and Certificates market prices for Penalty / fixed Price Electricity and Incentive Certificates high Level of Security high Level of Security Market induced for Investors for Investors Insecurity for Investors Source: Energy Information Administration: International Energy Outlook 2006
  9. 9. CONTENT 1. What is a certificate system? 2. How certificatessytem works 3. What are the benefits of certificates 4. Case studies – The case of harmonisation in EU (RECS) – The case of the certificates market in the US
  10. 10. What information is provided through certificates • paper form • electronic form
  11. 11. Tracking the Life cyclus of certificates Certification” of the Plant Measuring of produced Electricity Issuing of Certificates Transfer of Certificates Redemption of Certificates
  12. 12. Life cycle of a Green Certificates
  13. 13. Central registration of certificates Price Waterhouse Coopers, 1999
  14. 14. Example: How to issue Issuing certificates
  15. 15. Balance for an account owner
  16. 16. CONTENT 1. What is a certificate system? 2. How certificate system works 3. What are the benefits of certificates 4. Case studies – The case of harmonisation in EU (RECS) – The case of the certificates market in the US
  17. 17. How can green certificates be used? • Monitoring and Statistics: -Proof of RE generation - Labelling - Disclosure ( guarantee of origin ) • International trade : -Proof of import/export of renewable energy • Incentive system – requires Obligations and incentives/ penalties – together with Feed-in tariff – together with tax incentive
  18. 18. Proof of RE generation/Labelling/ Disclosure • Some suppliers may wish to target “green” consumers by selling them an electricity product with high renewables content • The labelling body could require Green Certificates to be redeemed in order to verify compliance with label criteria. e.g. generated from hydro plant with a capacity below 20MW • Within EU it is obligatory that suppliers provide customers with information on the fuel mix for their electricity. Green Certificates can be used as guarantee of origin
  19. 19. Benefits of Green Certificate Systems • Green Certificates can be traded across country boundaries • Green Certificates overcome physical electricity transfer restrictions • Green certificates promote best practice : it gives incentives to most economical sites , since the physical barrier to trade of RE benefits is removed e.g. even production of solar electricity in tropical countries but green certificates bought by consumers in the North? • Green Certificates help to remove the requirement that supply & demand of RE occur at same time • Green Certificates can prove compliance with public support schemes
  20. 20. Constraints of Green Certificate Systems • Risk of double counting must be avoided • Reliable tracking system of the whole life cycles of the certificates is a quot;must quot; • Legal framework has to be stable ( obligations, penalties ) • No harmonized market, very scattered systems • market based prices
  21. 21. Conclusions • Green Certificates provide information • Green Certificate systems can be used with many different RE policies • Green Certificates offer flexibility and transparency for the market • Green Certificate systems have been proven to be robust and fraud-resistant
  22. 22. CONTENT 1. What is a certificate system? 2. How certificate system works 3. What are the benefits of certificates 4. Case studies – The case of harmonisation in EU (RECS) – The case of the certificates market in the US
  23. 23. In Europe are many incentive systems in place National Certificate Systems don´t contribute to a liquid European Certificate Market Country Start Supported Demand Certificate Validity Target Flexibility Imports RES Driver Size 2002 wind, hydro, Suppliers 1 MWh 5 years 3% (2004) banking No Belgium biomass, solar, 5% (2010) Flanders tidal, waves, Geothermal. 2002 hydro <20 MW , Suppliers 1 MWh 5 years 5% (2010) banking Yes - under the Belgium wind, solar, condition of Wallony biomass, biogas, reciprocity geothermal, 2002 hydro (after Producer / 100 MWh 1 year 2% (2002) borrowing Yes – if Italy 4/´99), waste, Importer 6% (2006) against a accompanied by biomass, solar, >100GW h 8% (2008) penalty price actual electricity wind, tidal import and reciprocity 2001 solar, hydro < 5 Suppliers 1, 10, 100, 1 year 5% (2010) no banking Yes – if Nether- MW, biomass, 1.000 MWh 10% accompanied by lands wind (2020) actual electricity import 2003 wind, solar, End users 1 MWh Unlimited Additional banking, No Sweden hydro up to 1,5 10 TW h borrowing MW, geothermal, until 2010 biofules, waves 2002 hydro (< 20 Licenced 1 MWh Unlimited From 3,1% Limited No UK MW), wind, suppliers (2002) to banking and solar, biogas, 7,7% borrowing biomass, waves (2010)
  24. 24. Existing Green Certificate Systems • EU : UK, Italy, Belgium, Sweden, etc. – Renewables Obligations • Netherlands – Certificates facilitate tax exemption • Europe – private RECS initiative • US – Several states use Green Certificates + moves to establish a North American Green Certificate market • Australia – Sustainable Energy (Electricity) Act introduced RE Certificate trading • South Africa?
