Promoting Green Power in Canada - Centre for Human Settlements

Promoting Green Power in Canada Pollution Probeeasily into a tracking system for green powerproduction. They are also able to effectivelyshift the monetary benefits of clean powerproduction to the sources supported byconsumers, and can be worked into nationaland international emissions trading schemes.5.2 Green Tags Linked to RPSObligationsIn the context of a renewable portfoliostandard, green tags, or tradable greencertificates, are used as an accounting systemto verify that an obligation has been met atthe end of each year. At the same time, sincethey are market-based instruments, theycould also facilitate compliance at the lowestcost, encouraging competition amongrenewable power providers. They work asfollows: The generators (producers),wholesalers, retailers or consumers(depending on who is targeted in theelectricity supply chain) are obligated tosupply/consume a certain percentage ofelectricity from renewable power sources. Atthe date of settlement, the generators have tosubmit the required number of RenewableEnergy Certificates (RECs) to demonstratecompliance. Generators can obtaincertificates in three ways:1. they can own their own renewable powergeneration, and each defined amount ofenergy (e.g., 1 MWh) produced by thesefacilities would represent one certificate;2. they can purchase electricity andassociated certificates from anotherrenewable power generator; and,Due to competition on the supply side, thissystem of tradable certificates leads, underthe assumption of perfect market conditions(perfect price signal), to minimal generationcosts from renewable power sources. Avoluntary system of trading renewableelectricity certificates has been implementedin the Netherlands. Tradable renewablecertificate systems are proposed or alreadyimplemented in Austria (only small hydro),Belgium, Italy, Sweden, the UK, Australiaand Texas.5.3 Green Tags — CurrentInternational DevelopmentsGreen tags are being used in Australia, theNetherlands, Great Britain and Texas tomonitor RPS requirements. Across the US,Green Power Sales amounted to about onemillion MWh in 2001. More than one-thirdof this amount was sold as green tags, with astrong growth tendency. In Canada, greentags are currently offered in Alberta andOntario, and from September 2002 onwardswill also be available to corporate customersin British Columbia. Table 5.1 contains anoverview of Canadian and US green tagproviders. Table 5.2 shows that Europeancountries are also very active in the field.Green tags can also be traded outside of RPSrequirements or national schemes, simply asgreen power sales through re-bundling thetags with electricity. In fact, internationaltrade of environmental attributes has alreadyhappened and can be expected to occurmore frequently in the future. 493. they can purchase certificates withoutpurchasing the actual power from agenerator or broker, (i.e., purchasingcertificates that have been tradedindependently of the power itself).126