  25. 25. RECS - the only voluntary reliable certificate system • Harmonised European standard for (national) Tradable Renewable Electricity Certificate Systems – Basic Commitment = Overall standard – Domain Protocols = (National) implementation – Technical specifications interfaces certificates registries • Comprises all major European utilities – for disclosure and green customers • Launched in 1998 today implemented in 18 countries: 15 EU members, 2 EU accession countries, + Norway + Switzerland, Slovenia • Currently no European market, but RECS provides a working exchange platform for diverse TREC systems
  26. 26. RECS meets high Quality Standards 1. Only Plants selected through a precise Procedure are eligible for RECS Certification 2. Continuous Auditing of the actual Operation is implemented 3. Any Subsidies the Plant receives must be declared on the Certificate 4. Issuing of RECS Certificates is exclusively based on Metering Data (1MWh - 1 Certificate) 5. RECS Certificates have unique Numbers throughout their Lifetimes (5 years)
  27. 27. Association of RECS International AIB Issuing Bodies Supply / Demand Registry Issue Transfer Redemption Issuing Body NL Supply / Demand Registry Issue Transfer Supply / Demand Redemption Issuing Body AT Registry Issue Transfer Redemption Issuing Body DE
  28. 28. Countries RECS members EC likely members Accession - 2004 Accession - 2007 Current members
  29. 29. Certificate Issued by technology RECS Certificates Issued per Technology Ind.& comm.waste, Onshore wind, 95,619, 0% 355,251, 1% Offshore wind, Mun.solid waste, 3,268, 0% 336,796, 1% Other biogas, 0, 0% Sewage gas, Photovoltaic, 0, 0% 25,100, 0% Landfill gas, 20,885, Thermal, 0, 0% 0% Forestry etc, 12,151,721, 43% Hy dro, 15,282,644, 54% Offshore wave, 0, 0% Geothermal, Offshore tidal, 0, 0% 166,024, 1% Onshore wave, 0, 0% Energy crops, 86,249, 0% Onshore tidal, 0, 0% Status: 1. August 2003
  30. 30. CONTENT 1. What is a certificate system? 2. How certificate system works 3. What are the benefits of certificates 4. Case studies – The case of harmonisation in EU (RECS) – The case of the certificates market in the US
  31. 31. Certificates in the USA • 14 of 19 RPS states in USA uses Certificates to demonstrate compliance • There is also a strong voluntary market which cannot be neglected • Prices can vary a lot on the compliance markets – From 0.70 US cents/MWh (Maine) – To 35-49 US dollar/MWh (New England) • Prices on the voluntary market – From 2 US dollar to 6 US dollar (new generation) – But some sources like 200 US dollar/MWh – From 1 US dollar to 3 US dollar (existing generation)
  32. 32. Market size in the USA
  33. 33. Tracking system in the USA
  34. 34. Use of certificates in the USA • Certificates can be sold – Bundled with the electricity to local retailers – Unbundled at a regional or national level • Certificates can be aggregated from small systems • Certificates can be sold in advance of generation
  35. 35. The future of TREC in the USA • National registration? – State registration currently so a generator can be in several tracking systems and issue REC in each tracking system • Link with the emission certificate market? – Currently RE not eligible or there is no rules to allow participation • Clarity of the system for end-users? – Currently, the system tends to get too complex to be understood • E.g. sale of certificate without the totality of their environmental attributes, sale of certificates without corresponding electricity
  36. 36. Conclusions • Green Certificates provide information • Green Certificate systems can be used with many different RE policies • Green Certificates offer flexibility and transparency for the market • Green Certificate systems have been proven to be robust and fraud-resistant • Green Certificates will be used in an growing market
  37. 37. REEEP - the Renewable Energy and Energy Efficiency Partnership is an international NGO registered in Austria 1. REEEP currently comprises more than 200 partners representing 35 governments, businesses and NGOs committed to accelerating the uptake of renewable energy and energy efficiency. 2. REEEP is currently funded by the EU and 11 governments: Austria, Australia, Canada, Germany, Ireland, Italy, the Netherlands, Norway, Spain, US, and UK, the major donor of REEEP
  38. 38. REEEP’s vision is to make energy systems sustainable 1. REEEP aims to reduce market barriers and financial obstacles for renewables and energy efficiency and so facilitate technology transfer 2. REEEP believes in action on the ground via project activities that are targeted on policy improvements and innovative finance mechanisms 3. REEEP focuses on emerging markets and developing countries and contributes to improving access to reliable energy for the poor
  39. 39. REEEP delivers value via Regional Secretariats REEEP Regional Office REEEP International Russia REEEP Regional Office Secretariat North America REEEP Regional Office Central Europe REEEP Regional Office REEEP Regional Office Latin America & East Asia Caribbean REEEP Local Focal Point MEDREP REEEP Regional Office South Asia REEEP Regional Office South East Asia & Pacific REEEP Regional Office Africa
  40. 40. The 50 REEEP projects encourage local initiatives in 40 countries 5 1 1 2 1 3 7 1 1 1 1 1 8 1 2 1 1 6 2 1 32 1 1 1 2 11 Currently 50 projects 1 1 1 Locations – 40 countries 3 7 122 • Some projects – multiple countries 1 1 6 1
  41. 41. REEEP International Secretariat Vienna International Centre Vienna, Austria info@reeep.org +43 1 26026 3425 www.reeep.org www.reegle.info
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